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Banks v. Schutter

January 15, 2009


The opinion of the court was delivered by: David R. Strawbridge United States Magistrate Judge


I. Introduction

Presently before the Court is the "Motion for Sanctions Pursuant to Fed.R.Civ.P. 11" filed by Defendant Stephen Schutter ("Schutter") on August 22, 2008 (Doc. 12) and the "Motion for Sanctions under Rule 11" filed by Defendant David Herskowitz ("Herskowitz") on August 26, 2008 (Doc. 13) (collectively, the "Rule 11 Motions"). Plaintiff Philip Banks ("Banks") filed a response on October 16, 2008 (Doc. 23), and former-counsel for Banks, Frank J. Marcone, Esquire ("Marcone"), filed an untimely response on January 6, 2009 (Doc. 44). For the reasons set out below, we will enter an Order granting the motions.

II. Procedural Background

This matter came before us in a unique procedural posture, and was filed at the same time that a related case, arising out of the same factual background, the same subject-matter, raising substantially the same claims, and involving the same parties, was ongoing. Given the pendency of that case, Schutter v. Banks and Herskowitz, Civil Action Number 07-3823 ("Schutter I"), we granted, on November 6, 2008, motions filed by both Schutter (Doc. 8) and Herskowitz (Doc. 3) seeking to dismiss the complaint filed by Banks in the present matter pursuant to Fed.R.Civ.P 12(b)(6) (Doc. 25). Our dismissal was predicated upon the fact that all four counts of the complaint had already been litigated (and rejected) on their merits in Schutter I and were thus barred by the doctrines of res judicata, claim preclusion and issue preclusion. (See Doc. 25 at 10-17).

After filing their motions to dismiss, and before our grant of those motions, both Schutter (Doc. 12) and Herskowitz (Doc. 13), on August 22 and August 26, 2008, respectively, filed motions pursuant to Fed.R.Civ.P. 11 seeking reasonable counsel fees and costs in defending against the complaint and in bringing the instant motions.*fn1 Banks, through counsel, filed a response to the motions on October 16, 2008. (Doc. 23). Oral argument on the motions was heard on December 10, 2008, at which time it was noted that Banks's original counsel, Marcone--who filed and signed the complaint in this matter, and thus the person toward whom the motions were directed--never filed his own response.*fn2 Upon his request, we deferred ruling and gave Marcone until December 29, 2008 to file a response. (Doc. 35). When he sought a continuance of that date (Doc. 41), we gave him additional time and allowed him until January 5, 2008 to respond (Doc. 43). He failed to do so, but did finally respond a day later. (Doc. 44). We will accept and consider that late filing on its merits.*fn3 The motions are now ripe for our review.

III. Legal Standard

Pursuant to Fed.R.Civ.P 11(b)(1), by "signing, filing, submitting, or later advocating" a pleading with the district court, an attorney or unrepresented party is deemed to certify that the pleading "is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation." Pursuant to Fed.R.Civ.P 11(b)(2), the signing or filing attorney is deemed to certify that the claims and legal contentions contained therein "are warranted by existing law or by a non-frivolous argument for extending, modifying, or reversing existing law or for establishing new law."

Upon motion from an opposing party and upon the finding of a violation, the court may, pursuant to Fed.R.Civ.P 11(c), sanction a responsible party or attorney by, among other things, ordering reimbursement to the moving party "part or all of the reasonable attorney's fees and other expenses directly resulting from the violation." In determining the propriety of sanctions, courts within our circuit have turned to the Advisory Committee's notes which set out several relevant factors:

Whether the improper conduct was willful, or negligent; whether it was part of a pattern of activity, or an isolated event; whether it infected the entire pleading, or only one particular count or defense; whether the person has engaged in similar conduct in other litigation; whether it was intended to injure; what effect it had on the litigation process in time or expense; whether the responsible person is trained in the law; what amount, given the financial resources of the responsible person is needed to deter that person from repetition in the same case; what amount is needed to deter similar activity by other litigants.

See, e.g., Reynolds v. Metro. Life Ins. Co., Civ. A. No. 04-232, 2007 U.S. Dist. LEXIS 12227, *32 (E.D. Pa. Feb. 22, 2007) (quoting Lal v. Borough of Kennett Square, 935 F. Supp. 570, 577 (E.D. Pa. 1996)). Not surprisingly, courts have found that repetitive filings and successive complaints can constitute "a pattern of activity" indicative of the improper purposes of harassment, causing unnecessary delay, or needlessly increasing the cost of litigation. See, e.g. Mulgrew v. Fumo, Civ. A. No. 05-5309, 2005 U.S. Dist. LEXIS 15394, *21 (E.D. Pa. July 26, 2005); see also Professional Management Assocs. v. KPMG LLP, 345 F.3d 1030, 1033 (8th Cir. 2003); Knipe v. Skinner, 19 F.3d 72, 77 (2d Cir. 1994); Zaldivar v. City of Los Angeles, 780 F.2d 823, 832 (9th Cir. 1986).

By its plain language, the strictures of Fed.R.Civ.P. 11(b) are directed toward any "attorney or unrepresented party" who "present[s] to the court a pleading, written motion, or other paper-whether by signing, filing, submitting, or later advocating it...." The initial complaint in this case, which is the filing that forms the basis for the Rule 11 Motions (see Docs. 12 & 13), was signed and filed by Marcone. (See Doc. 1). Given this circumstance, our consideration of the Rule 11 Motions is applicable to him. Further, while Fed.R.Civ.P. 11(c)(5)(A) expressly precludes a court from issuing monetary sanctions against a represented party for any violation of Fed.R.Civ.P 11(b)(2), sanctions for violations of Fed.R.Civ.P 11(b)(1) may nonetheless be awarded against a represented party "responsible for the violation." See Fed.R.Civ.P. 11(c)(1); New Life Homecare, Inc. v. Blue Cross, Civ. A. No. 06-2485, 2008 U.S. Dist. LEXIS 12527, *3 (M.D. Pa. Feb. 20, 2008) (citing United States v. Int'l Bhd. of Teamsters, 948 F.2d 1338, 1343-44 (2d Cir. 1991). Accordingly, given the serious concerns which we have articulated about the conduct of Banks throughout this litigation, our consideration of the Rule 11 Motions is applicable to him as well.

IV. Discussion Both

Defendants predicate their Rule 11 Motions for sanctions on the same bases--namely, that the complaint "is but a continuation of the pattern of harassing and dilatory behavior" exhibited by Banks and Marcone over the course of Schutter I. (Doc. 13 at 8; see also Doc. 12 at 12-16). Upon examination of the circumstances against the ...

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