Equine Colic Relief Company, Inc., et al v. Martinez, et al

Filing 67

ORDER ON PENDING MOTIONS, ORDER REFERRING MOTION: 44 MOTION to Compel Responses to Written Discovery Requests filed by Reba Martinez, DENYING 47 MOTION for Sanctions, DENYING 46 MOTION for Leave to File, GRANTING 56 Motion to Withdraw 42 MOTION for Summary Judgment, GRANTING in part DENYING in part 50 MOTION for Leave to File Amended Complaint, DENYING 37 MOTION to Join Absentee Plaintiff and Motion to Disjoin From Misjoined Plaintiffs, MOOTING 23 MOTION to Sever, GRANTING 58 Unopposed MOTION to Withdraw 35 . Signed by Judge David A. Ezra.. Referral Magistrate Judge: Henry J. Bemporad. (rf)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF TEXAS
SAN ANTONIO DIVISION
§
EQUINE COLIC RELIEF COMPANY, §
INC. f/k/a EQUINE COLIC RELIEF §
COMPANY INTERNATIONAL,
§
§
Plaintiff,
§
§
vs.
§
§
REBA MARTINEZ, LARRY
§
MARTINEZ, PAM SCHROEDER,
§
EQUINE COLIC RELIEF AMERICA §
and PURE EARTH PRODUCTS, LLC, §
§
Defendants.
§

No. SA:13-CV-321-DAE

ORDER ON PENDING MOTIONS
On January 21, 2014, the Court heard argument on (1) Plaintiff’s
Composite Motion for Leave to Respond and Leave to File an Amended
Complaint (Dkt. # 50); (2) Plaintiff’s Response to Order to Obtain Counsel and
Motion for Extension of Time (Dkt. # 32); (3) Plaintiff’s Motion to Join Absentee
Plaintiff and Motion to Disjoin from Misjoined Plaintiffs (Dkt. # 37); (4) Reba
Martinez’s Motion to Compel Responses to Written Discovery Requests
(Dkt. # 44); (5) the Martinez Defendants’ Motion to Join Counter-Plaintiffs and
Counter-Defendants and Motion for Leave to File a Second Amended Answer
1

(Dkt. # 46); and (6) the Schroeder Defendants’ Motion for Sanctions (Dkt. # 47).
Mark Nacol, Esq., represented Plaintiff. Ross Garsson, Esq., represented the
Schroeder Defendants, and Michael Paul, Esq., appeared on behalf of the Martinez
Defendants. During the hearing, Plaintiff moved for leave to file a Third Amended
Complaint.
The Court hereby rules as follows:


Dkt. # 50 – Plaintiff’s Composite Motion
o GRANTS Plaintiff’s Request to Withdraw its Motion for Remand
(Dkt. # 19)
o DENIES AS MOOT Plaintiff’s Request to Respond to the Martinez
Defendants’ Motion for Summary Judgment
o DENIES AS MOOT Plaintiff’s Request for Leave to File a Second
Amended Complaint
o DENIES AS MOOT Plaintiff’s Request for an Extension of Time to
Respond to Schroeder Defendants’ Alternative Motion to Sever
o DENIES AS MOOT Plaintiff’s Motion for an Extension of Time to
Respond to Schroeder Defendants’ Motion for Partial Summary
Judgment and Motion to Dismiss
o GRANTS Plaintiff’s Request for Leave to File a Corrected Request for
Injunctive Relief
2

o REFERS TO MAGISTRATE JUDGE BEMPORAD Plaintiff’s
Motion for Extension of Time to Respond to Reba Martinez’s Discovery
Requests
o DENIES Plaintiff’s Request to Extend the Time of the Rule 11
Safe-Harbor Provision
 DENIES AS MOOT Plaintiff’s Response to Order to Obtain Counsel and
Motion for Extension of Time (Dkt. # 32)
 DENIES Plaintiff’s Motion to Join Absentee Plaintiff and Motion to Disjoin
from Misjoined Plaintiffs (Dkt. # 37)
 REFERS TO MAGISTRATE JUDGE BEMPORAD Reba Martinez’s
Motion to Compel Responses to Written Discovery Requests (Dkt. # 44)
 Dkt. # 46 – Martinez Defendants’ Composite Motion
o DENIES WITHOUT PREJUDICE the Martinez Defendants’ Motion
to Join Tara Flynn as Counter-Defendant
o DENIES WITHOUT PREJUDICE the Motion to Join Stops Colic as a
Counter-Plaintiff
o DENIES WITHOUT PREJUDICE the Motion to File a Second
Amended Answer
 DENIES the Schroeder Defendants’ Motion for Sanctions (Dkt. # 47)

3

 GRANTS the Martinez Defendants’ Motion (Dkt. # 56) withdrawing their
Motion for Summary Judgment (Dkt. # 42)
 GRANTS the Schroeder Defendants’ Motion (Dkt. # 58) withdrawing their
Composite Motions (Dkt. # 35)
 Finds that the Schroeder Defendants’ Motion to Sever (Dkt. # 23) is now
MOOT
Background
I.

Factual Background
Plaintiff Equine Colic Relief Company, Inc. (“Plaintiff”) is a

corporation whose agent is Tara Flynn (“Flynn”). (Dkt. # 50 at 7.) Initially,
Plaintiff claimed that it manufactured a formula used in ameliorating symptoms of
colic in horses called Equine Colic Relief (“the Product”). (See e.g., Dkt. # 13.)
Plaintiff claimed it entered into two contracts with the Defendants Reba and Larry
Martinez (the “Martinez Defendants”) on January 19, 2012. (Id.) Through these
contracts, the Martinez Defendants became Wholesale Representatives and
Distributor Business Owners of Plaintiff to market the Product. (Id.) Plaintiff
alleges that the Martinez Defendants subsequently used Plaintiff’s trade secrets,
formulations, and confidential and proprietary information to compete with and
injure Plaintiff. (Id.)

4

Plaintiff alleges it also entered into contracts with Pam Schroeder and
Equine Colic Relief America and Pure Earth Products, LLC (the “Schroeder
Defendants”) appointing them Wholesale Representatives of Plaintiff. (Id.)
Plaintiff contends that the Schroeder Defendants misused Plaintiff’s trade secrets,
formulations, and confidential and proprietary information to compete with and
injure Plaintiff. (Id.)
II.

Procedural Posture
Plaintiff filed its Original Petition and Verified Application for a

Temporary Restraining Order and for Temporary and Permanent Injunctive Relief
in Texas state court on April 5, 2013. (Dkt. # 1 Ex. 4.) The state court granted
Plaintiff a temporary restraining order. (Id., Ex. 5.)
The Schroeder Defendants removed the case to this Court on April 18,
2013. (Dkt. # 1.) Subsequently, both the Schroeder and Martinez Defendants
answered and asserted counterclaims. (Dkt. # 4; Dkt. # 6.) The Schroeder
Defendants additionally asserted a third-party claim against Flynn. (Dkt. # 6.)
On May 21, 2013, Plaintiff filed her Amended Complaint, sought a
temporary restraining order, and moved for a permanent injunction. (Dkt. # 13.)
Because of Plaintiff’s failure to comply with procedural requirements, the Court
denied without prejudice Plaintiff’s motion for a temporary restraining order and
permanent injunction. (Dkt. # 14.)
5

On May 28, 2013, Plaintiff answered the Schroeder Defendants’
counterclaims and answered on behalf of Flynn. (Dkt. # 15.)
On June 4, 2013, the Martinez Defendants filed their First Amended
Answer. (Dkt. # 17.)
On July 10, 2013, Plaintiff moved to remand the case to state court.
(Dkt. # 19.) The Schroeder Defendants responded opposing remand, and in the
alternative, moved to sever. (Dkt. # 23.)
On September 6, 2013, Plaintiff’s counsel filed a motion to withdraw.
The Court granted the motion on September 9, 2013, and additionally issued an
order requiring Plaintiff to obtain counsel within fifteen days (the “September 9,
2013 Order”). Plaintiff did not comply with this order, and on September 26,
2013, Plaintiff filed a response seeking an additional fifteen days. (Dkt. # 32.)
On November 8, 2013, the Schroeder Defendants moved (1) to
dismiss Plaintiff’s claims with prejudice, (2) for partial summary judgment on their
counterclaims, (3) to strike Plaintiff’s defenses, (4) for damages/sanctions, and
(5) for realignment of the parties. (Dkt. # 35.) This motion has been withdrawn.
On November 11, 2013, Flynn, on behalf of Plaintiff, filed a “Motion
to Join Absentee Plaintiff and Motion to Disjoin from Misjoined Plaintiffs.”
(Dkt. # 37.) Flynn is not an attorney, and her actions on behalf of Plaintiff were in
direct opposition to the Court’s September 9, 2013 Order. In this filing, Flynn
6

made various assertions contradicting statements she verified in the Original
Petition and Amended Complaint. Both the Schroeder and Martinez Defendants
responded to and opposed Flynn’s motion. (Dkt. # 39; Dkt. # 41.)
On November 26, 2011, the Martinez Defendants filed a Motion for
Summary Judgment. (Dkt. # 42.) However, this motion was withdrawn on
January 15, 2014. (Dkt. # 56.)
On December 12, 2013, Reba Martinez filed a Motion to Compel
Responses to Written Discovery Requests. (Dkt. # 44.) This motion is currently
before the Court.
On December 12, 2013, Mark A. Nacol entered an appearance on
behalf of Plaintiff.
On December 13, 2013, the Martinez Defendants filed a Motion to
Join Tara Flynn as Counter-Defendant and Stops Colic LLC as Counter-Plaintiff
and for Leave to File a Second Amended Answer. (Dkt. # 46.) These motions are
currently pending before the Court.
On December 24, 2013, the Schroeder Defendants moved for
sanctions against Plaintiff arguing that Plaintiff filed false pleadings. (Dkt. # 47.)
This motion is currently pending before the Court.
On December 27, 2013, Plaintiff filed a composite motion seeking
(1) leave to file an amended complaint; (2) leave to file a corrected request for
7

preliminary and permanent injunctive relief; (3) an extension of time to file replies
to pending motions and discovery requests; (4) a continuance of the hearing date
from January 6, 2014; and (5) to withdraw the pending Motion for Remand
(Dkt. # 19). (Dkt. # 50). Both the Martinez and Schroeder Defendants responded
to these motions. These motions, with the exception of the motion to continue the
hearing date, are currently pending before the court. At the hearing, Plaintiff also
sought leave to file a Third Amended Complaint. Defendants did not oppose the
motion.
Each of the pending motions is discussed, in turn, below.
DOCKET # 50 PLAINTIFF’S DECEMBER 27 COMPOSITE MOTION
I.

Martinez Defendants’ Unopposed Motion for Summary Judgment
The Martinez Defendants have moved to withdraw their Motion for

Summary Judgment as premature in light of the Plaintiff’s proposed Amended
Complaint. The Court GRANTS the Martinez Defendants’ Motion to Withdraw
their Motion for Summary Judgment (Dkt. # 42). Therefore, Plaintiff’s Motion for
an Extension of Time to Respond to it is DENIED AS MOOT.
II.

Plaintiff’s Motion for Leave to File the Second Amended Complaint and
Oral Motion to File a Third Amended Complaint
Under Rule 15(a) of the Federal Rules of Civil Procedure, “if the

pleading is one to which a responsive pleading is required, [a party may amend
8

within] 21 days after service of a responsive pleading or 21 days after service of a
motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed. R. Civ.
P. 15(a)(1)(B). “In all other cases, a party may amend its pleading only with the
opposing party’s written consent or the court’s leave. The court should freely give
leave when justice so requires.” Fed. R. Civ. P. 15(a)(2).
In considering whether to grant or deny leave to amend, the court
“may consider such factors as undue delay, bad faith or dilatory motive on the part
of the movant, . . . undue prejudice to the opposing party, and futility of
amendment.” In re Southmark Corp., 88 F.3d 311, 314–15 (5th Cir. 1996); see
also Jones v. Robinson Prop. Grp. L.P., 427 F.3d 987, 994 (5th Cir. 2005).
Plaintiff’s request to file a Third Amended Complaint mooted
Plaintiff’s Motion to File a Second Amended Complaint. Defendants did not
oppose Plaintiff’s request to file a Third Amended Complaint. The Court
GRANTED Plaintiff’s oral motion seeking leave to file a Third Amended
Complaint, and Plaintiff filed the Third Amended Complaint on February 4, 2014.
(Dkt. # 61.)
III.

Plaintiff’s Request for an Extension of Time to Respond to Schroeder
Defendants’ Alternative Motion to Sever
The Schroeder Defendants state that this Motion is moot because the

Schroeder Defendants Alternative Motion to Sever only was relevant if the Court
granted Plaintiff’s Motion to Remand. (See Dkt. # 53 at 3.) Because the Plaintiffs
9

have withdrawn the Motion to Remand, the Schroeder Defendants withdraw their
Alternative Motion to Sever, and therefore, Plaintiff’s Motion for an extension of
time to respond is also DENIED AS MOOT. (See id.)
IV.

Plaintiff’s Motion for an Extension of Time to Respond to Schroeder
Defendants’ Composite Motions
The Schroeder Defendants have withdrawn their composite motion,

therefore this request is DENIED AS MOOT.
V.

Plaintiff’s Request for Leave to File a Corrected Request for Preliminary and
Permanent Injunctive Relief
Plaintiff filed a request for injunctive relief (both temporary and

permanent) on May 21, 2013. (Dkt. # 13.) The Court denied that motion on May
22, 2013, because Plaintiff failed to comply with the procedural requirements set
forth in the Local Rules. (See Dkt. # 14.) Plaintiff now requests leave to file
another application for Preliminary and Permanent Injunctive Relief. (Dkt. # 50.)
The initial order denied Plaintiff’s Motion for Temporary and Permanent
Injunctive Relief without prejudice. (Id.) Therefore, the Court GRANTS
Plaintiff’s request for leave to refile.
VI.

Plaintiff’s Motion for Extension of Time to Respond to Martinez
Defendants’ Discovery Requests
This motion will be addressed as part of the discussion of Reba

Martinez’s Motion to Compel Responses to Written Discovery Requests
(Dkt. # 44).
10

VII. Plaintiff’s Motion for Extension of Time Respond to Pending Motions
Plaintiff seeks leave to respond to the Motion to Sever (Dkt. # 23), to
the Motion for Summary Judgment (Dkt. # 35), and to the Motion to Dismiss
(Dkt. # 35). Additionally, Plaintiff seeks to Extend the Amount of Time of the
Safe-Harbor Provision to allow Plaintiff to Respond to the Schroeder Defendants’
Motion for Sanctions (Dkt. # 47).
A number of these motions are already moot: the Motion to Sever has
been withdrawn, and the Court has already granted leave to Plaintiff to respond to
the Motion for Summary Judgment and to the Motion to Dismiss. The Motion to
Extend the Time of the Safe-Harbor Provision is addressed below in conjunction
with the Schroeder Defendants’ Motion for Sanctions (Dkt. # 47).
DOCKET # 32 RESPONSE TO ORDER TO OBTAIN COUNSEL
On September 26, 2013, Flynn filed a “Response to Order to Obtain
Counsel” stating that she was not in compliance with the Court’s September 9,
2013 Order requiring her to obtain counsel within fifteen days. (Dkt. # 32.) Flynn
alleged that she had attempted to find representation, but could not find an attorney
to take her case. She then argued that her previous counsel should not have named
Equine Colic Relief Company, Inc. as the Plaintiff because it is “without standing
to seek relief from Defendants[.]” (See Dkt. # 32 at 2.) Flynn continued, stating,
Equine Colic Relief Company, Inc. “has active status on paper, but it is an entity,
11

inactive, has no income, no meetings, it does not earn nor spend[,] has never
interacted in a [sic] Defendants, agreement nor had contact with Defendants. Nor
has it conducted business with Defendants in any manner nor form.” (See id.)
Additionally, in this Response, Plaintiff informally sought an
additional fifteen days to retain counsel.1 Plaintiff did eventually obtain counsel,
but not until December 11, 2013, far outside the time-limit prescribed by the Court.
Nonetheless, this request is now DENIED AS MOOT.
DOCKET # 37 PLAINTIFF’S MOTION TO JOIN ABSENTEE PLAINTIFF
AND MOTION TO DISJOIN FROM MISJOINED PLAINTIFFS
Flynn filed this motion, on behalf of Plaintiff, on November 19, 2013,
seeking to join herself as a plaintiff and remove Equine Colic Relief Company, Inc.
and Equine Colic Relief Company International from the suit.
However, at the time of filing of this motion, Plaintiff Equine Colic
Relief Company, Inc. had been without counsel in contravention of this Court’s
order. The Plaintiff, as a corporation, may not be represented in court by a nonattorney. This motion is DENIED.
DOCKET # 44 REBA MARTINEZ’S MOTION TO COMPEL RESPONSES
TO WRITTEN DISCOVERY REQUESTS
Reba Martinez moves separately to compel Plaintiff to respond to her
pending written discovery requests served on September 11, 2013. (Dkt. # 44).

1

The Court did not address this motion.
12

Reba Martinez asserts that Plaintiff’s response was due on October 14, 2013, but
Plaintiff has still failed to respond. Reba Martinez seeks an award of expenses
incurred in bringing this motion as provided for by Rule 37 of the Federal Rules of
Civil Procedure.
Reba Martinez served her First Set of Interrogatories and her First Set
of Requests for Production on Plaintiff on September 11, 2013.
(See Dkt. # 44 at 1.) She has yet to receive any response to either request. (Id.)
Reba Martinez asserts that she has filed this motion after numerous unsuccessful
attempts to obtain the discovery responses from Plaintiff on her own. (See id. at 2.)
Rule 37(5) of the Federal Rules of Civil Procedure provides that if a
motion to compel is granted, “the court must, after giving an opportunity to be
heard, require the party . . . whose conduct necessitated the motion, the party or
attorney advising that conduct, or both to pay the movant’s reasonable expenses
incurred in making the motion, including attorney’s fees.” Fed. R. Civ. P. 37(5).
However, Rule 37(5) also provides that the Court should not order this payment if
the opposing party’s actions were substantially justified or if other circumstances
would make expenses unjust. Id.
The Court hereby REFERS this motion to Magistrate Judge
Bemporad.
DOCKET # 46 MOTION BY MARTINEZ DEFENDANTS TO (1) JOIN
TARA FLYNN AS COUNTER-DEFENDANT; (2) MOTION TO JOIN
13

STOPS COLIC LLC AS COUNTER-PLAINTIFF; AND (3) MOTION FOR
LEAVE TO FILE SECOND AMENDED ANSWER, AFFIRMATIVE
DEFENSES, AND COUNTERCLAIMS
In June 2013, the Martinez Defendants filed their First Amended
Answer, Affirmative Defenses and Counterclaims against Equine Colic Relief
Company, Inc. (Dkt. # 17.)
I.

Martinez Defendants’ Motion to Join Tara Flynn as a Counter-Defendant
The Martinez Defendants seek to add Tara Flynn as counter-defendant

and argue this is proper because (1) she is already a counter-defendant in the
counterclaims asserted by the Schroeder Defendants (see Dkt. # 22); (2) Plaintiff
has already moved – albeit unsuccessfully because Flynn, as a non-attorney, is not
permitted to represent a corporation– to join Flynn as a Plaintiff; and (3) because
the Martinez Defendants’ counterclaims against Flynn arise out of the same
transaction and occurrence giving rise to the Martinez Defendants’ counterclaims
against Plaintiff. (See Dkt. # 46 at 3.)
Rule 20 of the Federal Rules of Civil Procedure provides that a person
may be joined as a defendant if “any question of law or fact common to all
defendants will arise in the action.” Further, Rule 20 is to be liberally construed.
Walker v. City of Houston, 341 F. Supp. 1124, 1132 (S.D. Tex. 1971).

14

However, in light of this Court’s grant of Plaintiff’s request to file a
Third Amended Complaint, this motion is DENIED WITHOUT PREJUDICE
AS MOOT.
II.

Martinez Defendants’ Motion to Join Stops Colic, LLC as Counter-Plaintiff
Under Rule 20 of the Federal Rules of Civil Procedure, one may join

in an action as a plaintiff if, “any question of law or fact common to all plaintiffs
will arise in the action.” Here, the Martinez Defendants assert that Stops Colic,
LLC is a Texas company owned by the Martinez Defendants. They contend that
this company produces a product that competes with Plaintiff’s, and therefore
should be properly added as a counter-plaintiff. Additionally, they argue that
Stops Colic, LLC’s claims against Plaintiff and Flynn arise out of the same
transaction and occurrence giving rise to the Martinez Defendants’ claims.
(Dkt. # 46 at 2–3.)
Because of the filing of the Third Amended Complaint, this motion is
DENIED WITHOUT PREJUDICE AS MOOT.
III.

Martinez Defendants’ Motion to Amend Answer
The Martinez Defendants seek to amend their answer to assert

allegations based on events occurring after the filing of their answer, principally
the use of statements about the Martinez Defendants on a website under the control
of Flynn. (See Dkt. # 46 at 3.)
15

Under Rule 15(a) of the Federal Rules of Civil Procedure, “if the
pleading is one to which a responsive pleading is required, [a party may amend
within] 21 days after service of a responsive pleading or 21 days after service of a
motion under Rule 12(b), (e), or (f), whichever is earlier.” Fed. R. Civ. P.
15(a)(1)(B). “In all other cases, a party may amend its pleading only with the
opposing party’s written consent or the court’s leave. The court should freely give
leave when justice so requires.” Fed. R. Civ. P. 15(a)(2).
Here, Plaintiff’s filing of the Third Amended Complaint renders this
motion MOOT. Therefore, the Court DENIES this motion WITHOUT
PREJUDICE.
DOCKET # 47 SCHROEDER DEFENDANTS’ MOTION FOR SANCTIONS
The Schroeder Defendants have moved for sanctions against Plaintiff
and its agent pursuant to Rule 11 of the Federal Rules of Civil Procedure. (See
Dkt. # 47.) The Schroeder Defendants contend that Plaintiff and its agent, Flynn,
knowingly filed false claims and false verifications in support of those claims,
against them. (Id.)
Federal courts do not have authority to sanction parties under Rule 11
of the Federal Rules of Civil Procedure for actions taken while a case was pending
in state court even if the case was later removed to federal court. Tompkins v. Cyr,
202 F.3d 770, 787 (5th Cir. 2000). However, a federal court may consider whether
16

sanctions would be applicable under Texas Rule of Civil Procedure 13 for filings
made in the Texas state court. Id. Texas Rule of Civil Procedure 13 provides
The signatures of attorneys or parties constitute a certificate by them
that they have read the pleading, motion or other paper; that to the
best of their knowledge, information, and belief formed after
reasonable inquiry the instrument is not groundless and brought in bad
faith or groundless and brought for the purpose of harassment. . . . If a
pleading, motion or other paper is signed in violation of this rule, the
court, upon motion or upon its own initiative, after notice and hearing,
shall impose an appropriate sanction available under Rule 215, upon
the person who signed it, a represented party, or both.
Courts shall presume that pleadings, motions, and other papers are
filed in good faith. No sanctions under this rule may be imposed
except for good cause, the particulars of which must be stated in the
sanction order. “Groundless” for purposes of this rule means no basis
in law or fact and not warranted by good faith argument for the
extension, modification, or reversal of existing law. . . .”
Tex. R. Civ. P. 13. “To determine if a pleading was groundless, the trial court uses
and objective standard: did the party and counsel make reasonable inquiry into the
legal and factual basis of the claim?” Harrison v. Harrison, 363 S.W.3d 859, 863
(Tex. App. 2012) (quoting In re United Servs. Auto. Ass’n, 76 S.W.3d 112, 116
(Tex. App. 2002) (internal quotation marks omitted)).
Texas courts presume that filings are undertaken in good faith, and the
moving party bears the burden of demonstrating otherwise. Dike v. Peltier
Chevrolet, Inc., 343 S.W.3d 179, 191 (Tex. App. 2011). Mere negligence by a
party or attorney is not enough to demonstrate bad faith. Shaw v. County of
Dallas, 251 S.W.3d 165, 171 (Tex. App. 2008). “[B]ad faith is not simply bad
17

judgment or negligence, but means the conscious doing of a wrong for dishonest,
discriminatory, or malicious purposes. Harrison v. Harrison, 363 S.W.3d 859, 863
(Tex. App. 2012); accord Dike, 343 S.W.3d at 191 (“Bad faith does not exist
when a party exercises bad judgment or negligence.”).
Here, Plaintiff’s Original Petition, filed in state court, listed claims
against the Schroeder Defendants and was verified by Flynn. Based on this
petition, Plaintiff obtained a temporary restraining order.
The Schroeder Defendants maintain that Plaintiff undertook the above
actions knowing the underlying claims against the Defendants were false and
meritless. The Schroeder Defendants argue that the Response Flynn filed in
federal court, on behalf of Plaintiff, (“Flynn’s Response” or “the Response”),
(Dkt. # 32), demonstrates that she knew the allegations in the Original Petition
were false.
In Flynn’s Response, she rhetorically questions why Equine Colic
Relief Company, Inc., was named as a Plaintiff in the suit because “it is an entity,
inactive, has no income, no meetings, it does not earn or spend has never interacted
in a [sic] Defendants, agreement nor had contact with Defendants. Nor has it
conducted business with Defendants in any manner nor form.” (Id. at 2.) This
statement is in direct contrast to the allegations in the Original Petition and
Amended Complaint, verified by Flynn, that the Plaintiff is an active company that
18

entered into a contract with the Schroeder defendants and that “Plaintiff is being
irreparably damaged by the Defendants’ actions.” (Dkt. # 1–3; Dkt. # 13.)
The Schroeder Defendants argue that because Flynn’s Response
admits that she knew the Plaintiff had no claims against the Schroeder Defendants,
her filing of the pleadings, attempts to obtain injunctive relief, and motion for
remand are sanctionable. Additionally, the Schroeder Defendants contend that
they have suffered monetary harm in defending against these false allegations.
(See Dkt. # 47.)
In response, Plaintiff asserts that the Flynn Response was filed by
Flynn without an attorney. (Dkt. # 52.) Plaintiff asserts that the Response is only
evidence of Flynn’s lack of comprehension of federal law and her attempt to
comply with the Court’s September 9, 2013 Order.2 However, Plaintiff has
presented no evidence to contradict the statements made in the Response or
counter the allegation that the Original Petition contained false statements.
Nonetheless, the Schroeder Defendants have not met their burden
under Rule 13 of the Texas Rules of Civil Procedure of demonstrating that
Plaintiff’s filings were made in bad faith; rather, the Court finds that the naming of
the wrong Plaintiff was, at most, negligence.

2

It should be noted that by filing the Response without an attorney, Flynn was
acting in direct contravention of the Court’s September 9, 2013 Order requiring
Plaintiff, as a corporation, to obtain counsel.
19

Although Flynn and her previous attorney did list the wrong Plaintiff
on the Complaint, the claims asserted were not clearly frivolous; they were simply
asserted on behalf of the wrong party. Given the closely intertwined nature of
Flynn and both Equine Colic Relief companies, the Complaint still gave notice to
Defendants of nature of the claims against which they would have to defend.
Therefore, the Court finds that Plaintiffs have not met their burden of
demonstrating Plaintiff’s filings were done in bad faith or were groundless in
violation of Texas Rule of Civil Procedure 13.
The Schroeder Defendants also argue they are entitled to sanctions for
Plaintiff’s and Flynn’s filing of the Amended Complaint (Dkt. # 13) in federal
court and their subsequent use of the Amended Complaint to support their Motion
for Remand (Dkt. # 19). Because these documents were filed in federal court, Rule
11 of the Federal Rules of Civil Procedure governs the availability of sanctions.
See Tompkins, 202 F.3d at 787.
The purpose of Rule 11 “is to deter baseless filings in district court.”
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). “Rule 11 imposes on
trial courts an objective standard of reasonableness under the circumstances.
Jennings v. Joshua Indep. Sch. Dist., 948 F.2d 194, 196 (5th Cir. 1991). The Fifth
Circuit instructs that “[t]he reasonableness of the conduct involved is to be viewed

20

at the time counsel or the party signed the document alleged to be the basis for the
Rule 11 violation.” Id.
Ultimately, the decision of whether to impose sanctions is within the
Court’s discretion. 61A Am. Jur. 2d Pleading § 585; Advisory Committee Notes
to 1993 Amendments to Fed. R. Civ. P. 11 (“The court has significant discretion in
determining what sanctions, if any, should be imposed for a violation.”). Sanctions
are appropriate where Plaintiff has “no basis in fact” for naming defendants in the
initial complaint. Sussman v. Salem, Saxon and Nielsen, P.A., 150 F.R.D. 209,
212 (M.D. Fla. 1993). In Jennings v. Joshua Indep. Sch. Dist., the Fifth Circuit
held that an appropriate Rule 11 sanctions for the filing of a frivolous complaint
was the attorney’s fees and costs incurred prior to dispositive motions being filed.
Id. Jennings, 948 F.2d at 197 (finding that Plaintiff and Plaintiff’s counsel failed to
conduct a reasonable inquiry into the facts prior to filing the lawsuit).
Rule 11 also creates a safe-harbor provision that requires a moving
party to serve a motion for sanctions on the other party twenty one days before to
filing it with the Court. Fed. R. Civ. P. 11(c)(2). This delay provides a party the
opportunity cure the sanctionable conduct. Id.
Plaintiff has sought an extension of the expired safe-harbor period that
expired on or around December 18, 2013. Plaintiff asks this Court to reopen the
safe-harbor provision to provide more time to cure the allegedly sanctionable
21

conduct. However, Plaintiff has provided no law indicating a Court may extend
the safe-harbor provision, and this Court has searched, but not found any cases in
which a court has extended the safe-harbor period. Therefore, the Court declines
to extend the safe-harbor provision here.
The Court finds that Plaintiff’s filings in federal court with the wrong
named-party amounts to negligence, but not bad faith. The allegations against the
defendants are not clearly frivolous. The Court finds that Rule 11 sanctions are not
appropriate at this time. The Court DENIES the Schroeder Defendants’ Motion
for Sanctions.
CONCLUSION
For the reasons stated above, the Court (1) GRANTS IN PART AND
DENIES IN PART Plaintiff’s Composite Motion (Dkt. # 50); (2) DENIES AS
MOOT Plaintiff’s Response to Order to Obtain Counsel and Motion for Extension
of Time (Dkt. # 32); (3) DENIES Plaintiff’s Motion to Join Absentee Plaintiff and
Motion to Disjoin from Misjoined Plaintiffs (Dkt. # 37); (4) REFERS Reba
Martinez’s Motion to Compel Responses to Written Discovery Requests to
Magistrate Judge Bemporad (Dkt. # 44); (5) DENIES WITHOUT PREJUDICE
AS MOOT the Martinez Defendants’ Motion to Join Counter-Plaintiff and
Counter-Defendant and to File a Second Amended Answer (Dkt. # 46); and (6)
DENIES the Schroeder Defendants’ Motion for Sanctions (Dkt. # 47).
22

Additionally, the Court GRANTS the Martinez Defendants’ Motion
(Dkt. # 56) withdrawing their Motion for Summary Judgment (Dkt. # 42). The
Court GRANTS Plaintiff’s request to withdraw its Motion for Remand (Dkt.
# 19). The Court GRANTS the Schroeder Defendants’ Motion (Dkt. # 58)
withdrawing their Composite Motions (Dkt. # 35). The Court also finds that the
Schroeder Defendants’ Motion to Sever, (Dkt. # 23) is now MOOT.
Additionally, in light of Plaintiff’s counsel’s recent appearance in this
case, and the complexity of the prior proceedings, the Court ORDERS that all
scheduling order deadlines shall be extended by 120 days.
IT IS SO ORDERED.
DATED: San Antonio, Texas, March 4, 2014.

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