Bennington Realty, LLC v. Jard Co., Inc.

Bennington Realty v. Jard Co.  (98-229); 169 Vt. 538; 726 A.2d 56

[Filed 14-Jan-1999]


                                 ENTRY ORDER

                       SUPREME COURT DOCKET NO. 98-229

                             DECEMBER TERM, 1998


  Bennington Realty, LLC    }     APPEALED FROM:
                            }
                            }
       v.                   }     Bennington Superior Court
                            }
  Jard Company, Inc., et al.}
  Town of Bennington        }     DOCKET NO. 263-9-97Bncv


       In the above-entitled cause, the Clerk will enter:

       Defendant Town of Bennington appeals from a summary judgment entered
  in its favor by  the Superior Court on plaintiff's foreclosure action. 
  According to defendant, the trial court erred  by denying its request for
  attorney fees.  We affirm.


       The relevant facts are not in dispute.  Plaintiff, through counsel,
  initiated foreclosure  proceedings in connection with two parcels of land
  in Bennington.  The Town was one of five  named defendants, all of whom
  were alleged to have some interest in the realty.  The complaint  recited
  that the Town was joined by virtue of a tax lien it had recorded on the
  property.  In its  answer, the Town asserted as an affirmative defense that
  under 32 V.S.A. § 5061 its lien was  superior to any interest asserted by
  either plaintiff or any other defendant.  Based on that  unassailable legal
  proposition, the Town prevailed on its subsequent summary judgment motion.


       In its motion, the Town also sought costs and fees in light of what it
  characterized as the  "patently frivolous nature" of plaintiff's claim
  against it.  Subsequent to its decision on the merits,  the trial court
  conducted a hearing on the issue of costs and fees.  At the hearing, the
  Town  indicated that it was basing its request for costs and attorney fees
  on V.R.C.P. 11.  The Town also  submitted an affidavit from one of its
  attorneys averring that (1) he had telephoned plaintiff's  attorney prior
  to filing an answer and secured an agreement from him to dismiss the
  complaint  against the Town voluntarily and (2) the Town filed its answer
  and summary judgment motion  only after plaintiff's counsel took no action
  to relieve the Town of its obligation to defend itself.  The trial court
  filed a written decision denying the Town's request and this appeal
  followed.


       Generally, V.R.C.P. 11 imposes on "an attorney or unrepresented party"
  an obligation to  present the court with only those pleadings that assert
  claims, defenses or other legal positions  "warranted by existing law or by
  a nonfrivolous argument for the extension, modification, or  reversal of
  existing law or the establishment of new law."  V.R.C.P. 11(b)(2).  The
  rule contains  a detailed mechanism for imposing sanctions in appropriate
  circumstances against "the attorneys,  law firms, or parties that have
  violated subdivision (b)."  Id. at (c).  Under this mechanism, a  party
  seeking Rule 11 sanctions must make the request separately from other
  motions or requests,  describe the specific conduct alleged to warrant the
  sanctions and must serve the motion on the  opposing party in question. 
  See id. at (c)(1)(A).  Further, the sanctions motion "shall not be filed 
  with or presented to the court unless, within 21 days after the 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 appropriately corrected."  Id.

       It is undisputed that the Town did not comply with these requirements,
  notwithstanding 

 

  the conversation in which counsel for plaintiff agreed to withdraw the
  claim against the  Town.  The Town neither served plaintiff with a separate
  motion for Rule 11 sanctions nor gave  it the requisite 21 days after such
  service to withdraw the foreclosure claim against the  municipality. 


       According to the Town, the 21-day requirement should not apply in
  these circumstances  because it sought sanctions only after it had obtained
  a favorable summary judgment ruling and,  thus, "[t]here simply was no
  offending pleading or paper to be withdrawn."  Such a reading of  Rule 11
  is itself arguably frivolous.  The Town's sanctions request was made as
  part of its  summary judgment motion, at a time when plaintiff's complaint
  was obviously still pending  against it; the Town neither made the
  sanctions motions separately as required nor gave plaintiff  and its
  attorney the requisite 21 days to withdraw any frivolous legal positions. 
  See 5A C. Wright  & A. Miller, Federal Practice & Procedure § 1337 (2d ed.
  Supp. 1998) (noting that, under  identical requirements of Fed. R. Civ. P.
  11(c), sanctions motion cannot be included in summary  judgment motion and
  failure to comply with 21-day "safe harbor" means motion will be rejected).


       Ordinarily, we review a trial court's denial of Rule 11 sanctions for
  abuse of discretion. See  State v. Delaney, 157 Vt. 247, 256, 598 A.2d 138,
  143 (1991).  In this instance, however, we  do not even reach the question
  whether the trial court properly exercised its discretion in denying 
  sanctions and explaining that it saw "no indication that the claim was
  filed for any improper  purpose."  Rule 11 sanctions were unavailable to
  the Town as a matter of law by virtue of its  failure to comply with the
  rule's procedural requirements.


       The Town's remaining contention is that, beyond Rule 11, principles of
  equity and justice  required the trial court to award attorney fees in this
  instance.  For this proposition, the Town  relies upon our observation in
  Cameron v. Burke, 153 Vt. 565, 572 A.2d 1361 (1990), that "an  equity court
  may grant fees in exceptional cases as justice requires . . . includ[ing]
  instances  where a litigant acts in bad faith or vexatiously and where a
  litigant's conduct is unreasonably  obdurate or obstinate."  Id. at 576,
  572 A.2d  at 1367 (citations and internal quotation marks  omitted).  As was
  implicit in Cameron, Rule 11 is the appropriate vehicle for invoking these 
  principles of equity and justice.  See id. (holding that Rule 11 provides
  authority for invoking  sanctions in non-equity cases).  Thus, a party may
  not defeat the safe-harbor provision of Rule  11, added to the rule
  subsequent to Cameron, by invoking the same residual powers of equity and 
  justice that form the basis of the rule and its requirements.


       Affirmed.	

BY THE COURT:


_______________________________________
Jeffrey L. Amestoy, Chief Justice

_______________________________________
John A. Dooley, Associate Justice

_______________________________________
James L. Morse, Associate Justice

_______________________________________
Denise R. Johnson, Associate Justice

_______________________________________
Marilyn S. Skoglund, Associate Justice