• Is it too late to seek Rule 11 sanctions?

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    As every North Carolina litigator should know, Rule 11 of the Rules of Civil Procedure states that, by signing a pleading or “other paper” (motion, subpoena, etc.) related to the litigation, the attorney certifies that,

    to the best of his knowledge, information, and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

    If an opposing party decides that the paper violates one more of these requirements—legal sufficiency, factual sufficiency, or proper purpose—that party can move the court to impose “an appropriate sanction,” which may include attorney fees and other expenses.  Rule 11 does not, however, set a time limit for filing a Rule 11 motion.  So when is it too late?  I have been asked this question (or similar ones) a few times in recent months.  The short answer, of course, is that it depends on the facts.  But  I thought I would share the parameters I have observed from reviewing the case law:

    Our appellate courts have declined to impose a fixed deadline for filing a Rule 11 motion.  Instead they have stated that “a party should make a Rule 11 motion within a reasonable time after …discover[ing] an alleged impropriety.  Renner v. Hawk, 125 N.C. App. 483, 491 (1997).  Whether the timing is reasonable depends on the circumstances, but the question is reviewable de novo on appeal and is assessed using an objective standard. Static Control Components, Inc. v. Vogler, 152 N.C. App. 599, 607 (2002); Griffin v. Sweet, 136 N.C. App. 762, 765 (2000).

    A party is not expected to file a Rule 11 motion soon after receiving an improper pleading if discovery or other investigation will be necessary to demonstrate the problem to the court.  Such was the outcome in Renner, where the court held that a Rule 11 motion was filed within a reasonable time after depositions revealed that the plaintiff’s true purpose in filing the action was to gain an advantage in a separate custody dispute.  125 N.C. App. at 491–92.  Similar logic applied Vogler.  The defendant in that case contended from the start that the complaint was baseless, but he was only able to “unequivocally expose[ ] the absence of any factual basis” after deposing plaintiff’s representatives. Once that happened, plaintiff voluntarily dismissed the action without prejudice and defendant “promptly” sought a final settlement.  After three months with no response from plaintiff, defendant filed his Rule 11 motion.  Both the trial court and the Court of Appeals found the timing of the Rule 11 motion reasonable.  152 N.C. App. 599, 607–08 (2002).  It also was reasonable in Stocum v. Oakley for a defendant to file a Rule 11 motion seeking dismissal of a frivolous complaint, then to file another Rule 11 motion after the plaintiff voluntarily dismissed the complaint and a year later refiled the same meritless claims. 185 N.C. App. 56, 63–64 (2007).

    The trial court typically retains jurisdiction over Rule 11 motions after trial, after voluntary dismissals, and during and (after sometimes after) appeal of the underlying claims. See, e.g., VSD Communications, Inc. v. Lone Wolf Pub. Group, Inc., 124 N.C. App. 642, 644 (1996); Dodd v. Steele, 114 N.C. App. 632, 634 (1994).  It is foreseeable, then, that a party may raise Rule 11 arguments after a court has disposed of the case on its merits.  But this does not mean that a party can hold that possibility over its opponent’s head indefinitely.  The Court of Appeals held, for example, that it was unreasonable for defendant to wait until after trial to make a Rule 11 motion where defendant “obviously formed an opinion of the alleged impropriety of plaintiff’s pleadings” much earlier in the litigation, apparently even before it filed its answer.  Rice v. Danas, Inc., 132 N.C. App. 736, 741 (1999).  The court stressed that in that case it was not necessary for defendant to await a jury verdict in its favor before seeking the sanction:

    The fact that the jury found against plaintiff is not proof, as a matter of law, that her pleadings were unfounded, baseless, improper, or interposed for an improper purpose. We must be cautious not to allow an adverse jury verdict to dictate the decision on a sanctions motion, as that would amount to taxing the costs of litigation to the losing party, an approach that our legislature has not seen fit to embrace.

    Id.at 742.  Along the same lines, it was objectively unreasonable for plaintiff to file a Rule 11 motion approximately thirteen months after the North Carolina Supreme Court denied defendant’s petition for discretionary review of the underlying judgment, particularly where there had been no other activity in the case.  Griffin v. Sweet, 136 N.C. App. 762, 767–68 (2000).  Under this timeline, the alleged Rule 11 impropriety occurred at least two years prior to plaintiff’s Rule 11 motion.  Id. at 765.

    In sum, there’s no requirement that a party rush a Rule 11 motion to the clerk’s office as soon as it believes a filing warrants sanctions.  If further development of the record will help the trial court make a sanctions decision, waiting for that process to play out is likely to be found reasonable.  But the mere fact that the court’s jurisdiction over sanctions can extend past the underlying case does not justify sitting on a Rule 11 motion longer than necessary.

    Ann Anderson is an associate professor with the UNC School of Government and specializes in civil procedure, civil practice, and judicial authority.

    2 thoughts on “Is it too late to seek Rule 11 sanctions?”

    • Susan Jacobs says:

      Ms Anderson
      I have been in a legal battle that involved a NC State court judgement, where I ran out of money for appeal. The opposition failed to look at a lease they intended to collect on. Income on lease was my husband’s income.

      So I filed Chapter 7, and I just got
      Judge’s decision that their Adversary claim was dismissed with prejudice. I had to handle the trial pro se

      I am presently looking for practicing attorney with your background and I wondered if you practice law or if you teach. I need guidance on a possible sanction claim, a claim for malicious prosecutions, and if there is a possibility of overturning judgment. Opposition attorney failed to read his own evidence, concealed evidence, and misrepresenting Federal Tax codes in front of jury.

      I had a filing bankruptcy attorney but did not have the money to pay him for the adversary trial. My husband is in advanced Parkinson’s disease. And is in Hospice. He has money but needed the money for care.

      Thank you for your consideration

    • Russell Ryan says:

      Hello Ann. I wonder if you could tell me if we have the ability to sue a plaintiff and their attorney under Rule 11. As you can read below, we have been subjected to serious litigation misconduct.

      We have been in litigation for 4.5 years as a Defendant against a Plaintiff who is on a crusade to try to sink our business after we terminated them for cause for a piece of work valued at around $100k, of which we paid $80k.

      We have won every single substantial motion filed by us or the other side (around 15) except two procedural motions.
      The case progressed from the District Court (without going to State Court), where we won on Summary Judgment. We also won almost $500,000 in attorneys’ fees as judge ruled that it was a frivolous/improper motive lawsuit. This is only about 1/2 of our total legal bill as the case had 7 parties, some indemnified by us, and 7 counts.

      After losing, the plaintiff then took its case to the Xth circuit court of appeals where the lower court’s decision was upheld after waiting 2 years. Now the Plaintiff has filed motions to delay paying our fees (which we forced Plaintiff to place in Escrow as they could not raise a $1mm bond) because they just filed an entirely different case with the U.S. Supreme Court.

      We have been forced to counter every frivolous and time wasting motion which has added another $100k to our legal bills after the case was closed out of district court. The plaintiff has engaged in these four manners of conduct I have read elsewhere as examples of miscondict
      1) Frivolity (and agreed by judge)
      2) The Plaintiffs sued several unrelated parties whom we had indemnified who had nothing to do with the case, and e.g. dragged us into court to demand access to our cell phones and email meta-data, after first telling us to delete it, then accusing us of spoilation of evidence, among several other motions to compel
      3) the attorney dragged us into depositions on the pretext of asking questions about some non-dismissed contractual counts, but deposed us on Federal counts we had already won on Summary Judgement, then he filed motions for reconsideration of the summary judgment based on the deposition, which was summarily dismissed – this cost $100k in fees and
      4) the attorney has blatantly lied to the court, the Xth circuit and now the U.S. Supreme Court. His lies directly contravene the record, such as saying we did not pay when we have cancelled checks saying we did and it is acknowledged by the court as part of reason for winning on summary judgment, and claiming we constructed our new business location without a proper building permit, when the city authorities are on record saying we did. There are several specious and easily provable lies he keeps repeating in writing and verbally at the nth circuit court hearing.

      So with all that, can we sue the attorney and plaintiff under article 11. The judge seems reluctant to sanction the attorney despite our counsel asking several times for sanctions. We have been tortured by a deranged plaintiff and their willing attorney-accomplice.

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