Sullivan, Beth A. v. Hunt, Craig M. ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 03-1928
BETH ANNE SULLIVAN and TERRENCE M. DONOHOE,
Plaintiffs-Appellees,
v.
CRAIG M. HUNT,
Defendant-Appellant.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 94 C 539—John A. Nordberg, Judge.
____________
ARGUED NOVEMBER 5, 2003—DECIDED NOVEMBER 26, 2003
____________
Before FLAUM, Chief Judge, and BAUER and WILLIAMS,
Circuit Judges.
FLAUM, Chief Judge. After winning a motion to dismiss
based upon the plaintiffs’ failure to prosecute, defendant
and attorney Craig Hunt moved for costs pursuant to 18
U.S.C. § 1964 and for sanctions under Rule 11 of the
Federal Rules of Civil Procedure. The district court denied
Hunt’s motions, and he now appeals. For the reasons stated
herein, we affirm.
2 No. 03-1928
I. BACKGROUND
In 1994, shareholders Beth Anne Sullivan and Terrence
M. Donohoe brought suit for state law securities violations
against AdeXpress, Inc. and its founders William Rilling
and Warren Hornsby. The plaintiffs filed a First Amended
Complaint on July 13, 1995, which added Craig Hunt and
William Freschi, Jr. as defendants in both their individual
capacities and as directors of AdeXpress. The First
Amended Complaint also added claims under federal
securities law and the Racketeer Influenced and Corrupt
Organizations Act (“RICO”), 18 U.S.C. § 1962(c).
Plaintiffs’ RICO claims were dismissed on May 22, 1997,
because the plaintiffs failed to allege a pattern of racketeer-
ing activity sufficient to support a RICO claim. The federal
securities law claims against defendant Hunt were dis-
missed on March 31, 1999. In 2001, the defendants filed a
motion for summary judgment and for dismissal for failure
to prosecute and the motion was granted in July 2002. Two
weeks later, the plaintiffs filed motions to vacate the
dismissal, and these motions were denied on November 13
and 14, 2002. On February 14, 2003, Hunt filed a “Motion
for Attorney Fees/Costs Under 18 USC 1964(c) and for Rule
11 Sanctions.” The district court denied this motion and
Hunt now appeals.
II. DISCUSSION
Hunt argues that the district court abused its discretion
by refusing to grant Hunt fees and costs pursuant to 18
U.S.C. § 1964(c) and Federal Rule of Civil Procedure 11. We
disagree.
First, 18 U.S.C. § 1964(c) does not apply to prevailing
defendants. The statute provides that
Any person injured in his business or property by
reason of a violation of section 1962 of this chapter may
No. 03-1928 3
sue therefor in any appropriate United States district
court and shall recover threefold the damages he
sustains and the cost of the suit, including a reasonable
attorney’s fee. . . .
18 U.S.C. § 1964. The plain language of this statute allows
plaintiffs who successfully bring suit under RICO to recover
costs and attorney’s fees. It does not, however, provide a
remedy for defendants who successfully defend against a
RICO suit.
Although Hunt argues that case law compels us to find in
his favor, the two cases he cites have nothing to do with a
defendant receiving costs or fees under 18 U.S.C. § 1964(c).
See Brandt v. Schal Assocs., 960 F.2d 640 (7th Cir. 1992)
(holding that successful RICO defendants may receive
attorney’s fees under Federal Rule of Civil Procedure 11);
Zenith Ins. Co. v. Breslaw, 108 F.3d 205 (9th Cir. 1997)
(holding that a prevailing RICO defendant may receive
attorney’s fees under Federal Rule of Civil Procedure 54(d)).
Hunt is not a person injured in his business or property by
reason of a violation of RICO, and therefore cannot receive
relief under 18 U.S.C. § 1964(c).
Hunt also cannot prevail under Federal Rule of Civil
Procedure 11 because his request for sanctions was un-
timely. It is well established in this Circuit that 90 days
from the date of entry of final judgment represents “the
outer parameters of the timeliness for sanctions claims.”
See Kaplan v. Zenner, 956 F.2d 149, 151 (7th Cir. 1992).
Moreover, 90 days from the entry of final judgment is not
guaranteed to the parties; we have held that this limit “will
not necessarily protect a sanctions claim if the party
bringing it has failed to do so within a reasonable amount
of time.” Id. at 152. Where appropriate, sanctions motions
“should be filed at an earlier time—as soon as practicable
after discovery of a Rule 11 violation.” Id. at 151.
4 No. 03-1928
In this case, Hunt clearly exceeded the 90-day bright-line
limit for filing Rule 11 motions. Final judgment was entered
on July 31, 2002; Hunt’s motion was not filed until 198 days
later on February 14, 2003. Hunt argues that we should not
use July 31, 2002 as the final judgment date, but should
rather begin counting from November 14, 2002—the date
that the last motion to vacate was denied. Even if we were
to accept this tolling approaching, however, Hunt’s motion
was still filed two days beyond the 90-day maximum.
Hunt further argues that this two-day period should be
disregarded because the litigation had been ongoing for
many years and there was significant factual information
needed from other attorneys and the various defendants.
We find this argument to be unpersuasive. Hunt had ample
time to gather the information needed for his motion, which
mainly challenged the First Amended Complaint (filed in
1995) and the RICO claims (dismissed in 1997). Finally, if
the motion could not have been properly filed within these
limits, Hunt should have filed a motion requesting the
district court for an extension of time. Considering Hunt’s
failure to act in a timely manner, the district court’s denial
of his motion for Rule 11 sanctions was not an abuse of
discretion.
No. 03-1928 5
III. CONCLUSION
The judgment of the district court is AFFIRMED.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—11-26-03