Opinion
NO. 3:00CV026-B-A
June 14, 2000
MEMORANDUM OPINION
This cause comes before the court on the defendants' motion for sanctions. The court has duly considered the parties' memoranda and is ready to rule.
Defendants Windham, Thompson, Cornerstone Rehabilitation of Batesville, Inc. and Cornerstone Rehabilitation of Oxford, Inc. moved for sanctions and the remaining defendants joined in the motion. The pleading of defendants Tedford and Clarksdale Physical Therapy, Inc., styled and docketed on April 21, 2000 as a motion for sanctions, is in fact a joinder.
On April 10, 2000 this cause was dismissed for lack of subject matter jurisdiction due to an absence of complete diversity of citizenship between the plaintiffs and the defendants. The complaint alleges diversity jurisdiction but on its face reflects lack of complete diversity between plaintiff The Rehab Group of Clarksdale, LLC [Clarksdale Rehab Group] and the defendants.
The plaintiffs filed the complaint on February 9, 2000 and a motion for a temporary restraining order on February 15, 2000. On February 17, 2000 defendants Windham, Thompson, Shinall, Tedford, Cornerstone Rehabilitation of Batesville, Inc., Cornerstone Rehabilitation of Oxford, Inc. and Clarksdale Physical Therapy, Inc. filed a response to the motion for a temporary restraining order. On February 18, 2000 the court set the hearing on the motion for a temporary restraining order for March 1, 2000. On February 25, 2000 the plaintiffs filed a notice of service of requests for production of documents on the defendants and defendants Tedford and Clarksdale Physical Therapy, Inc. filed a motion to dismiss for lack of jurisdiction. On February 29, 2000 plaintiff Clarksdale Rehab Group filed a notice of voluntary dismissal pursuant to Rule 41(a) of the Federal Rules of Civil Procedure. On March 1, 2000 defendant Rauch filed a response to the motion for a temporary restraining order and the court heard oral argument on the jurisdictional issue; no hearing was held on the motion for a temporary restraining order. The court took the jurisdictional issue under advisement and granted the parties seven days to submit memoranda. Following the hearing, the plaintiffs' attorney advised the defendants' counsel that the discovery requests propounded by the plaintiffs were withdrawn. Defendant Shinall joined in the motion to dismiss for lack of jurisdiction on March 7, 2000 and defendants Windham, Thompson, Cornerstone Rehabilitation of Batesville, Inc. and Cornerstone Rehabilitation of Oxford, Inc. filed a joinder on March 10, 2000.
During the hearing on March 1, 2000 Clarksdale Rehab Group moved to dismiss its claims pursuant to Rule 21 of the Federal Rules of Civil Procedure.
The defendants complain that the plaintiffs' improper filing of this action in this court without subject matter jurisdiction caused them to incur substantial attorneys' fees and expenses in opposing the motion for a temporary restraining order, preparing for the hearing set for the motion for a temporary restraining order, addressing the jurisdictional issue and defending this action. They seek sanctions, including attorneys' fees, expenses and costs, pursuant to the Mississippi Litigation Accountability Act of 1988, Miss. Code Ann. § 11-55-5, 28 U.S.C. § 1919, 28 U.S.C. § 1927 and the court's inherent equitable authority. The defendants do not contend that the plaintiffs filed the complaint in bad faith. The plaintiffs assert that the lack of complete diversity as to one plaintiff was an oversight. The defendants do not contest the plaintiffs' assertion:
Miss. Code Ann. § 11-55-5 provides in pertinent part:
in any civil action commenced or appealed in any court of record in this state, the court shall award . . . reasonable attorney's fees and costs . . . if the court . . . finds that an attorney or party brought an action . . . that is without substantial justification . . . or if it finds that an attorney or party unnecessarily expanded the proceedings by other improper conduct including, but not limited to, abuse of discovery procedures available under the Mississippi Rules of Civil Procedure.
28 U.S.C. § 1919 provides:
Whenever any action or suit is dismissed in any district court . . . for want of jurisdiction, such court may order the payment of just costs.
This statute does not authorize an award of attorneys' fees. Wilkinson v. D. M. Weatherly Co., 655 F.2d 47, 49 (5th Cir. 1981) ("such `costs' do not include attorney's fees and the district court may not condition the dismissal upon payment thereof.") See 28 U.S.C. § 1920 (attorney's fees excluded from the list of taxable costs). The defendants request an assessment of costs, as well as attorneys' fees and expenses, but did not file a bill of costs, as required under section 1920.
28 U.S.C. § 1927 provides in pertinent part:
Any attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.
On or about February 29, 2000, the Plaintiffs' attorneys, apparently recognizing that this Court did not have subject matter jurisdiction as alleged in their Complaint and in an attempt to cure such defect, filed with this Court a Notice of Dismissal wherein Plaintiff The Rehab Group of Clarksdale, LLC attempted to dismiss its claims against all Defendants pursuant to the provisions of Federal Rule of Civil Procedure 41(a).
Motion for sanctions at 4. See supra note 1.
The defendants contend that the plaintiffs filed the motion for a temporary restraining order "despite the fact that they knew or should have known that this Court did not possess the requisite jurisdiction to enter such an order." The defendants further complain that the plaintiffs bombarded the defendants with affidavits in support of the motion for a temporary restraining order and served requests for production of documents prior to resolution of the jurisdictional issue.
Motion for Sanctions at 2. See supra note 1.
Subsequent to the hearing on the jurisdictional issue, the plaintiffs withdrew their requests for production of documents but on March 15, 2000 again served requests for production of documents.
At the hearing the plaintiffs asserted that it was their understanding that the filing of Clarksdale Rehab Group's notice of dismissal corrected the jurisdictional defect. The jurisdictional issue was first raised in the motion to dismiss filed by defendants Tedford and Clarksdale Physical Therapy, Inc. The notice of dismissal is dated February 28, 2000, three days after the filing of the motion to dismiss for lack of jurisdiction. It appears to the court that the plaintiffs first learned of their mistake upon receipt of the motion to dismiss filed by Tedford and Clarksdale Therapy, Inc. on February 25 and promptly took action in an effort to create diversity by dismissing the nondiverse plaintiff's claims.
The defendants were put on notice of the lack of diversity upon service of the complaint but, like the plaintiffs, apparently overlooked the jurisdictional issue until four days before the scheduled court hearing. All of the defendants responded to the motion for a temporary restraining order before they challenged the court's jurisdiction. When defendants Tedford and Clarksdale Therapy, Inc. moved to dismiss, they could have moved to continue the March 1, 2000 hearing and stay all aspects of the action not related to the jurisdictional issue. The remaining defendants had the same options but declined to exercise them. Even after defendants Tedford and Clarksdale Therapy, Inc. moved to dismiss for lack of jurisdiction, defendant Rauch filed a response to the motion for a temporary restraining order. Since the plaintiffs believed that Clarksdale Rehab Group's notice of dismissal resolved the jurisdictional issue, they had no reason to move to continue the hearing or ensure that the defendants received the nondiverse plaintiff's notice of dismissal before the hearing.
On March 10, the court ruled that no responsive pleadings were due unless and until the court determined that jurisdiction is proper. Yet, on March 13, defendant Rauch filed an answer to the complaint and a counterclaim. With respect to the plaintiffs' discovery requests propounded on March 15, the defendants had the option of moving for a protective order pending a jurisdictional ruling. Instead, defendant Rauch propounded interrogatories and requests for production of documents on March 21 and responded to the plaintiffs' discovery requests on March 27. In any event, it is not asserted that such discovery has not been used in the state court action filed by the plaintiffs against the defendants herein.
The court finds that there is no showing that the plaintiffs acted in bad faith or that they vexatiously multiplied or unduly expanded the proceedings within the purview of the above-referenced state and federal statutes. Although an obvious defect on the face of the complaint, all parties, the writers of the complaint and the receivers of the complaint, overlooked the defect until four days before the scheduled hearing. The court further finds no exceptional circumstances that would invoke the court's inherent authority to impose sanctions. For the foregoing reasons, the court finds that the defendants' motion for sanctions is not well taken and should be denied.
The court need not address the applicability of the Mississippi Litigation Accountability Act in this action.
An order will issue accordingly.