Wood v. Brosse U.S.A., Inc.

149 F.R.D. 44, 1993 U.S. Dist. LEXIS 7481, 1993 WL 198835
CourtDistrict Court, S.D. New York
DecidedJune 2, 1993
DocketNo. 91 Civ. 7176 (RWS)
StatusPublished
Cited by21 cases

This text of 149 F.R.D. 44 (Wood v. Brosse U.S.A., 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
Wood v. Brosse U.S.A., Inc., 149 F.R.D. 44, 1993 U.S. Dist. LEXIS 7481, 1993 WL 198835 (S.D.N.Y. 1993).

Opinion

OPINION

SWEET, District Judge.

Defendant Brosse U.S.A., Inc. (“Brosse”) has moved pursuant to Rule 11, Fed.R.Civ. P., 28 U.S.C. § 1927, and this Court’s inherent power, for an order sanctioning the Plaintiff, Leon Firman Wood, Jr. (“Wood”), and Wood’s counsel, Louis C. Pulvermacher, P.C. (“Pulvermacher”), for frivolous and bad faith conduct in bringing and maintaining various claims in this action. For the reasons set forth below, the motion is granted.

Background

The parties to this diversity action, the factual background of the dispute, and the specific allegations of Wood’s Complaint are described in this Court’s previous opinion, familiarity ¡ with which is presumed. See Wood v. Brosse U.S.A., Inc., 788 F.Supp. 772, 773-74 (S.D.N.Y.1992) (the “Opinion”). Only those facts relevant to the present motion are rehearsed below.

According to Wood’s Complaint, he and Brosse entered into a “Letter Agreement” in 1988 or 1989 covering the period from January 1, 1989 to December 31, 1990. The agreement apparently stated that Wood would received an annual salary of $84,000 in 1989, to be raised to $100,000 in 1990, and subject to an annual cost of living adjustment. It also allegedly called for Wood to receive the following: an automobile; a contribution to a profiting sharing plan of at least $20,000 a year; three weeks of paid vacation; a bonus of $13,000 to $15,000 a year when sales for that year were within 10% of the previous year’s gross; and severance pay, bonus, profit share, and use of the automobile through the end of the year in the event Wood was terminated.

The parties allegedly agreed to extend the terms of the Letter Agreement through the end of 1991 in January or February 1991. Wood contends, however, that, in violation of the Letter Agreement, Brosse’s president hired a younger man at a lower salary to perform Wood’s duties in May 1991 and fired Wood on August 23, 1991. On the day he was fired, Wood was apparently told to surrender his car immediately. Wood also claims he enjoyed only two out of the three [47]*47weeks of vacation to which he was allegedly entitled in 1991.

Wood set forth eight causes of action in his Complaint.1 The First, Second, Third, Fifth, and Sixth Causes of Action appear to allege that Brosse breached the agreement by taking back the car and by not paying Wood severance pay, vacation pay, the balance of his bonus for 1990, his bonus and profit sharing entitlement for 1991, and cost of living allowances for 1990 and 1991. The Fourth Cause of Action alleges that Brosse tortiously interfered with the Letter Agreement. The Seventh seeks compensatory and punitive damages under New York’s Human Rights Law, N.Y.Exee.Law §§ 290-301, while the Eighth seeks damages for emotional distress.

In the Opinion, Brosse’s Rule 12(b)(6) motion to dismiss Wood’s Complaint was granted as to the Fourth and Eighth Causes of Action and as to the punitive damages portion of the claim set forth in the Seventh Cause of Action. See 788 F.Supp. at 775. With regard to the Second, Fifth, and Sixth Causes of Action, Brosse sought to dismiss these contentions on the basis of various discrepancies between the allegations set forth in the Complaint and the alleged Letter Agreement. However, because the Complaint did not incorporate the Letter Agreement by reference, the Court declined to address those contentions and denied Brosse’s motion as to them. See id.

Following the disposition of Brosse’s Rule 12(b)(6) motion, discovery continued apace through August 19, 1992. The day before the discovery cutoff date, Wood voluntarily withdrew the surviving portion of his claim for compensatory damages resulting from Brosse’s alleged age discrimination as set forth in the Seventh Cause of Action and asserted pursuant to New York’s Human Rights Law.

In anticipation of the close of the discovery period, Brosse informed Wood by a letter dated July 15, 1992, which was “so ordered” by this Court, that it would be moving for summary judgment by October 16, 1992. Rather than withdrawing the remaining claims made in the Third, Fifth, and Sixth Causes of Action, Wood and Pulvermacher waited for Brosse to file its motion for summary judgment before voluntarily withdrawing them.

Oral argument was held on Brosse’s Rule 56 motion on November 18, 1992, at which time this Court recognized that Wood’s only colorable claims were those set forth in the First and Second Causes of Action of the Complaint. In the face of this motion, Wood withdrew the Third, Fifth, and Sixth Causes of Action without contesting any aspect of the motion. Thus, at the end of pre-trial phase of this action, only the First and Second Causes of Action survived.

In December 1992, the parties reached a settlement agreement as to those two remaining claims, and a Stipulation of Dismissal was filed with this Court on January 4, 1993, dismissing the action with prejudice and on the merits. The parties also stipulated that this Court would retain jurisdiction over this matter with respect to any subsequent motions brought by Brosse for the imposition of sanctions pursuant to Rule 11.2

Brosse filed this motion on January 22, 1993. Oral argument was heard on February 3, 1993, and the motion is considered submitted as of that date.

Discussion

1. The Legal Standards For Awarding Costs And Imposing Sanctions For Asserting Frivolous Claims And Acting In Bad Faith

A. Rule 11

The familiar prescriptions of Rule 11 require a federal court to impose sanctions against an attorney or party who signs a [48]*48pleading, motion, or other paper, in violation of the requirement that the signer certifies:

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 purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

Fed.R.Civ.P., Rule 11.

In the event that this Rule is violated: the court, upon motion or upon its own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay to the other party or parties the amount of the reasonable expenses incurred because of the filing of the pleading, motion, ’or other paper, including a reasonable attorney’s fee.

Id.

The Second Circuit has defined the standard to be applied in determining whether sanctions should be imposed for a violation of Rule 11:

Rule 11 explicitly and unambiguously imposes an affirmative duty on each attorney to conduct a reasonable inquiry into the viability of a pleading before it is signed. Simply put, subjective good faith no longer provides the safe harbor it once did.... [A] showing of subjective bad faith is no longer required to trigger the sanctions imposed by the rule. Rather, sanctions shall be imposed against an attorney and/or his client when it appears that a pleading has been interposed for any improper purpose, or where,

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Bluebook (online)
149 F.R.D. 44, 1993 U.S. Dist. LEXIS 7481, 1993 WL 198835, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wood-v-brosse-usa-inc-nysd-1993.