Unit Petroleum Co. v. Nuex Corp.

HODGES. Vice Chief Justice.

The issue presented in this case is whether the trial court erred in denying the plaintiffs Motion for Sanctions against the law firm of DeVilliers, Inc. Sanctions were sought against the law firm for failure to dismiss the counterclaim which lacked any legal or factual basis. Because we find that liability under Okla.Stat. tit. 12, § 2011 (Supp.1988) does not extend to the law firm represented by an attorney signing a document, we affirm.

On December 30, 1988, Unit Petroleum Company (Unit) filed suit against several defendents including Nuex Corporation (Nuex) seeking a money judgment, a declaratory judgment, and foreclosure of Unit’s lien against certain gas wells including the Reed # 3 well.

Nuex filed an answer and counterclaim signed by J. Matthew DeVilliers. After the execution of disclaimers and confession of judgment by some of the defendants, only Nuex’s counterclaim remained. The counterclaim was tried to the court and resulted in a directed verdict in Unit’s favor. Before the trial Nuex filed a Proposed Pre-Trial Conference Order signed by Wm. Rodney DeVilliers, Jr., and a Trial Brief signed by J. Matthew DeVilliers.

After trial, Unit filed a Motion for Sanctions under Okla.Stat. tit. 12, § 2011 (Supp. 1988), against the firm of DeVilliers, Inc. as counsel for Nuex. After a hearing, the trial court found that section 2011 only applies to the signing of pleadings and denied the motion.

Title 12, section 2011 of the Oklahoma Statutes provides:

Every pleading, motion, and other paper of a party represented by an attorney shall be signed by at least one attorney of record in his individual name, whose address and Oklahoma Bar Association identification number shall be stated. A party who is not represented by an attorney shall sign his pleading, motion, or other paper and state his address .... The signature of an attorney or party constitutes a certificate by him that he has read the pleading, motion, or other paper; that to the best of his 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 improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. If a pleading, motion, or other paper is not signed, it shall be stricken unless it is signed promptly after the omission is called to the attention of the pleader or movant. If a pleading, motion, or other paper is signed in violation of this rule, 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.

Except for the requirement that an attorney’s Oklahoma Bar Association identification number be on a paper, section 2011 is identical to Rule 11 of the Federal Rules of Civil Procedure.

We have not previously decided whether a law firm is subject to sanctions under section 2011. However, the United States Supreme Court has recently addressed the issue under Rule 11 in Pavelic & LeFlore v. Marvel Entertainment Group, 493 U.S. 120, 110 S.Ct. 456, 107 L.Ed.2d 438 (1989).

In Pavelic, the plaintiff's attorney, Ray L. LeFlore, signed the complaint and the amended complaint. Thereafter, LeFlore formed a partnership with Radovan Pavelic and the remaining court papers were signed:

“ ‘Pavelic & LeFlore By /s/ Ray L. LeFlore (A Member of the Firm) Attorneys for Plaintiff’ ”

After trial and upon motion for the imposition of sanctions by the opposing party, the district court held a hearing. After the hearing, the district court imposed sane-tions under Rule 11 against the law firm of Pavelic & LeFlore. After Pavelic objected to the sanction on the basis that the firm did not exist during the time that the complaint and the amended complaint were filed, the district court shifted half of the sanction to LeFlore personally. Pavelic also contended that a court does not have the power under Rule 11 to impose sanctions against the law firm. However, the district court found that it could impose sanctions under Rule 11 against both the attorney and the law firm.

After determining that the phrase “the person who signed [the paper]” is ambiguous read in isolation, the United States Supreme Court found that when taken in context the phrase is clear and does not include a law firm on whose behalf an attorney has signed papers. Although the opinion in Pavelic is not binding on this Court, we agree with its rationale and holding.

There are times when the Legislature uses the term “person” to include business entities. However, that is not the case with section 2011. Throughout both section 2011 and Rule 11, the language is clear that the requirements are addressed to an individual, not a law firm. As pointed out in Pavelic, the rule begins by requiring an attorney to sign every paper. It would be absurd to require a law firm to sign the documents. The rule then goes on to establish that the signing is a certification that the attorney has read the document and that the document is well grounded in fact and in law and is not interposed for an improper purpose. It would be strange to construe this phrase as requiring a law firm to certify that it had read the document. Again, the rule is addressing an individual rather than a firm. The next phrase sets out the repercussions of failing to sign a paper; the paper shall be stricken. This phrase refers to the absence of an individual’s signature, not a law firm’s. It would be inconsistent to construe the last phrase “the person who signed [the paper]” as including a law firm when none of the other reference can properly be so construed.

Section 2011, like Rule 11, is written in very precise language. The sanction extends to “the person who signed [the paper], a represented party, or both.” By enumerating who is subject to the sanctions and omitting law firms from the list, the Legislature must have intended the sanctions run only against those individuals who are listed.

For the foregoing reasons, we find that sanctions under section 2011 cannot properly be imposed against a law firm but only against the individual attorney. We need not address the reasoning of the trial court. When the trial court reaches the correct decision, even if for the wrong reasons, this Court will affirm. Atlantic Richfield Co. v. State ex rel. The Wildlife Conservation Comm ’n, 659 P.2d 930, 934 (Okla.1983).

JUDGMENT OF THE DISTRICT COURT AFFIRMED.

LAVENDER, SIMMS, ALMA WILSON and SUMMERS, JJ., concur. HARGRAVE, J., concurs in result. OPALA, C.J., and DOOLIN and KAUGER, JJ., dissent.