Howell v. Nesbit

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
CHARLENE DENISE HOWELL,
Plaintiff-Appellant,
v.
No. 98-1402
RENE NESBIT; SUSAN G. CREEKMUIR;
CAROLINAS TELCO FEDERAL CREDIT
UNION,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of North Carolina, at Charlotte.
Graham C. Mullen, District Judge.
(CA-97-539-3-MU)
Submitted: May 19, 1998
Decided: June 16, 1998
Before WIDENER, MURNAGHAN, and WILKINS, Circuit Judges.
_________________________________________________________________
Dismissed in part, vacated in part, and remanded by unpublished per
curiam opinion.
_________________________________________________________________
COUNSEL
Charlene Denise Howell, Appellant Pro Se. Joseph W. Eason, Sr.,
Christopher J. Blake, MOORE & VAN ALLEN, Raleigh, North Car-
olina, for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Charlene Denise Howell appeals the district court's orders denying
her motion to remand and for reconsideration and granting the Defen-
dants' motions for judgment on the pleadings and for sanctions under
Fed. R. Civ. P. 11. Howell commenced an action in state court against
Carolinas Telco Federal Credit Union and two of its employees under
2025 33 1 the Privacy Act of 1974,1 the Righ
t to Financial Privacy Act,2 North
Carolina's Financial Privacy Act,3 and the United States and North
Carolina constitutions. Howell asserted that the Defendants acted
unlawfully when they "froze" Howell's account and transferred funds
in the account to the IRS in compliance with an IRS notice of levy.
On October 28, 1997, the Defendants removed the action to federal
district court under 28 U.S.C. § 1441 (1994). We find that Howell
filed an untimely notice of appeal from the order denying her motion
to remand and granting the Defendants' motion for judgment on the
pleadings and accordingly dismiss the appeal as to that order. We also
find that awarding sanctions on the Defendants' Rule 11 motion was
improper and vacate that order and the order denying Howell's
motion for reconsideration and remand to the district court for further
proceedings on the sanctions issue consistent with this opinion.
After the action was removed to district court, Howell filed a
motion to remand. On November 12, 1997, the Defendants filed a
motion seeking judgment on the pleadings. On November 21, 1997,
the district court denied Howell's motion for remand and granted the
Defendants' motion for judgment on the pleadings. The court also
ordered Howell to show cause why she should not be sanctioned.
_________________________________________________________________
1 5 U.S.C.A. § 552 (West 1994 & Supp. 1998).
2 12 U.S.C.A. §§ 3401-3422 (West 1994 & Supp. 1998).
3 N.C. Gen. Stat. §§ 53B-1- 53B-10 (1995).
2
Meanwhile, on November 20, 1997, the Defendants served upon
Howell a motion for sanctions under Fed. R. Civ. P. 11 seeking rea-
sonable costs and attorney's fees, contending that Howell's complaint
and subsequent filings were frivolous. The motion was filed with the
court twelve days later on December 2, 1997, after the court had
granted the judgment on the pleadings. Howell responded by filing an
amended complaint which substantially repeated allegations con-
tained in the original complaint, a document titled"error coram
nobis" challenging the court's denial of her motion for remand, and
a "memorandum to deny motion for sanctions" arguing the merits of
her action. The court ordered the Defendants to file a supplemental
memorandum regarding the request for costs and fees.
On February 20, 1998, the Defendants filed an affidavit and memo-
randum asserting that they should be awarded attorney's fees and
costs in the amount of $8,472.32. On February 27, 1998, the court
granted the Defendants' motion for sanctions in the amount requested
in the affidavit and memorandum.
On March 2, 1998, Howell filed a motion for reconsideration of the
court's order regarding sanctions. The motion was denied on March
6. On March 13, Howell filed a notice of appeal challenging the
court's denial of her motions for remand and reconsideration and
granting the Defendants' motions for judgment on the pleadings and
Rule 11 sanctions.
Appellant filed an untimely notice of appeal from the order which
denied her motion for remand and granted the Defendants' motion for
judgment on the pleadings. The time periods for filing notices of
appeal are governed by Fed. R. App. P. 4. These periods are "manda-
tory and jurisdictional." Browder v. Director, Dep't of Corrections,
434 U.S. 257, 264 (1978) (quoting United States v. Robinson, 361
U.S. 220, 229 (1960)). Parties to civil actions have thirty days within
which to file in the district court notices of appeal from judgments or
final orders. See Fed. R. App. P. 4(a)(1). The only exceptions to the
appeal period are when the district court extends the time to appeal
under Fed. R. App. P. 4(a)(5) or reopens the appeal period under Fed.
R. App. P. 4(a)(6).
The order awarding a judgment on the pleadings is a final order on
the merits. See Slagle v. ITT Hartford, 102 F.3d 494, 497 (11th Cir.
3
1996); Fairmont Aluminum Co. v. C.I.R., 222 F.2d 622, 625 (4th Cir.
1955). A final order is one which "ends the litigation on the merits
and leaves nothing for the court to do but execute the judgment."
Catlin v. United States, 324 U.S. 229, 233 (1945). A request for attor-
ney's fees does not affect the finality of the court's decision to dis-
miss the complaint. See Budinich v. Becton Dickinson & Co., 486
U.S. 196, 202-03 (1988). Finality was also not affected by the fact
that the November 12 order included a show cause order instructing
Howell to state why she should not be sanctioned. See Brown v.
Francis, 75 F.3d 860, 864 (3d Cir. 1996); Turnbull v. Wilcken, 893
F.2d 256, 256-57 (10th Cir. 1990). Furthermore, the order awarding
attorney's fees did not affect the running of the period for filing a
notice of appeal. See Bernstein v. Menard, 728 F.2d 252, 253 (4th Cir.
1984).
The district court entered its order on November 21, 1997; How-
ell's notice of appeal was filed on March 13, 1998, which is beyond
the thirty-day appeal period. Howell's failure to note a timely appeal
or obtain an extension of the appeal period leaves this court without
jurisdiction to consider the merits of Appellant's appeal as to the
November 21 order. We therefore dismiss the appeal as to that order.
The notice of appeal was timely as to the orders granting the
Defendants' motion for Rule 11 sanctions and denying Howell's
motion for reconsideration. Thus, we have subject matter jurisdiction
to review those two orders.
The decision to order sanctions is reviewed for abuse of discretion.
See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 400-01 (1990).
Under Fed. R. Civ. P. 11(c)(1)(A), a motion for sanctions should first
be served upon the offending party and should not be filed in the
court unless, "within 21 days after service of the motion (or such
other period as the court may prescribe), the challenged paper, claim,
defense, contention, allegation, or denial is not withdrawn or appro-
priately corrected." If the movant fails to serve the offending party
within the "safe harbor" period of twenty-one days prior to filing a
motion for sanctions with the court, sanctions should be denied. See
Elliott v. Tilton, 64 F.3d 213, 216 (5th Cir. 1995); Hadges v. Yonkers
Racing Corp., 48 F.3d 1320, 1329 (2d Cir. 1995). This provision is
an "absolute requirement." Ridder v. City of Springfield, 109 F.3d
4
288, 296 (6th Cir. 1997), cert. denied, ___ U.S. ___, 66 U.S.L.W.
3445, 66 U.S.L.W. 3455 (U.S. Jan. 12, 1998) (No. 97-559); see also
Elliott, 64 F.3d at 216 (Rule 11 procedures are"mandatory").
In Ridder, the court held that "sanctions under Rule 11 are unavail-
able unless the motion for sanctions is served on the opposing party
for the full twenty-one day ``safe harbor' period before it is filed with
or presented to the court; this service and filing must occur prior to
final judgment or judicial rejection of the offending contention. Quite
clearly then, a party cannot wait until after summary judgment to
move for sanctions under Rule 11." Ridder, 109 F.3d at 297. Advisory
committee notes to Rule 11 state that a "party cannot delay serving
its Rule 11 motion until conclusion of the case (or judicial rejection
of the offending contention)."
In the instant case, Howell was served with the Rule 11 motion the
day before the court dismissed the case on the Defendants' motion.
Thus, Howell did not have the advantage of the twenty-one day safe
harbor provision. We find the court abused its discretion by awarding
sanctions without following the procedural requirements of Rule 11.
See Johnson v. Waddell & Reed, Inc., 74 F.3d 147, 151-52 (7th Cir.
1996) (court abuses its discretion when it does not follow the proce-
dures of Rule 11). Accordingly, the February 27 order granting the
Defendants' Rule 11 motion and the March 6 order denying Howell's
motion for reconsideration of that order should be vacated and the
case remanded for further proceedings. See Ridder, 109 F.3d at 297.
On remand, the court may sanction Howell on its own initiative
under Rule 11(c)(1)(B). Under this provision of Rule 11, sanctions
may not be awarded to the Defendants. See Thornton v. General
Motors Corp., 136 F.3d 450, 455 (5th Cir. 1998); Johnson v. Waddell
& Reed, Inc., 74 F.3d at 152 n.3. On the other hand, when the court
sanctions an offending party under this provision of Rule 11, it is
under no obligation to provide the offending party with the benefits
of the safe harbor provision. See Ridder, 109 F.3d at 297 n.8.
The district court also possesses its own inherent power to sanction
a litigant in addition to or instead of the sanctioning provisions of
Rule 11. See, e.g., In re Weiss, 111 F.3d 1159, 1171 (4th Cir. 1997),
cert. denied, ___ U.S. ___, 66 U.S.L.W. 3171, 66 U.S.L.W. 3316, 66
5
U.S.L.W. 3322 (U.S. Nov. 3, 1997) (No. 97-366). Awarding attor-
ney's fees are appropriate under the court's inherent powers if: (1) the
party's litigation efforts directly benefit others; (2) a party has will-
fully disobeyed a court order; or (3) a party has acted in bad faith,
vexatiously, wantonly, or for oppressive reasons. See Chambers v.
NASCO, Inc., 501 U.S. 32, 45-46 (1991). "Because of their very
potency, inherent powers must be exercised with restraint and discre-
tion." Id. at 44-45; see also United States v. Shaffer Equip. Co., 11
F.3d 450, 461-62 (4th Cir. 1993) (inherent powers to sanction "must
be exercised with the greatest restraint and caution, and then only to
the extent necessary"). In light of Rule 11, the inherent powers should
be used only if the rule does not provide for an appropriate sanction.
See Chambers, 501 U.S. at 50.
In the instant case, the court awarded sanctions under Rule 11 after
finding Howell's action was frivolous and without basis in law. The
court did not specifically find that Howell commenced the action in
bad faith. Accordingly, we will not speculate as to whether attorney's
fees and costs would be appropriate under the court's inherent pow-
ers. See Brubaker v. City of Richmond, 943 F.2d 1363, 1382 n.25 (4th
Cir. 1991).
For the foregoing reasons, the appeal is dismissed as to the order
denying the motion for remand and granting the Defendants' motion
for judgment on the pleadings. The orders granting the Defendants'
Rule 11 motion and denying Howell's motion for reconsideration are
vacated and the case is remanded to the district court for further pro-
ceedings consistent with this opinion regarding sanctions under Rule
11(c)(1)(B) or the court's inherent powers.
We dispense with oral argument because the facts and legal conten-
tions are adequately presented in the materials before the court and
argument would not aid the decisional process.
DISMISSED IN PART, VACATED IN PART, AND REMANDED
6