Month: June 2019

Can you file a Rule 11 Motion After Judgment Is Entered?


Rule 11 contains a number of procedural requirements. You must serve the motion for sanctions 21 days before you file it to give the other party an opportunity to withdraw the pleading. One question that has received different answers is whether ot not you can file a motion for sanctions after final judgment is entered.

The case, Blue Heron Commercial Group, Inc. v. Lee Webber, 18-cv-467 (MD Florida June 20, 2019) holds that the motion for sanctions must be filed before final judgment is entered. It is noteworthy that the defendants obtained summary judgment against Blue Heron before they filed the sanctions motion.

As to the timeliness of a Rule 11 motion, the Eleventh Circuit has analyzed Rule 9011 of the Federal Rules of Bankruptcy Procedure, which is “substantially identical” to Rule 11, and “agree[d] with the Second, Fourth, and Sixth Circuits that the service and filing of a motion for sanctions must occur prior to final judgment or judicial rejection of the offending motion.” In re Walker, 532 F.3d 1304, 1309 (11th Cir. 2008)(emphasis added)(quotation and citation omitted). The Eleventh Circuit in Walker thus affirmed the bankruptcy court’s denial of a motion for sanctions because the “motion for sanctions was filed after the offending motion had been denied.” Id.

Here, although it is undisputed that Defendants complied with Rule 11’s safe harbor provision, the Court finds that Defendants’ Motion for Sanctions is due to be denied because Defendants filed the motion after the Court granted summary judgment, entered final judgment, and disposed of Blue Heron’s alleged frivolous pleading. Id. Defendants, however, contend that Walker is inapplicable under the instant facts because, unlike this case, the movant in Walker sought sanctions prior to the conclusion of the 21-day safe harbor provision. The Court does not find that distinction to be determinative in this case because, although the court discussed the safe harbor provision in its analysis, the Eleventh Circuit in Walker did not ultimately base its ruling on the movant’s failure to satisfy the safe harbor provision. Walker, 532 F.3d at 1309. Rather, as discussed above, the court affirmed the bankruptcy court’s denial of sanctions because the “motion for sanctions was filed after the offending motion had been denied.” Id.

The Seventh Circuit follows a different rule, allowing a motion for sanctions to be filed after judgment.

The Blue Heron court also declined to award sanctions under its inherent powers on the ground that the arguments raised by Blue Heron were not frivolous.

The issue as to whether you must file a sanctions motion before judgment is entered is an unsettled question of law. The rules in one circuit may differ from the rules in another circuit. Someday the Supreme Court may resolve this conflict.

Ed Clinton, Jr.

http://www.clintonlaw.net

Tax Protestor’s Claim For Refund Nets Rule 11 Sanctions


Shawn K. Weiler sued the IRS for refunds for taxes he paid. Weiler v IRS, 17 cv 2226 (N.D. Ohio Eastern Division). The IRS moved for summary judgment and sanctions. The motion for summary judgment was granted and the Magistrate Judge also awarded Rule 11 sanctions for the filing of a frivolous pleading.

Mr. Weiler claimed that the Constitution does not permit the imposition of an income tax. He contended that (1) the Sixteenth Amendment does not authorize a direct, non-apportioned income tax; (2) the federal income tax is an improper excise tax that cannot be levied in this case; and (3) Weiler is not subject to income tax because he is not a governmental employee.

The IRS responded that these arguments have been rejected numerous times by U.S. Courts and are, in fact, frivolous.

The IRS also requested the imposition of Rule 11 sanctions against Weiler.

Under Rule 11, a party signing a pleading attests to the court that, to the party’s knowledge, information, and belief, formed after reasonable inquiry under the circumstances, the claims and legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law. By its own terms, Rule 11 applies to pro se litigants as well as to attorneys.

Once a pleading is found by the court to have violated Rule 11, the Rule itself states that the court “shall impose on the person who signed it, . . . an appropriate sanction,” which may include paying the reasonable expenses incurred by the opposing party as a result of filing the action. District courts have broad discretion in tailoring an appropriate and reasonable sanction. Courts should seek to “impose a sanction limited to that which is sufficient to deter repetition of future conduct, either by the offending party or by others similarly situated.”

Here, Weiler certainly violated Rule 11 in filing this action. He has asserted a taxprotestor claim of the sort that federal courts have uniformly rejected in clear language for years. And numerous federal courts have imposed Rule 11 sanctions in similar tax protestor cases.

Therefore, because Weiler asserted a manifestly frivolous claim that did nothing more than burden the courts and the government with addressing claims that he knew, or should have known, to be completely without merit, I recommend the imposition of sanctions consisting of $1,000 payable to the Clerk of Court.

(Footnotes Omitted)

Comment: the federal courts deal with a significant amount of tax protestor litigation. Here, the tax protestor presented legal theories that have been rejected by the courts for many, many years and was sanctioned as a result.

Ed Clinton, Jr.