Shucart v. CACH, LLC
MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendants motion for sanctions under Federal Rule of Civil Procedure 11 is DENIED. (Doc. No. 40 .) Signed by District Judge Audrey G. Fleissig on 02/09/2017. (KCB)
UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF MISSOURI
CACH, LLC, et al.,
) Case No. 4:15CV01090 AGF
MEMORANDUM AND ORDER
This matter is before the Court on Defendants’ motion for sanctions under
Federal Rule of Civil Procedure 11 against Plaintiff Stephen Shucart. For the reasons
set forth below, Defendants’ motion will be denied on the ground that it was filed after
the case was dismissed.
Plaintiff initiated this action in state court on July 14, 2015, claiming that
Defendant CACH, LLC, (“CACH”) a debt collector, violated the federal Fair Debt
Collection Practices Act and the Missouri Merchandising Practices Act by engaging in
“litigation misconduct” in filing a state court action to collect a debt that CACH alleged
had been assigned to it. The litigation misconduct asserted was that CACH had failed
to attach to the state court petition proof that Plaintiff owed the debt or proof that the
debt was assigned to CACH, and that CACH filed the action without any way to
substantiate “the balance owed or even confirm that there was indeed a debt,” and
without “the means or intent to prosecute the [case], absent Plaintiff defaulting.” (Doc.
No. 4.) The case was one of several similar lawsuits filed by Plaintiff’s law firm against
CACH on behalf of different plaintiffs.
On the same day that the state action was filed, CACH removed the case to this
Court on the basis of federal question jurisdiction. On August 26, 2015, CACH filed its
answer and attached thereto evidence of the debt owed by Plaintiff that was the subject
matter of the state court collection action, as well as evidence of the debt’s assignment
to CACH. On December 23, 2015, Plaintiff filed an amended complaint adding as
Defendants CACH’s owners and/or parent companies and the law firm that represented
CACH in the underlying state collection action. Defendants filed motions to dismiss
and for judgment on the pleadings. On March 11, 2016, another judge in this district
granted summary judgment to Defendants who were the defendants in another case
raising the same legal issues as those raised in this case, Gray v CACH, LLC, No. 4:15cv-00228-RWS, 2016 WL 931193 (E.D. Mo. March 11, 2016). On March 18, 2016,
Plaintiff filed a motion under Rule 41(a)(2) for voluntary dismissal of the present case
with prejudice, which Defendants did not oppose, and the Court granted the motion to
dismiss on March 28, 2016.
The motion now before the Court was filed on April 4, 2016. Defendants argue
that even if Plaintiff had a viable theory of recovery at the time he filed his initial
complaint, that theory was no longer viable after August 26, 2015, when Defendants
filed documents that defeated Plaintiff’s claims, and Plaintiff had an obligation under
Rule 11 to abandon his claims at that point. Defendants seek as sanctions their fees and
expenses incurred in defending this action after August 26, 2015. In response to the
motion for sanctions, Plaintiff states that he voluntarily dismissed the present case in
light of the decision in Gray, and that
[t]o the best of Plaintiff’s knowledge, information, and belief, he possessed
sufficient evidence to submit a triable issue of fact to a jury as to whether
Defendants actually intended to prosecute the state court collection lawsuit.
Plaintiff also had an objectively reasonable belief that his allegations would
have additional evidentiary support after a reasonable opportunity for
(Doc. No. 41 at 1.) Plaintiff also asserts that the claims he voluntarily dismissed were
warranted by existing law. Thereafter, Plaintiff filed a supplemental response,
submitting to the Court the decision in Noonan v. CACH, LLC, No. 4:15-CV-01305CAS, 2016 WL 1641405 (E.D. Mo. April 26, 2015), holding under virtually identical
circumstances, that in light of the 21-day “safe harbor” provision or Rule 11(c), the
court was without jurisdiction to grant Rule 11 sanctions where the motion for sanctions
was filed after the case was dismissed under Rule 41(a)(2).
Rule 11 requires that every pleading, written motion, or other paper be signed by
an attorney or pro se party. By signing, filing, submitting or later advocating the
pleading, motion or paper, the signer represents to the court that “to the best of the
person’s knowledge, information and belief, formed after an inquiry reasonable under
the circumstances, . . . (2) the claims, defenses, and other legal contentions therein are
warranted by existing law or by a nonfrivolous argument for extending, modifying, or
reversing existing law . . . .” Fed. R. Civ. P. 11(b). Upon determining that Rule 11(b)
has been violated, a court may impose appropriate sanctions either on its own motion or
after proper motion by a party. Fed. R. Civ. P. 11(c).
In 1993, Congress added a 21-day “safe harbor” provision to Rule 11, which
now provides as follows:
The motion [for sanctions] must 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. If warranted, the
court may award to the prevailing party the reasonable expenses, including
attorney’s fees, incurred for the motion.
Fed. R. Civ. Pro. 11(c)(2).
The addition of the safe harbor provision in the 1993 amendment [to Rule
11] dramatically changed the effect that a final judgment or the dismissal of
the claim has on the possibility of a Rule 11 proceeding. The Advisory
Committee Note accompanying the 1993 amendment provides that “[g]iven
the ‘safe harbor’ provisions . . . a party cannot delay serving its Rule 11
motion until conclusion of the case (or judicial rejection of the offending
contention).” Thus, service of a sanctions motion after the district court has
dismissed the claim or entered judgment prevents giving effect to the safe
harbor provision or the policies and procedural protections it provides, and
it will be rejected.
5A Charles Alan Wright and Arthur R. Miller, Federal Practice and Procedure § 1337.2
(3d ed. 2016); see also Roth v. Green, 466 F.3d 1179, 1193 (10th Cir. 2006).
The Court agrees with the reasoning and result in Noonan, and will deny
Defendants’ motion for sanctions because it was filed after the Rule 41(a)(2) dismissal
of the case. See also AeroTech, Inc. v. Estes, 110 F.3d 1523, 1528-29 (10th Cir. 1997)
(concluding that Rule 11 sanctions were unavailable to the defendant who moved for
sanctions after the plaintiff moved to voluntarily dismiss its claims against the
IT IS HEREBY ORDERED that Defendants’ motion for sanctions
under Federal Rule of Civil Procedure 11 is DENIED. (Doc. No. 40.)
Dated this 9th day of February, 2017
AUDREY G. FLEISSIG
UNITED STATES DISTRICT JUDGE
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