United States District Court, D. South Carolina, Rock Hill Division
M. Whitner Slagsvol and Elizabeth Slagsvol, Plaintiffs,
Thomas Oswald General Carpentry and Builders, LLC, and Thomas Oswald, Defendants,
Thomas Oswald General Carpentry and Builders, LLC, Third-Party Plaintiff,
Richard Molten, Third-Party Defendant.
OPINION AND ORDER DENYING DEFENDANTS' MOTION FOR
ATTORNEYS' FEES (ECF NO. 46)
Cameron McGowan Currie, Senior United States District Judge.
this action, Plaintiffs M. Whitner Slagsvol and Elizabeth
Slagsvol (“Plaintiffs”), bring claims against
Defendants Thomas Oswald General Carpentry and Builders, LLC
(“Oswald Builders”) and Thomas Oswald
“Defendants”) for civil RICO violations, fraud,
breach of contract accompanied by a fraudulent act, negligent
misrepresentation, breach of fiduciary duty, breach of
contract, and negligence. ECF No. 23 (Amended Complaint).
Defendants filed a motion to dismiss for failure to state a
claim as to the RICO claim (ECF No. 43) and Plaintiffs did
not respond. The court entered an Order granting the motion
to dismiss the RICO claim with prejudice and dismissing the
remaining claims without prejudice to Plaintiffs' right
to bring them in state court. ECF No. 44.
1, 2019, Defendants filed a motion for attorneys' fees
pursuant to Fed.R.Civ.P. 54 and 11, arguing Plaintiffs'
RICO claim was baseless and frivolous, and the attorneys'
fees paid by Defendants would not have been necessary
“but for Plaintiffs' meritless RICO claim.”
ECF No. 46. Plaintiffs filed a response on May 7, 2019,
opposing an award of attorneys' fees. ECF No. 47.
Plaintiffs explained they “somehow missed the filing of
the Oswald defendants' Rule 12(b)(6) motion, which
explains why they did not file a reply objecting to the
motion.” Id. at 1. They further argue the RICO
claim was not baseless or frivolous, and that Defendants
failed to first serve their Rule 11 motion on Plaintiffs as
required under Rule 11(c)(2). Id. at 2-3. Defendants
did not reply.
Civ. P. 11 requires service of a Rule 11 motion on the
opposing party at least 21 days before filing the motion with
the district court, to give the opposing party an opportunity
to withdraw or correct the challenged action. Fed.R.Civ.P.
11(c)(2). “Because the rule requires that the party
submitting the challenged pleading be given an opportunity to
withdraw the pleading, sanctions cannot be sought
after” the conclusion of the case. Brickwood
Contractors, Inc. v. Datanet Engineering, Inc., 369 F.3d
385, 389 (4th Cir. 2004); Hunter v. Earthgrains Co.
Bakery, 281 F.3d 144, 152 (4th Cir. 2002).
case, Defendants did not first serve their Rule 11 motion on
Plaintiffs before filing a motion under Rule 12(b)(6), before
that motion was granted ending the case, or before filing the
Rule 11 motion with the District Court. Although Defendants
have attached a letter sent to Plaintiffs' counsel prior
to filing the motion under Rule 12(b)(6) to the motion for
sanctions now filed with this court, this letter does not
meet the requirements of Rule 11(c)(2): while it states
“I am writing this letter pursuant to FRCP Rule 11 in
an attempt to resolve a dispute relating to the RICO claim
included with your complaint, ” it is not a Rule 11
motion. ECF No. 46-1. It did, however, notify Plaintiffs of
Defendants' intention to file a motion to dismiss under
Rule 12(b)(6) and stated “we will move for
attorney's fees and costs if successful . . . If I do not
receive a response . . . I will move forward with the
12(b)(6) motion.” Id. at 3. The Fourth Circuit
has considered failure to serve a Rule 11 motion on opposing
counsel sufficient to reverse an award of sanctions, as the
district court “lacks authority to impose the requested
sanctions” if the conditions precedent are not
satisfied. See Brickwood, 369 F.3d at 389-390 (“The
conclusion that the defendants failed to comply with the
procedural requirements of Rule 11(c)(1)(A) would be enough,
at least in most cases, to require reversal of the district
court's imposition of sanctions.”).
the court were to consider the letter sufficient to meet the
requirement of Rule 11(c)(2), Defendants have failed to show
conduct of Plaintiffs' counsel in declining to withdraw
the RICO claim following receipt of the letter violated Rule
11(b)(1), (2), or (3). Plaintiffs' counsel has admitted
his failure to respond to the 12(b)(6) motion was caused by
inadvertence. He has, however, insisted that
Plaintiffs believed, had discovery been answered, subsequent
investigation would have revealed a RICO pattern extending to
a No. of persons. It appeared to Plaintiffs that the pattern
of business Oswald Builders engaged in was common practice,
and that discovery would have revealed a No. of other
victims. Plaintiffs also believed that the fact pattern in
this case fits the fact pattern in Cedric Kushner
Promotions, Ltd. v. King, 553 U.S. 158 (2001), a case
decided in the Supreme Court.
ECF No. 47 at 3. The court finds no basis to conclude
reasons above, Defendants' motion for attorneys' fees