In re San Juan Dupont Plaza Hotel Fire Litigation

142 F.R.D. 41, 1992 U.S. Dist. LEXIS 3713, 1992 WL 61659
CourtDistrict Court, D. Puerto Rico
DecidedMarch 18, 1992
DocketNo. MDL-721
StatusPublished
Cited by10 cases

This text of 142 F.R.D. 41 (In re San Juan Dupont Plaza Hotel Fire Litigation) is published on Counsel Stack Legal Research, covering District Court, D. Puerto Rico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re San Juan Dupont Plaza Hotel Fire Litigation, 142 F.R.D. 41, 1992 U.S. Dist. LEXIS 3713, 1992 WL 61659 (prd 1992).

Opinion

ORDER NO. 449 IN THE MATTER OF JOHNSON CONTROLS’ MOTION FOR ATTORNEYS’ FEES AND BILL OF COSTS

ACOSTA, District Judge.

Before the Court are several motions filed by Johnson Controls, Inc. for an Award of Attorneys’ Fees Under Puerto Rico Rule 44.1(d) or, in the Alternative, Under Fed.R.Civ.P. 11 and 28 U.S.C. § 1927 (docket No. 15821), filed on October 25, 19901 and Bill of Costs (docket No. 15709), filed on October 9, 1992.2

Defendant alleges that the PSC engaged in obstinate conduct to justify the award of attorney fees under Rule 44.1(d) Puerto Rico R.Civ.P. and that such conduct was sufficiently vexatious to support the award of sanctions pursuant to Rule 11 of the Fed.R.Civ.P. and 28 U.S.C. § 1927.

In addition, defendant argues that it is entitled to reimbursement of costs necessarily incurred during its defense pursuant to Rule 54(d) of the Fed.R.Civ.P. and Local Rule 331.

After a review of the submissions, the Court finds the following:

I. BACKGROUND

Johnson Controls, Inc., a defendant in the Phase II Trial,3 supplied a Power Per-[44]*44feet 5000 energy management system to the San Juan Dupont Plaza Hotel (Hotel) during 1981. According to defendant's motion, the system was in fact a computer which was designed to assist in the management of the Hotel’s ventilation and air conditioning units by turning the equipment on and off according to a pre-set schedule. The PSC alleged that Johnson Controls was liable under the theories of negligence and/or strict liability.4 All claims against Johnson Controls were dismissed pursuant to Rule 50 motions filed at the completion of the plaintiffs’ case-in-chief.5

II. ATTORNEYS’ FEES

Rule 44.1(d) of the Puerto Rico R.Civ.P.; Rule 11 of the Fed.R.Civ.P.; and, 28 U.S.C. § 1927

The determination of whether a party was obstinate lies within the sound discretion of the Court and is dependent upon the particular facts of each case, de León López v. Corporación Insular de Seguros, 742 F.Supp. 44, 48 (D.P.R.1990), affd on other grounds, 931 F.2d 116 (1st Cir.1991); Reyes v. Banco Santander De P.R., N.A., 583 F.Supp. 1444, 1445 (D.P.R. 1984). A finding of obstinacy leading to the award of attorney fees pursuant to Rule 44.1(d)6 is not considered an entitlement to the prevailing party but a penalty to those parties whose litigation practices result in “unreasonable pertinaciousness.” Reyes, 583 F.Supp. at 1446. Obstinacy is defined as:

... an attitude which casts its shadow over the proceeding and which affects the sound operation and administration of justice. It also subjects the innocent litigant to the ordeal of the judicial process and unnecessary costs, and to retainment of professional services, including attorneys, with the usually exorbitant burden to his pocket.

Fernandez Marino v. San Juan Cement Co., 118 D.P.R. 713, 718 (1987), citing, H. Sánchez, Rebelde Sin Costas, IV-2 Boletín Judicial 14. Likewise, the purpose of Rule 117 is to discourage “dilatory and abusive litigation and to streamline the litigation process by lessening frivolous claims ...” Cruz v. Savage, 896 F.2d 626, 630 (1st Cir.1990). This provision requires that an attorney takes care to ensure that prior to pursuing a claim, it is well-grounded in law and fact. In order to determine whether an attorney is in compliance with Rule 11, the Court shall apply an objective standard of reasonableness under the circumstances. Muthig v. Brant Point Nantucket, Inc., 838 F.2d 600, 604-05 (1st Cir.1988); Kale v. Combined Ins. Co. of America, 861 F.2d 746, 756-57 (1st Cir.1988). The First Circuit has cautioned against using hindsight; the Court should view and evaluate an attorney’s conduct on the basis of what was reasonable at the time of the behavior in question. Cruz, 896 F.2d at 631.

Attorney’s actions considered “unreasonable and vexatious” so as to multiply [45]*45the proceedings are sanctionable under 28 U.S.C. § 1927.8 While a finding of bad faith always supports sanctions pursuant to § 1927, it is not necessary that subjective bad faith be found prior to the imposition of sanctions, i.e. that the harassing and annoying conduct was intended. On the other hand, sanctionable vexatious behavior requires that the conduct be more severe than mere negligence, inadvertence or incompetence. Cruz, 896 F.2d at 631— 32.

DISCUSSION

Johnson Controls alleges that the PSC pursued claims against them which were not supported by fact or law and which resulted in years of expensive litigation amounting to harassment and multiplication of proceedings. Defendant contends that the PSC knew or should have known that their claims were baseless and, that rather than voluntarily dismissing them, the PSC chose to aggressively pursue settlement which, according to defendants, amounted to “extortion.”9 Although the Court found that the evidence presented at trial was not sufficient to support a finding of liability by the jury and consequently, dismissed the action pursuant to Rule 50, the Court does not find that the PSC’s conduct in pursuing its claim was entirely baseless or attributable to bad faith and, therefore, deserving of an imposition of sanctions.

Significant facts were developed to support plaintiffs’ contentions. The PSC had grouped this defendant with other HVAC defendants which included various product manufacturers and distributors whose products were comprised of the Hotel’s air handling unit. The evidence supported that the design of the HYAC unit was instrumental in the spread of smoke and toxic gases throughout the Hotel during the fire thereby causing injuries to the Hotel guests.10

In addition, plaintiffs presented a rebuttal witness who testified that the product sold to the Hotel by defendant was adaptable as a “fire management” system;11 that defendants were contracted to train Hotel employees as well as start-up of the system; 12 and, although the Hotel personnel were responsible for the actual installation of the computer, each hook-up site was reviewed by Johnson Controls personnel.13

Furthermore, the PSC was not aware that the Court was going to preclude the testimony of expert witness, J.

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Bluebook (online)
142 F.R.D. 41, 1992 U.S. Dist. LEXIS 3713, 1992 WL 61659, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-san-juan-dupont-plaza-hotel-fire-litigation-prd-1992.