Opinion
10 Civ. 386 (DAB)
08-22-2013
MAC TRUONG, Plaintiff, v. HUNG THI NGUYEN, ALPHONSE HOTEL CORP., ELAINE NGUYEN, SANG KIM NGUYEN, and TRUONG DINH TRAN, Defendants.
MEMORANDUM AND ORDER
After the Second Circuit vacated this Court's March 30, 2011 Order imposing sanctions against Plaintiff Mac Truong ("Plaintiff" or "Truong"), this Court issued an Order to Show Cause, pursuant to Rule 11(c)(3) of the Federal Rules of Civil Procedure ("Rule 11(c)(3)"), why Plaintiff brought the instant action in good faith and should not be sanctioned.
For the reasons that follow, the Court finds that Plaintiff brought the instant action in bad faith, violated Rule 11(b), and is subject to nonmonetary and monetary sanctions. I. Background
A. Plaintiff's Litigation History
Familiarity with the underlying facts is assumed, and they are only repeated here to the extent necessary to resolve this Rule 11 proceeding. This Court has previously set forth Plaintiff's history of filing dozens of lawsuits; the Court will not restate Plaintiff's well-documented history. (Dkt. # 20, at 4-9; Dkt. # 33, at 1-3.)
Because of his pattern of filing repetitive lawsuits, the Second Circuit, the Southern District of New York, the District of New Jersey, and at least one New York State court have imposed leave-to file injunctions against Truong. Truong v. Nguyen, 503 Fed. App'x 34, 36 n.1 (2d Cir. 2012); Truong v. McGoldrick, No. O6 Civ. 1430, 2006 WL 1788960, at *5 (S.D.N.Y. June 27, 2006); Vishipco Line v. Charles Schwab & Co., No. 02 Civ. 7823, No. 02 Civ. 7846, No. 02 Civ. 7877, No. 02 Civ. 7915, No. 02 Civ. 7928, No. 02 Civ. 7929, 2003 WL 1345229 at *9 (S.D.N.Y. Mar. 19, 2003.); Truong v. Alphonse Hotel Corp., No. 101405/09 (N.Y. Sup. Ct. Apr. 17, 2009) ("THE COURT: And I am imposing the following: You may not file another lawsuit without this Court's prior approval. If you do so you will be held in contempt. Do you understand that? DR. TRUONG: Yes, Your Honor."). Additionally, courts have put Plaintiff on notice that filing numerous claims stemming from the same transaction or occurrence is improper. See, e.g., Truong v. Kaye, 328 Fed. App'x 31, 32 (2d Cir. 2009) (advising Plaintiff "that any future frivolous appeals, motions, or other vexatious filing could result in the imposition of sanctions). B. The Instant Suit
Magistrate Judge Henry B. Pitman's March 3, 2011 Report and Recommendation recommended that Defendants' Motion for Summary Judgement be granted. (Dkt. # 18.) Plaintiff filed an Objection, which merely reiterated the arguments he made in his Opposition to Defendants' Motion to Dismiss, (Dkt. # 12), his own Motion for Summary Judgment, (Dkt. # 17), and his Affirmation. (Dkt. # 3.)
On March 30, 2011, the Court Adopted the Report and Recommendation, granted Defendants' Motion for Summary Judgment, and imposed a leave-to-file injunction and monetary sanctions. (Dkt. # 20.) The Second Circuit denied Truong's request to appeal the Summary Judgment decision, but it vacated the injunction and sanctions on procedural grounds. Truong v. Nguyen, 503 Fed. App'x 34 (2d Cir. 2012). The Second Circuit explained, "These procedural errors require us to vacate and remand the district court's order. But we leave to the sound discretion of that court the question of whether leave-to-file and monetary sanctions are appropriate here upon proper notice and an opportunity to be heard." Id. at 36.
C. Rule 11(c)(3) Proceedings
On March 15, 2013, pursuant to Rule 11(c)(3), the Court issued an Order to Show Cause ("OSC"), ordering Plaintiff to show cause why he brought the Complaint in good faith and why he should not be enjoined from filing additional federal court actions relating to Defendants' alleged fraud in August 1997. (Dkt. # 33.) The OSC specified that "Plaintiff has filed several actions in state, federal, and bankruptcy court, all alleging similar claims." (Dkt. # 33.) Plaintiff filed a timely Response as did Defendants. Although he was not granted leave to do so, Truong filed a Reply on May 3, 2013.
In his Response, Plaintiff claims he "filed the complaint herein in good faith, i.e. with the knowledge and conviction that it is meritorious, and its filing was not at all made for any improper purpose." (Pl.'s Response 2.) Instead of explaining why he filed the Complaint in good faith, Plaintiff then recites its factual allegations and his various actions brought before New York state and federal courts. (Id. 2-14, 17-19.)
At times when making these recitations, Plaintiff misstates the record. For example, he writes, "Judge Pitman had determined that plaintiff filed the complaint herein in good faith, and should not be subject to sanction because of such filing." (Id. 10.) Magistrate Judge Pitman made no such determination or recommendation. Truong also writes that the Second Circuit "issued an order finding in substance that there was no rational basis for the U.S. District Court to grant Defendants' summary judgment," which the Second Circuit did not do. Compare Truong, 503 Fed. App'x at 36 with Pl.'s Response 12. He also avers that the Second Circuit decided "with finality" that he "filed this case in good faith," which is unsupported by the Second Circuit's ruling. Compare Truong, 503 Fed. App'x 34 with Pl.'s Response 14. On the basis of these misstatements, Plaintiff states he filed the instant action in good faith.
Plaintiff then argues that all his leave-to-file injunction orders should be lifted. (Pl.'s Response 15-17.) He claims he was disbarred without any evidence and that he is an attorney admitted to practice before the Second Circuit. (Id. 16-17.) Additionally, Truong erroneously states that a reason for the Court's OSC was his disbarment. (Id. 21.) He asserts this Court issued the OSC for an "improper purpose" because the issue of whether his Complaint was frivolous "had been clearly and substantially raised exactly six times" and determined "with finality" that he filed it in good faith. (Id. 21-22, 14.) He also argues that, because of the death of Truong Dinh Tran, "the Court's instant order to show cause should be vacated as a matter law [sic] due to the court's lack of subject-matter jurisdiction, and/or the theory of res judicata, and/or the Rooker-Feldman doctrine." (Id. 20.) Yet, at the same time, he requests this Court to "grant sua sponte an order lifting all filing injunction order(s) against plaintiff." (Id. (emphasis removed).)
Plaintiff also asserts, "various courts' injunction orders against me are only cautious warnings against my right to litigate to ensure that it would be exercised with due care and in absolute good faith." (Pl.'s Response 21 (emphasis added).)
He erroneously claims that his disbarment "did not mean that I have done anything improper to be sanctioned by this Court . . . [and that] my disbarment does not imply that I have filed claims without any merit for the sole purpose of harassing my adversaries." (Pl.'s Response 21.) While he asserts the Third Circuit "formally vacated . . . the finding of misconduct rationalizing my said disbarment," (Id. 21), Plaintiff provides no evidence of such a decision, nor can the Court find one.
Defendants' Response discusses some of Plaintiff's lawsuits, noting that many relitigate the same subject matter as the Complaint, and they have been dismissed on res judicata and collateral estoppel grounds. (Defs.' Response 1-7.) Defendants note that, only months after a state court dismissed Plaintiff's action, he brought this Complaint, which made nearly identical allegations of wrongful conversion of his Schwab accounts, albeit he added two additional frivolous causes of action. (Id. 7-8.)
In his Reply, Plaintiff writes, "[D]efendants make it absolutely undisputed that the instant [OSC] is the eighth time the issue of whether plaintiff had filed this action in good faith." (Pl.'s Reply 2.) He conclusorily states, "[D]efense Memorandum is undisputed evidence that . . . [the OSC] is without merits and issued for improper purpose." (Id. 2.) II. Discussion
A. Legal Standard for Sanctions
Pursuant to Rule 11(c)(3), a court on its own initiative "may order . . . [a] party to show cause why conduct specifically described in the order has not violated Rule 11(b)." Fed. R. Civ. P. 11(c)(3). A party violates Rule 11(b) when it brings a cause of action "for any improper purpose," when "the claims, defenses, or other legal contentions are [not] warranted by existing law," or when "the denials of factual contentions are [not] warranted on the evidence." Fed. R. Civ. P. 11(b)(1),(2); Sassower v. Field, 973 F.2d 75, 81 (2d Cir. 1992); Williamson v. Recovery Ltd. P'ship, 542 F.3d 43, 51 (2d Cir. 2008) (explaining that conduct is sanctionable if a party makes "false, misleading, improper, or frivolous representations to the court"). "The fact that a litigant appears pro se does not shield him from Rule 11 sanctions." Malley v. New York City Bd. of Educ., 207 F. Supp. 2d 256, 259 (S.D.N.Y. 2002); Colliton v. Cravath, Swaine & Moore LLP, No. 08 Civ. 400, 2008 WL 4386764, at *13 (S.D.N.Y. Sept. 24, 2008) (sanctioning a pro se former attorney).
When a court initiates a Rule 11 inquiry, sanctions are imposed only if the party acted with "bad faith." S.E.C. v. Smith, 710 F.3d 87, 97 (2d Cir. 2013); In re Pennie & Edmonds LLP, 323 F.3d 86, 91 (2d Cir. 2003). "[B]ad faith conduct may include pursuing 'frivolous contentions' and making 'frivolous motions' . . . or 'where the action is completely without merit.'" McGuire v. Village of Tarrytown, No. 08 Civ. 2049, 2011 WL 4347175, at *2 (S.D.N.Y. Sept. 14, 2011) (citations omitted); In re 60 East 80th Street Equities, Inc., 218 F.3d 109, 116 (2d Cir. 2000). When a party brings multiple claims, a court engages in a three-step sanction inquiry. Gurary v. Nu-Tech Bio-Med, Inc., 303 F.3d 212, 223 (2d Cir. 2002). "First, the Court must determine whether frivolous claims have been brought . . . , [second], the Court must determine whether non-frivolous claims were [brought] . . . , and if so, 'whether these claims--whatever their number--are of a quality sufficient to make the suit as a whole non-abusive and the Rule 11 violation not substantial.'" Amorosa v. Ernst & Young LLP, No. 03 Civ. 3902, 2010 WL 245553, at *4 (S.D.N.Y. Jan. 20, 2010) (quoting Gurary, 303 F.3d at 223).
This contrasts the objective unreasonableness standard when a party makes a Rule 11 motion. In re Pennie & Edmonds LLP, 323 F.3d at 90.
B. Plaintiff's Conduct is Sanctionable
In filing the instant suit, Plaintiff has acted in bad faith. Plaintiff repeatedly has been admonished by various courts for bringing repetitive and meritless actions relating to his Schwab accounts. See, e.g., Truong v. Kaye, 328 Fed. App'x 31, 32-33 (2d Cir. 2009). Despite being told that he "has abused the process of the Court in pursuing these actions," Plaintiff brought the instant suit alleging the same claims that he repeatedly has brought with respect to the Schwab accounts and Defendants' alleged conversion of his accounts. (Compl. ¶¶ 33-56, 60-64.) These allegations are plainly barred by collateral estoppel and res judicata, as various courts repeatedly have held. See, e.g., Vishipco Line, 2003 WL 1345229, at *4-8; Truong v. Truong, No. 03 Civ. 3423, 03 Civ. 3242, 03 Civ. 3425, 2007 WL 415152, at *6-11 (S.D.N.Y. Feb. 5, 2007).
Vishipco Line, 2003 WL 1345229 at *9. --------
Plaintiff, however, did assert one relatively novel claim, namely that Defendants and their attorneys willfully acted in concert with New York state judges to violate Plaintiff's civil and constitutional rights. (Compl. ¶¶ 57-59.) Nonetheless, that claim too is meritless. See Truong v. Bogatin, No. 10 Civ. 387, Dkt. # 2 (dismissing Plaintiff's claim that Defendants' attorneys willfully acted in concert to violate his civil rights because it "lacks an arguable basis either in law or in fact . . . [and] plaintiff presents no arguably meritorious case"). Accordingly, Plaintiff's entire Complaint only asserts frivolous claims, making the instant suit abusive of the Court's process. See Amorosa, 2010 WL 24553, at *4.
Because Plaintiff repeatedly has been warned that his claims are without merit and yet has brought the instant suit alleging substantially the same claims, this Court finds that Plaintiff acted with bad faith in filing this frivolous Complaint. See Gollomp v. Spitzer, 568 F.3d 355, 369 (2d Cir. 2009) (upholding a finding of bad faith where "several courts had already instructed plaintiff's counsel that similar claims . . . were barred"); Pentagen Techs. Int'l Ltd. v. United States, 172 F. Supp. 2d 464, 473-74 (S.D.N.Y. 2001) (finding bad faith where plaintiffs "engaged in a pattern of litigation designed to evade previous rulings" and "were keenly aware of the repetitive nature of their claims"). Even though Truong is no longer an attorney, he is capable of complying with Rule 11, especially given the many warnings he has received. See Colliton, 2008 WL 4386764, at *13 ("Moreover, as a former attorney with experience, [the plaintiff] is fully capable of conforming with the demands of Rule 11.").
This finding of bad faith is reinforced by the fact that Plaintiff, in responding to the OSC, used the Court's Order as an opportunity to relitigate issues already dismissed in the Court's Adoption of the Report and Recommendation, thereby demonstrating Plaintiff's unabated desire to continue litigating frivolous claims. Moreover, in an attempt to relitigate claims, he plainly misstated the Second Circuit's holding, Truong v. Nguyen, 503 Fed. App'x 34, and Judge Pitman's Report and Recommendation.
C. Legal Standard for Appropriate Sanctions
"Once a court determines that Rule 11(b) has been violated, it may . . . impose sanctions limited to what is 'sufficient to deter repetition of such conduct.'" Margo v. Weiss, 213 F.3d 55, 64 (2d Cir. 2000). "District courts are given broad discretion in tailoring appropriate and reasonable sanctions." O'Malley v. N.Y.C. Transit Auth., 896 F.2d 704, 709 (2d Cir. 1990); Smith, 710 F.3d at 98 (same). In determining whether and what sanctions to impose, the 1993 Advisory Committee Note to Rule 11 set forth certain factors to consider, including
(1) whether the improper conduct was willful, or negligent; (2) whether it was part of a pattern or activity, or an isolated event; (3) whether it infected the entire pleading, or only one particular count or defense; (4) whether the person has engaged in similar conduct in other litigation; (5) what effect it had on the litigation process in time or expense; (6) whether the responsible person is trained in the law; (7) what amount, given the financial resources of the responsible person, is needed to deter that person from repetition in the same case.Colliton, 2008 WL 4386764, at *12.
Sanctions may include "nonmonetary directives" and monetary penalties." Fed. R. Civ. P. 11(c)(4). However, "a court may award attorneys' fees under Rule 11 only 'if imposed on motion' . . . thus preclud[ing] a court from awarding attorneys' fees on its own initiative." Muwesra v. Merrill Lych, Fenner & Smith, Inc., 174 F.3d 87, 94 (2d Cir. 1999). Absent a motion, a court still has "authority to order sanctions payable to the court." Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 57 (2d Cir. 2000). A court may fashion an order requiring a party "to secure prior leave from the court before filing further actions . . . when the offending party has filed multiple frivolous motions or actions." Rowe Entm't v. William Morris Agency Inc., No. 98 Civ. 8272, 2013 WL 182787, at *3 (S.D.N.Y. Jan. 17, 2013) (collecting cases); Hong Mai Sa v. Doe, 406 F.3d 155, 158 (2d Cir. 2005).
D. Plaintiff's Sanctions
Plaintiff has already been enjoined from filing claims relating to his Schwab accounts within the Southern District of New York. Truong v. McGoldrick, 2006 WL 1788960, at *5; Vishipco Line, 2003 WL 1345229 at *10. Nonetheless, this has not deterred Plaintiff; he has continued filing similar suits within this District. See, e.g., In re Mac Truong, No. 13 Civ. 2771; Truong v. Bogatin, No. 10 Civ. 387; Truong v. Kratzman, No. 07 Civ. 7070; Truong v. Neal, No. 07 Civ. 2473; Truong v. Kaye, No. 07 Civ. 2483; Truong v. Marcus, No. 04 Civ. 6853. The Second Circuit has explained,
[I]n determining whether or not to restrict a litigant's future access to the courts, should consider the following factors: (1) the litigant's history of litigation and in particular whether it entailed vexatious, harassing or duplicative lawsuits; (2) the litigant's motive in pursuing the litigation, e.g., does the litigant have an objective good faith expectation of prevailing?; (3) whether the litigant is represented by counsel; (4) whether the litigant has caused needless expense to other parties or has posed an unnecessary burden on the courts and their personnel; and (5) whether other sanctions would be adequate to protect the courts and other parties.Safir v. U.S. Lines, Inc., 792 F.2d 19, 24 (2d Cir. 1986); Lipin v. Hunt, 573 F. Supp. 2d 836, 844 (S.D.N.Y. 2008). Because of Truong's extensive history of filing duplicative and vexatious lawsuits, his lack of an objective good faith expectation of prevailing, his onerous burden on the courts and other parties, and his refusal to obey previous injunctions, the Court finds that the prior leave-to-file sanctions imposed by Judge Shira A. Scheindlin and Judge Sidney H. Stein against Truong are in full force and effect. See Truong, 2006 WL 1788960, at *5; see also Vishipco Line, 2003 WL 1345229, at *10.
Because prior injunctions have not deterred Plaintiff from filing vexatious suits, an additional sanction is necessary to deter Truong. Accordingly, a monetary sanction, payable to the court in the amount of $10,000.00, is also appropriate to discourage Plaintiff's any further duplicative filings. However, "[a]s a final matter of the [Rule 11] sanctions determination, courts must take into account the financial circumstances of the sanctioned party." Ass'n of Holocaust Victims for Restitution of Artwork and Masterpieces v. Bank Austria Creditanstalt AG, No. 04 Civ. 3600, 2005 WL 3099592, at *8 (S.D.N.Y. Nov.17, 2005) (citing Sassower v. Field, 973 F.2d 75, 81 (2d Cir. 1992)).
This Court therefore will afford Plaintiff one opportunity "to demonstrate that the sanctions set forth above will be an unreasonable burden." Weinraub v. Glen Rauch Sec., Inc., 419 F. Supp. 2d 507, 520 (S.D.N.Y. 2005). Plaintiff may, within 45 days of the date of this Order, submit a sworn affidavit, valid and accurate personal financial records (including tax returns), and any other truthful and relevant supporting documents, which explain any financial circumstances that demonstrate why he cannot pay in full the $10,000.00 sanctions this Court is inclined to award. Weinraub, 419 F. Supp. 2d at 520; Adams v. IntraLinks, Inc., No. 03 Civ. 5384, 2005 WL 1863829, at *5 (Aug. 5, 2005) ("Conclusory [assertions of hardship], without a backing of 'hard data,' do not suffice to show that the imposition of sanctions in the amount necessary to compensate defendants would be unjust."(quotation and citation omitted)). This submission shall not address any of Plaintiff's causes of action or the issue of whether Rule 11 sanctions are appropriate. Defendants' response, if any, is due within 30 days of service of Plaintiff's submission. There shall be no extensions of Plaintiff's filing date. III. Conclusion
For the foregoing reasons, this Court finds that Plaintiff has violated Rule 11(b) of the Federal Rules of Civil Procedure. As set forth above, the leave-to-file injunctions entered into by Judge Shira A. Scheindlin and Judge Sidney H. Stein against Plaintiff in the Southern District of New York are in full force and effect. Monetary sanctions against Plaintiff are provisionally awarded in the amount of $10,000.00 payable to the Court. Plaintiff must submit financial documentation, as set forth above, within 45 days of the date of this Order. Failure to file timely, truthful, and relevant documentation shall result in the imposition of the $10,000.00 sanction. SO ORDERED. Dated: New York, New York
August 22, 2013
/s/_________
Deborah A. Batts
United States District Judge