Horowitz et al v Continental Casualty Company et al

Filing 57

MEMORANDUM OPINION. Signed by Judge Deborah K. Chasanow on 7/5/2016. (sat, Chambers)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
:
ROBERT HOROWITZ, et al.

:

v.

:

Civil Action No. DKC 14-3698

:
CONTINENTAL CASUALTY
COMPANY, et al.

:
MEMORANDUM OPINION

Presently pending and ready for resolution in this case is
a

motion

to

alter

or

amend

the

court’s

judgment

filed

by

Plaintiffs Robert and Cathy Horowitz (“Plaintiffs”) (ECF No. 46)
and a motion for sanctions filed by Defendant Eccleston and
Wolf, P.C. (“Eccleston”) (ECF No. 44).

The relevant issues have

been fully briefed, and the court now rules, no hearing being
deemed necessary.

Local Rule 105.6.

For the following reasons,

both motions will be denied.
I.

Background
The factual and procedural background to this case may be

found in the memorandum opinion issued on December 28, 2015 (the
“Memorandum Opinion”).

(ECF No. 42, at 1-5).

The Memorandum

Opinion and an accompanying order granted the motions to dismiss
filed by Defendants Eccleston; Selzer Gurvitch Rabin Wertheimer
Polott & Obecny, P.C. (“Selzer”); Bregman, Berbert, Schwartz &
Gilday,

LLC

(“Bregman”);

and

Continental

Casualty

Company

(“Continental”).

Accordingly, the first amended complaint was

dismissed.

On January 11, 2016, Eccleston filed the pending

motion

sanctions

for

(ECF

No.

44),

and

the

court

ordered

Plaintiffs to respond within twenty-one days (ECF No. 45).

On

January 25, Plaintiffs filed the pending motion to alter or
amend the judgment pursuant to Fed.R.Civ.P. 59(e).
46).

(ECF No.

Plaintiffs then responded to the motion for sanctions (ECF

No. 49), and Eccleston replied (ECF No. 54).

Each defendant

responded to Plaintiffs’ motion for reconsideration (ECF Nos.
50; 51; 52; 53), and Plaintiffs replied (ECF No. 55).
II.

Plaintiffs’ Motion for Reconsideration
A.

Standard of Review

Courts have recognized three limited grounds for granting a
motion for reconsideration under Rule 59(e): (1) to accommodate
an intervening change in controlling law; (2) to account for new
evidence not previously available; or (3) to correct clear error
of law or prevent manifest injustice.

See United States ex.

rel. Becker v. Westinghouse Savannah River Co., 305 F.3d 284,
290 (4th Cir. 2002) (citing Pacific Ins. Co. v. Am. Nat’l Fire
Ins. Co., 148 F.3d 396, 403 (4th Cir. 1998)).
A Rule 59(e) motion “may not be used to relitigate old
matters, or to raise arguments or present evidence that could
have been raised prior to the entry of judgment.”
Co.,

148

F.3d

at

403

(quoting
2

11

Wright,

et

Pac. Ins.

al.,

Federal

Practice & Procedure § 2810.1, at 127–28 (2d ed. 1995)); see
also Medlock v. Rumsfeld, 336 F.Supp.2d 452, 470 (D.Md. 2002),
aff’d, 86 F.App’x 665 (4th Cir. 2004) (citation omitted) (“To the
extent that Plaintiff is simply trying to reargue the case, he
is not permitted to do so.

Where a motion does not raise new

arguments, but merely urges the court to ‘change its mind,’
relief is not authorized.”).

“In general, ‘reconsideration of a

judgment after its entry is an extraordinary remedy which should
be used sparingly.’”

Pac. Ins. Co., 148 F.3d at 403 (quoting

Wright, et al., supra, § 2810.1, at 124).
B.

Analysis

Plaintiffs

assert

that

reconsideration

is

necessary

“to

prevent clear errors of law and ensure adherence to the standard
of review that requires facts pleaded in the complaint to be
deemed

true.”

(ECF

No.

46,

at

1).

Plaintiffs

seek

reconsideration on: the court’s application of res judicata and
collateral estoppel; the holding that Plaintiffs failed to plead
sufficient

facts

showing

Continental

and

Eccleston

were

debt

collectors for purposes of the Fair Debt Collection Practices
Act (“FDCPA”), the Maryland Debt Collection Act (“MCDCA”), and
the Maryland Collection Agency Licensing Act (“MCALA”); and the
dismissal

of

Plaintiffs’

§

1983

claim

against

Selzer.

Plaintiffs also seek “permission to re-plead” and request that

3

the judgment be stayed “until related appeals in state court are
finalized.”

(ECF No. 46, at 14).

Plaintiffs ask that the court reconsider the application of
res judicata to their claims against Selzer and Bregman.
Memorandum

Opinion,

“transactional
Plaintiffs’

the

approach”

claims

court
res

to

against

held
judicata

Selzer

and

that

Maryland’s

barred

Bregman

In the

many

because

of
“the

claims all arise from the same transaction: Selzer and Bregman’s
representation of Plaintiffs in their suit against the Zipin
Firm.”
court

(ECF No. 42, at 10).
incorrectly

unpersuasive.

applied

Plaintiffs’ argument that the

the

transactional

approach

is

Plaintiffs cite to Kent Cty. Bd. of Educ. v.

Bilbrough, 309 Md. 487 (1987), and argue that the court “ignored
the convenient trial unit for the res judicata transaction test.
(ECF No. 46, at 9-10).

The Court of Appeals of Maryland’s

passing citation to the Restatement’s mention of the “convenient
trial unit” in Kent Cty. does not alter the Memorandum Opinion’s
extensive analysis of more recent Maryland case law regarding
the appropriate transactional test for res judicata.
42, at 7-11).

(ECF No.

Specifically, res judicata bars claims, such as

those at issue here, which are “identical to [those] determined
or [those] which could have been raised and determined in the
prior litigation.”

Comproller of Treasury v. Sci. Applications

Int’l Corp., 405 Md. 185, 195-96 (2008) (emphasis added) (citing
4

R&D

2001,

LLC

v.

Rice,

402

Md.

648,

663)).

Accordingly,

Plaintiffs have not shown that the court’s application of res
judicata was a clear error.
Similarly, Plaintiffs argue that collateral estoppel should
not

prevent

Settlement

the

court

Agreement

from

and

assessing

Release

(the

the

legality

entered into by Plaintiffs and the Zipin Firm.
7-9).

the

that

“Settlement”)

of

was

(ECF No. 46, at

In the Memorandum Opinion, the court determined that

collateral
legality

of

estoppel
the

bars

Plaintiffs

Settlement

because

from

relitigating

Plaintiffs

“had

the

extensive

opportunity to litigate these issues” and were afforded a full
opportunity

to

present

arguments

before

the

circuit

regarding the Settlement’s legality.

(Id. at 13).

motion

point

attempt

for
to

incorrect.

reconsideration
argue

that

on

the

Plaintiffs’

this

circuit

continued

is

court’s

court”

Plaintiffs’

merely

another

decision

disagreement

with

was
the

decisions of the circuit court does not warrant reconsideration
under Rule 59(e).
In their motion, Plaintiffs put forth two primary arguments
for

reconsideration

collection

claims

of

the

against

court’s
Eccleston

dismissal
and

of

the

debt

Continental:

that

Plaintiffs pleaded facts sufficient to show that Eccleston and
Continental engaged in debt collection activities; and that the
court’s citation to Fleet Nat. Bank v. Baker, 263 F.Supp.2d 150
5

(D.Mass. 2003) was inappropriate.

Plaintiffs’ first argument is

an attempt to relitigate the motion to dismiss.

Plaintiffs

continue to assert that Eccleston and Continental engaged in
debt

collection,

but

this

assertion

supported by factual allegations.

is

not

sufficiently

The Memorandum Opinion noted:

“[I]t
is
well
established
that
‘the
threshold requirement for application of the
[FDCPA] is that prohibited practices are
used in an attempt to collect a debt.’”
Bradshaw, 765 F.Supp.2d at 725 (quoting Mabe
v. G.C. Servs. Ltd. P’ship, 32 F.3d 86, 8788 (4th Cir. 1994)). Plaintiffs assert that
Eccleston represented the Zipin Firm in its
action to recover unpaid fees, but Mr. Zipin
and
other
lawyers
at
the
Zipin
Firm
represented themselves in the fee-recovery
portion.
(See, e.g., ECF No. 21-7, at 8).
Plaintiffs have not alleged facts, beyond
conclusory accusations, that Continental and
Eccleston undertook any debt collection
activities.
(ECF

No.

42,

at

17).

Plaintiffs’

repeated

assertions

that

Eccleston and Continental engaged in debt collection are not
sufficient for reconsideration.
DKC-11-2417,
(“Plaintiff’s

2015

WL

5895528,

reiteration

disagreement’

with

insufficient

based

See Panowicz v. Hancock, No.

the
for

of

at

*3

prior

court’s
[the]

(D.Md.

arguments
decision

Oct.

5,

2015)

a

‘mere

reveals
and

extraordinary

thus

is

remedy”

an
or

reconsideration under Rule 59(e). (citing Hutchinson v. Staton,
994 F.2d 1076, 1082 (4th Cir. 1993))).

Plaintiffs’ attack on the

Memorandum Opinion’s citation to Fleet is also insufficient to

6

warrant reconsideration.

In the Memorandum Opinion, the court,

given the relative lack of apposite precedent within the Fourth
Circuit, cited to Fleet as persuasive authority supporting one
of several reasons why Eccleston and Continental’s actions were
not

covered

by

the

Accordingly,

none

extraordinary

FDCPA.
of

remedy

(See

ECF

Plaintiffs’

of

altering

No.

42,

arguments
or

amending

at

17-18).

warrant
the

the

court’s

judgment under Rule 59(e).
Finally,
dismissed

Plaintiffs

their

§

1983

contend
claim

that

the

against

court

Selzer.

incorrectly
The

court

dismissed the § 1983 claim in light of the Supreme Court of the
United States’ holding in Lugar v. Edmonson Oil, 457 U.S. 922
(1982)

and

subsequent

Fourth

(See ECF No. 42, at 20-23).

Circuit

applications

of

Lugar.

The Memorandum Opinion explained:

Plaintiffs do not contend that the Maryland
laws
or
procedures
themselves
are
unconstitutional or constitute a violation
of federal law.
Rather, the first amended
complaint contains multiple allegations that
Selzer and the sheriff’s deputies violated
applicable state statutes and rules.
(See
ECF No. 5 ¶¶ 118-119, 123-127, 132, 134). A
private party’s alleged “unlawful invocation
of statutory procedures does not constitute
action under color of state law as required
for a § 1983 claim.”
Keystone Builders,
Inc. v. Floor Fashions of Va., Inc., 829
F.Supp. 181, 182 (W.D.Va. 1993) (citing
Poindexter, 903 F.2d at 1011); see also
Martin v. Sessoms & Rogers, P.A., No. 5:09CV-480-D, 2010 WL 3200015, at *5 (E.D.N.C.
Aug. 12, 2010) (citing Lugar, 457 U.S. at
941-42;
Poindexter,
903
F.2d
at
1011)
7

(dismissing a § 1983 claim against a private
party because the complaint “has done no
more
than
allege
that
[the
defendant]
‘misused
or
abused’
North
Carolina’s
statutory procedure for execution against
real property”).
The Fourth Circuit’s
interpretation
of
Lugar
is
directly
applicable to the analysis here.
(ECF No. 42, at 22-23).

Plaintiffs’ motion for reconsideration

reveals a disagreement with the court’s holding but does not
show a “clear error” that would justify reconsideration.
III. Plaintiffs’ Request to Amend the Complaint or Stay the
Judgment
In

their

motion

for

reconsideration,

permission to file a second amended complaint.
13).

Plaintiffs

seek

(ECF No. 46, at

When the right to amend as a matter of course has expired,

as here, “a party may amend its pleading only with the opposing
party’s written consent or the court’s leave.”
15(a)(2).

Fed.R.Civ.P.

Rule 15(a)(2) provides that courts should “freely

give leave [to amend] when justice so requires,” and commits the
matter to the discretion of the district court.

See Simmons v.

United Mortg. & Loan Inv., LLC, 634 F.3d 754, 769 (4th Cir.
2011).

Denial of leave to amend is appropriate “only when the

amendment would be prejudicial to the opposing party, there has
been bad faith on the part of the moving party, or the amendment
would be futile.”

Edwards v. City of Goldsboro, 178 F.3d 231,

242 (4th Cir. 1999) (quoting Johnson v. Oroweat Foods Co., 785
F.2d 503, 509 (4th Cir. 1986)).
8

Judges in this district have

held that “permission to replead should not be granted where
plaintiffs have already had ample opportunity to frame their
claims and have failed to do so properly.”

Anusie-Howard v.

Todd, 983 F.Supp.2d 645, 651 (D.Md. 2013) (citation and internal
quotation

marks

omitted).

Plaintiffs

filed

one

amended

complaint earlier in this litigation, and it is not clear how a
second

amended

claims.

complaint

would

prevent

dismissal

of

their

Accordingly, Plaintiffs will not be granted leave to

file a second amended complaint.
Plaintiffs also request that the court’s judgment be stayed
“until related appeals in state court are finalized.”
46,

at

14).

Plaintiffs

assert

that

a

stay

is

(ECF No.

appropriate

because “res judicata and collateral estoppel, based on [state
court] decisions being appealed, potentially bar related actions
until finally adjudicated.”

(Id.).

Plaintiffs’ argument is

unpersuasive because, as noted in the Memorandum Opinion, “[i]n
Maryland,

‘the

pendency

of

an

appeal

does

not

affect

the

finality of a judgment for res judicata [or collateral estoppel]
purposes.’”
Hallowell
Moreover,
proceedings

(ECF No. 42, at 8 n.2 (quoting Campbell v. Lake

Homeowners
Plaintiffs
they

Ass’n,
do

consider

their requested stay.

157
not

Md.App.
specify

“related

504,

525

which

appeals”

for

(2004))).

state

court

purposes

of

Accordingly, Plaintiffs have not shown

9

why a stay is necessary or appropriate, and their request will
be denied.
IV.

Eccleston’s Motion for Sanctions
Eccleston seeks $30,890.79 in sanctions against Plaintiffs

and

their

attorney,

John

S.

Lopatto,

because

“the

claims

asserted by [Plaintiffs] are not warranted by existing law, not
supported by facts[,] and could only have been alleged against
[Eccleston]

for

an

improper

11(b)(1), (2), and (3).”

purpose,

in

violation

(ECF No. 44-1, at 4).

of

Rule

According to

Eccleston, Plaintiffs are maintaining this action to “harass the
Defendants, cause unnecessary delay in the finalization of the
settlement

reached

in

the

underlying

case

and

to

needlessly

cause [Eccleston] and the other Defendants to expend attorney’s
fees and costs.”
amended

complaint

(Id. at 8).
“appl[ied]

Plaintiffs counter that the

existing

law

and

call[ed]

for

extending existing law” within the parameters of Rule 11(b).
(ECF No. 49, at 3).

In short, Plaintiffs argue that the amended

complaint contained “good faith pleadings” asserting arguably
violative

conduct

by

Defendants,

including

improper

debt

collection activity by Eccleston.
“[T]he central purpose of Rule 11 is to deter baseless
filings

in

District

Court

and

thus

.

.

.

streamline

administration and procedure of the federal courts.”
Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990).
10

the

Cooter &
Under Rule

11, by presenting a pleading or written motion to the court, an
attorney or unrepresented party “is certifying that to the best
of the person’s knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances,” the pleading or
motion is, among other things, “warranted by existing law or by
a

nonfrivolous

argument

for

the

extension,

modification,

or

reversal of existing law or the establishment of new law” and
“is not being presented for any improper purpose, such as to
harass, cause unnecessary delay, or needlessly increase the cost
of litigation.”

Fed.R.Civ.P. 11(b).

There is a difference between a losing case and a frivolous
case: “We have recognized that maintaining a legal position to a
court is only sanctionable when, in ‘applying a standard of
objective
attorney

reasonableness,
in

like

it

can

said

that

a

could

circumstances

be

not

have

believed

actions to be legally justified.’”

reasonable
his

Hunter v. Earthgrains Co.

Bakery, 281 F.3d 144, 153 (4th Cir. 2002) (quoting In re Sargent,
136 F.3d 349, 352 (4th Cir. 1998)).
“allegation

merely

must

be

Thus, to avoid sanctions, an

supported

by

some

evidence.”

Brubaker v. City of Richmond, 943 F.2d 1363, 1377 (4th Cir. 1991)
(emphasis

in

original).

Those

seeking

sanctions

for

legal

positions that violate Rule 11 must prove the other party had
“absolutely no chance of success under the existing precedent.”
In re Sargent, 136 F.3d 349, 352 (4th
11

Cir. 1998) (citations

omitted).

Furthermore, “[m]otions for sanctions are to be filed

sparingly.”

Thomas v. Treasury Mgmt. Ass’n, Inc., 158 F.R.D.

364, 366 (D.Md. 1994); see Local Rule 105.8(a).
As evidenced by the dismissal of Plaintiffs’ complaint and
the denial of their motion for reconsideration, Plaintiffs did
not

assert

plausible

defendants.

claims

Plaintiffs’

against
claims,

Eccleston

or

however,

were

the

other

not

so

objectively unreasonable and frivolous as to warrant sanctions.
Much

of

Eccleston’s

motion

for

sanctions

reiterates

the

arguments it made in support of its motion to dismiss, which
articulate why Plaintiffs’ assertions were insufficient, but do
not

illustrate

frivolous.
honest,

why

they

were

objectively

unreasonable

and

Plaintiffs and Mr. Lopatto assert that they had an

good-faith

belief

that

Eccleston

engaged

in

debt

collection activities in violation of the FDCPA, the MCDCA, and
the

MCALA.

Although

such

a

belief

was

not

supported

by

sufficient facts to state a claim, it was not entirely frivolous
or

objectively

unreasonable.

Similarly,

although

many

of

Plaintiffs’ claims and assertions were barred by res judicata
and collateral estoppel, the apparent mistaken interpretation of
these legal doctrines by Plaintiffs and their counsel does not
justify sanctions.
Perhaps more troubling is the fact that Plaintiffs have
filed multiple civil actions in state and federal court arising
12

out

of

the

against

same

the

underlying

facts,

defendants,

parties.

additional

same

The

some

and

of

some

actions

of

which

of

are

which

Plaintiffs

filed

pull
and

in

their

counsel, at the very least, appear to border on being motivated
by an improper purpose.

At this point, however, the extreme

measure of Rule 11 sanctions is not warranted.

“The fact that

Plaintiff[s] had to respond to Defendant’s motion for sanctions
will serve as enough of a warning to Plaintiff[s] and [their]
attorney[] that their allegations must have evidentiary support
to

bring

and

litigate

a

case

such

as

this

one.

Capitol

Radiology, LLC v. Sandy Spring Bank, No. DKC-09-1262, 2010 WL
2595781,

at

*2

(D.Md.

June

24,

2010).

Plaintiffs

and

Mr.

Lopatto are now on notice that additional similar filings may be
cause for sanctions under Rule 11(b)(1).
utilize

the

appropriate

appellate

Plaintiffs may fully

channels

to

litigate

their

disagreements with judicial opinions, but they may not initiate
what amount to repeated collateral attacks on prior rulings by
continuing to commence new civil actions.
Accordingly,

given

the

high

standard

required

for

the

imposition of sanctions, and the fact that all of Plaintiffs’
claims

were

dismissed,

the

court

sanctions.

13

will

decline

to

impose

V.

Conclusion
For

the

reconsideration

foregoing
will

be

sanctions will be denied.

reasons,
denied.

Plaintiffs’
Eccleston’s

motion

for

motion

for

A separate order will follow.

/s/
DEBORAH K. CHASANOW
United States District Judge

14