Unpublished Disposition, 925 F.2d 1469 (9th Cir. 1990)

MEMORANDUM^* 

Appellant Cooley Godward Castro Huddleson & Tatum ("Cooley Godward") filed a complaint on behalf of the Federal Savings and Loan Corporation ("FSLIC") alleging breach of fiduciary duty, negligence per se, conspiracy to breach fiduciary duty, fraud, and unjust enrichment and constructive trust against appellee Clinton Wilson. Wilson is an ex-officer of a Centennial Savings and Loan Association ("Centennial") subsidiary. Centennial was ultimately taken over by FSLIC.

After approximately six months of discovery, Wilson brought a motion for summary judgment, which Cooley Godward opposed. After the district court ruled in favor of Wilson, he moved for sanctions against Cooley Godward under Fed. R. Civ. P. 11. The district court awarded Wilson $20,000 in attorneys' fees and $3,500 in costs on the ground that Cooley Godward's opposition to Wilson's motion for summary judgment was frivolous. Cooley Godward appeals the imposition of Rule 11 sanctions. Wilson requests sanctions against Cooley Godward for filing a frivolous appeal.

Our recent decision in Stitt v. Williams, No. 87-2090, slip. op. (9th Cir. November 15, 1990), provides the standard for determining whether an attorney's opposition to a summary judgment motion violates Rule 11. In Stitt, we held that:

[I]n evaluating the opposition to a motion for summary judgment for purposes of Rule 11, the district court must consider the filing as a whole. Sanctions are not appropriate where, as here, counsel opposes a summary judgment motion and: (1) there is a non-frivolous basis for opposing the motion, and (2) the non-frivolous basis constitutes more than an incidental part of the opposition. Under these circumstances, the opposition as a whole is not frivolous.

Stitt, slip. op. at 14089.

Applying this standard here, we find that the district court abused its discretion in imposing Rule 11 sanctions. Among the grounds upon which Cooley-Godward relied in opposing the summary judgment motion was its contention that the Memorandum of Understanding ("MOU") between Wilson, his partner, and the President of Centennial was either not authentic or did not reflect the parties' true understanding. Although the district court found that there was no genuine issue of material fact as to the MOU, Cooley-Godward's argument that the MOU should not be taken at face value cannot be characterized as frivolous. It was supported by testimony by the draftsman of the MOU that he did not consider the MOU to be a "final documentation of the arrangement between the parties."

Because Cooley-Godward's challenge to the MOU was not frivolous, its opposition to the summary judgment motion was not frivolous as a whole. The challenge to the MOU formed much more than an incidental part of Cooley-Godward's opposition to the summary judgment motion. It was essential to several of Cooley-Godward's claims.

Therefore, the judgment of the court below is reversed. Wilson's request for sanctions for the filing of a frivolous appeal is denied.

REVERSED.