McGlothlin v. Hennelly

Filing 14

ORDER denying 6 Motion to Stay Signed by Honorable David C Norton on July 24, 2018.(cban, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
James W. McGlothlin,

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Plaintiff,
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vs.
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Kevin N. Hennelly,
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Defendant.
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____________________________________)

No. 9:18-cv-00246-DNC
ORDER

This matter comes before the court on Kevin N. Hennelly’s (“Hennelly”)
Motion to Stay Action and Award Fees, ECF No. 6. For the reasons set forth below,
the court denies the motion.
I. BACKGROUND
This matter arises from an action of alleged defamation and libel brought by
Florida citizen, James McGlothlin (“McGlothlin”), against Hennelly. ECF No. 1.
McGlothlin is a founding member of The United Company, which is the parent
company of Scratch Golf, LLC. Hennelly allegedly posted a link on Facebook to an
article about a corruption investigation involving then Virginia Governor Bob
McDonnell and monies Gov. McDonnell’s wife received as a consultant to The
United Company. Hennelly made a second allegedly defamatory comment on
Facebook, stating that McGlothlin was “up to [his] eyeballs in the recent scandals in
Virginia with the Governor and his wife. McGlothlin gave the Governors [sic] wife a
no show job at the heart of the ethical and criminal activity.” Id. at ¶ 14. Hennelly
also allegedly posted about Scratch Golf LLC’s rezoning application in the comment
section of an Island Packet news article.
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McGlothlin first sued Hennelly in the Middle District of Florida (the “Florida
Suit”). Hennelly responded by filing a motion to dismiss under Federal Rule of Civil
Procedure 12(b)(2) and (3), based on lack of personal jurisdiction and improper
venue. McGlothlin opposed this motion, and the court found that the Florida Long
Arm Statute did not confer jurisdiction over non-resident Hennelly. The court
granted the motion to dismiss but gave McGlothlin two weeks to amend his
complaint. McGlothlin chose to voluntarily dismiss the Florida suit two weeks later.
McGlothlin filed suit in this district on January 30, 2018 based the same facts.
The complaint brings causes of action for defamation and negligence/gross
negligence/recklessness, and requests injunctive relief. McGlothlin asks for actual
and punitive damages of an amount in excess of $75,000. McGlothlin also asks the
court to enjoin Hennelly from making or publishing any other false, defamatory,
and/or libelous statements as to McGlothlin, and to order him to remove all
information and statements he has already disseminated.
Hennelly filed a Motion to Stay Action and Award Fees under Federal Rule of
Civil Procedure 41(d) on February 15, 2018. ECF No. 6. McGlothlin filed his reply
in opposition on March 16, 2018, ECF No. 10, and Hennelly responded on March 23,
2018, ECF No. 13. This matter has been fully briefed and is now ripe for the court’s
review.
II. STANDARD
Under Federal Rule of Civil Procedure 41(d), “[i]f a plaintiff who previously
dismissed an action in any court files an action based on or including the same claim
against the same defendant, the court: (1) may order the plaintiff to pay all or part of

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the costs of that previous action; and (2) may stay the proceedings until the plaintiff
has complied.” Fed. R. Civ. P. 41(d)(1)(2).
Federal Rule of Civil Procedure 54(d) provides that “[u]nless a federal statute,
these rules, or a court order provides otherwise, costs–other than attorney’s fees–
should be allowed to the prevailing party.” Fed. R. Civ. P. 54(d)(1).
III. DISCUSSION
Hennelly argues that the court should grant his motion to stay and award fees
because McGlothlin has acted in bad faith, as the Florida suit was dismissed by the
court on substantive grounds and McGlothlin’s legal counsel filed an identical suit in
Tennessee on behalf of McGlothlin’s business associate, Martin Kent (“Kent”). ECF
No. 13. Hennelly contends that McGlothlin and Kent’s actions are evidence of
“vexatious intent, forum shopping, or their efforts to oppress and simply outspend
Hennelly.” ECF No. 6.
Under Rule 41(d), a defendant may obtain attorney’s fees from a plaintiff “[i]f
a plaintiff who previously dismissed an action in any court files an action based on or
including the same claim against the same defendant.” The Fourth Circuit has
established that, where a statute does not provide for attorney’s fees, “a district court
may award attorneys’ fees when the opposing party has “acted in bad faith,
vexatiously, wantonly, or for oppressive reasons.” Andrews v. America’s Living
Ctrs., LLC, 827 F.3d 306 (4th Cir. 2016) at *311 (internal quotes omitted). In
Andrews, the plaintiff filed an action and was met by a motion to dismiss under
12(b)(6) for failure to state a claim. Because the plaintiff had missed the deadline for
amending her complaint, she moved for a voluntary dismissal and withdrew her

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original complaint before filing a second one in the same district. The district court
granted attorney’s fees under Rule 41(d). The Fourth Circuit reversed this decision,
finding her behavior did not amount to vexatious litigation.
Here, McGlothlin originally filed suit in the Middle District of Florida, and
Hennelly moved to dismiss based on lack of personal jurisdiction. McGlothlin refiled
his claim in the District of South Carolina, which does have personal jurisdiction over
Hennelly. This is not an attempt by McGlothlin to avoid dismissal of his complaint
based on its merits by voluntarily dismissing and then refiling a better-worded
complaint. Rather, after being told by the Florida court that he wrongly assessed the
Florida court’s jurisdiction over Hennelly, McGlothlin simply re-filed his case in the
appropriate district. The actions in Andrews were much more grievous, with
Andrews attempting to get a second bite at the apple. If the Fourth Circuit found that
the plaintiff’s actions in Andrews did not amount to vexatious behavior, McGlothlin’s
actions clearly do not warrant an award of attorney’s fees under Rule 41(d).
Although the current motion for attorney’s fees is brought under Rule 41(d),
the court also looks to how “bad faith” has been defined in cases considering
attorney’s fees under Rule 54(d). When considering whether to award attorney’s fees
under Rule 54(d), courts have found that attorney’s fees are warranted when the party
has been notified by a prior court that the claim is insufficient or has no merit and
files a subsequent action anyway. In Zuraf v. Clearview Eye Care, Inc., 261
F.Supp.3d 637, Judge Raymond A. Jackson of the Eastern District of Virginia
determined that “attorney’s fees are warranted in this case because Plaintiff’s counsel
was on notice that the claim was insufficiently pled at the motion to dismiss stage.”

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Zuraf at *645. Furthermore, “the continuation of litigation of claims which have
become frivolous has been held to amount to ‘bad faith’ justifying a fee award.” Id.
Here, while McGlothlin was aware that the Florida court was planning to
dismiss his action, such dismissal was due to lack of personal jurisdiction rather than
the claim being legally insufficient or having no merit. This is much different than
filing a baseless claim and seeking a second bite at the apple. Additionally,
McGlothlin filed first in Florida because he believed that the Florida Long Arm
Statute allowed him to do so because he was a Florida resident and Facebook was
accessible in Florida at the time the statements were made. Though the plaintiff
could not prove the veracity of his claims, at the time of the complaint he stated he
believed the comments had been accessed in Florida. ECF 6–2, ¶12. While
ultimately incorrect, this was a reasonable basis upon which to bring suit in Florida
and thus does not amount to a bad faith attempt. See also Noffz v. Austin
Maintenance & Construction, Inc., WL 4385872 (2016) (finding the claim had a good
faith basis and was not vexatious, leaving no grounds for attorney’s fees). With this
refiling, McGlothlin has not “vexatiously multiplied litigation” by filing multiple
suits around the country; rather, he simply re-filed in order to move to the correct
district. Thus, the court finds that his conduct does not warrant attorney’s fees under
Rule 41(d).

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IV. CONCLUSION
Based on the above, the court DENIES the motion to award fees.
AND IT IS SO ORDERED.

DAVID C. NORTON
UNITED STATES DISTRICT JUDGE
July 24, 2018
Charleston, South Carolina

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