Chevaldina v. Katz et al
ORDER denying 49 Defendants' Motion for Sanctions. Signed by Magistrate Judge Edwin G. Torres on 10/13/2017. (js02)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 17-22225-Civ-WILLIAMS/TORRES
RAANAN KATZ, et al.,
ORDER DENYING DEFENDANTS’ MOTION FOR SANCTIONS
This matter is before the Court on Raanan Katz’s et al. (“Defendants”) motion
for Rule 11 sanctions against Irina Chevaldina (“Plaintiff”). [D.E. 49]. Plaintiff
responded to Defendants’ motion on September 19, 2017 [D.E. 52] to which
Defendants replied on October 10, 2017. [D.E. 62]. Therefore, Defendants’ motion
is now ripe for disposition. After careful consideration of the motion, response,
reply, relevant authority, and for the reasons discussed below, Defendants’ motion
This case began on June 14, 2017 when Plaintiff filed a complaint [D.E. 1],
alleging that Defendants breached a settlement agreement between R. Katz, D.
Katz and the corporate defendants (collectively, the “RK Defendants”) on one side,
and Plaintiff on the other. The settlement agreement was reached in the case of
R.K./FL Management, Inc. et. al. v. Irina Chevaldina, in the Circuit Court of the
Eleventh Judicial Circuit in and for Miami-Dade County, Florida (case no. 1117842), after Plaintiff made a settlement offer which the RK Defendants accepted.
[D.E. 23-3]. Despite Plaintiff’s alleged attempts to avoid the plain language of the
settlement agreement, it has purportedly been enforced against Plaintiff several
times by the state court and the Third District Court of Appeal. [D.E. 23-3, 23-7,
23-8, 23-9, 23-10, 23-13].1
On June 30, 2017, Defendants filed a motion to dismiss Plaintiff’s original
complaint on the basis that the Court does not have subject matter jurisdiction to
adjudicate this case. [D.E. 23]. On July 10, 2017, Plaintiff served Defendants with
an amended complaint [D.E. 26] and Defendants field another motion to dismiss on
July 19, 2017. [D.E. 29]. In addition to re-alleging her previous claims, Plaintiff
added a new count, contending that Defendants violated the Driver’s Privacy
Protection Act (the “DPAA”). Defendants believe that Plaintiff invented this claim
out of thin air to contrive a new basis for the Court’s jurisdiction since there is no
diversity of citizenship between the parties.
In any event, Defendants suggest that this new count fails to state a cause of
action upon which relief may be granted and that it too should be dismissed with
prejudice. On August 31, 2017, Plaintiff filed her motion for leave to file a second
Defendants suggest that a Florida state court has specifically reserved
jurisdiction to enforce the terms of the settlement agreement at issue, and that the
state court reiterated its continuing jurisdiction to enforce those terms as recently
as June 8, 2017 – less than one week before Plaintiff filed this action. [D.E. 23-13].
amended complaint to clarify that this court has diversity jurisdiction because the
parties are citizens of different states. The Court granted Plaintiff’s motion [D.E.
54] and Defendants renewed their motion to dismiss on October 12, 2017. [D.E. 65].
Rule 11 Standard
ARule 11 is intended to deter claims with no factual or legal basis at all;
creative claims, coupled even with ambiguous or inconsequential facts, may merit
dismissal, but not punishment.” Davis v. Carl, 9106 F.2d 533, 538 (11th Cir. 1990)
(emphasis in original).
Rule 11 sanctions are proper A(1) when a party files a
pleading that has no reasonable factual basis; (2) when the party files a pleading
that is based on legal theory that has no reasonable chance of success and that
cannot be advanced as a reasonable argument to change existing law; or (3) when
the party files a pleading in bad faith for an improper purpose.@
Primates, Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996) (quoting Jones v.
International Riding Helmets, Ltd., 49 F.3d 692, 694 (11th Cir. 1995)). Federal
Rules of Civil Procedure 11(b)(1) and 11(b)(3) state:
By presenting to the court a pleading, written motion, or other
paperCwhether by signing, filing, submitting, or later advocating
itCan 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: (1) it is not being presented for
any improper purpose, such as to harass, cause unnecessary delay, or
needlessly increase the cost of litigation . . . (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.
FED. R. CIV. PRO. 11(b)(1), 11(b)(3).
Additionally, Federal Rule of Civil Procedure 11(c)(1) provides:
If, after notice and a reasonable opportunity to respond, the court
determines that Rule 11(b) has been violated, the court may impose an
appropriate sanction on any attorney, law firm, or party that violated
the rule or is responsible for the violation.
FED. R. CIV. PRO. 11(c)(1).
AIn this circuit, a court confronted with a motion for Rule 11 sanctions first
determines whether the party’s claims are objectively frivolousCin view of the facts
or lawCand then, if they are, whether the person who signed the pleadings should
have been aware that they were frivolous; that is, whether he would=ve been aware
had he made a reasonable inquiry. If the attorney failed to make a reasonable
inquiry, then the court must impose sanctions despite the attorney=s good faith
belief that the claims were sound. The reasonableness of the inquiry >may depend
on such factors as how much time for investigation was available to the signer;
whether he had to rely on a client for information as to the facts underlying the
[violative document]; . . . or whether he depended on forwarding counsel or another
member of the bar.@ Worldwide Primates, Inc., 87 F.3d at 695 (quoting Mike Ousley
Productions, Inc. v. WJBF-TV, 952 F.2d 380, 382 (11th Cir. 1992)); see also Byrne v.
Nezhat, 261 F.3d 1075, 1105 (11th Cir. 2001). AAlthough sanctions are warranted
when the claimant exhibits a ‘deliberate indifference to obvious facts,’ they are not
warranted when the claimant’s evidence is merely weak but appears sufficient,
after a reasonable inquiry, to support a claim under existing law.”
Adelman, 158 F.3d 561, 524 (11th Cir. 1998) (citations omitted).
Defendants’ motion is premature
Defendants’ motion primarily requests sanctions on the basis that the Court
lacks diversity jurisdiction over the parties because (1) Plaintiff resides in Ukraine,
(2) the damages alleged in the amount of $5 million dollars have no legal or factual
basis, and (3) the state court retained jurisdiction over the issues presented in this
case. Defendants also argue that sanctions are appropriate because the case is
barred by the doctrine of res judicata and a rule under Florida law against splitting
causes of action. As for Defendants’ remaining arguments, Defendants suggest that
sanctions must be imposed because (1) Plaintiff could not have been induced to
enter into a settlement agreement, (2) neither the facts nor the law support Count
III of the amended complaint, and (3) Plaintiff has no claims as a matter of law
against Mr. Levine.2
As an initial matter, pro se litigants are subject to sanctions under Rule 11,
Moon v. Newsome, 863 F.2d 835, 837 (11th Cir. 1989), but the Eleventh Circuit has
directed district courts to be very cautious before imposing them. See Woods v. IRS,
3 F.3d 403, 404 (11 Cir. 1993) (finding “there can be no doubt that this is a frivolous
appeal and we would not hesitate to order sanctions if appellant had been
Mr. Levine was one of Defendants’ attorneys in the state court case and
Defendants suggest that he was not a party to the settlement agreement.
represented by counsel. However, since this suit was filed pro se, we conclude that
sanctions would be inappropriate”).
Many of Defendants’ arguments concern whether this action is properly
before this court. For example, Defendants argue that Plaintiff is lying about where
she is domiciled and that diversity jurisdiction does not exist because Plaintiff
resides in the Ukraine.
The basis for Defendants’ contention is that Plaintiff
previously stated in prior complaints that she resided in the Ukraine. Plaintiff
made corrections to her second amended complaint and now states that she is
domiciled in Indiana.
Defendants are skeptical if Plaintiff is pleading her
allegations in good faith because the Indiana address in the signature block of her
second amended complaint is a P.O. Box – not a residence.
Next, Defendants take issue with Plaintiff’s alleged damages and whether
they were presented in good faith. Specifically, Defendants argue that Plaintiff’s
allegations of $5 million in damages are improper because the alleged conduct could
not possibly give rise to such a significant amount of money. More specifically,
Defendants cast doubt on the allegation that Plaintiff forfeited $165,000 to satisfy
the monetary component of a settlement agreement or that Plaintiff gave up a right
to fees as a part of the settlement to support a claim for damages. Defendants also
point out that Plaintiff’s request for punitive damages are also improper and that
they cannot be used to satisfy the $75,000 jurisdictional threshold. Defendants’
next arguments are that the state court retains exclusive jurisdiction over this
matter, that Plaintiff’s allegations of fraud or breach do not allow Plaintiff to
litigate these issues in this forum, and that the doctrine of res judicata and the rule
against splitting causes of action doom Plaintiff’s complaint.
Without rehashing all of the arguments presented in Defendants’ motion, it
does not appear that Plaintiff’s conduct warrants Rule 11 sanctions at this time
“because there is simply not enough evidence to establish that Plaintiff exhibited a
‘deliberate indifference to obvious facts’ or bad faith for an improper purpose, among
other things.” Pena v. New Horizons Computer Learning Ctr. of Miami, 2012 WL
12903323, at *1 (S.D. Fla. Oct. 22, 2012).
Moreover, “[t]he record shows that
Defendant[s] moved for Rule 11 sanctions before the court had an opportunity to
consider the merits of Defendant’s motion to dismiss Plaintiff's complaint.”
When coupled with the fact that the Eleventh Circuit is very cautious “about
imposing such sanctions on pro se plaintiffs, which defense counsel should have
known, the undersigned finds that [Defendants’] motion for Rule 11 sanctions
against this pro se Plaintiff [is] at best premature.” Id.
The reason the Rule 11 motion is premature is because it is ordinarily
presented during or after the discovery period when a court has enough evidence to
determine the veracity of a plaintiff’s allegations. See Luv N’ Care, Ltd. v. Shiboleth
LLP, 2017 WL 3671039, at *13 (S.D.N.Y. Aug. 8, 2017) (“Only after discovery has
been completed will the Court properly have before it evidence regarding the
veracity of Plaintiffs’ allegations.”).
As such, “the prevailing approach of courts
faced with this situation, where a defendant files a sanctions motion at the outset of
a case on the ground that the plaintiff's allegations are false, is to deny the motion
without prejudice to renewal after discovery.” Id. (citing Litras v. PVM Int’l Corp.,
2013 WL 4118482, *2 (E.D.N.Y. Aug. 15, 2013) (“[B]ecause the Court concludes that
plaintiff's amended complaint survives defendants’ motion to dismiss . . . and
because the Court has no basis to believe that any of the allegations contained
within plaintiff's amended complaint are false and were known to be false at the
time the amended complaint was filed, defendants’ motion for sanctions is denied at
this juncture.”); Johnson v. Levy, 2012 WL 3580236, at *11-12 (E.D.N.Y. Aug. 17,
2012); Baez v. JetBlue Airways, 745 F. Supp. 2d 214, 226 (E.D.N.Y. 2010); Young v.
Suffolk County, 705 F. Supp. 2d 183, 215 (E.D.NY. 2010); GTFM Inc. v. Int’l Basic
Source, Inc., 2002 WL 42884, at *2 (S.D.N.Y. Jan. 11, 2002) (concluding that
“motion for sanctions under Rule 11 [wa]s premature” because it could not “be
resolved until after jurisdictional discovery ha[d] been conducted”); Baskin v.
Lagone, No. 90 Civ. 5478(RPP), 1993 WL 59781, at *6 (S.D.N.Y. Mar. 3, 1993)
(“Because it is not entirely clear, and it is in any event premature to ascertain, that
the Plaintiffs' Amended Complaint is not grounded in fact or warranted by existing
law, as Rule 11 requires before sanctions can be imposed, the motion for sanctions is
In sum, we find that Defendants’ arguments are premature and that
Defendants “can be made whole by, inter alia, an award of attorney’s fees and costs
in connection with the motion to dismiss the amended complaint pending before,”
the District Judge.3 See Pena, 2012 WL 12903323, at *1. Accordingly, Defendants’
motion is DENIED.
For the foregoing reasons, it is hereby ORDERED AND ADJUDGED that
Defendants’ motion for sanctions is DENIED with leave to renew when appropriate
before entry of final judgment. [D.E. 62].
DONE AND ORDERED in Chambers at Miami, Florida, this 13th day of
/s/ Edwin G. Torres
EDWIN G. TORRES
United States Magistrate Judge
If the District Judge denies Defendants’ motion to dismiss, Defendants have
the option of filing another motion for sanctions at a later stage of the litigation.
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