Opinion
NUMBER 2011 CA 1419
03-23-2012
ALEJANDRO LICONA v. KENNETH AROSTEGUI AND LYNN T. SCHAYOT
Robert B. Evans, III Cesar R. Burgos Gabriel O. Mondino Maria J. Leon New Orleans, LA Attorneys for Plaintiff - Appellant Alejandro Licona Wayne A. Collier Slidell, LA Attorney for Defendants - Appellees Kenneth Arostegui and Lynn T. Schayot
NOT DESIGNATED FOR PUBLICATION
Appealed from the
Twenty-Second Judicial District Court
In and for the Parish of St. Tammany, Louisiana
Trial Court Number 2008-14979
Honorable William J. Knight, Judge
Robert B. Evans, III
Cesar R. Burgos
Gabriel O. Mondino
Maria J. Leon
New Orleans, LA
Attorneys for
Plaintiff - Appellant
Alejandro Licona
Wayne A. Collier
Slidell, LA
Attorney for
Defendants - Appellees
Kenneth Arostegui and
Lynn T. Schayot
BEFORE: PETTIGREW, McCLENDON, AND WELCH, JJ.
WELCH, J.
Gabriel Mondino, an attorney, appeals a judgment imposing sanctions upon him and ordering him to pay legal fees in the amount of $3,460.00. We reverse.
BACKGROUND
The background forming the basis for this appeal can be found in a companion case decided this day, Licona v. Arostegui, 2011-1160 (La. App. 1st Cir. 3/23/12). In May 2007, Kenneth Arostegui and Alejandro Licona entered into a verbal contract of sale pursuant to which Mr. Arostegui agreed to sell Mr. Licona a trailer for $15,000.00 on an installment basis. In June 2008, after Mr. Licona paid $12,500.00 towards the purchase price, Mr. Arostegui seized the trailer and sold it to a third party. On September 19, 2008, Mr. Licona filed a lawsuit against Mr. Arostegui, claiming that he did not learn until after he paid $12,500.00 towards the purchase price that Mr. Arostegui did not have title to the trailer and could not transfer ownership to him. He asserted causes of action for fraud, breach of contract, and unjust enrichment against Mr. Arostegui. Mr. Arostegui answered the lawsuit, claiming that Mr. Licona was aware that the trailer was in Mr. Arostegui's sister's name and that upon completion of payments by Mr. Licona, title to the trailer would be transferred to Mr. Licona. Mr. Arostegui alleged that Mr. Licona breached the verbal contract and that as a result, Mr. Arostegui took possession of the trailer.
Thereafter, Mr. Licona filed an amended petition adding Lynn Schayot, Mr. Arosteugi's sister and the title owner of the subject trailer, as a defendant. In the amended petition, Mr. Licona alleged that Ms. Schayot knew of the contract to sell the trailer entered into between himself and Mr. Arostegui, knew that Mr. Arostegui could not deliver title to the property because it was in Ms. Schayot's name, and asserted that Mr. Arostegui and Ms. Schayot conspired to enter into a "false contract" to defraud Mr. Licona. He further alleged that Ms. Schayot had no intention to transfer the property to him after he paid the sales price and that Ms. Schayot had been unjustly enriched because of the fraud.
Ms. Schayot filed a reconventional demand against Mr. Licona, alleging therein that she loaned her brother money to fund the purchase of the subject trailer, which she obtained from a loan at a bank. She alleged that at all times, Mr. Arostegui had complete authority to use the trailer and to contract to sell the trailer. She claimed that despite Mr. Licona's knowledge that Mr. Arostegui had full authority regarding the trailer, Mr. Licona added her as a defendant to the lawsuit and alleged fraud and conspiracy on her part with malice and reckless disregard for the truth. She sought to recover from Mr. Licona damages to her reputation and credit, mental anguish, and consequential damages allegedly caused by the false allegations in Mr. Licona's petition and Mr. Licona's failure to make a good faith effort to investigate the truth of the allegations after notice.
A bench trial was held, during which Mr. Licona's case-in-chief consisted primarily of his testimony and the testimony of Mr. Arostegui. Thereafter, Ms. Schayot's attorney moved for an involuntary dismissal of the cause of action for fraud and unjust enrichment against Ms. Schayot. The attorney argued that Mr. Licona failed to introduce any evidence of the essential elements of his claim for fraud, namely, misrepresentation of a material fact by Ms. Schayot with the intent to deceive. In response, Mr. Licona's attorney, Mr. Gabriel Mondino, urged that Mr. Arostegui testified that he was acting with Ms. Schayot's authority and that it was reasonable to conclude that all of the actions taken by Mr. Arostegui in relation to the contract for the sale of the trailer were sanctioned by Ms. Schayot. The trial court granted the motion for involuntary dismissal, concluding there was no evidence to link Ms. Schayot to any agreement, direct or indirect, with Mr. Licona. The court further found that there was no evidence presented to indicate that Ms. Schayot committed a fraud on Mr. Licona.
The trial court entered judgment on September 13, 2010, awarding Mr. Licona $6,000.00 against Mr. Arostegui and dismissing Ms. Schayot's defamation claim. In dismissing Ms. Schayot's defamation claim, the court concluded that while the statements in the pleadings and in the record made with respect to Ms. Schayot were defamatory per se, Ms. Schayot was not entitled to an award of damages against Mr. Licona because Mr. Licona did not verify the pleadings and there was no proof that Mr. Licona had actual knowledge of the defamatory pleadings. However, the court questioned Mr. Mondino's failure to dismiss Ms. Schayot from the litigation despite being given two opportunities to do so, noting that such refusal appeared to be unjustified given the lack of evidence at trial to support the allegations against Ms. Schayot, which led to her involuntary dismissal from the litigation. The court ordered that a hearing be held in accordance with La. C.C.P. art. 863 for Mr. Mondino to show cause why he should not be sanctioned under La. C.C.P. articles 863 and 864 for failing to dismiss Ms. Schayot from the litigation.
At a hearing held on November 10, 2010, Mr. Mondino's attorney argued that Ms. Schayot was added as a defendant after Mr. Arostegui filed an answer on his own behalf, revealing that title to the trailer was in his sister's name. He further stated that after Mr. Licona breached the contract by moving the trailer without notice and permission, "we had to hunt him on our own as it appears that he [Mr. Licona] was not going to let us know where the trailer had been relocated." Mr. Mondino's attorney also pointed to a letter from Ms. Schayot's attorney after the lawsuit was filed, stating that Mr. Arostegui had her full authority to use the trailer and to negotiate any transactions he chose. Mr. Mondino continued to take the position he took at trial, principally, that Ms. Schayot was responsible under the law for her brother's actions.
At the conclusion of the hearing, the trial court expressed its belief that there was certainly reason to include Ms. Schayot in the litigation initially, and that the use of the word "fraud" in the amending petition adding her as a defendant may have been ill advised, but was excusable, at that point in time. However, the court stated, after discovery had been completed, Mr. Mondino had a chance to dismiss Ms. Schayot from the litigation when there was no reasonable basis to believe there was fraud on her part, and had the same chance again when the trial began. The court felt that Mr. Mondino "crossed the line" when he alleged fraud and failed to withdraw the allegation when there was no evidence to support the allegation. The court stated that all of the evidence showed that Ms. Schayot was simply a sister helping out her brother who fell on hard times by loaning him money indirectly, and there was no evidence to link her to her brother's fraudulent actions. Thus, the court concluded, Mr. Mondino should have corrected his mistake on the morning of the trial by dismissing Ms. Schayot from the lawsuit, and he violated Article 863 for not so doing. The court imposed sanctions in the amount of $3,465.00, representing the cost of attorney's fees incurred by Ms. Schayot in defending the litigation. Mr. Mondino filed this appeal, challenging the imposition of sanctions against him.
MOTIONS TO DISMISS
Both parties filed motions to strike portions of the other party's brief. We grant Mr. Mondino's motion to strike that portion of Ms. Schayot's brief asking for an increase in the amount of the sanctions imposed by the trial court. Ms. Schayot did not appeal the judgment. Louisiana Code of Civil Procedure article 2133(A) provides that an appellee desiring to have the trial court's judgment modified, revised, or reversed is obligated to timely answer the appeal. Ms. Schayot did not answer the appeal. Because Ms. Schayot did not appeal the amount of the sanctions or answer the appeal, this court may not review this allegation of error in her brief. In all other respects, the motions to strike are denied.
SANCTIONS
Louisiana Code of Civil Procedure article 863 authorizes a court to impose sanctions upon an attorney who signs pleadings without making an objectively reasonable inquiry into the facts and the law. Brown v. Sanders, 2006-1171 (La. App. 1sl Cir. 3/23/07), 960 So.2d 931, 934. Article 863 provides, in pertinent part:
B. ... the signature of an attorney or party shall constitute a certification by him that he has read the pleading, and that to the best of his knowledge, information, and belief formed after reasonable inquiry, he certifies all of the following:
(1) The pleading is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation.
(2) Each claim, defense, or other legal assertion in the pleading is warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law.
(3) Each allegation or other factual assertion in the pleading has evidentiary support or, for a specifically identified allegation or factual assertion, is likely to have evidentiary support after a reasonable opportunity for further investigation or discovery.
. . .
D. If, upon motion of any party or upon its own motion, the court determines that a certification has been made in violation of the provisions of this Article, the court shall impose upon the person who made the certification...an appropriate sanction which may include an order to pay to the other party the amount of the reasonable expenses incurred because of the filing of the pleading, including reasonable attorney fees.
This provision imposes upon attorneys and litigants affirmative duties as of the date a document is signed. Bracken v. Payne and Keller Co., Inc., 20060865 (La. App. 1st Cir. 9/5/07), 970 So.2d 582, 591; Tubbs v. Tubbs, 96-2095 (La. App. 1st Cir. 9/19/97), 700 So.2d 941, 945. It is well settled that Article 863 sanctions are not to be imposed simply because parties disagree as to the correct resolution of a matter in litigation or a particular argument or ground for relief is subsequently found to be unjustified. Brown, 960 So.2d at 934. This article is intended to be used only in exceptional circumstances: where there is even the slightest justification for the assertion of a legal right, sanctions are not warranted. Tubbs, 700 So.2d at 945. A trial court should avoid using the wisdom of hindsight and should test the signer's conduct by inquiring what was reasonable to believe at the time the pleading was filed. Brown, 960 So.2d at 934. A trial court's factual determination of whether a party violated Article 863 is reviewed on appeal pursuant to the manifest error or clearly wrong standard of review. See Brown, 960 So.2d at 933.
After examining the record, we find that the trial court was clearly wrong in imposing sanctions under Article 863 on Mr. Mondino. The trial court found, and we agree, that it was certainly reasonable to add Ms. Schayot, the record owner of the trailer, as a defendant in Mr. Licona's lawsuit seeking to recover damages as a result of the seizure of the trailer and/or the return of the trailer to him. We further agree with the trial court's conclusion that when Mr. Mondino signed the amended petition adding Ms. Schayot as a defendant, he was justified in alleging that Ms. Schayot, the record owner of the trailer, had some legal responsibility for her brother's wrongful seizure of the trailer and was unjustly enriched as the result of Mr. Arostegui's actions. Mr. Licona failed to prove at trial that Ms. Schayot should be held responsible for her brother's actions under any legal theory. However, failure to prevail does not trigger an award of sanctions. Tubbs, 700 So.2d at 945. We conclude that Mr. Mondino's conduct simply does not rise to the level of sanctionable conduct contemplated by Article 863, and we reverse the imposition of sanctions against him.
CONCLUSION
For the foregoing reasons, the judgment appealed from is reversed. All costs of this appeal are assessed to appellee, Lynn Schayot.
REVERSED.