Hamil v. Mobex Managed Services Co.

208 F.R.D. 247, 53 Fed. R. Serv. 3d 113, 2002 U.S. Dist. LEXIS 10995, 2002 WL 1289901
CourtDistrict Court, N.D. Indiana
DecidedJune 11, 2002
DocketNo. 1:01-CV-366
StatusPublished
Cited by4 cases

This text of 208 F.R.D. 247 (Hamil v. Mobex Managed Services Co.) is published on Counsel Stack Legal Research, covering District Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Hamil v. Mobex Managed Services Co., 208 F.R.D. 247, 53 Fed. R. Serv. 3d 113, 2002 U.S. Dist. LEXIS 10995, 2002 WL 1289901 (N.D. Ind. 2002).

Opinion

MEMORANDUM OF DECISION AND ORDER

WILLIAM C. LEE, Chief Judge.

Currently before the Court is a motion for sanctions filed by the defendants in this case, Mobex Managed Services Company and Mo-bex Communications, Inc. (hereinafter, “MMSC” collectively) on May 7,2002. Plaintiffs in this case, Kevin Hamil (“Hamil”) and Mark Jones (“Jones”), filed a response to the motion for sanctions on May 22, 2002, to which MMSC replied in support of its pending motion on June 5, 2002. For the following reasons, MMSC’s motion for sanctions will be DENIED.

[249]*249FACTUAL AND PROCEDURAL HISTORY

Hamil and Jones filed a lawsuit against MMSC on October 10, 2001, alleging that MMSC breached Plaintiffs’ employment contracts. On October 29, 2001, MMSC filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction arguing that MMSC and the Plaintiffs were all residents of Indiana, thereby destroying diversity of citizenship. Plaintiffs responded to MMSC’s motion to dismiss on November 13, 2001. In their response, Plaintiffs argued that this Court could properly assert subject matter jurisdiction because MMSC’s principal place of business was not in Fort Wayne, Indiana, but rather Washington, D.C. In support of their response, Plaintiffs filed the Affidavits of Kevin Hamil and Mark Jones. On November 26, 2001, MMSC filed a Reply Memorandum in Support of its Motion to Dismiss.

This Court entered its original Memorandum of Decision and Order on December 10, 2001. Due to conflicting affidavit testimony regarding MMSC’s principal place of business, the Court took the matter of subject matter jurisdiction under advisement and directed that the parties submit supplemental briefs on the issue within thirty (30) days.

In response to the Court’s December 10, 2001 order, MMSC filed a Supplemental Memorandum and Appendix in further support of its motion to dismiss. Plaintiffs chose not to respond to this Court’s request for additional information. Moreover, Plaintiffs made no effort to clarify or correct their previously submitted affidavit testimony.

On February 12, 2002, this Court entered its second Memorandum of Decision and Order granting MMSC’s motion to dismiss and finding that Fort Wayne, Indiana was indeed MMSC’s principal place of business. In making that determination, this Court found claims made by the Plaintiffs in their supporting affidavits to be “not credible” and, in certain instances, to have been directly contradicted by the evidence.

On April 11, 2002, MMSC moved, by counsel, that Plaintiffs be sanctioned in the amount of $8382.00 for submitting affidavits to this Court that contained factual allegations contradicted by the evidentiary record. MMSC claimed that such an award of sanctions would compensate MMSC for the costs it incurred in preparing its Reply Memorandum, Supplemental Memorandum, and three supporting affidavits. MMSC withdrew its first motion for sanctions on April 16, 2002, but filed the Renewed Motion for Sanctions now before this Court on May 7, 2002.

DISCUSSION

I. Rule 11 Sanctions

MMSC first argues that Plaintiffs should be sanctioned under Rule 11 of the Federal Rules of Civil Procedure. Rule 11 requires that pleadings filed with the Court be reasonably based on the law and not meant to harass, cause unnecessary delay, or needlessly increase the costs of litigation. See Fed. R.Civ.P. 11. In pertinent part, Rule 11 states:

By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney ... is certifying that to the best of the person’s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, — (1) it is not being presented for any improper purpose ...; (2) the claims, defenses, and other legal contentions therein are warranted by existing law or the establishment of new law; ... (3) the allegations and other factual contentions have eviden-tiary support----

Fed.R.Civ.P. 11. Litigants who violate Rule 11 are liable for sanctions, including reasonable attorneys’ fees. See Fed.R.Civ.P. 11.

Here, MMSC argues that Plaintiffs’ conduct in this case violates Rule 11. MMSC states, “Even if Plaintiffs reasonably believed that there was an adequate factual basis for initially raising their claims in this Court, after MMSC’s Motion to Dismiss, it was apparent that Plaintiffs’ position was not well-grounded in fact or warranted by existing law. Rather than voluntarily dismissing the case at that time, Plaintiffs filed affidavits that were ‘not credible,’ a fact recognized by this Court in its February 12, 2002 Or-der____” Memorandum in Support of Defen[250]*250dant’s Renewed Motion for Sanctions at 4. Indeed, this Court was dismayed by the fact that Plaintiffs declined to correct or clarify the affidavits they first submitted in opposing the motion to dismiss, especially where Plaintiffs’ affidavit testimony was contradicted by the evidence. Nevertheless, the Court does not believe that an award of sanctions is appropriate in this case because MMSC has failed to abide by the procedural requirements for bringing a motion for Rule 11 sanctions.

A. Safe Harbor Provision

Rule 11 provides that a motion for sanctions “shall not be filed with or presented to the court unless, within twenty-one (21) days after service of the motion (or such other period as the court might prescribe), the challenged paper, claim, defense, condition, allegation or denial is not withdrawn or appropriately corrected.” Thus, Rule 11 contains a “safe-harbor provision” whereby parties seeking to file a motion for sanctions must give the opposing party twenty-one (21) days to correct the offending document before actually seeking sanctions before the court.

Several courts have addressed the issue of whether the safe-harbor provision applies in cases such as the one now before the court, where the motion for sanctions is filed after judgment has been rendered. Plaintiffs cite Ridder v. City of Springfield, 109 F.3d 288, 296-97 (6th Cir.1997) for the proposition that the safe-harbor provision of Rule 11 precludes an award of sanctions after the matter has been judicially disposed. The Ridder court reasoned that because the offending party cannot have any opportunity to correct the challenged paper if the court has already rendered judgment, the safe harbor provision would be meaningless if motions for sanctions could be filed after judgment. Because the Sixth Circuit believed that the safe harbor provision must always be followed, it held that no Rule 11 sanctions may be awarded post-judgment. See id.

However, as MMSC argues, the Seventh Circuit Court of Appeals expressly declined to adopt the rule set forth in Ridder. In Divane v. Krull Electric Co., Inc.,

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208 F.R.D. 247, 53 Fed. R. Serv. 3d 113, 2002 U.S. Dist. LEXIS 10995, 2002 WL 1289901, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hamil-v-mobex-managed-services-co-innd-2002.