Stearns v. Stearns

Opinion

5 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 6 AT SEATTLE 7 8 EDWIN B. STEARNS, JR., Case No. C22-1579RSL

9 Plaintiff, ORDER DISMISSING 10 v. DEFENDANT’S MOTION FOR AWARD OF 11 KATHERINE R. STEARNS, et al., ATTORNEY’S FEES AND 12 COSTS Defendant.

14 This matter comes before the Court on defendant’s “Motion for Award of Attorney’s 15 Fees and Costs” (Dkt. # 33). The Court, having reviewed the submissions of the parties and the 16 remainder of the record, finds as follows: 17 On December 21, 2022 this Court issued an Order to Show Cause, raising the issue of 18 subject matter jurisdiction sua sponte. Dkt. # 13. In his response, plaintiff conceded that 19 diversity jurisdiction did not exist and asserted that federal question jurisdiction existed under 20 “the tort of conversion,” “the Securities Exchange Act of 1934,” and 12 U.S.C. § 66. Id. at 3. 21 The Court found plaintiff had failed to identify a basis for federal question jurisdiction and 22 dismissed plaintiff’s complaint for lack of subject matter jurisdiction. Dkt. # 28 at 4. However, 23 the Court provided plaintiff with thirty (30) days from the filing of the Order of Dismissal to file 24 an amended complaint curing the deficiencies identified in the Order. Id. 25 Plaintiff did not file an amended complaint and the Court found that the facts as pleaded 26 did not give rise to jurisdiction, and no amendment would cure this deficiency. Dkt. # 31 at 2. 27 Accordingly, after providing the plaintiff with two opportunities to demonstrate subject matter 28 1 jurisdiction, the Court dismissed plaintiff’s Amended Complaint for lack of subject matter 2 jurisdiction without leave to amend. Id. 3 Defendant Katherine Stearns now seeks an award of attorney’s fees and costs associated 4 with defending against plaintiff’s lawsuit. Dkt. # 33 at 1. Defendant argues that she is entitled to 5 reasonable attorney’s fees under Federal Rule of Civil Procedure 54(d)(2) because plaintiff’s 6 lawsuit was frivolous and advanced without reasonable cause. Id. at 4. Defendant contends that 7 both RCW 4.84.185 and Federal Rule of Civil Procedure 11 entitle her to an award of attorney’s 8 fees. Id. at 5. She seeks a total of $9,427.77. Dkt. # 36 at 5. 9 Plaintiff objects to any award of attorney’s fees, arguing that defendant did not file an 10 answer in response to plaintiff’s complaint or actively participate in the lawsuit, nor did 11 defendant’s counsel adequately communicate with plaintiff or act in good faith. Dkt. # 35 at 4. 12 A. Federal Courts’ Limited Jurisdiction 13 As a preliminary matter, the Court must determine whether it has jurisdiction to rule on 14 defendant’s motion for attorney’s fees after having dismissed plaintiff’s claims for lack of 15 subject matter jurisdiction. Federal courts have limited jurisdiction and “possess only that power 16 authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 17 375, 377 (1994). District courts should presume “that a cause lies outside this limited 18 jurisdiction, and the burden of establishing the contrary rests upon the party asserting 19 jurisdiction.” Id. 20 Moreover, “[u]nder Ninth Circuit precedent, a court that has dismissed a case for lack of 21 subject matter jurisdiction generally has no jurisdiction to award attorneys’ fees.” Russell City 22 Energy Co., LLC v. City of Hayward, No. C14-3102JSW-DMR, 2015 WL 983858, at *2 (N.D. 23 Cal. Feb. 17, 2015) (collecting cases). “A court that lacks jurisdiction at the outset of a case 24 lacks the authority to award attorney’s fees.” Skaff v. Meridien N. Am. Beverly Hills, LLC, 506 25 F.3d 832, 837 (9th Cir. 2007). 26 The Ninth Circuit utilizes a “two-part test for analyzing whether a district court can 27 award attorneys’ fees when the underlying action is dismissed for lack of subject matter 28 1 jurisdiction.” Amphastar Pharms. Inc. v. Aventis Pharma SA, 856 F.3d 696, 709 (9th Cir. 2017). 2 First, the court asks whether the fee-shifting statute under which a party seeks attorney’s fees 3 contains an independent grant of subject matter jurisdiction. Id. In deciding whether a statute 4 contains an independent grant of jurisdiction, courts must “look[] at the text and structure of the 5 statute.” Id. at 710. Second, the court asks whether the winning party “prevailed.” Id. A party 6 does not have to obtain a favorable ruling on the merits to be considered a “prevailing party.” Id. 7 (citing CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S. 419 (2016)). 8 Here, defendant argues that the Court may award attorney’s fees under Federal Rule of 9 Civil Procedure 11 and a Washington statute, RCW § 4.84.185. Dkt. # 33 at 5. The Court 10 addresses each proffered basis for attorney’s fees below. 11 B. Federal Rule of Civil Procedure 11 12 Defendant contends that Federal Rule of Civil Procedure 11 (“Rule 11”) entitles her to an 13 award of attorney’s fees. Dkt. # 33 at 5. Rule 11 states that if, “after notice and a reasonable 14 opportunity to respond, the court determines that Rule 11(b)1 has been violated, the court may 15 16 1 Rule 11(b), in turn, states that: 17 By presenting to the court a pleading, written motion, or other paper—whether by 18 signing, filing, submitting, or later advocating it—an attorney or unrepresented party certifies that to the best of the person’s knowledge, information, and belief, 19 formed after an inquiry reasonable under the circumstances: 20 (1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation; 21 (2) the claims, defenses, and other legal contentions are warranted by existing law 22 or by a nonfrivolous argument for extending, modifying, or reversing existing law 23 or for establishing new law; (3) the factual contentions have evidentiary support or, if specifically so 24 identified, will likely have evidentiary support after a reasonable opportunity for 25 further investigation or discovery; and 26 (4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information. 27 Fed. R. Civ. P. 11(b). 28 1 impose an appropriate sanction on any attorney, law firm, or party that violated the rule.” Fed. 2 R. Civ. P. 11(c)(1). A district court “has the power to impose sanctions [under Rule 11] after it 3 has determined that it has no subject matter jurisdiction.” Kloberdanz v. Martin, 203 F.3d 831, 4 832 (9th Cir. 1999) (citing Willy v. Coastal Corp., 503 U.S. 131, 137-38 (1992)). However, Rule 5 11 requires parties to make a motion for sanctions “separately from any other motion” and, 6 within this motion, to describe “the specific conduct that allegedly violates Rule 11(b).” Fed. R. 7 Civ. P. 11(c)(2). Rule 11’s safe harbor provision also requires the motion to “be served under 8 Rule 5, but it must not be filed or be presented to the court if the challenged paper, claim, 9 defense, contention, or denial is withdrawn or appropriately corrected within 21 days after 10 service or within another time the court sets.” Id. Here, there is no indication that defendant 11 complied with the safe harbor provision, nor did defendant move separately for sanctions under 12 Rule 11. See Dkt. #33 at 5. ‘[T]he procedural requirements of Rule 11[(c)(2)]’s ‘safe harbor’ are 13 mandatory.’” Radcliffe v. Rainbow Constr. Co., 254 F.3d 772, 789 (9th Cir. 2001) (quoting 14 Barber v. Miller, 146 F.3d 707, 710-11 (9th Cir. 1998)). Because defendant has not complied 15 with the procedure set out in the rule, she is precluded from seeking sanctions under Rule 11. 16 See id. at 789 (reversing district court’s grant of Rule 11 sanctions where the moving party 17 failed to comply Rule 1 l(c)(2)’s safe harbor provision); see also Holgate v. Baldwin, 425 F.3d 18 671, 678 (9th Cir. 2005) (“We must reverse the award of sanctions when the . . . [moving] party 19 failed to comply with the safe harbor provisions, even when the underlying filing is frivolous.”). 20 C. RCW § 4.84.185 21 Defendant also contends that RCW § 4.84.185 entitles her to an award of attorney’s fees. 22 Dkt. # 33 at 5. Per Amphastar, the Court must first determine whether the statute contains an 23 independent grant of subject matter jurisdiction. In California Ass’n of Physically Handicapped, 24 Inc. v. FCC, the Ninth Circuit found an independent grant of jurisdiction in § 505(b) of the 25 Rehabilitation Act. 721 F.2d 667, 671 (9th Cir.1983). The court in that case relied on the 26 congressional intent behind the statute, noting that it was meant “to authorize civil suits in 27 federal court solely to obtain an award of attorneys’ fees for legal work done in administrative 28 1 proceedings.” Id. Conversely, in Latch v. United States, the Ninth Circuit did not find an 2 independent grant of jurisdiction in 26 U.S.C. § 7430, which allowed attorney’s fees only in 3 “civil proceeding[s] . . . brought . . . in connection with the determination, collection, or refund 4 of any tax . . . and brought in a court of the United States.” 842 F.2d 1031, 1033 (9th Cir. 1988) 5 (quoting 26 U.S.C. § 7430(a)). The district court in Archer v. Silver State Helicopters, LLC 6 applied this body of law to several state statutes— California Code of Civil Procedure § 1021, 7 California Civil Code § 1717, and Nevada Revised Statute 18.010—and found that none 8 contained an independent grant of subject matter jurisdiction. No. C06-1229JAH-RBB, 2007 9 WL 4258237, at *2 (S.D. Cal. Dec. 3, 2007). 10 Here, RCW § 4.84.185 provides that: 11 In any civil action, the court having jurisdiction may, upon written findings by the judge that the action, counterclaim, cross-claim, third party claim, or 12 defense was frivolous and advanced without reasonable cause, require the 13 nonprevailing party to pay the prevailing party the reasonable expenses, including fees of attorneys, incurred in opposing such action, counterclaim, 14 cross-claim, third party claim, or defense. This determination shall be made 15 upon motion by the prevailing party after a voluntary or involuntary order of dismissal, order on summary judgment, final judgment after trial, or 16 other final order terminating the action as to the prevailing party. The judge 17 shall consider all evidence presented at the time of the motion to determine whether the position of the nonprevailing party was frivolous and advanced 18 without reasonable cause. In no event may such motion be filed more than 19 thirty days after entry of the order. 20 Defendant provides no authority to support construing this statute as containing an independent 21 grant of subject matter jurisdiction.2 Moreover, nothing in the language of the RCW suggests 22 that it was meant to provide an independent basis for federal court jurisdiction on the issue of 23 attorney’s fees. Fundamentally, if this Court lacks jurisdiction to hear claims brought under 24 Washington law, it also lacks jurisdiction to entertain a request for fees pursuant to state law. 25 See Avery v. First Resol. Mgmt. Corp., 568 F.3d 1018, 1023 (9th Cir. 2009) (explaining that 26 2 Indeed, the statute specifically notes that only a court “having jurisdiction” may authorize 27 attorney’s fees. See RCW § 4.84.185. 28 1 “state law controls entitlement to attorney’s fees if the district court exercises subject matter 2 jurisdiction over a state law claim” (citing MRO Commc’ns, Inc. v. Am. Tel. & Tel. Co., 197 3 F.3d 1276, 1281 (9th Cir. 1999)). “Outside of the exercise of valid diversity jurisdiction, state 4 laws have no bearing upon the authority of federal courts, and therefore cannot bestow fee- 5 shifting power.” S.-Owners Ins. Co. v. Tomac of Fla., Inc., 687 F. Supp. 2d 665, 667-68 (S.D. 6 Tex. 2010) (citing 28 U.S.C. § 1652). The Court joins with other district courts in the Ninth 7 Circuit and concludes that it lacks authority to award attorney fees under state law in this case. 8 See, e.g., Archer, 2007 WL 4258237, at *2; Nina Oshana Separate Prop. Tr., dated Sept. 16, 9 2015 v. Bank of Am., N.A., No. C17-2408WQH-RBB, 2019 WL 2436558, at *2 (S.D. Cal. June 10 11, 2019); Doan v. Singh, No. C13-531LJO, 2013 WL 5718720, at *3-4 (E.D. Cal. Oct. 18, 11 2013); Skaaning v. Sorensen, 679 F. Supp. 2d 1220 (D. Haw. 2010); Willow Farms, LLC v. 12 Awcc Wcw Holdings, LLC, No. C15-1862BR, 2016 WL 4150749 (D. Or. Aug. 2, 2016).3 13 D. Conclusion 14 “Ordinarily, the appropriate disposition of a motion for attorneys’ fees when the court 15 lacked jurisdiction from the outset of an action is not denial of the motion . . . but dismissal of 16 the motion for lack of jurisdiction.” Skaff, 506 F.3d at 837 n.2. Because this Court lacks 17 jurisdiction, defendants’ motion for attorney’s fees is not denied but is DISMISSED for lack of 18 jurisdiction. 19 IT IS SO ORDERED. 20 21 22 3 Although not raised by the parties, the Court notes that while the Ninth Circuit’s decision in Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 887 (9th Cir. 2000) appears contrary to the 23 Ninth Circuit’s later statement in Skaff, “district courts have routinely declined to follow Kona Enterprises either because that case is distinguishable because the jurisdictional problem [in Kona 24 Enterprises] was cured by amendment . . . or because the court has found Kona Enterprises to not be 25 binding authority because it is contrary to prior established precedent as well as subsequent Ninth Circuit case law.” Van v. LLR, Inc., No. C18-197HRH, 2019 WL 1966088, at *2 (D. Alaska May 2, 26 2019) (citations omitted) (collecting cases). This court too declines to follow Kona Enterprises and instead follows Skaff and the cases cited therein that hold that when the court lacks subject matter 27 jurisdiction of a case at the outset, it lacks authority to award attorney’s fees. Id. 28 1 2 DATED this 1st day of May, 2023. 3 4 A

5 Robert S. Lasnik 6 United States District Judge 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28