Brignoli v. Balch, Hardy & Scheinman, Inc.

126 F.R.D. 462, 1989 U.S. Dist. LEXIS 6001, 1989 WL 69514
CourtDistrict Court, S.D. New York
DecidedMay 31, 1989
DocketNo. 86 Civ. 4103 (RWS)
StatusPublished
Cited by10 cases

This text of 126 F.R.D. 462 (Brignoli v. Balch, Hardy & Scheinman, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brignoli v. Balch, Hardy & Scheinman, Inc., 126 F.R.D. 462, 1989 U.S. Dist. LEXIS 6001, 1989 WL 69514 (S.D.N.Y. 1989).

Opinion

OPINION

SWEET, District Judge.

Defendant Balch Hardy & Scheinman, Inc. (“BHS”) has moved pursuant to Rule 11 of the Federal Rules of Civil Procedure, 28 U.S.C. § 1927, and § 487 of New York State Judiciary Law to impose sanctions against plaintiff Richard J. Brignoli (“Brignoli”) and his prior counsel Arie E. David (“David”). Brignoli and David have moved for sanctions under Rule 11 against BHS, BHS’s former attorneys Charlotte M. Fischman (“Fischman”) of Kramer, Levin, Nessen, Kamin & Frankel (“Kramer Levin”) and BHS’s current attorneys, John F. Triggs (“Triggs”) of Jacobson and Triggs, or in the alternative, to refer all matters to a formal judicial investigation under Rule [464]*4644(k) of the Local Rules of this court. For the reasons set forth below, BHS’s motion is granted in part and denied in part, and Brignoli’s and David’s motion is denied. Prior Proceedings

In an opinion dated September 30, 1986, Brignoli v. Balch Hardy and Scheinman, Inc., 645 F.Supp. 1201 (S.D.N.Y.1986), BHS’s motion to dismiss Brignoli’s complaint for failure to state a cause of action was granted as to Claims Three, Five and Seven, and denied as to Claims One, Two, Four and Six. BHS’s motion for sanctions was denied. In an opinion dated on October 3, 1988, this court granted BHS’s motion to dismiss Brignoli’s complaint for lack of subject matter jurisdiction on the grounds that there was no diversity of citizenship between the parties. Brignoli’s motion for sanctions was denied. Brignoli v. Balch Hardy and Scheinman, Inc., 696 F.Supp. 37 (S.D.N.Y.1988) (the “October Opinion”). Familiarity with these opinions is assumed.

Rule 11

Rule 11 provides:

The signature of an attorney or party constitutes a certificate by the signer that the signer has read the pleading, motion, or other paper; that to the best of the signer’s knowledge, information and belief formed after reasonable inquiry it is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law, and that it is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

Fed.R.Civ.P. 11. In applying Rule 11, courts must assess whether an attorney’s conduct was objectively reasonable as of the time he or she signed the pleading, motion, or other paper. See Calloway v. Marvel Entertainment Group, 854 F.2d 1452, 1469-70 (2d Cir.1988), cert. granted, — U.S.-, 109 S.Ct. 1116, 103 L.Ed.2d 179 (1989); International Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d 388 (2d Cir.1989); Eastway Constr. Corp. v. City of New York, 762 F.2d 243, 253-54 (2d Cir.1985), cert. denied, 484 U.S. 918, 108 S.Ct. 269, 98 L.Ed.2d 226 (1987); Oliveri v. Thompson, 803 F.2d 1265, 1274-75 (2d Cir. 1986), cert. denied, 480 U.S. 918, 107 S.Ct. 1373, 94 L.Ed.2d 689 (1987).

28 U.S.C. § 1927

28 U.S.C. § 1927 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 as to increase costs unreasonably and vexatiously may be required by the court to satisfy personally such excess costs.

The purpose of the statute is “to deter unnecessary delays in litigation.” H.R. Conf.Rep. No. 1234, 96th Cong., 2d Sess. 8, reprinted in 1980 U.S.Code Cong. & Ad. News, 2716, 2782, cited in Oliveri v. Thompson, 803 F.2d at 1273. Furthermore, “an award made under § 1927 must be supported by a finding of bad faith____” Oliveri at 1273.

Diversity Jurisdiction

BHS’s primary ground for its motion for sanctions is that Brignoli and his attorneys wilfully misstated Brignoli’s residence for the purpose of purporting to invoke this Court’s jurisdiction based upon diversity citizenship, that Brignoli signed documents, including affidavits and deposition transcripts, in which he swore to facts about his place of residence which he knew were false, and that David signed pleadings which based jurisdiction upon diversity even though he knew that Brignoli was not a Connecticut resident.

In the October Opinion, this court dismissed the Complaint for lack of subject matter jurisdiction, holding that Brignoli failed to establish his intent to be domiciled in Connecticut. One among many of the factors leading to this result was that certain documents, including portions of Brignoli’s New York State tax returns that would have enabled BHS to determine whether Brignoli filed as a New York resident or as a non-resident, were not produced despite four separate directions by the court. On May 27, at the oral argument of the motion to dismiss, Brignoli was given [465]*465one more week to produce New York State tax returns, but again, no New York State tax returns were produced. The failure to produce the returns gave rise to an unfavorable inference, which ultimately turned out to be the fact, namely, that Brignoli had filed his state tax returns as a New York resident.

According to David and attorneys in his office, they “believed” that the New York State returns had been sent to BHS’s attorneys as early as February, 1988, and if they were not, the failure to produce the returns was unintentional. Moreover, they contend that a discovery conference was scheduled for May 6, 1988 at which they would have produced the New York tax returns. However, the conference was cancelled by Fischman, BHS’s attorney.

In support of its motion for sanctions, BHS has submitted an affidavit by Brignoli’s former accountant, Robert Wishnew (“Wishnew”). Wishnew states that he prepared Brignoli’s 1985 and 1986 New York State resident tax returns and gave the original and one copy of each to Brignoli to sign and file. In the late spring or early summer of 1986, Wishnew claims, David asked him to change Brignoli’s address on his New York and federal tax returns to reflect a Connecticut address. Wishnew performed the change. In mid to late December 1987, Wishnew says that David called him and said that the 1985 and 1986 New York State tax returns were incorrect and Brignoli should have filed as a non-resident of the State of New York. David and Wishnew discussed Brignoli’s residence, but Wishnew refused to prepare amended returns declaring Brignoli a non-resident of the State of New York.

David claims that Wishnew’s affidavit is false, and states that Brignoli himself told Wishnew, in David’s presence, that he was a Connecticut resident. David also denies asking Wishnew to prepare amended returns.

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Bluebook (online)
126 F.R.D. 462, 1989 U.S. Dist. LEXIS 6001, 1989 WL 69514, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brignoli-v-balch-hardy-scheinman-inc-nysd-1989.