Opinion
CASE NO. 19-40172
11-21-2019
IN THE MATTER OF: MICHAEL JOHN RAE Debtor
NOT INTENDED FOR PUBLICATION DECISION AND ORDER DENYING MOTION FOR SANCTIONS
On November 21, 2019
The matter before the court involves a motion, filed by the debtor, for sanctions under Rule 9011(c) to be imposed against Wilmington Savings Fund Society, FSB, its counsel, Michael Kulak, and counsel's firm, Codillis Law, LLC. Ordinarily, the court would schedule the motion for such proceedings as may be appropriate. But, given the motion's deficiencies, it sees no reason to do so here.
Although the debtors served a notice of the motion and the opportunity to object thereto, motions for sanctions are not among those subject to the notice and opportunity to object procedure established by local rule B-2002-2. See, N.D. Ind. L.B.R. B-2002-2(a)(1)-(27). Since the notice was not authorized by the court or its local rules, neither it nor the deadline it purports to establish mean a thing. In re Pratt, 2007 WL 2413010 (Bankr. N.D. Ind. 2007).
A motion for sanctions under Rule 11 may not be filed with or presented to the court unless the opposing party has first been given an opportunity, of at least twenty-one days, to withdraw the offending paper or claim. Fed. R. Civ. P. 11(c)(1)(A); Fed. R. Bankr. P. Rule 9011(c)(1)(A). See also, Northern Illinois Telecom, Inc. v. PNC Bank, N.A., 850 F.3d 880, 881-82 (7th Cir. 2017). This twenty-one day period, often referred to as the "safe harbor" provision, is a mandatory procedural prerequisite, see e.g., Barber v. Miller, 146 F.3d 707, 710 (9th Cir. 1998); Waters v. Walt Disney World Co., 237 F. Supp. 2d 162, 168 (D. R.I. 2002); In re McNichols, 258 B.R. 892, 902-03 (Bankr. N.D. Ill. 2001), and not "merely an empty formality." Divane v. Krull Electric Co., Inc., 200 F.3d 1020, 1026 (7th Cir. 1999). As such, the motion itself should somehow indicate that this requirement has been fulfilled. See, Wilson v. Kautex, Inc., 2009 WL 1657460 (N.D. Ind. 2009). See also, Martins v. Charles Hayden Goodwill Inn School, 178 F.R.D. 4 (D. Mass. 1997) (lack of compliance with safe harbor determined "based on the docket filings").
Nothing about the present motion, or anything accompanying it, suggests that it was served on the bank, Codillis Law and Mr. Kulak at least twenty-one days before it was filed or that they were given any kind of previous warning and opportunity to withdraw the filings the debtor finds so deficient. The certificate of service accompanying the motion indicates it was served on the day before it was filed with the court, and there are no allegations in the motion, or information in any exhibits attached to it, that suggest that the necessary pre-filing warning was given in some other fashion. Given the absence of such information, the motion does not comply with the requirements of Rule 11 and no purpose would be served by inviting for a response or scheduling it for any type of hearing. See, See, Northern Illinois Telecom, Inc., 850 F.3d 880; Wilson v. Kautex, Inc., 2009 WL 1657460 (N.D. Ind. 2009) (where compliance with the safe harbor provision is not apparent from the filings, the court may rule without further notice or hearing). See also, Martins v. Charles Hayden Goodwill Inn School, 178 F.R.D. 4 (D. Mass. 1997) (motion served on the day it was filed had to be denied); Rubio ex rel. Z.R. v. Turner Unified School Dist. No. 202, 475 F. Supp. 2d 1092, 1101 (D. Kan. 2007).
The court is actually doing the debtor a favor by acting now. A precipitously filed motion for sanctions is itself sanctionable conduct. See, Waters v. Walt Disney World Co., 237 F. Supp. 2d 162 (D. R.I. 2002). See also, Fed. R. Civ. P. Rule 11, Advisory Committee Note (1983 Amendments) (A motion for sanctions is itself subject to the requirements of Rule 11); Draper and Kramer, Inc. v. Baskin-Robbins, Inc., 690 F. Supp. 728, 732 ("Rule 11 is not a toy." ). --------
Furthermore, the filings which the debtor alleges are sanctionable - claim number 4 and objections to confirmation - have never been ruled upon. The court has not ruled upon any objection to confirmation because the debtor has consistently withdrawn the challenged plan before the question could be submitted to the court. See, Docket Entry (#80) entered Nov. 15, 2019, Docket Entry (#44) entered Aug. 16, 2019. Neither have the issues raised by the debtor's objection to the bank's claim have been determined. By agreement of the parties, those issues will be the subject of a status conference in connection with the hearing on the debtor's forthcoming plan. See, Docket Entry (#80) entered Nov. 15, 2019. Although Rule 11 does not specify when the motion should be filed, Fed. R. Bankr. P. Rule 9011(c)(1), to file such a motion (as opposed to serving it) before the court has ruled upon the arguments being challenged seems a bit premature. Cf., The Cancer Foundation, Inc. v. Cerberus Capital Management, L.P., 2008 WL 927989 (N.D. Ill. 2008) (sanctions not appropriate where "court is unable to find a purpose other than to seek relief in a court of law."); Draper and Kramer, Inc. v. Baskin-Robbins, Inc., 690 F. Supp. 728, 732 (N.D. Ill. 1988) ("When the accused attorney actually prevails on his underlying position, his effort to turn the tables on his [Rule 11] accuser has particular strength.").
Debtor's motion for sanctions, filed on November 13, 2019, is DENIED.
SO ORDERED.
/s/ Robert E . Grant
Chief Judge, United States Bankruptcy Court