Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Lawrence v. Richman Group of CT LLC

September 16, 2010

JOHN F. LAWRENCE, PLAINTIFF-APPELLANT,
BRIAN P. DANIELS, ESQ., RUTH ANN AZEREDO, ESQ.,
v.
RICHMAN GROUP OF CT LLC, USA INSTTAX CREDITFUNDXXXVI, USA INSTTAX CREDITFUNDXXXVIII, APPELLANTS, DEFENDANTS-APPELLEES,
RICHMANGROUPCAPITALCORP., RICHMANGROUP, INC., RICHMANASSETMGMT, LLC, RICHMANGROUP OF NY LLC, RICHMANGROUPMGMT CORP, USA INSTITUTIONALTAX CREDITFUNDXXVII LP, RICHMANUSA TAX CREDITXXVII LP, RICHMANUSA TAX CREDITXXVII, INC, USA INSTITUTIONALTAX CREDITFUNDXXVIII LP, RICHMANUSA TAX CREDITXXVIII LP, RICHMAN USA TAX CREDIT XXVIII, INC, USA INSTITUTIONAL TAX CREDITFUNDXXX LP, RICHMANUSA TAX CREDITXXX LLC, USA INSTITUTIONALTAX CREDITFUNDXXXII LP, RICHMANUSA TAX CREDITXXXII LLC, RICHMANFAMILYTRUSTI, USA INSTITUTIONALTAX CREDITFUNDXXXIV LP, RICHMANUSA TAX CREDITXXXIV LLC, USA INSTITUTIONALTAX CREDITFUND XXXV LP, RICHMANUSA TAX CREDITXXXV LLC, RICHMANUSA MGR, INC, USA/FLEETINSTTAX CREDITFUNDXX-A LP, USA INSTITUTIONALTAX CREDITFUND XX-C LP, RICHMANUSA TAX CREDITXX LP, RICHMANUSA TAX CREDITXX, INC, CONSOLIDATED-DEFENDANTS-APPELLEES.



SYLLABUS BY THE COURT

Appeal from a judgment of the United States District Court for the District of Connecticut (Janet Bond Arterton, Judge; Joan Glazer Margolis, Magistrate Judge) awarding Rule 11 sanctions for filing a second amended complaint without a reasonable basis in law and fact. We now clarify that where, as here, a district court has dismissed a prior complaint without awarding Rule 11 sanctions and granted a party leave to replead, the filing of the new pleading resets the clock for seeking sanctions pursuant to Rule 11(c)(2), so that the filer must be afforded twenty-one days to correct or withdraw the pleading before a motion for sanctions is presented to the district court.

VACATED.

Per curiam.

Argued: July 9, 2010

Before: RAGGI and LYNCH, Circuit Judges, and GARAUFIS, District Judge.*fn1

Plaintiff John F. Lawrence and the named appellees have engaged in extensive litigation over a number of years in the United States District Court for the District of Connecticut (Janet Bond Arterton, Judge; Joan Glazer Margolis, Magistrate Judge), regarding Lawrence's claim for commissions owed on the sale of securities. A contested issue between the parties was whether the proper forum for resolution of Lawrence's commissions claim was judicial or arbitral. The tortured factual and procedural background to this dispute is set forth in the district court's published opinions in this case, Lawrence v. Richman Grp. Capital Corp., 358 F. Supp. 2d 29 (D. Conn. 2005), and in a related case, Lawrence v. Wilder Richman Secs. Corp., 359 F. Supp. 2d 161 (D. Conn. 2005), which represent only two of more than a dozen decisions issued by the district court to resolve matters raised by the parties. We do not ourselves detail this background here except as necessary to resolve this appeal, in which Lawrence and his attorneys in the district court (hereafter referred to collectively as "Lawrence"), challenge a judgment entered on October 23, 2009, awarding sanctions of $113,667.50 in attorneys' fees pursuant to Fed. R. Civ. P. 11(c) for Lawrence's filing of a second amended complaint in this case without a reasonable basis in law and fact.*fn2

Lawrence submits that the sanctions award must be vacated because (1) his second amended complaint was supported by a reasonable basis in law and fact, (2) he was not afforded twenty-one days to correct or withdraw the second amended complaint as required by Rule 11(c)(2), and (3) the sanctions award was excessive. Because we conclude that Lawrence's second argument requires us to vacate the award of sanctions, we so order without addressing his other two contentions.

I. Background

A. The Second Amended Complaint

In an order dated March 4, 2005, the district court dismissed Lawrence's first amended complaint in this case, finding that it failed to plead a contract that was legal and enforceable. Nevertheless, based on counsel's representation that this defect could be cured by allegations of fact that would bring the contract claim within Rule 3040 of the National Association of Securities Dealers, the district court granted Lawrence leave to replead the complaint "subject to Rule 11." Oral Arg. Tr. at 73:10-13 (Feb. 22, 2005). In so ruling, the district court stated what it deemed necessary "to satisfy Rule 3040": Lawrence would have to plead that he gave "detailed written notice of each proposed transaction expressly to Wilder Richman," and that he "received express written consent from Wilder Richman." Lawrence v. Richman Grp. Capital Corp., 358 F. Supp. 2d at 40 (emphasis in original).

Plaintiff filed a second amended complaint on March 21, 2005, and moved for the district court to reconsider its order of dismissal. The district court denied the motion on August 10, 2005, finding that the second amended complaint "nowhere" alleged the requisite express notice or consent. Lawrence v. Richman Grp. Capital Corp., No. 3:03 CV 850, 2005 WL 1949864, at *3-4 (D. Conn. Aug. 11, 2005). Indeed, the district court observed that the amended pleading only reinforced the conclusion that plaintiff had been engaged in "gamesmanship" with the court. Id. at *4.

B. The Sanctions Litigation

Appellees initially moved for Rule 11 sanctions in conjunction with their motion to dismiss Lawrence's first amended complaint. Soon after the district court dismissed that complaint, the magistrate judge (to whom the Rule 11 motion had been referred) determined that the sanctions motion should be denied "without prejudice to renew." Lawrence v. Richman Grp. of Conn., LLC, No. 3:03 CV 850, slip op. at 7 (D. Conn. Mar. 9, 2005). In so ruling, the magistrate judge directed defendants to defer filing any renewed motion until the district court determined what, if any, of Lawrence's claims would proceed. Neither party filed objections with the district court.

On December 20, 2005 -- some nine months after Lawrence filed the second amended complaint and four months after the district court denied reconsideration of dismissal -- defendants renewed their motion for Rule 11 sanctions. On March 10, 2006, the magistrate judge recommended granting the motion and awarding monetary sanctions for the time expended by defense counsel on plaintiff's contract claim after the district court's March 2005 dismissal of the first amended complaint. See Lawrence v. Richman Grp. of Conn., LLC, No. 3:03 CV 850, 2006 WL 908453 (D. Conn. Mar. 10, 2006). Rejecting Lawrence's objections to this recommendation, the district court awarded Rule 11 sanctions on December 28, 2006, finding that, despite his representations to the court, Lawrence did not have a reasonable basis in law and fact to pursue his contract claim in an Article III proceeding "after the Court's March 2005 ruling." Lawrence v. Richman Grp. of Conn., LLC, No. 3:03 CV 850, 2006 WL 3826684, at *5-6 (D. Conn. Dec. 28, 2006). Lawrence unsuccessfully moved for reconsideration, arguing inter alia that his counsel's consultations with "securities experts" before filing the second amended complaint demonstrated a reasonable ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.