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Doherty v. Allstate Indemnity Co.

United States District Court, E.D. Pennsylvania

September 30, 2019

MARY LOU DOHERTY et al., Plaintiffs,


          GERALD J. PAPPERT, J.

         This is an unfortunate and all too predictable end to a lawsuit that should have never been filed, much less taken all the way to the Supreme Court of the United States. Mary Lou Doherty, joined later by her co-counsel, Joseph Mirarchi, sued Allstate claiming that it had to compensate her for the neglect and squalid conditions that led Radnor Township to revoke the rental licenses for two of her rental properties. After Allstate endured years of meritless, inherently contradictory and ever-changing allegations, the Court granted summary judgment in Allstate’s favor on all Doherty’s claims. See (Mem. Granting Summ. J., ECF No. 175). Doherty and Mirarchi appealed the Court’s decision, which the Third Circuit Court of Appeals affirmed in all respects. See Doherty v. Allstate Indem. Co., 734 Fed.App’x 817 (3d Cir.) (unpublished), cert. denied 139 S.Ct. 594 (2018). Believing that the Supreme Court would want to delve into the interpretation of a standard Landlords’ Package Insurance Policy, the duo petitioned for a writ of certiorari, which the Court denied. See 139 S.Ct. 594 (2018). Allstate now moves for sanctions against Doherty[1] and Mirarchi under Federal Rule of Civil Procedure 11 and 28 U.S.C. § 1927. The Court grants the Motion in part and denies it in part for the reasons that follow.


         The Court has already exhaustively detailed this case’s factual and procedural history, see (Mem. Granting Summ. J. 2–27), and need not do so again. For present purposes, Doherty is a self-described “slumlord” who over the past forty-five years has owned at least eight and perhaps as many as twenty rental properties at a time, managed roughly forty tenants per year and purchased numerous insurance policies. (Doherty Dep. 241:1–5, ECF No. 132-85); see (Tr. of Sanctions Hr’g 45:24–25, 47:12–14, 48:7–17). She has also clashed repeatedly with Radnor Township officials over the conditions of some of her properties. See, e.g., (Radnor Suit Against Doherty, ECF No. 93-5); (Notice of Code Violations, ECF No. 184-27).

         Doherty is more than a sophisticated, experienced landlord-she is a highly educated professional. She received a Bachelor of Science in Economics from the University of Pennsylvania, a Master of Business Administration from the Wharton School and a law degree from the University of Virginia School of Law. See (Mem. Granting Summ. J. 19 n.21). Since being admitted to the Pennsylvania bar in 1974, Doherty has maintained an active law license and a law office. See (Tr. of Rule 16 Conference 2:20, ECF No. 19); (Doherty Pa. Bar Records, ECF No. 184-4). In this case, she formally appeared as attorney on behalf of herself and her sons. See (Notice of Doherty’s Appearance, ECF No. 9). And though she withdrew as counsel for her sons, Doherty remains as counsel of record and still represents herself. See (Notice of Doherty’s Partial Withdrawal, ECF 91).

         Factually, legally and otherwise, Doherty’s lawsuit was meritless ab initio. Her Allstate insurance policy covered “sudden and accidental direct physical loss to property.” (Insurance Policy 7, ECF No. 184-57). It did not cover vandalism or damage caused by tenants or, as her favorite theory went, by a rogue Radnor Township inspector. See (id. at 9); (Tr. of Rule 16 Conference 13:11–24). Yet in Doherty’s complaint, the two alleged “dates of loss” were the dates on which (1) a Radnor inspector notified Doherty of the code violations at her properties, and (2) Doherty learned that the Township locked her out of the properties because of the code violations. See (Mem. Granting Summ. J. 20). This case never had anything to do with Allstate; it was about Doherty’s feud with Radnor Township. See, e.g., (Tr. of Rule 16 Conference 11:9–13:21, 18:19–24); (Tr. of Sanctions Hr’g 50:18–51:1)[2].

         About nine months into the case, Mirarchi, a purportedly experienced insurance litigator, signed on as Doherty’s co-counsel.[3] See (id. 58:18–23); (Notice of Mirarchi’s Appearance, ECF No. 36). By that time, Allstate had already sent Doherty several letters asking her to withdraw the lawsuit and threatening to move for sanctions. See, e.g., (Apr. 4, 2016, Letter to Doherty, ECF No. 184-17). The Court also had warned Doherty during its first interaction with her that, so far as the Court could understand it, her suit lacked a legal or factual basis. See (Tr. of Rule 16 Conference 30:22–31:6). Nevertheless, Mirarchi took the case and turned it into an “unmanageable mess.” (Tr. of Mar. 7, 2017, Hr’g 53:52–54:1, ECF No. 173.)

         After prevailing at every level, Allstate moved for sanctions. Doherty and Mirarchi each responded to the Motion, see (ECF Nos. 191, 192-1); Doherty added a supplemental response, see (ECF No. 201). The Court then held a hearing on the Motion, during which Doherty and Mirarchi had ample opportunity to address Allstate’s allegations and the Court’s concerns. See (ECF No. 202).



         Under Rule 11, attorneys must certify that their representations to a court are made for a proper purpose and have factual and legal bases. See Fed. R. Civ. P. 11(b). If a court finds that an attorney violated Rule 11(b), it may “impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation.” Id. 11(c)(1). Under the “supervisory rule, ” a Rule 11 motion filed after the district court entered final judgment is untimely. See Mary Ann Pensiero, Inc. v. Lingle, 847 F.2d 90, 92 (3d Cir. 1988). A court may not sua sponte impose Rule 11 sanctions after final judgment; it must “resolve any Rule 11 issues prior to or concurrent with its resolution of the merits of the case.” Simmerman v. Corino, 27 F.3d 58, 63 (3d Cir. 1994).

         The supervisory rule renders Allstate’s Motion for Rule 11 sanctions untimely. Allstate filed its Motion almost two years after the Court entered final judgment. See (Order, ECF No. 176); (Allstate’s Mot. for Sanctions). That the Court had dismissed without prejudice Allstate’s earlier motion for sanctions is immaterial. Cf. Gary v. Braddock Cemetery, 517 F.3d 195, 203–04 & n.7 (3d Cir. 2008) (remanding for district court to rule on Rule 11 motion that had been dismissed without prejudice but was renewed and pending when the court entered final judgment).



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