Opinion
Case No. 1:03-CV-378.
March 15, 2005
MEMORANDUM OPINION DENYING MOTIONS FOR SANCTIONS
Defendant Springvale-Bear Creek Sewage Disposal Authority ("Authority") filed a motion for sanctions pursuant to Fed.R.Civ.P. 11 ("Rule 11") and 28 U.S.C. § 1927 (docket # 58). Defendant City of Petoskey filed a motion for sanctions pursuant to Fed.R.Civ.P. 11 (docket # 80). Defendants argue that sanctions are appropriate in this case because plaintiff's complaint was filed without reasonable inquiry into the facts of the case. Defendants also argue that plaintiff's complaint is not warranted by existing law or by a non-frivolous argument for the extension, modification or reversal of existing law or the establishment of new law. Defendants request the Court to find that plaintiff violated Rule 11 and 28 U.S.C. § 1927 by filing the complaint and ask the Court to award defendants costs and attorney fees incurred by them.
Fed.R.Civ.P. 11 provides, in part:
(b) Representations to Court. By presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney or unrepresented party is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, —
(1) it is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation;
(2) the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law;
(3) the allegations and other factual contentions have evidentiary support or, if specifically so identified, are likely to have evidentiary support after a reasonable opportunity for further investigation or discovery . . .
(c) Sanctions. If, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may . . . impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation.
Rule 11 sanctions are designed to combat the signing of frivolous pleadings or other papers. DirecTV v. Zink, 337 F. Supp. 2d 984, 988 (E.D. Mich. 2004) (citing In re Ruben, 825 F.2d 977, 984 (6th Cir. 1987). They are appropriate when the claims are presented for improper purposes, unwarranted under existing law or a good faith argument to alter the law. Id. The test for imposing sanctions under Rule 11 is "whether the individual's conduct was reasonable under the circumstances." Union Planters Bank v. L J Dev. Co., 115 F.3d 378, 384 (6th Cir. 1997). The court is not to employ hindsight as a guide, but rather it is to assess the attorney's level of knowledge at the time the complaint was filed, taking into account that the complaint could be based solely on information provided by the party and other factors beyond the attorney's immediate control. See Fed.R.Civ.P. 11 advisory committee notes (1993 Amendment). The imposition of sanctions for violations of Rule 11, after the 1993 amendment to the rule, is within the Court's discretion. See Ridder v. City of Springfield, 109 F.3d 288, 293-94 (6th Cir. 1997).
28 U.S.C. § 1927 sanctions are designed to punish the "unreasonable and vexatious multiplication" of proceedings, even if that impropriety was not conscious or in "`bad faith.'" Jones v. Continental Corp., 789 F.2d 1225, 1230 (6th Cir. 1986). "[W]hen an attorney knows or reasonably should know that a claim pursued is frivolous, or that his or her litigation tactics will needlessly obstruct the litigation of nonfrivolous claims," § 1927 sanctions may be properly imposed. Id.
Defendant Authority argues that plaintiff's failure to recognize the existence and application of the Rooker-Feldman doctrine, the failure to exhaust state remedies and plaintiff's improper purpose in filing this suit make sanctions appropriate. Defendant City of Petoskey argues that sanctions are appropriate because it played no part in the decision to deny plaintiff a sewer connection, and that plaintiff failed to conduct a reasonable inquiry into the facts underlying this case.
Plaintiff argues that its claims are not barred by the Rooker-Feldman doctrine and that its claims are ripe for adjudication. Plaintiff also argues that defendant City of Petoskey is necessary to the resolution of this case to the extent that the City of Petoskey must amend its agreement with the Authority in order for plaintiff to proceed with its development.
The Court has duly considered defendants' motions for sanctions and plaintiff's response thereto. Rule 11 is not intended to chill an attorney's enthusiasm or creativity in vigorously pursuing factual or legal theories on behalf of his or her client. See McGhee v. Salinac County, 934 F.2d 89, 93 (6th Cir. 1991). While there is certainly disagreement between the parties as to the extent and nature of each defendant's involvement in the decision to deny plaintiff a sewer connection, it is clear that plaintiff's actions in filing this lawsuit were reasonable under the circumstances, and therefore, Rule 11 and 28 U.S.C. § 1927 have not been transgressed. See Union Planters Bank, 115 F.3d at, 384. Therefore, the Court, in the exercise of its discretion, declines to impose sanctions under Rule 11 or 28 U.S.C. § 1927. An Order consistent with this Memorandum Opinion shall follow.