Ovella v. B & C Construction and Equipment, LLC et al
Filing
424
ORDER denying 412 Motion to Recover Expert Witness Fees; denying 415 Motion for Sanctions Signed by Chief District Judge Louis Guirola, Jr on 08/09/2012 (Guirola, Louis)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
DOMINIC OVELLA and
KATHLEEN OVELLA
v.
PLAINTIFFS
CAUSE NO. 1:10CV285-LG-RHW
B&C CONSTRUCTION AND EQUIPMENT, LLC.
DEFENDANT
ORDER DENYING DEFENDANTS’ POST-TRIAL MOTIONS
BEFORE THE COURT is the Motion [412] filed by Defendant B&C
Construction and Equipment, LLC, for recovery of expert witness fees; and the
Motion [415] filed by B&C and the individual Defendants for sanctions. B&C
obtained a take-nothing judgment following a seven day jury trial. It now seeks
payment of its expert witness costs and fees pursuant to Fed. R. Civ. P. 26(b)(4)(E).
All of the Defendants seek sanctions against Dominic Ovella and the Hailey
McNamara Firm pursuant to Fed. R. Civ. P. 11, 28 U.S.C. § 1927, and the Court’s
general sanctioning power. The Plaintiffs have responded and the Defendants have
replied. After due consideration, the Court finds that the Motions should be denied.
Payment of Expert Witness Fees
A party seeking discovery from an opposing side's expert must pay the expert
a reasonable fee for time spent in responding to discovery unless manifest injustice
would result. Fed. R. Civ. P. 26(b)(4)(E)(i). “The purpose of the rule is to avoid the
unfairness of requiring one party to provide expensive discovery for another party's
benefit without reimbursement.” Pizzuto v. Blades, No. 1:05-CV-516-BLW, 2011 WL
2690134, at *2 (D. Idaho July 9, 2011) (citations omitted).
It is apparent from its Motion that B&C seeks to obtain all of the costs of its
experts, as it recounts the number of times the experts had to recalculate figures
and reissue their expert reports. None of that expense is allowable under Rule
26(b)(4)(E) - only the expense incurred because the experts were responding to
discovery requests from the Ovellas. Of the items for which B&C requests
reimbursement, only the expert depositions are chargeable discovery request
responses. The Ovellas provide documentation of their remuneration of expert fees
for deposing B&C’s three experts. (Pl. Mot. Ex. A&B, ECF No. 413-1, 2). They note
that the experts included preparation time and travel time in their invoices, and so
those categories of expenses were paid as well. B&C is entitled to no more under
Rule 26(b)(4)(E)(i). Its Motion For Recovery of Expert Witness Fees will be denied.
Sanctions
Rule 11 Sanctions:
The Defendants contend that Ovella and his counsel violated Rule 11(b)(2)
and (3) by filing claims that had no good-faith basis in law or fact, and by
maintaining factually baseless claims for damages not supported by their own
experts. The Ovellas argue that the Defendants are untimely with their motion,
and have violated the safe harbor provisions of the Rule.
Rule 11 authorizes a court to impose sanctions on a party who files a
pleading if the claims or defenses of the signer are not supported by existing law or
by a good-faith argument for an extension or change in existing law, FED. R. CIV. P.
11(b)(2); or the allegations and other factual statements lack evidentiary support or
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are unlikely to do so after a reasonable opportunity for investigation. FED. R. CIV. P.
11(b)(3). The purpose of the rule is to “deter baseless filings in district court,”
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990), and to insure that
“victims of frivolous lawsuits do not pay the expensive legal fees associated with
defending such lawsuits.” Thomas v. Capital Sec. Servs., Inc., 836 F.2d 866, 879
(5th Cir. 1988). After notice and opportunity to respond, courts finding a Rule 11(b)
violation may impose appropriate sanctions. FED. R. CIV. P. 11(c)(1). These may
include monetary and injunctive sanctions, Farguson v. MBank Houston, N.A., 808
F.2d 358, 359-60 (5th Cir. 1986), and even dismissal, see Jimenez v. Madison Area
Technical Coll., 321 F.3d 652, 657 (7th Cir. 2003). Courts have a duty to impose the
least severe sanction that is sufficient to deter future conduct. Mendoza v.
Lynaugh, 989 F.2d 191, 196 (5th Cir.1993); Fed.R.Civ.P. 11(c)(4).
A party seeking Rule 11 sanctions must file a stand-alone motion describing
specific sanctionable conduct. FED. R. CIV. P. 11(c)(2). The rule contains a safe
harbor provision that requires that the motion be served under Rule 5, “but it must
not be filed or be presented to the court if the challenged paper, claim, defense,
contention, or denial is withdrawn or appropriately corrected within 21 days after
service or within another time the court sets.” This requirement is strictly
construed and substantial compliance is insufficient. Cf. In re Pratt, 524 F.3d 580,
586-88 (5th Cir. 2008) (addressing “substantially identical” bankruptcy Rule 9011).
Informal notice and opportunity to withdraw is not an adequate substitute for
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serving a copy of the motion at least twenty-one days before filing the motion with
the court. Id. A motion for Rule 11 sanctions is appropriately denied when the
movant fails to comply with this requirement. Tompkins v. Cyr, 202 F.3d 770, 788
(5th Cir. 2000) (Rule 11 motion properly denied when filed after trial had concluded,
and opposing counsel served same day rather than twenty-one days prior). The
movant has the burden to show compliance with the safe harbor provision. See
Harris v. Auxilium Pharms., Inc., 664 F. Supp. 2d 711, 724 (S.D. Tex. 2009).
Here, Defendants filed their motion for sanctions on May 25, 2012 – three
months after the trial had concluded. A motion for sanctions filed after the trial has
concluded does not give the opposing party an opportunity to correct their
complaint. Tompkins, 202 F.3d at 788. Furthermore, the certificate of service
indicates that the motion was served on the Ovellas on the same date it was filed
with the Court. Defendants clearly did not comply with the service requirement of
the Rule, but they argue that the Ovellas had notice of their intention to pursue
Rule 11 sanctions from their earlier withdrawal of a Rule 11 claim in their answer.
This argument runs counter to the Fifth Circuit’s firm rejection of informal notice
as an adequate substitute for service of the motion under the Rule. The Defendants
have not shown that they complied with the safe harbor provision, and their motion
for sanctions under Rule 11 will be denied on that basis.
28 U.S.C. § 1927:
The Defendants also move for costs and attorneys fees from the Hailey
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McNamara firm under 28 U.S.C. § 1927, which provides:
Any attorney or other person admitted to conduct cases in any court of
the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be required
by the court to satisfy personally the excess costs, expenses, and
attorneys' fees reasonably incurred because of such conduct.
The Fifth Circuit has stated that because it is penal, and “in order not to dampen
the legitimate zeal of an attorney in representing his client,” the statute must be
strictly construed. Travelers Ins. Co. v. St. Jude Hosp. of Kenner, La., Inc., 38 F.3d
1414, 1416 (5th Cir. 1994). The district court may exercise its discretion in
awarding costs and fees. Id. at 1417.
Defendants argue that the Ovellas alleged unfounded claims against the
individual members of B&C, such as fraud, breach of contract, breach of the New
Home Warranty Act and negligence. Defendants also argues that the Ovellas took
an unsubstantiated position during the litigation when they asserted that the
National Design Specifications for Wood was a new and unproven standard.
Finally, the Defendants argue that the Ovellas’ claims of physical damage to the
home caused by excessive movement were unfounded.
The Court finds that none of these grounds justifies sanctions against the
Hailey McNamara firm. “A plaintiff need not have a fully developed factual case in
order to base a suit upon a well-recognized legal claim.” F.D.I.C. v. Calhoun, 34
F.3d 1291, 1298 (5th Cir. 1994). Id. at 1299. The relevant inquiry is whether the
claims were at least colorable at the time of the signing of the complaint. The Court
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should not go beyond its discretion “by applying the clarity of hindsight to judge the
complaint.” Id. Furthermore, only those fees and costs associated with “the
persistent prosecution of a meritless claim” may be awarded. Thomas v. Capital
Sec. Serv., Inc., 836 F.2d 866, 875 (5th Cir.1988) (en banc).
Early in the litigation of this case, the Court denied two motions for partial
summary judgment filed by B&C and its individual members. One motion [188]
requested judgment on alleged building code violations, and the other [189]
requested judgment as to the Ovellas’ duty to mitigate their damages. There was
no motion regarding the claims B&C complains of here. It was only at the trial that
the Court found the claims to lack sufficient evidence to submit to the jury. (See
Order Dismissing Individual Defendants and Unjust Enrichment Claims, Feb. 15,
2012, ECF No. 396). As the claims were never tested prior to trial, the Court
cannot find that the Ovellas “persistently prosecuted” them. Browning v. Kramer,
931 F.2d 340, 345 (5th Cir. 1991) (party continued to press state law claims after
court ruled they were preempted by ERISA). At the time of the signing of the
Complaint, the claims were at least colorable.
Furthermore, it should be noted that the Defendants themselves brought
claims to trial that the Court dismissed rather than submit to the jury. (See Order
Dismissing Individual Defendants and Unjust Enrichment Claims, Feb. 15, 2012
(ECF No. 396); Order Dismissing Counterclaims (ECF No. 397)). And as stated by
the Fifth Circuit, “[w]here judgment has been entered only at the conclusion of trial,
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we have noted that ‘[o]ne might well wonder how a case could be so frivolous as to
warrant sanctions if it has sufficient merit to get to trial.’” Browning, 931 F.2d at
345 (citing Nat’l Ass'n of Gov't Emp. v. Nat’l Fed'n of Fed. Emp., 844 F.2d 216, 223
(5th Cir. 1988)). The Defendants are not entitled to costs and fees for the claims
found to be lacking a factual basis.
In regard to the Defendants’ allegation that the Ovellas took an
unsubstantiated position during the litigation regarding the National Design
Specifications for Wood, this position was not among Dominic Ovella’s claims or
Kathleen Ovella’s counterclaims. It is difficult to see how an expert’s refusal to
agree with an opposing expert on the applicable industry standard would result in
multiplication of needless proceedings. The Defendants are not entitled to costs and
fees for the Ovellas’ position regarding the NDS for Wood.
Inherent Sanctioning Power:
Finally, the Defendants ask that if the Court declines to sanction the Ovellas
or their law firm under statute or rule, that it sanction them pursuant to its
inherent, general sanctioning power. The purpose of the inherent power is to
control the litigation before the court. F.D.I.C. v. Maxxam, Inc., 523 F.3d 566, 591
(5th Cir. 2008). However, “a court's inherent power to impose attorney's fees as a
sanction [is limited] to cases in which a litigant has engaged in bad-faith conduct or
willful disobedience of a court's orders.” Chambers v. NASCO, Inc., 501 U.S. 32, 47
(1991). Despite some rough spots in this litigation, the Court does not find
sanctionable conduct by any party. This request by the Defendants will be denied.
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IT IS THEREFORE ORDERED AND ADJUDGED that the Defendant’s
Motion [412] for Recovery of Expert Witness Fees Pursuant to Fed. R. Civ. P.
26(b)(4)(E) is DENIED.
IT IS FURTHER ORDERED AND ADJUDGED that the Defendants’
Motion for Sanctions [415] is DENIED.
SO ORDERED AND ADJUDGED this the 9th day of August, 2012.
s/
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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