EXPORTING COMMODITIES INTERNATIONAL, LLC v. SOUTHERN MINERALS PROCESSING, LLC
Filing
38
OPINION. Signed by Judge Noel L. Hillman on 7/13/2018. (rss, n.m.)
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EXPORTING COMMODITIES
INTERNATIONAL, LLC,
Plaintiff,
1:16-cv-09080-NLH-KMW
OPINION
v.
SOUTHERN MINERALS PROCESSING,
LLC,
Defendant.
APPEARANCES:
JOSEPH B. SILVERSTEIN
GREEN, SILVERSTEIN & GROFF, LLC
215 SOUTH BROAD STREET
SUITE 500
PHILADELPHIA, PA 19107
On behalf of Plaintiff
JOSEPH ABRAHAM BAHGAT
THE PRIVACY FIRM PC
1701 WALNUT ST. FL. 7
PHILADELPHIA, PA 19103-5220
On behalf of Defendant
HILLMAN, District Judge
Plaintiff, Exporting Commodities International, LLC
(“ECI”), located in New Jersey among other places, filed a
complaint for breach of contract and related claims against
Defendant, Southern Minerals Processing, LLC (“SMP”), an Alabama
company, for SMP’s alleged breach of the parties’ agreement that
ECI purchase the remaining coal stockpile at a closed power
plant owned by Mississippi Power.
Previously, ECI filed a
motion for default judgment against SMP.
SMP objected to the
entry of default against it, opposed ECI’s motion for default
judgment, and lodged a motion to dismiss ECI’s complaint,
primarily on the basis that ECI’s complaint should be dismissed
for lack of personal jurisdiction.
In resolving the pending motions, the Court vacated default
and dismissed ECI’s complaint, finding that the exercise of
personal jurisdiction over SMP in this Court did not satisfy the
requirements of due process.
The Court concluded that ECI had
not established that SMP had sufficient contacts to New Jersey,
or that SMP’s presence in this Court would comport with fair
play and substantial justice.
(Docket No. 28.)
Following the Court’s decision, SMP filed a motion for
sanctions and attorney’s fees.
SMP argues that ECI brought its
complaint in bad faith and knew from the outset that not only
did no enforceable contract exist, personal jurisdiction over
SMP was completely and obviously lacking.
ECI refutes SMP’s
position, and also argues that SMP’s motion is procedurally
barred under Fed. R. Civ. P. 11, and is not appropriately
brought under Fed. R. Civ. P. 54 and Local Civil Rule 54.1 and
54.2.
The sanctions requested by SMP typically cannot be imposed
through the wisdom of hindsight, and can only be assessed
through the lens of what was reasonable at the time.
2
Quiroga v.
Hasbro, Inc., 934 F.2d 497, 502 (3d Cir. 1991) (“[The district
court must resist the understandable temptation to engage in
post hoc reasoning by concluding that, because a plaintiff did
not ultimately prevail, his action must have been unreasonable
or without foundation.” (citation omitted)).
Sanctions in the
form of attorneys’ fees and reimbursement of costs cannot be
used as a fee shifting device to contravene the American rule
that each litigant covers its own legal expenses.
Gaiardo v.
Ethyl Corp., 835 F.2d 479, 483 (3d Cir. 1987) (discussing
sanctions pursuant to Fed. R. Civ. P. 11).
Moreover, sanctions are not appropriate when a party's
“only sin was being on the unsuccessful side of a ruling.”
Id.;
Ario v. Underwriting Members of Syndicate 53 at Lloyds for 1998
Year of Account, 618 F.3d 277, 297 (3d Cir. 2010) (citation
omitted) (explaining that sanctions “must not be used as an
automatic penalty against an attorney or party advocating the
losing side of a dispute,” and it “should not be applied to
adventuresome, though responsible, lawyering which advocates
creative legal theories”).
Finally, the sanctions requested by
SMP are reserved for the exceptional circumstance where a claim
is patently unmeritorious or frivolous, even though not brought
in subjective bad faith.
See Doering v. Union County Bd. of
Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988) (assessing
Rule 11 sanctions); Hughes v. Rowe, 449 U.S. 5, 14 (1980)
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(assessing the imposition of attorneys’ fees and costs as a
prevailing party under 42 U.S.C. § 1988, and stating that the
plaintiff's action “must be meritless in the sense that it is
groundless or without foundation”); Quiroga, 934 F.2d at 502-03
(assessing the imposition of attorneys’ fees and costs as a
prevailing party under 42 U.S.C. § 2000e-5(k)).
In this case, the Court issued a detailed 25-page Opinion
thoroughly analyzing the relevant case law and the parties’
arguments on the personal jurisdiction issue.
Even though the
Court concluded that there was “scant evidence that SMP engaged
in the kind of purposeful activity necessary for a valid
assertion of personal jurisdiction over a nonresident defendant”
(Docket No. 28 at 24), the Court reached that conclusion after
much deliberation and analysis.
If the personal jurisdiction
issue were as straightforward from the outset of the case as SMP
argues, the Court’s deliberations on the issue would have been
much more brief.
The Court understands SMP’s frustrations, particularly when
it ultimately prevailed on its position.
The Court also
recognizes the procedural missteps by ECI in service and docket
filings, pointed out by SMP in support of its argument that ECI
unnecessarily prolonged the ligation which ultimately should
have been brought in Alabama – if at all.
But “[w]herever the law draws a line there will be cases
4
very near each other on opposite sides.”
U.S. 396, 399 (1930).
U.S. v. Wurzbach, 280
The Court concludes that this case does
not fall on the “patently unmeritorious or frivolous” side of
the line.
SMP’s motion for the reimbursement of attorney’s fees
and costs will be denied. 1
An appropriate Order will be entered.
Date: July 13, 2018
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
1
Because the Court denies SMP’s motion on a substantive basis,
it is not necessary to delve into whether the procedure by which
SMP brought its motion is correct. See, e.g., In re Schaefer
Salt Recovery, Inc., 542 F.3d 90, 102 (3d Cir. 2008) (discussing
the substantive and procedural differences between a court
imposing sanctions pursuant to Fed. R. Civ. P. 11 and 28 U.S.C.
§ 1927, and noting that under either provision, a motion for
sanctions should be filed within a reasonable time, and that
ultimately it is a court’s inherent power to impose sanctions).
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