The plaintiffs are pro se litigants who sued FNMA in federal court in an effort to challenge a prior state court decision which foreclosed on their mortgage. Because the federal case was barred by res judicata (a doctrine prohibiting a party from litigating the same issue a second time after losing a prior case), FNMA filed a motion for Rule 11 Sanctions. The district court denied the sanctions motion because FNMA did not use the 21-day safe harbor provision in Rule 11, which would have given the plaintiffs 21 days to withdraw their case. The court did order that the plaintiffs were barred from filing any future pleadings without leave of court. The court reasoned as follows:
The same Rule “also provides procedural requirements that must be followed before sanctions can be imposed.” Shamoun v. Federal Nat. Mortg. Ass’n, 2013 WL 2237906, *9 (E.D.Mich. May 21, 2013). Among the requirements is a two-step process under 11(c)(2) of the rule, “known as the `safe harbor’ provision” which requires the party intending to make a motion for sanctions “to `first, serve the Rule 11 motion on the opposing party for a designated period (at least twenty-one days); and then file the motion with the court.'” Shamoun at *9 (citing Ridder v. City of Southfield, 109 F.3d 288, 293-94 (6th Cir.1997)). “This two-step procedure allows the opposing party twenty-one days to withdraw the challenged paper, claim, allegation, etc., and thus avoid Rule 11 sanctions.” Id. (citing Ridder at 294).
Defendants have not applied the two-step safe harbor procedure under subdivision (c)(1)(A) but instead, request that the Court issue a show cause order under its own authority. Defendants’ Brief at 17. A Court may impose sanctions sua sponte“after notice and a reasonable opportunity to respond.” Rule 11(c)(1)(3).
The Court declines to impose sanctions. First, Defendants have not applied the twostep safe harbor procedure or made the request for sanctions in a separate motion which are both required by subsection (c)(2). Defendants’ request for the Court to impose sanctions “sua sponte” under (c)(3) amounts to an end run around the safe harbor requirements of (c)(2) for parties seeking sanctions. Further, given that Plaintiffs are proceeding pro se and in forma pauperis, the sanction of costs and fees is inappropriate. See Hiles (declining to impose sanctions but enjoining the plaintiff from filing any additional motions without leave of Court).
Comment: this decision is a merciful application of the law.