Aldmyr Systems, Inc. v. Stephen Friedman

Filing

UNPUBLISHED PER CURIAM OPINION filed. Originating case number: 8:15-cv-00864-PJM Copies to all parties and the district court/agency. [1000020519].. [16-1357]

Appeal: 16-1357

Doc: 29

Filed: 02/09/2017

Pg: 1 of 5

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 16-1357

ALDMYR SYSTEMS, INC.; ZEGATO SOLUTIONS, INC.,
Plaintiffs – Appellants,
v.
STEPHEN A. FRIEDMAN, Esq.; JOSEPH, GREENWALD & LAAKE, PA,
Defendants - Appellees.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, Senior District Judge.
(8:15-cv-00864-PJM)

Submitted:

January 31, 2017

Decided:

February 9, 2017

Before GREGORY, Chief Judge, and NIEMEYER and AGEE, Circuit Judges.

Affirmed by unpublished per curiam opinion.

James P. Chandler, CHANDLER LAW FIRM, PLLC, Washington, D.C., for
Appellants.
Shirlie Lake, Daniel R. Hodges, ECCLESTON & WOLF,
P.C., Hanover, Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

Appeal: 16-1357

Doc: 29

Filed: 02/09/2017

Pg: 2 of 5

PER CURIAM:
Aldmyr

Systems,

Inc.,

and

Zegato

Solutions,

Inc.

(collectively “Appellants”), appeal the district court’s dismissal
of their complaint and the court’s determination that sanctions
were

warranted

against

Appellants,

their

counsel,

and

Donald

Bailey, Sr. (“Mr. Bailey”), Appellants’ Chief Executive Officer.
Appellants
Greenwald

filed
&

suit

Laake,

against

P.A.

Stephen

(collectively

Friedman

and

“Appellees”),

Joseph,
alleging

copyright infringement and misappropriation of trade secrets for
actions taken by Appellees during the state divorce proceedings
between Mr. Bailey and Appellees’ client, Geraldine Bailey (“Ms.
Bailey”).

We affirm.

Appellants first argue that the district court erred in
granting Appellees’ motion to dismiss because Appellants alleged
sufficient facts to establish their claims.

Because Appellants do

not

court’s

challenge

on

appeal

the

district

dispositive

determination that the domestic relations exception to federal
jurisdiction 1 barred their claims, we conclude that Appellants have
waived review of that issue.

See Suarez-Valenzuela v. Holder, 714

F.3d 241, 249 (4th Cir. 2013) (“[I]t is a well settled rule that

1

The domestic relations exception “divests the federal courts
of power to issue divorce, alimony, and child custody decrees,”
Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992), and to rule on
any issues that are inextricably intertwined with those matters.
Kahn v. Kahn, 21 F.3d 859, 860-61 & n.1 (8th Cir. 1994).
2

Appeal: 16-1357

Doc: 29

Filed: 02/09/2017

Pg: 3 of 5

contentions not raised in the argument section of the opening brief
are abandoned.” (brackets and internal quotation marks omitted)).
Consequently,

we

affirm

the

district

court’s

dismissal

of

Appellants’ complaint.
Next, Appellants argue that the district court erred in
imposing sanctions.

Appellants contend that Appellees failed to

comply with the safe-harbor provision of Fed. R. Civ. P. 11(c)(2),
by not identifying the conduct that warranted sanctions.

However,

our review of the record on appeal leads us to conclude that
Appellees complied with the rule.

See Brickwood Contractors,

Inc. v. Datanet Eng’g, Inc., 369 F.3d 385, 389 (4th Cir. 2004) (en
banc) (discussing Rule 11(c)(2)).
Appellants also assert the district court erred in concluding
that

they

filed

their

lawsuit

for

an

improper

purpose—

specifically, to harass Ms. Bailey and her counsel and to gain
leverage in Mr. Bailey’s state court divorce proceeding.
R. Civ. P. 11(b)(1). 2

See Fed.

“We review a district court’s imposition of

Rule 11 sanctions for abuse of discretion.”
284, 287 (4th Cir. 2009).

In re Bees, 562 F.3d

“A district court . . . necessarily

2

“Rule 11 defines the term improper purpose to include
factors such as to harass or to cause unnecessary delay or needless
increase in the costs of litigation.” In re Kunstler, 914 F.2d
505, 518 (4th Cir. 1990) (internal quotation marks omitted). “[I]n
order to determine ‘improper purpose,’ a district court must judge
the
conduct
of
counsel
under
an
objective
standard
of
reasonableness rather than assessing subjective intent.” Id.
3

Appeal: 16-1357

Doc: 29

Filed: 02/09/2017

Pg: 4 of 5

abuse[s] its discretion if it based its ruling on an erroneous
view of the law or on a clearly erroneous assessment of the
evidence.”

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405

(1990); see Andrews v. Am.’s Living Ctrs., LLC, 827 F.3d 306, 312
(4th Cir. 2016) (defining clear error); In re Kunstler, 914 F.2d
at 520 (reviewing finding of improper purpose for clear error).
We have carefully reviewed the parties’ briefs and the record on
appeal and conclude that the district court did not clearly err in
finding Appellants filed their action for an improper purpose.
Finally, Appellants challenge the application of sanctions
to Mr. Bailey as a violation of his due process rights.

The

district court held Mr. Bailey liable for sanctions, jointly and
severally with Appellants and Appellants’ counsel, concluding that
Mr. Bailey represented the true party in interest in this suit and
acted as Appellants’ alter ego and that piercing the corporate
veil was appropriate.

Notably, Appellants do not challenge on

appeal the district court’s piercing of the corporate veil and,
therefore,

have

waived

review

of

Suarez-Valenzuela, 714 F.3d at 249.
to their due process claim.

that

determination.

See

Appellants’ failure is fatal

See Newport News Holdings Corp. v.

Virtual City Vision, Inc., 650 F.3d 423, 433 (4th Cir. 2011)
(holding

that

Due

Process

Clause

is

not

violated

when

court

“exercise[s] personal jurisdiction over an individual [who] would
not ordinarily be subject to personal jurisdiction in that court
4

Appeal: 16-1357

Doc: 29

Filed: 02/09/2017

Pg: 5 of 5

when the individual is an alter ego of a corporation that would be
subject to personal jurisdiction in that court”) (ellipses and
internal quotation marks omitted).

Thus, we conclude that the

district court did not abuse its discretion in imposing sanctions.
Accordingly, we affirm the district court’s judgment.

We

dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED

5