Opinion
Civil Action No. 3:01-CV-2314-D
August 2, 2002
MEMORANDUM OPINION AND ORDER
Defendant Crest Cadillac, Inc. ("Crest") moves the court to dismiss this action under Fed.R.Civ.P. 12(b)(4) and (b)(5), contending that plaintiff failed to effect service within the 120-day period prescribed by Rule 4(m), and for sanctions under Rule 11, asserting that plaintiffs counsel misrepresented facts to the court to obtain an extension of the Rule 4(m) service deadline. The court denies the motion to dismiss but grants the motion for sanctions.
I
Plaintiff Robert B. Meadows ("Meadows") filed this suit pro se on November 16, 2001 against defendants Tony Morrison ("Morrison") and Crest, and the case was assigned to Judge Kendall's docket. The case was reassigned to the undersigned's docket on January 24, 2002, following Judge Kendall's resignation.
As of April 1, 2002 neither Morrison nor Crest had been served. The court issued an order under the authority of Rule 4(m) directing Meadows to demonstrate good cause for failing to effect service on defendants. In an April 23, 2002 response to the court's order signed by J. Paul Nelson, Esquire ("Nelson"), as Meadows' counsel, Nelson represented that he "ha[d] not effected service of the complaint upon the Defendants in this matter due to the ongoing settlement discussions taking place between the parties." P. Resp. at 1. He also stated that "[t]here was a tentative settlement agreement prior to the filing of this suit which may be salvageable, and would save the Court considerable time and resources should settlement be reached." Id. Nelson averred that he was "able to effect immediate service at this time," but he requested additional time to do so. The court granted the motion and continued to June 24, 2002 the deadline for Meadows to serve Morrison and Crest.
On June 11, 2002 the clerk issued a summons for Crest, and the return shows that Crest was served on June 13, 2002. On June 28, 2002 Meadows moved for additional time to serve Morrison, contending he was having trouble locating him. The court granted the motion the same day, extending until August 28, 2002 the deadline for Meadows to serve Morrison.
In its motion to dismiss, Crest acknowledges that it was served on June 13, 2002. See D. Mot. Dis. at 5.
Crest now moves to dismiss under Rules 12(b)(4) and (5) and for Rule 11 sanctions. Crest filed the motions on July 3, 2002, and Meadows' and Nelson's responses were due no later than July 23, 2002. See N.D. Tex. Civ. R. 7.1(e). Meadows and Nelson have not responded to the motions, and they are now ripe for decision.
II
The court turns first to Crest's motion to dismiss. Crest maintains that the court should dismiss the case under Rule 4(m) because the case should have been dismissed in April. It argues that after the 120-day deadline set out in Rule 4(m) had expired, Meadows' counsel falsely represented that he had not effected service due to ongoing settlement discussions, that the case had tentatively settled, and that he was attempting to salvage the settlement. Crest posits that counsel made the misrepresentations solely to obtain a good cause continuance. It argues that, in truth, the parties had had no settlement discussions for months, and Meadows' counsel had made no attempt to salvage the settlement. Crest moves the court to vacate its prior order granting a good cause extension, to dismiss this case, and to award it attorney's fees and costs.
Rule 4(m) provides:
If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period. This subdivision does not apply to service in a foreign country pursuant to subdivision (f) or (j)(1).
Crest has established without contradiction that Meadows was in fact unable to show good cause for an extension. Rule 4(m) is therefore clear: the court in such circumstances must either dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time. See Thompson v. Brown, 91 F.3d 20, 21 (5th Cir. 1996) ("If good cause is present, the district court must extend time for service. If good cause does not exist, the court may, in its discretion, decide whether to dismiss the case without prejudice or extend time for service.").
Although the options available to the court under Rule 4(m) seem clear enough, the decision whether to dismiss the case without prejudice or to order service by a specific date is affected by whether dismissal would effectively be with prejudice. A dismissal with prejudice is reserved only for those cases in which there is a "failure to comply with [a] court order [and the failure] was the result of purposeful delay or contumaciousness and the record reflects that the district court employed lesser sanctions before dismissing the action." Long v. Simmons, 77 F.3d 878, 880 (5th Cir. 1996) (Rule 41(b) case) (footnote omitted); cf. Bann v. Ingram Micro, Inc., 108 F.3d 625, 626 (5th Cir. 1997)("The dismissal with prejudice can never be based on Rule 4(m)'s 120 day requirement."). The court must examine the dismissal in the context of the statute of limitations, because even a dismissal without prejudice is treated as one with prejudice if a subsequent action would be time-barred. See Long, 77 F.3d at 880. From reviewing Meadows' complaint, it appears that if the court dismisses this case, the lawsuit would be barred by limitations.
Although Long is a Rule 41(b) case, there are several Fifth Circuit cases, in varying contexts, that adhere to the premise that lesser sanctions must be imposed before a case is dismissed with prejudice. See, e.g., Bann v. Ingram Micro, Inc., 108 F.3d 625, 627 (5th Cir. 1997) (addressing Rule 16(f) dismissal).
To dismiss Meadows' suit against Crest with prejudice, the court must be able to make the findings required by Long and must comply with its procedural prerequisites. In other words, the court must not only find that Meadows' conduct was the result of purposeful delay or contumaciousness (which the court could perhaps find), it must employ lesser sanctions before dismissing the action. In this case, where the plaintiff obtained an extension of time based on the misrepresentations of his counsel but then effected service within the extended period (thus fulfilling Rule 4(m)'s intent to "get the case moving"), the lesser sanction is to exact a penalty against Meadows' counsel for obtaining an extension based on misrepresented facts, not to punish the client, and to direct that service be effected within a specified time (which Meadows has in fact already accomplished).
Accordingly, the court denies Crest's motion to dismiss.
The decisions of this court that Crest cites in its motion, see D. Mot. Dis. at 3, are not to the contrary. There is no indication in either case that plaintiff's claims would effectively have been time barred by a dismissal without prejudice. Accordingly, the question that the court must now resolve was not presented in those actions.
III
Relying on the same facts as it asserts to support the motion to dismiss, Crest also moves under Rule 11 for sanctions of $1,750 against Nelson. It does not seek such relief from Meadows.Rule 11(b)(3) provides, in pertinent part, that "[b]y presenting to the court (whether by signing, filing, submitting, or later advocating) a pleading, written motion, or other paper, an attorney is certifying that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances, — . . . the allegations and other factual contentions have evidentiary support[.]" Rule 11(c) provides that "[i]f, after notice and a reasonable opportunity to respond, the court determines that subdivision (b) has been violated, the court may, subject to the conditions stated below, impose an appropriate sanction upon the attorneys, law firms, or parties that have violated subdivision (b) or are responsible for the violation." Under Rule 11(c)(2), "[a] sanction imposed for violation of this rule shall be limited to what is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated. Subject to the limitations in subparagraphs (A) and (B), the sanction may consist of, or include, directives of a nonmonetary nature, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of some or all of the reasonable attorneys' fees and other expenses incurred as a direct result of the violation." Rule 11(c)(3) requires that, "[w]hen imposing sanctions, the court shall describe the conduct determined to constitute a violation of this rule and explain the basis for the sanction imposed."
It does not matter that Crest requested a hearing, see D. Mot. Sanctions at 7, and that the court is deciding the motion on the papers. Rule 11(c) requires notice and a reasonable opportunity to respond. No evidentiary hearing is necessary where, as here, Nelson has made no effort to refute the allegations of Crest's motion and the amount of sanctions to be awarded does not of itself warrant a court hearing.
Crest has demonstrated that, in a "response regarding service of complaint" filed with the court April 23, 2002 and signed by Nelson, he represented, without evidentiary support, that "[t]he Plaintiff has not effected service of the complaint upon the Defendants in this matter due to the ongoing settlement discussions taking place between the parties." P. Resp. at 1. Crest has also shown that Nelson represented, without evidentiary support, that "[t]here was a tentative settlement agreement prior to the filing of this suit which may be salvageable, and would save the Court considerable time and resources should settlement be reached." Id. The court therefore holds that Nelson violated Rule 11(b)(3) by presenting to the court a pleading that contained factual contentions that lacked evidentiary support.
Crest moves for sanctions in the amount of $ 1,750. This sum is based on the attorney's fees that its counsel incurred responding by letter to Nelson's misrepresentations and preparing Crest's Rule 11 motion. See M. Brett Burns Aff at ¶ 9. The court concludes that awarding Crest the reasonable attorney's fees that it actually incurred in refuting Nelson's affirmative misrepresentations to the court constitutes the least sanction that is sufficient to deter repetition of such conduct or comparable conduct by others similarly situated.
Accordingly, the court grants Crest's motion for sanctions and awards it the sum of $ 1,750, which Nelson shall pay within 45 days of the date this memorandum opinion and order is filed. If he fails to do so, the court will enter a judgment against him that Crest may collect by normal processes.
* * *
For the reasons set out, the court denies Crest's motion to dismiss and grants its motion for sanctions.
SO ORDERED.