Sharma v. City of Redding

Filing 64

ORDER signed by District Judge Morrison C. England, Jr., on 5/29/18, DENYING Defendant City of Redding's 58 Motion for Sanctions. (Kastilahn, A)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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NARENDRA SHARMA, assignee for
Shree Shiva LLC,
Plaintiff,

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v.

No. 17-cv-00487-MCE-AC PS

ORDER

CITY OF REDDING, a municipal
corporation, RICHARDSON C.
GRISWOLD, a court appointed
receiver,
Defendants.

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On March 6, 2017, Plaintiff Narendra Sharma, Assignee for Shree Shiva LLC

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(“Plaintiff”) filed the present action, which sought to enjoin the sale of Americana Lodge,

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a motel located in Redding, California. Related state court litigation was already pending

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in Shasta County for nuisance abatement and receivership against the registered owner

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of the motel, Shree Shiva, LLC.

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Plaintiff, citing an assignment he purportedly received from Shree Shiva, filed a

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request for temporary restraining order (“TRO”) concurrently with his federal complaint,

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which request was denied on grounds that Plaintiff failed to demonstrate the presence of

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an immediate irreparable injury. ECF No. 5. Given Plaintiff’s status as a pro se litigant,

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his alternative request for a preliminary injunction was ultimately referred, on April 25,
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2017, to the assigned magistrate judge for adjudication pursuant to Eastern District

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Local Rule 302(c). ECF No. 20. By that time, Defendant City of Redding had filed

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Motions to Dismiss and to Strike (ECF Nos. 14 and 15) which were also referred to the

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magistrate judge for disposition. ECF No. 18. After the filing of a First Amended

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Complaint on May 17, 2017, Plaintiff then moved to set aside a state court order

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appointing a receiver in proceedings involving the subject motel. ECF No. 28.

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Defendant City renewed its Motions to Dismiss and to Strike following its receipt of the

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First Amended Complaint. ECF Nos. 35-36. With the exception of the Motion to Set

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Aside and the initial TRO request, none of the motions enumerated above were ever

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ruled upon prior to the time Plaintiff filed a Notice of Voluntary Dismissal which

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terminated these proceedings on July 17, 2017.

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Despite Plaintiff’s dismissal, Defendant City filed the Motion for Sanctions now

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before the Court on September 15, 2017. ECF No. 48. The City’s motion is based on

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the provisions of Federal Rule of Civil Procedure 11(c), which provides for the imposition

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of sanctions where court filings are “frivolous, legally unreasonable, or without factual

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foundation, or… brought for an improper purpose.” Estate of Blue v. County of Los

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Angeles, 120 F.3d 982, 985 (9th Cir. 1997). The City claims that Plaintiff’s lawsuit was

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nothing more than a frivolous and harassing tactic intended to retaliate against it for

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lawfully exercising its police and regulatory powers to abate dangerous and unlawful

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nuisance conditions existing at the subject motel.

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The City correctly notes that Plaintiff’s voluntary dismissal of the action does not

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necessarily insulate him from Rule 11 liability or exposure. Id. at 395-98. Additionally,

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the fact that Plaintiff was proceeding in pro se prior to dismissal of this action1 also does

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not immunize Plaintiff from Rule 11 sanctions. Warren v. Guelker, 29 F.3d 1386, 1390

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(9th Cir. 1994). Nonetheless, as Plaintiff points out in response to the City’s Motion, the

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party requesting sanctions has the burden to show why sanctions are justified (see Tom

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Growney Equipment, Inc. v. Shelley Irrigation Development, Inc., 834 F.2d 833, 837

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Plaintiff obtained counsel only after the present Motion was filed.

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(9th Cir. 1987), since Rule 11 sanctions are “an extraordinary remedy, one to be

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exercised with extreme caution.” Operating Engineers Pension Trust v. A-C Company,

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859 F.2d 1336, 1345 (9th Cir. 1988).

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Defendant City argues that Plaintiff was already warned in the state court

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proceedings about filing frivolous motions. Nonetheless, Plaintiff was not formally

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determined to be a vexatious litigant, apparently because he was not formally a party to

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the Shasta County lawsuit. In the only motion (aside from the TRO order filed at the very

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onset) actually adjudicated in this case, the assigned magistrate judge did take Plaintiff

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to task, and denied his Motion to Set Aside, on grounds that Plaintiff had “identified no

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authority for the proposition that a federal district court may set aside or otherwise vacate

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or invalidate an order of a state court . . . ” July 12, 2017 Amended Order, ECF No. 43:

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3:10-13. Nonetheless the magistrate judge denied the City’s request for sanctions,

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stating that any such request would best be adjudicated during the hearing on the City’s

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pending Motion to Dismiss, which also requested that sanctions be imposed. Id. at 6:6-

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12.

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Plaintiff dismissed his lawsuit on July 13, 2017, just over a month after the

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magistrate judge’s Amended Order discussed above and before the magistrate judge

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made any ruling on either the pending Motion to Dismiss, the concurrently filed Motion to

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Strike, or the Motion for Preliminary Injunction. Consequently, the magistrate judge

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assigned to the case, and responsible for making orders and/or recommendations on

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those pending motions given Plaintiff’s pro se status, never ruled on any of those matters

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or found Plaintiff’s conduct to be sanctionable. Defendant City nevertheless now

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requests that the Court award $68,317 in attorney’s fees, litigation costs and other

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related expenses it claims to have incurred in defending this lawsuit.

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While Plaintiff’s voluntary dismissal does not insulate him from Rule 11 sanctions,

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the fact that this lawsuit was pending for just over four months has to be considered. In

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addition, Plaintiff was proceeding in pro se status and is not an attorney. Although that

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status also is not dispositive with respect to the propriety of Rule 11 sanctions, as one
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court has noted, “[a] layman cannot be expected to realize as quickly as a lawyer would

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that a legal position has no possible merit.” Bacon v. American Federation of State,

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County & Municipal Employees, 795 F.2d 33, 35 (7th Cir. 1986). A layperson like

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Plaintiff, then, should not be held to the same standard of care in prosecuting a lawsuit

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as a lawyer. Id. Additionally, as indicated above, the imposition of Rule 11 sanctions is

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“an extraordinary remedy, one to be exercised with extreme caution.” (Operating

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Engineers Pension Trust, 859 F.2d at 345). The Court does not believe that Defendant

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City has met its burden to show that the circumstances of this case justify such

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extraordinary sanctions. Finally, and in any event, it must be noted that because the

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assigned magistrate judge never made rulings on the bulk of the motions filed in this

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matter prior to the case being dismissed,2 making a determination as to whether the

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filings were frivolous would require this Court to assess the merits of those motions in a

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vacuum, which it declines to do.

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For all the foregoing reasons, Defendant City of Redding’s Motion for Sanctions
(ECF No. 58) is DENIED.3
IT IS SO ORDERED.
Dated: May 29, 2018

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The Court recognizes Defendant City’s argument that filing a dismissal before oppositions to the
Amended Motions to Dismiss and to Strike were due amounts to a tantamount admission that Plaintiff
knew this action was frivolous. That argument, however, amounts to no more than speculation.
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Having determined that oral argument would not be of material assistance, the Court ordered this
matter submitted on the briefs in accordance with Local Rule 230(g).

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