Bowman v. Ackerman

Bowman v. Ackerman (2003-404); 177 Vt. 589; 865 A.2d 1120

2004 VT 112

[Filed 29-Oct-2004]


                                 ENTRY ORDER

                                 2004 VT 112

                      SUPREME COURT DOCKET NO. 2003-404

                            SEPTEMBER TERM, 2004

  William M. Bowman, III	       }	APPEALED FROM:
                                       }
                                       }
       v.	                       }	Franklin Superior Court
                                       }	
  James and Renee Ackerman, Gary and   }
  Lindsay Ryan, Richard Schattman and  }	DOCKET NO. S127-99 FC
  Ruth Dennis, Lawrence and 	       }	
  Barbara Young                        }
  					        Trial Judge: David A. Jenkins
                                                             Ben W. Joseph

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

       ¶  1.  Plaintiff William Bowman III appeals the superior court's
  order awarding defendants Alan Simoneau and Sal Wiggin attorney's fees and
  costs as a V.R.C.P. 11 sanction against Bowman and his counsel for pursuing
  a frivolous declaratory judgment action against Simoneau and Wiggin. 
  Because Simoneau and Wiggin failed to follow Rule 11's strict procedural
  requirements, the court erred in granting their motion to sanction Bowman
  and his counsel.  Accordingly, we reverse the superior court's order and
  reinstate a previous order denying the motion for Rule 11 sanctions.

       ¶  2.  In June 1999, Bowman filed a declaratory judgment action
  seeking to resolve issues concerning a right of way located on his
  property.  Bowman named several defendants, including Simoneau and Wiggin,
  who owned adjacent property.  Simoneau and Wiggin filed multiple motions to
  dismiss, all of which were denied, before Judge Joseph granted their motion
  for summary judgment in September 2001 and dismissed them as party
  defendants in the action. In February 2002, Simoneau and Wiggin filed a
  motion for Rule 11 sanctions against Bowman, seeking an award of attorney's
  fees and costs incurred in the action.  On April, 1, 2002, following a
  hearing, Judge Jenkins denied the motion because Simoneau and Wiggin had
  never served Bowman with a separate motion at least twenty-one days before
  filing the motion in court, as required by Rule 11.  The court awarded
  Bowman $325 in attorney's fees incurred in defending against the motion for
  sanctions.
   
       ¶  3.  Ten days later, Simoneau and Wiggin filed a motion for
  reconsideration.  In February 2003, a final judgment was entered in favor
  of the remaining defendants.  That same month, Judge Joseph held a hearing
  on the motion to reconsider Judge Jenkins's order denying Rule 11
  sanctions.  On June 2, 2003, Judge Joseph vacated Judge Jenkins's April
  2002 order and awarded Simoneau and Wiggin $14,743 in attorney's fees and
  costs as a Rule 11 sanction against Bowman for pursuing the declaratory
  judgment action against them.  The court acknowledged that the motion for
  sanctions did not meet Rule 11's procedural requirements, but concluded
  that, by requesting the imposition of Rule 11 sanctions in their original
  answer to Bowman's complaint, Simoneau and Wiggin had provided adequate
  notice to Bowman of their intent to seek such sanctions if he continued to
  pursue his lawsuit.

       ¶  4.  On appeal, Bowman argues that Judge Joseph abused his
  discretion by awarding Rule 11 sanctions because Simoneau and Wiggin failed
  to satisfy the rule's strict procedural requirements and, in any event,
  failed to establish any violation of the rule.  Bowman also argues that the
  court abused its discretion by failing to apply the factors governing
  imposition of sanctions, by failing to make written findings in support of
  its order, and by failing to determine the least severe monetary sanction
  sufficient to deter repetition of the alleged offending conduct.  Bowman
  requests that this Court reverse Judge Joseph's June 2003 order, reinstate
  Judge Jenkins's April 2002 order, including the award of $325 in attorney's
  fees, and remand the matter for the superior court to award additional
  reasonable attorney's fees he incurred in opposing the sanctions motion.

       ¶  5.  We conclude that Rule 11 sanctions were unavailable to
  Simoneau and Wiggins because they failed to comply with the rule's
  procedural requirements; therefore, we do not reach Bowman's remaining
  arguments.  Pursuant to a 1996 amendment adopting the amended federal rule,
  Vermont's Rule 11 requires that a motion for sanctions "shall be made
  separately from other motions or requests" and "shall not be filed with or
  presented to the court unless, within 21 days after service of the motion .
  . . the challenged paper, claim, defense, contention, allegation, or denial
  is not withdrawn or appropriately corrected."  V.R.C.P. 11(c)(1)(A).  This
  provision is intended to mitigate Rule 11's chilling effect by affording
  litigants some protection against sanctions, to formalize procedural due
  process considerations concerning notice, and to encourage the withdrawal
  of offending papers without involving the trial court.  5A C. Wright & A.
  Miller, Federal Practice and Procedure § 1337.2, at 722 (3d ed. 2004); see
  Agency of Natural Res. v. Lyndonville Sav. Bank & Trust Co., 174 Vt. 498,
  499, 811 A.2d 1232, 1234 (2002) (mem.) ("safe-harbor" provision "is
  intended to provide protection against sanctions when lawyers or
  unrepresented litigants timely withdraw or correct potential violations
  brought to their attention").  In light of these policy considerations,
  courts, including this Court, have required strict compliance with the
  rule's procedural requirements before relief may be granted.  Lyndonville
  Sav. Bank & Trust Co., 174 Vt. at 499-500, 811 A.2d  at 1234 ("[U]nder the
  safe-harbor provision, sanctions are generally unavailable, as a matter of
  law, if the moving party fails to abide by the rule's procedural
  requirements."); Bennington Realty, LLC v. Jard Co., 169 Vt. 538, 539, 726 A.2d 56, 58 (mem.) (1999) ("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."); see also 5A C. Wright & A. Miller, supra §
  1337.1, at 710-12, & § 1337.2, at 723 (failure to comply with procedural
  requirements results in rejection of motion for sanctions); Ridder v. City
  of Springfield, 109 F.3d 288, 296 (6th Cir. 1997) (courts "have found the
  'safe-harbor' provision to be an absolute requirement").
        
       ¶  6.  Here, Simoneau and Wiggin did not serve Bowman with a
  separate sanctions motion before filing their motion in the superior court. 
  Further, they did not file their motion in the court until long after they
  were dismissed from the case.  Hence, Bowman was never given the formal
  notice required by the rule.  See 5A C. Wright & A. Miller, supra § 1337.2,
  at 727 ("[S]ervice of a sanctions motion after the . . . court has
  dismissed the claim or entered judgment prevents giving effect to the safe
  harbor provision or the policies and procedural protections it provides,
  and it will be rejected.").  The one-line request for Rule 11 sanctions
  contained in the answer to Bowman's complaint plainly does not satisfy
  Rule's 11's procedural requirements.  Nor does Divane v. Krull Electric
  Co., 200 F.3d 1020 (7th Cir. 1999) support the notion that it could satisfy
  the rule, as Simoneau and Wiggin suggest.  In Divane, 200 F.3d  at 1026, the
  Seventh Circuit Court of Appeals upheld the trial court's post-judgment
  sanctions award after noting that a previous motion for sanctions had been
  served on the nonmoving party more than twenty-one days before being
  submitted to the court and before the court entered final judgment.  That
  was not the case here.  Accordingly, Judge Joseph erred by granting the
  motion for sanctions filed by Simoneau and Wiggin after they were dismissed
  from the case. 

       ¶  7.  Simoneau and Wiggin argue, however, that, notwithstanding
  their failure to satisfy Rule 11's procedural requirements, Judge Joseph
  reasonably determined that an award of attorney's fees was appropriate in
  this case.  We find this argument unavailing.  Simoneau and Wiggin sought
  attorney's fees and costs as a Rule 11 sanction, and both Judge Jenkins and
  Judge Joseph considered the request under Rule 11.  Although attorney's
  fees may also be awarded in "exceptional cases" in which a litigant acted
  vexatiously or in bad faith, Lyndonville Savings Bank & Trust Co., 174 Vt.
  at 501, 811 A.2d  at 1236, "a party may not defeat the safe-harbor provision
  of Rule 11 . . . by invoking the same residual powers of equity and justice
  that form the basis of the rule and its requirements."  Bennington Realty,
  LLC, 169 Vt. at 539, 726 A.2d  at 58.  In this case, Simoneau and Wiggin did
  not demonstrate that Bowman had acted vexatiously or in bad faith, and the
  superior court made no such finding.  Nor did the superior court, on its
  own initiative, enter an order specifically describing suspected Rule 11
  violations and directing Bowman and his counsel to show cause why they had
  not engaged in the offensive conduct.  See V.R.C.P. 11(c)(1)(B) (empowering
  trial court to enter order, on its own initiative, describing specific
  conduct that appears to violate rule and requiring party to show cause why
  rule has not been violated).
        
       ¶  8.  Bowman requests on appeal that we reinstate Judge Jenkins's
  order and remand the matter for a determination of additional attorney's
  fees he reasonably incurred in opposing the sanctions motion.  We agree
  that Judge Jenkins's order denying Rule 11 sanctions should be reinstated. 
  We decline, however, to uphold the $325 in attorney's fees previously
  awarded to Bowman or to remand the matter for a determination of additional
  attorney's fees to be awarded to him.  We recognize that the superior court
  has the discretion to award attorney's fees to parties presenting or
  opposing motions for sanctions, see V.R.C.P. 11(c)(1)(A), and that a
  request for attorney's fees on appeal is normally addressed by the trial
  court in the first instance, with independent review by this Court, see
  Reporter's Notes, V.R.A.P. 39(f), 1996 Amendment.  Here, however, an award
  of attorney's fees is not warranted.  Although Bowman incurred attorney's
  fees in opposing the motion for sanctions and the motion for
  reconsideration of Judge Jenkins's order denying sanctions, and also in
  appealing Judge Joseph's order granting sanctions, the record reveals at
  least a colorable basis for requesting Rule 11 sanctions against him. 
  Bowman successfully challenged the imposition of Rule 11 sanctions based on
  the failure of Simoneau and Wiggin to follow Rule 11's strict procedural
  requirements, but his declaratory judgment action was the latest in a
  series of legal actions he had taken against the same defendants to
  relitigate the same issues.  Indeed, defendants prevailed in the
  declaratory judgment action based on principles of res judicata.  Under
  these circumstances, we decline to remand the matter for a determination of
  an award of attorney's fees.

       The superior court's June 2, 2003 order is vacated, and the court's
  April 1, 2002 order is reinstated in all respects, except that the $325
  attorney's fee award is stricken.


                                       BY THE COURT:


                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Paul L. Reiber, Associate Justice

                                       _______________________________________
                                       Frederic W. Allen, Chief Justice (Ret.),
                                       Specially Assigned