Thomas Land & Development, LLC v. Vratsinas Construction Company

• Court: District Court, S.D. California
• Decided: August 14, 2019
• Docket: 3:18-cv-01896
• Status: Unknown

Opinion

1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 THOMAS LAND & DEVELOPMENT, Case No.: 18-CV-1896-AJB-NLS LLC, 12 Plaintiff, ORDER DENYING DEFENDANT’S 13 v. MOTION FOR SANCTIONS VRATSINAS CONSTRUCTION (Doc. No. 10) 14 COMPANY, an Arkansas corporation; et 15 al., 16 Defendants. 17 18 Defendant moves the Court for sanctions under Federal Rule of Civil Procedure 11 19 arguing Plaintiff “assert[ed] claims against defendant Vratsinas Contruction Company [ ] 20 that even a cursory investigation would have revealed are both factually and legally 21 groundless. . . .” (Doc. No. 10-1 at 4.) 22 Federal Rule of Civil Procedure 11 provides in pertinent part, that when an attorney 23 presents a signed paper to a court that attorney is certifying that to the best of his or her 24 “knowledge, information and belief, formed after an inquiry reasonable under the 25 circumstances ... the claims, defenses, and other legal contentions are warranted by existing 26 law or by nonfrivolous argument for extending, modifying, or reversing existing law or for 27 establishing new law.” Fed. R. Civ. P. 11(b)(2). When one party seeks sanctions against 28 another, a court must first determine whether any provision of Rule 11(b) has been violated. 1 Warren v. Guelker, 29 F.3d 1386, 1389 (9th Cir. 1994). A finding of subjective bad faith 2 is not required under Rule 11. See Smith v. Ricks, 31 F.3d 1478, 1488 (9th Cir. 1994) 3 (“Counsel can no longer avoid the sting of Rule 11 sanctions by operating under the guise 4 of a pure heart and empty head.”). “Instead, the question is whether, at the time the paper 5 was presented to the Court (or later defended) it lacked evidentiary support or contained 6 ‘frivolous’ legal arguments.” Odish v. CACH, LLC, No. 12cv1710-AJB (DHB), 2012 WL 7 5382260, at *3 (S.D. Cal. Nov. 1, 2012). If the court determines a Rule 11 violation 8 occurred, “the court may impose an appropriate sanction on any attorney, law firm, or party 9 that violated the rule or is responsible for the violation.” Fed. R. Civ. P. 11(c)(1) (emphasis 10 added). 11 Defendant argues “the claims asserted by Thomas Land against Vratsinas in the 12 Complaint are factually frivolous.” (Doc. No. 10-1 at 12.) Accordingly, Defendant claims 13 “there is no basis for a finding that Mr. Lazo conducted a reasonable or competent inquiry 14 into the factual underpinnings of Thomas Land’s claims against Vratsinas prior to filing to 15 the Complaint.” (Id. at 13.) Defendant also alleges Plaintiff’s complaint is also legally 16 frivolous “because [the claims asserted] are barred by general release contained in the 2015 17 Settlement Agreement, governed by Georgia law.” (Id.) 18 The Court finds Plaintiff’s claims are not factually or legally baseless. Although the 19 Court granted Defendants’ dismissal motions, the Court granted Plaintiff leave to amend. 20 Because the Court granted leave to amend, the Court inferred the factual and legal grounds 21 of Plaintiff’s complaint were not completely baseless—otherwise it would have denied 22 leave to amend. “A claim is not objectively baseless as long as there is ‘some plausible 23 basis’ for the argument, even if that basis is ‘quite a weak one.’” Simpson v. Cal. Pizza 24 Kitchen, Inc., No. 13-cv-164-JLS (JMA), 2013 WL 12114487, at *3 (S.D. Cal. Oct. 23, 25 2013) (citing United Nat. Ins. Co. v. R & D Latex Corp., 242 F.3d 1102, 1117 (9th Cir. 26 2001)) (emphasis in original). Although the Court wonders how Plaintiff will prove some 27 of its claims—alter ego theory, for example—at this stage the Court finds the allegations 28 are not completely baseless and has given Plaintiff an opportunity to prove it. However, 1 Court’s granting Plaintiff leave to amend now does not preclude a future motion for 2 sanctions from being allowed. 3 As to Defendant’s arguments surrounding the 2015 global settlement, this is the first 4 ||the Court is hearing about this. Defendants’ two motions to dismiss do not reference a 5 || general release or a settlement agreement. 6 Accordingly, the Court DENIES Defendant’s motion for sanctions without 7 || prejudice. (Doc. No. 10.) 8 IT IS SO ORDERED. ? || Dated: August 14, 2019 | ZS Zz : Le 10 Hon. Anthony J.Battaglia 11 United States District Judge 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28