DiPaolo v. Moran

Opinions of the United
2005 Decisions States Court of Appeals
for the Third Circuit
5-10-2005
DiPaolo v. Moran
Precedential or Non-Precedential: Precedential
Docket No. 04-1670
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PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 04-1670 & 04-1769
GREGORY DIPAOLO
v.
STEVEN MORAN; NEIL A. MORRIS ASSOCIATES, P.C.;
WILLIAM MCCAULLY; WILLIAM FOX; DALE
RICHARDSON; RON HOWARD TRANENKLE;
BENSALEM TOWNSHIP; BENSALEM TOWNSHIP
BOARD OF COUNCIL; HEATHER ODY;
WILLIAM MADDOCK; JOSEPH PILARI; JOSEPH
SZAFRAN; EDWARD KISSELBACK; JOSEPH
DIGERALMO, Sued
individually and in their official capacities;
NEIL A. MORRIS
BRIAN M. PURICELLI,
(*Pursuant to FRAP 12(a))
Appellant in No. 04-1670
NEIL A. MORRIS and
NEIL A. MORRIS
ASSOCIATES, P.C.,
Appellants in No. 04-1769
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 99-cv-05974)
District Judge: Honorable William H. Yohn, Jr.
Submitted Under Third Circuit LAR 34.1(a)
February 15, 2005
Before: SLOVITER, AMBRO
and ALDISERT, Circuit Judges
(Filed: May 10, 2005)
Brian M. Puricelli, Esquire
Law Office of Brian M. Puricelli
691 Washington Crossing Road
Newtown, PA 18940
Counsel for Appellant
Richard R. Morris, Esquire
Neil A. Morris, Esquire
Neil A. Morris Associates, P.C.
1735 Market Street
Mellon Bank Center, 43 rd Floor
Philadelphia, PA 19103
Counsel for Appellee
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OPINION OF THE COURT
AMBRO, Circuit Judge
Before us is the imposition of a sanction under Rule 11
of the Federal Rules of Civil Procedure, with the sanctioned
party arguing that a sanction was not warranted and the
opposing party contending that the District Court should have
awarded a monetary sanction. For the reasons that follow, we
affirm both of the District Court’s determinations.
I. Factual Background and Procedural History
Appellant Brian Puricelli filed the underlying action on
behalf of his client, Gregory DiPaolo, in November 1999,
claiming that the Bensalem Police Department’s termination of
DiPaolo’s employment as a tenured police officer violated his
rights under the United States and Pennsylvania Constitutions
and Pennsylvania law. The complaint named fifteen
defendants—among whom were Neil Morris, Esquire and his
law firm, Neil A. Morris Associates, P.C. (collectively
“Morris”)—both Appellees and Cross-Appellants here.
As the District Court stated, “[e]arly on in this litigation,
it became apparent that there was extensive bad blood between
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Puricelli and Morris involving not only this litigation, but other
litigation in other courts.” DiPaolo v. Moran, 277 F. Supp. 2d
528, 529 (E.D. Pa. 2003). Because an account of the various
suits between the parties—or the incidents evincing “bad
blood”—will not shed light on those issues before us, we
confine our discussion of the factual background and procedural
history to those events that relate to the sanction imposed against
Puricelli.
In January 2000 Puricelli (on DiPaolo’s behalf) moved
for a default judgment against Morris and the other defendants
on the ground that they had failed to file a response to DiPaolo’s
complaint. Several weeks thereafter, Morris and his firm filed
a motion for sanctions, in which they asserted that Morris and
the other defendants had responded by filing motions to dismiss.
Moreover, Puricelli refused to withdraw the motion for default
judgment even after the defendants informed him that they had
filed the motions to dismiss. In March 2000 the District Court
granted the motion for sanctions and sanctioned Puricelli (and
not DiPaolo) in the amount of $350.
Puricelli did not pay this amount, however, and
defendants filed a motion seeking additional sanctions against
Puricelli. In May 2000, the District Court entered an order
directing Puricelli to promptly pay the $350 or he would be
required to pay an additional sum.
While these events were taking place, Morris filed a
4
motion for sanctions under Rule 11 1 against DiPaolo and
1
Rule 11 provides in pertinent part:
(a) Signature. Every pleading, written motion,
and other paper shall be signed by at least one
attorney of record in the attorney’s individual
name . . . .
(b) Representations to Court. By presenting to the
court (whether by signing, filing, submitting, or
later advocating) a pleading, written motion, or
other paper, an attorney or unrepresented party is
certifying that to the best of the person’s
knowledge, information, and belief, formed after
an inquiry reasonable under the circumstances,—
(1) it is not being presented for any
improper purpose, such as to harass or to
cause unnecessary delay or needless
increase in the cost of litigation;
(2) the claims, defenses, and other legal
contentions therein are warranted by
existing law or by a nonfrivolous argument
for the extension, modification, or reversal
of existing law or the establishment of new
law;
(3) the allegations and other factual
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Puricelli, arguing that the complaint was frivolous and filed in
bad faith. In May 2000, after holding oral argument on the
various defendants’ motions seeking dismissal of the complaint,
the District Court issued an order setting out the
claims—including claims against Morris—that the plaintiff
(DiPaolo) could pursue in an amended complaint. The Court
did not expressly rule on Morris’s motion for sanctions.
However, as it allowed the filing of an amended complaint, the
Court apparently intended to deny the Rule 11 motion. See
DiPaolo, 277 F. Supp. 2d at 530 (explaining that the Court’s
decision to allow an amended complaint “effectively mooted the
contentions have evidentiary support or, if
specifically so identified, are likely to have
evidentiary support after a reasonable
opportunity for further investigation or
discovery. . . .
Fed. R. Civ. P. 11.
Morris also sought sanctions pursuant to 28 U.S.C.
§ 1927, which provides that “[a]ny attorney . . . who so
multiplies the proceedings in any case unreasonably and
vexatiously may be required by the court to satisfy personally
the excess costs, expenses, and attorneys’ fees reasonably
incurred because of such conduct.” Because the District Court’s
order of June 30, 2003 made clear that the Court imposed a
sanction solely pursuant to Rule 11, we consider only that issue.
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sanctions issue; had the claims been so frivolous as to warrant
Rule 11 sanctions, the court would not have permitted” the
amended pleading).
After Puricelli filed the amended complaint, Morris filed
a “supplemental” motion for Rule 11 sanctions against both
DiPaolo and Puricelli, arguing that the amended complaint
lacked legal and factual merit. In July 2000, after the time
period for filing a response had expired and no response had
been filed, the District Court granted Morris’s motion for
sanctions as to Puricelli only.
Several weeks later Puricelli moved for reconsideration,
arguing that he had never received the supplemental motion for
sanctions. The District Court held a hearing and found Puricelli
not to be credible insofar as he testified that he had not received
the supplemental motion. In making this credibility
determination, the Court found that a letter dated July 5, 2000
authored by Puricelli was a “smoking gun.” In the letter,
Puricelli stated that a response to the “Rule 11 motion is
forthcoming . . . .” As the District Court indicated, the date of
the letter is subsequent to the date of the filing of the
supplemental motion and supporting brief but prior to when
Puricelli’s response was due.
In view of these findings, the District Court deemed the
violation of Rule 11 to have been established as a result of
Puricelli’s failure to oppose the sanctions motion. The Court
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declined, however, to impose a sanction at that time.
DiPaolo’s claims against Morris and his law firm were
voluntarily dismissed in December 2000 and DiPaolo’s claims
against the remaining defendants were dismissed six months
later as the result of the parties’ settlement. As such, the District
Court never determined the merits of the amended complaint.
Although the underlying action was dismissed with
prejudice under Federal Rule of Civil Procedure 41(a),
proceedings in the District Court continued as to sanctions. In
June 2003 the Court determined that the dismissal of the case
pursuant to Rule 41 did not deprive it of the jurisdiction or
authority to impose sanctions against Puricelli. DiPaolo, 277 F.
Supp. 2d at 531-32. The Court scheduled an evidentiary hearing
to determine the nature of any sanction to be imposed.
During the hearing the parties informed the District Court
that Morris had begun litigation against Puricelli in the Court of
Common Pleas of Philadelphia County, in which Morris alleged
that the suit before the District Court was “baseless and without
merit” and that Puricelli’s conduct was an abuse of process.
After noting that Morris was seeking damages in the case
pending in state court, and, indeed, had established liability but
was awaiting an assessment of damages, the District Court
declined to award a monetary sanction. Instead, it reprimanded
Puricelli and ordered him to attend and complete twelve hours
of continuing legal education (in addition to the Pennsylvania
8
bar’s requirements) related to civil rights claims under 42 U.S.C.
§ 1983 and constitutional tort litigation. Puricelli appealed this
order, and Morris cross-appealed because the sanction ordered
did not include money.
II. Jurisdiction and Standard of Review
The District Court had jurisdiction over the § 1983 claim
pursuant to 28 U.S.C. §§ 1331 and 1343(a)(3) and had
supplemental jurisdiction over DiPaolo’s state law claims under
28 U.S.C. § 1367. We have jurisdiction to hear this appeal
under 28 U.S.C. § 1291. In reviewing a district court’s Rule 11
determination, we apply the abuse of discretion standard. Garr
v. U.S. Healthcare, 22 F.3d 1274, 1279 (3d Cir. 1994).
III. Discussion
A. Puricelli’s Appeal
Puricelli’s core issue on appeal is whether the District
Court erred in granting the Rule 11 motion by default. Beyond
the conclusory assertion of error, however, Puricelli gives little
in the way of argument directly bearing on this issue. Instead,
his brief devolves into a series of arguments that he could have
raised in opposition to the Rule 11 motion had he responded to
the motion for sanctions.
As the District Court explained, the pertinent local court
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rule provides that “any party opposing [a] motion shall serve a
brief in opposition . . . within fourteen (14) days after service of
the motion. . . . In the absence of a timely response, the motion
may be granted as uncontested. . . .” Eastern District of
Pennsylvania Local Rule of Civil Procedure 7.1(c). In light of
the District Court’s finding that Puricelli received the Rule 11
motion but failed to respond, the application of this local rule
seems on its face to doom Puricelli’s appeal. Moreover, citing
Local Rule 7.1(c) or a rule similar to it, courts have held that a
Rule 11 sanctions motion can be granted by default. See, e.g.,
Geller v. Randi, 40 F.3d 1300, 1304 (D.C. Cir. 1995); Aziz v.
Pa. State Univ., 1998 WL 964483, at *3 (E.D. Pa. Nov. 17,
1998); Carbone v. Gen. Accident Ins. Co., 1996 WL 420427, at
*2 (E.D. Pa. July 25, 1996).
Nevertheless, there is authority from our Court that, while
not cited by the parties, lends some support to Puricelli. See
Landon v. Hunt, 938 F.2d 450 (3d Cir. 1991) (per curiam). In
Landon the District Court sanctioned the plaintiffs after they
failed to file a timely response to the defendants’ motion for
sanctions under Rule 11 subsequent to two of the plaintiffs not
appearing for trial. Although recognizing that the sanctions
motion was unopposed, we nonetheless concluded that Rule 11
did not provide authority for imposing sanctions. See id. at 453.
As we explained, imposing sanctions suffered from two obvious
deficiencies. First, Rule 11 authorizes sanctions against the
signer of any pleading, motion or other paper. Fed. R. Civ. P.
11(b) and (c). The conduct at issue in Landon, however, was
10
entirely unrelated to the signing of any pleading, motion or other
paper—the sanction related to the failure to appear for trial. See
Landon, 938 F.2d at 453 (“We have consistently held that ‘Rule
11 sanctions are proper only in situations involving a signed
pleading.’” (quoting Schering Corp. v. Vitarine Pharms., Inc.,
889 F.2d 490, 496 (3d Cir. 1989))(emphasis added in Landon)).
Second, defendants’ sanctions motion was filed more than six
months after the entry of final judgment and, moreover, we
explained that there was no possible justification for the
inordinate delay. See id.; see also Mary Ann Pensiero, Inc. v.
Lingle, 847 F.2d 90, 100 (3d Cir. 1988) (adopting a “supervisory
rule for the courts in the Third Circuit . . . requir[ing] that all
motions requesting Rule 11 sanctions be filed in the district
court before the entry of a final judgment”).2
In contrast to Landon, and Puricelli’s protestations
notwithstanding, the sanctions motion here did not involve
obvious facial deficiencies. The motion asserted that the
amended complaint Puricelli had filed—and to which he was the
sole signer—was without adequate legal or factual basis. Thus
the motion did not fall outside Rule 11’s ambit (signed
pleadings), thus distinguishing Landon.3 Further, although
2
In Landon we did not consider the effect of a local rule
governing a party’s failure to file a timely response.
3
Puricelli also argues that the entry of the sanction after
dismissal of the action violates the supervisory rule—announced
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Puricelli argues that the sanctions motion suffered from
procedural defects (the most significant being the failure to
comply with Rule 11’s “safe harbor” provisions), the alleged
procedural shortcomings do not rise to the level of those
associated with a motion inexcusably filed six months too late.
Under Local Rule 7.1(c), the District Court was authorized to
consider Puricelli’s arguments waived, and we do so as well.
Accordingly, the District Court did not err in granting the
unopposed motion for Rule 11 sanctions.
B. Morris’s Cross-Appeal
Having concluded that the imposition of a sanction was
not in error, we turn now to the type of sanction imposed.
Although monetary sanctions are not encouraged under Rule 11,
they are not forbidden. Zuk v. E. Pa. Psychiatric Inst. of the
Med. Coll., 103 F.3d 294, 301 (3d Cir. 1996). We have
emphasized that the main purpose of Rule 11 is to deter, not to
compensate. Id. We have also indicated that “fee-shifting is but
one of several methods of achieving the various goals of Rule
in Lingle, 847 F.2d at 100, and relied upon in Landon, 938 F.2d
at 453—that a litigant must file a motion for Rule 11 sanctions
prior to the entry of final judgment. Here, although the sanction
was fashioned after the dismissal, the filing of the sanctions
motion, as well as the decision to impose a sanction, occurred
before the dismissal. As such, the supervisory rule is not
implicated.
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11, . . . [and that district courts] should consider a wide range of
alternative possible sanctions for violation of the rule.” Zuk,
103 F.3d at 301 (quoting Doering v. Union County Bd. of
Chosen Freeholders, 857 F.2d 191, 194-96 (3d Cir. 1988)).
“The language of Rule 11 evidences the critical role of judicial
discretion, stating that when the district court determines that a
filing is in violation of the rule, the court ‘shall’ impose
sanctions that ‘may’—not ‘shall’—‘include an order to pay’ the
other party’s expenses.” Doering, 857 F.2d at 194. Moreover,
we have encouraged district courts to “consider mitigating
factors in fashioning sanctions, most particularly the sanctioned
party’s ability to pay.” Zuk, 103 F.3d at 301.
In his cross-appeal, Morris argues that the District
Court’s refusal to impose a monetary sanction was an error of
law. In Morris’s view, the District Court erred by giving undue
weight to civil proceedings pending in state court pursuant to
which Morris could recover his counsel fees. While it is clear
from the transcript that the District Court inquired about and
gave some consideration to the pendency of the state action, the
transcript does not reveal that the District Court would have
awarded counsel fees as a sanction but for those proceedings.
Rather, its taking into account the state court proceedings was
merely one of many factors weighed in determining what
sanction to impose.
Consistent with our indication that courts considering
monetary sanctions should take into account the party’s financial
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resources, see Doering, 857 F.2d at 195-96, the District Court
asked a number of questions along those lines. The responses
to these questions illustrated that Puricelli is a solo practitioner
who runs a relatively modest law practice out of his home.
Further, Puricelli has several dependents and, other than his
home, does not have significant assets. In this regard, the Court
was concerned that Puricelli would have difficulty paying the
fees—which exceeded $30,000—sought by Morris. The state
court action, in which Morris was also seeking monetary
compensation, only added further reason to consider Puricelli’s
ability to pay as a mitigating factor.
Moreover, the guiding purpose in fixing Rule 11
sanctions is fashioning a sanction adequate to deter undesirable
future conduct. Viewing the record in its entirety, the District
Court did not abuse its discretion in this regard. To the contrary,
the sanction imposed was the product of careful deliberation
after thorough factual inquiry.
* * * * *
Accordingly, we affirm the District Court’s rulings on
appeal.
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