Smith v. Hunt & Henriques et al

Filing 63

ORDER by Magistrate Judge Howard R. Lloyd granting 55 defendant's Motion for Rule 11 Sanctions; granting 60 defendant's Motion to Strike Plaintiff's Untimely Opposition. (hrllc2, COURT STAFF) (Filed on 11/21/2013)

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NOT FOR CITATION

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

United States District Court
Northern District of California

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RAYMOND J. SMITH,

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Case No. 5:12-cv-04150 HRL

Plaintiff,
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v.
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HUNT & HENRIQUES and DOES 1-20,
inclusive,

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Defendants.

ORDER GRANTING DEFENDANT’S
MOTION TO STRIKE PLAINTIFF’S
UNTIMELY OPPOSITION AND
GRANTING DEFENDANT’S MOTION
FOR RULE 11 SANCTIONS
[Re: Dkt. Nos. 55, 60]

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Plaintiff Raymond J. Smith alleges that defendant Hunt & Henriques (H&H) engaged in

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unlawful debt collection practices. He filed the instant suit, asserting claims for violation of the

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federal Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692, et seq., the California

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Rosenthal Fair Debt Collection Practices Act (RFDCPA), Cal. Civ. Code § 1788, et seq., and

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negligence. 1

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H&H contends that plaintiff’s counsel and his law firm violated Fed. R. Civ. P. 11 by

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pursuing legally and factually meritless claims asserted in his First Amended Complaint (FAC).

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Pursuant to Fed. R. Civ. P. 11, defendant now moves for an award of its fees incurred in defending

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against those claims. Plaintiff filed a very belated opposition (nearly one month too late), and

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defendant moves to strike it. Plaintiff’s counsel did not bother to appear at the November 19,

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Both plaintiff and defendant have expressly consented that all proceedings in this matter may be
heard and finally adjudicated by the undersigned. 28 U.S.C. § 636(c); Fed. R. Civ. P. 73.

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2013 motion hearing. Instead, he sent another attorney to make a “special appearance” in his

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place. Other than his “special appearance,” that attorney has had no involvement in this matter,

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appeared to have little or no knowledge about the case, and told the court that he had nothing to

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say. Upon consideration of the moving papers, as well as the arguments presented at the motion

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hearing, the court grants the motion to strike as well as the motion for sanctions.

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A. Defendant’s Motion to Strike Plaintiff’s Belated Opposition Brief

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As noted above plaintiff’s opposition brief was due on October 14, 2013, see Civ. L.R. 7-

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3(a), but was not filed until November 13, 2013. Defendant’s motion to strike the untimely

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opposition is granted for the following reasons:

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Plaintiff’s counsel claims that defendant failed to meet-and-confer prior to filing the

United States District Court
Northern District of California

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motion and failed to serve a copy of the motion more than 21 days before the motion was filed.

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However, the case he cites concerns Civil Local Rule 7.1(A)(3) for the Southern District of

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Florida. Karakis v. Gulfstream Park Racing Ass’n, Inc., No. 08-61572-CIV, 2008 WL 4938406 at

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*1 (S.D. Fla. Nov. 18, 2008). While this court would never preclude or discourage a party from

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meeting-and-conferring with the opposing side prior to filing any motion, defense counsel avers

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that defendant did serve a copy of its sanctions motion on plaintiff’s counsel more than 21 days

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before the motion was filed, as required by Fed. R. Civ. P. 11(c)(2). (Dkt. 55-1, Lugay Decl. ¶ 2).

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Plaintiff, on the other hand, submits no declarations to support the assertion that defense counsel

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failed to make pre-filing service of the motion.

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Plaintiff’s arguments re excusable neglect are unavailing. Plaintiff’s counsel says that his

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staff overlooked the instant motion because they were busy preparing plaintiff’s oppositions to

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defendant’s California Code of Civil Procedure § 425.16 special motion to strike and defendant’s

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summary judgment motion. He further asserts that the instant sanctions motion “was caught just

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before the filing and service of these other oppositions which prompted the filing of the

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continuance letter in accordance with Local rules to allow for adequate preparation of the

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Sanctions opposition.” (Dkt. 58 at 5). The court’s docket, however, belies these assertions.

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Plaintiff’s oppositions to defendant’s other motions were due on September 20, 2013---ten days

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before the instant sanctions motion was even filed. Thus, the October 14, 2013 filing deadline on
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the instant sanctions motion did not overlap at all with the September 20 filing deadline on

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defendant’s other motions. Moreover, the referenced “continuance letter” concerned only

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defendant’s summary judgment motion and special motion to strike. (Dkt. 50). The court’s

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docket contains no request for an extension of briefing deadlines re the instant sanctions motion.

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Further, plaintiff’s counsel received electronic notice of the filing of the instant motion on

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September 30, 2013. (Dkt. 55). And, on October 21, 2013, he received electronic notice of

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defendant’s reply papers in which defendant advised that plaintiff failed to oppose the motion.

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(Dkt. 56). Yet, inexplicably, plaintiff’s counsel did nothing until November 13, 2013---nearly 30

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days past the filing deadline.
Finding no good cause to accept plaintiff’s belated filing, defendant’s motion to strike it is

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United States District Court
Northern District of California

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granted. 2 And, as discussed below, even if the tardy opposition were considered, the court

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concludes that sanctions are warranted.

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B. Defendant’s Motion for Fed. R. Civ. P. 11 Sanctions
Rule 11 of the Federal Rules of Civil Procedure provides, in relevant part:

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(b) Representations to the Court. By presenting to the court a
pleading, written motion, or other paper--whether by signing, filing,
submitting, or later advocating it--an attorney or unrepresented party
certifies that to the best of the person’s knowledge, information, and
belief, formed after an inquiry reasonable under the circumstances:

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(1) it is not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost of
litigation;

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(2) the claims, defenses, and other legal contentions are warranted
by existing law or by a nonfrivolous argument for extending,
modifying, or reversing existing law or for establishing new law;

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(3) the factual contentions have evidentiary support or, if
specifically so identified, will likely have evidentiary support after a
reasonable opportunity for further investigation or discovery; and

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(4) the denials of factual contentions are warranted on the evidence
or, if specifically so identified, are reasonably based on belief or a
lack of information.

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However, at the hearing, the court said that it would not preclude the specially appearing attorney
from presenting oral argument. Nevertheless, that attorney said he had no arguments to present.
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Fed. R. Civ. P. 11(b). A court may impose sanctions against a party or attorney for violations of

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this rule. Fed. R. Civ. P. 11(c).

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Before filing a complaint, attorneys have a duty, not only to conduct a reasonable factual

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investigation, but also to perform adequate legal research to confirm whether the underlying

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theories of the complaint are warranted by existing law or by a good faith argument for an

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extension, modification, or reversal of existing law. Christian v. Mattel, Inc., 286 F.3d 1118, 1127

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(9th Cir. 2002). When assessing whether a complaint is frivolous or without evidentiary support,

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the court “must conduct a two-prong inquiry to determine (1) whether the complaint is legally or

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factually baseless from an objective perspective, and (2) if the attorney has conducted a reasonable
and competent inquiry before signing and filing it.” Id. The term “frivolous” is “a shorthand . . .

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United States District Court
Northern District of California

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used to denote a filing that is both baseless and made without reasonable and competent inquiry.”

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Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1990). “Rule 11 sanctions

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shall be assessed if the paper filed in district court and signed by an attorney or an unrepresented

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party is frivolous, legally unreasonable, or without factual foundation, even though the paper was

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not filed in subjective bad faith.” Zaldivar v. City of Los Angeles, 780 F.2d 823, 831 (9th Cir.

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1986), abrogated on other grounds by Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S. Ct.

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2447, 110 L.Ed.2d 359 (1990).

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The gravamen of plaintiff’s First Amended Complaint (FAC), the operative pleading, is

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that defendant violated the FDCPA and the RFDCPA by trying to collect on a debt after failing to

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verify the outstanding financial obligation within 30 days after plaintiff disputed the debt. As

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discussed in the court’s summary judgment order, however, plaintiff failed to present any evidence

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establishing the threshold question whether the subject financial obligation is a “debt” within the

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meaning of the FDCPA or a “consumer debt” under the RFDCPA. In his opposition to

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defendant’s summary judgment motion, plaintiff instead argued that the FDCPA and RFDCPA

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apply because “Plaintiff does not have any debt with Defendants, as a matter of law.” (Dkt. 52 at

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5). He did not, however, present any evidence supporting that argument. And, indeed, that

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argument turned out to be nothing more than plaintiff’s main contention that H&H “failed to

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validate the debt within 30 days as required by 15 U.S.C. § 1692(g) [sic].” (Id.). As pointed out
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in defendant’s summary judgment motion, however, FDCPA section 1692g, imposes no such

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requirement on H&H. Rather, the plain language of the statute requires plaintiff to send his

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dispute re the debt within 30 days of his receipt of defendant’s section 1692g written notice. See

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15 U.S.C. § 1692g(a)(4). And, plaintiff did not present any evidence or argument that defendant’s

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verification otherwise was improper. See Clark v. Capital Credit & Collection Services, Inc., 460

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F.3d 1162, 1173-74 (9th Cir. 2006) (“‘At the minimum, verification of a debt involves nothing

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more than the debt collector confirming in writing that the amount being demanded is what the

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creditor is claiming is owed.’”) (quoting Chaudhry v. Gallerizzo, 174 F.3d 394, 406 (4th Cir.

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1999)).

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In his summary judgment opposition, plaintiff nevertheless maintained that H&H violated

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Northern District of California

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FDCPA section 1692g “by assuming an obligation of debt existed between Plaintiff and

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Defendants [sic] and attempted to illegally collect on the debt.” (Dkt. 52 at 7). FDCPA section

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1692g, however, states that “unless the consumer, within thirty days after receipt of the notice [of

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the debt], disputes the validity of the debt, or any portion thereof, the debt will be assumed to be

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valid by the debt collector.” 15 U.S.C. § 1692g(a)(3). On summary judgment, defendant

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submitted evidence showing that plaintiff was given notice of this statutory provision and that he

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did not timely dispute the debt within the 30-day period. Plaintiff presented no evidence to the

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contrary and simply reiterated that “Defendants [sic] failed to validate the debt within thirty (30)

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days as required by 15 U.S.C. § 1692(g) [sic].” (Dkt. 52 at 7). As noted above, that contention is

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not supported by the plain language of the statute.

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Plaintiff otherwise opposed defendant’s summary judgment by arguing that his credit

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report evidenced violations of the FDCPA and RFDCPA and that H&H engaged in fraudulent or

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deceptive practices to collect the debt. Plaintiff did not, however, submit a copy of the referenced

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credit report and did not even discuss it in his declaration. And, although plaintiff was required to

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do more than rely on his pleadings in order to avoid summary judgment, see Nissan Fire & Marine

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Ins. Co., Ltd., 210 F.3d 1099, 1102 (9th Cir. 2000), his summary judgment opposition papers did

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little more than parrot the FAC’s conclusory allegations, which in turn, largely parroted the

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language of the subject statutes.
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True, plaintiff’s current attorney substituted into the case a few months ago and, within a

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month of his appearance, found himself filing oppositions to defendant’s summary judgment

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motion and special motion to strike. But, even a cursory review by plaintiff’s counsel of the

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pertinent statutory requirements of FDCPA § 1692g (incorporated by reference in Cal. Civ. Code

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§ 1788.17) would have revealed that the statute does not require H&H to validate the debt within

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30 days of plaintiff’s request. Moreover, plaintiff’s counsel does not say what reasonable

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investigation, if any, he undertook as to the bases for plaintiff’s allegations. And, based upon

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counsel’s filings with the court---which assert arguments purportedly based on 15 U.S.C. § 1692g,

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but which are contradicted by the plain language of the statute, and which reiterate or parrot the

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conclusory allegations of the FAC---it is not apparent that he conducted any such investigation.

United States District Court
Northern District of California

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Although he is not the attorney who filed the FAC, plaintiff’s current counsel may

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nevertheless be sanctioned under Rule 11 by “later advocating it.” Fed. R. Civ. P. 11(b). Indeed,

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even plaintiff’s counsel acknowledges that sanctions may be imposed if he “files some paper

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indicating intention to continue prosecution” of the FAC’s allegations. (Dkt. 58 at 7). After he

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substituted into this case, plaintiff’s counsel filed briefs advocating allegations of the FAC and

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signifying that plaintiff intended to continue prosecution of this matter. (Dkt. 51-52).

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For the foregoing reasons, the court finds that plaintiff’s counsel and his firm have

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presented papers to the court in violation of Fed. R. Civ. P. 11, and H&H’s motion for sanctions is

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granted. Even so, the court does not find that defendant is entitled to recoup all fees incurred in

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the defense of this action.
Rule 11 sanctions “must be limited to what suffices to deter repetition of the conduct or

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comparable conduct by others similarly situated.” Fed. R. Civ. P. 11(c)(4). Sanctions may

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include “an order directing payment to the movant of part or all of the reasonable attorney’s fees

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and other expenses directly resulting from the violation.” Id. Any sanctions award therefore will

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be limited to H&H’s reasonable attorney’s fees incurred in filing its summary judgment motion

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and the instant motion for sanctions. In its discretion, the court will not award fees incurred in

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connection with defendant’s alternative special motion to strike, which this court has denied as

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moot.
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No later than December 20, 2013, H&H shall file its motion for fees, providing proper

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support for the claimed sums. Plaintiff’s counsel’s opposition or other response shall be filed no

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later than 14 days after service of defendant’s fees motion. Defendant’s reply is due within 7 days

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after service of plaintiff’s opposition or other response. Unless otherwise ordered, the matter will

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then be deemed submitted upon the papers without oral argument. Civ. L.R. 7-1(b). However, if,

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upon review of the papers, the court determines that a hearing is necessary, it will provide advance

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notice to the parties.

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United States District Court
Northern District of California

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SO ORDERED.
Dated: November 21, 2013
______________________________________
HOWARD R. LLOYD
UNITED STATES MAGISTRATE JUDGE

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5:12-cv-04150-HRL Notice has been electronically mailed to:

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Arvin Cero Lugay

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Jim Q. Tran

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Kurtiss Anthony Jacobs

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Tomio Buck Narita

[e-mail], [e-mail]

[e-mail], [e-mail]
[e-mail]

[e-mail], [e-mail]

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United States District Court
Northern District of California

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