No Rule 11 Violation for ‘Good Faith’ Suit

Standard Subjective; No Sanctions Imposed

Published: 1:00 am Mon, January 19, 1998

By MARK A. COHEN Massachusetts Lawyers Weekly

Two attorneys did not violate Rule 11(a) where they believed that their client’s claims were supported in fact and law, the Supreme Judicial Court has held.After a contract suit brought by the lawyers was was found to be meritless, a trial-court judge had imposed sanctions pursuant to MRCP 11(a) — citing no “reasonable inquiry” by the lawyers as to whether the claims were well-grounded, as required by the current version of federal Rule 11.But the SJC reversed, concluding that the trial judge had erred in incorporating the “reasonable inquiry” requirement into the Massachusetts rule.The “reasonable inquiry” requirement was not added to federal Rule 11 until 1983, while its Massachusetts counterpart has not been amended at all since it was adopted in 1974.Unlike the current federal rule, MRCP Rule 11(a) does not place an affirmative obligation on attorneys to verify that their clients’ claims are well-grounded, the SJC concluded.“[O]ur rule 11(a) authorizes a judge to impose attorney’s fees and costs [only] where an attorney has failed to show a subjective good faith belief that the pleading was supported in both fact and law,” Justice John M. Greaney wrote. (emphasis added)The judge went on to note that, “[a]lthough [the MRCP] standard is less demanding than the objective standard embodied in the amended Federal rule (which obliges attorneys to engage in some prefiling inquiry), … our rule does not excuse an attorney’s ‘willful ignorance’ of facts and law which would have been known had the attorney simply not consciously disregarded them.”The 20-page decision is Van Christo Advertising Inc. v. M/A-COM/LCS, et al., Lawyers Weekly No. 10-011-98.

If The Conduct Fits …

Boston lawyer Richard L. Neumeier, who represented one of the two attorneys, told Lawyers Weekly that “this is a definitive opinion. If you want sanctions against an attorney [in state court] in Massachusetts, you should look at this opinion and see if the attorney’s conduct fits.”According to Neumeier, the opinion makes clear that amendments to Federal Rule of Civil Procedure 11 in 1983 and 1993 do not apply to the rule’s Massachusetts analog.While pleased with the result in the case, Neumeier acknowledged that he was “somewhat surprised” that the SJC chose to articulate a subjective standard for determining when MRCP 11(a) has been violated.“The Appeals Court has previously intimated that an objective standard would apply,” he said.Beverly attorney John N. Greenwood, who successfully argued on his own behalf that he should not be subject to sanctions, said that, prior to this decision, courts were “all over the place” in deciding what type of conduct would result in an assessment of sanctions.“Courts took an ad hoc approach,” he stated. “This decision more clearly defines the standard. It is a step in the right direction.”The subjective standard annunciated by the SJC will allow attorneys’ to pursue more innovative theories than they could have under an objective standard, according to Greenwood.For example, he observed, under an objective standard, an attorney who took a smoker’s case when the law appeared to be clearly against such suits would have possibly been subject to sanctions.Boston lawyer Steven H. Schafer, president-elect of the Massachusetts Academy of Trial Lawyers, said the decision recognizes that lawyers must be able to rely on the representations of their clients.“What I would be concerned about with the so-called ‘objective’ standard which the SJC rejected would be the use of Rule 11 for leverage,” he stated. “After the fact, it is easy to say a case could not to be supported. What you have to look at is the attorney’s good-faith belief on the facts available at the time the pleading is filed.”Boston plaintiffs’ lawyer Douglas K. Sheff agreed with the SJC’s conclusion that the standard for Rule 11 should be subjective.“What is important is what the attorney subjectively thought at the time [the pleading was filed],” he stated. “There shouldn’t be Monday morning quarterbacking.”In addition, Sheff pointed, “in contingent fee cases, like most personal-injury cases, there is a built-in protection against frivolous claims. If the plaintiff doesn’t win, the attorney doesn’t get paid.”Boston attorney Susan G. Brander, who represented the defendant in the underlying action, could not be reached for comment prior to deadline.

Temporary Employee

In January 1988, defendant Dean Ricciardi was hired by plaintiff Van Christo Advertising Inc. as an independent contractor to provide temporary administrative assistance to the president, treasurer and sole shareholder of the company. In this position, Ricciardi maintained the files related to the account of the defendant company, a client of the plaintiff.The plaintiff terminated Ricciardi in October 1988, after he had completed training the person hired to succeed him on a permanent basis. According to the plaintiff, Ricciardi left the plaintiff on “good terms” and was provided with a “very strong reference” for his next job.In April 1988, the defendant company notified the plaintiff that it was terminating its advertising agreement.The following month, the plaintiff’s media director, defendant Amelia Bissett, left and became employed by the defendant company. The plaintiff alleged that Bissett wrongfully took documents that pertained to the defendant company’s account prior to leaving the plaintiff, and that Ricciardi assisted Bissett in removing the documents.The plaintiff noticed that the files pertaining to the defendant company were missing prior to Ricciardi’s departure and questioned him about the files. Ricciardi consistently denied any knowledge of them. During the course of discovery, the missing files were found in the plaintiff’s storage facility.

Two Attorneys

On July 24, 1992, attorney LisaAyn Padilla filed an action for damages in the Superior Court on behalf of the plaintiff, in which the plaintiff alleged that Ricciardi had participated in the misappropriation of its contract with the defendant company.Padilla, who filed an opposition to Ricciardi’s motion to dismiss, withdrew from the case after Ricciardi’s attorney filed a complaint against her with the Board of Bar Overseers. The board ultimately took no action on the complaint.Upon becoming the plaintiff’s successor counsel, attorney John N. Greenwood filed a motion to extend the time for filing an opposition to Bissett’s motion to dismiss; submitted a number of discovery motions; and hired another attorney to conduct a deposition. Greenwood withdrew from the case upon learning that the “missing” files were at the plaintiff’s storage facility.In 1994, the claims were dismissed against all defendants except Ricciardi.On March 17, 1995, summary judgment entered in favor of Ricciardi on the basis that, under G.L.c. 260, Sect. 2A, the remaining claims asserted in the plaintiff’s complaint were time-barred. The court ordered the plaintiff to pay Ricciardi’s attorneys’ fees.

Sanctions Sought

Counsel for Ricciardi subsequently moved to impose sanctions against Padilla and Greenwood for violating MRCP Rule 11(a).MRCP Rule 11(a) provides that “[t]he signature of an attorney to a pleading constitutes a certificate by him that he has read the pleading; that to the best of his knowledge, information, and belief there is a good ground to support it; and that it is not interposed for delay.”A “wilful violation” of the rule may subject an attorney “to appropriate disciplinary action,” although the rule is silent as to the particular disciplinary measures that may be imposed.Applying the objective standard enumerated in the current version of FRCP 11, Superior Court Judge Julian T. Houston concluded that both attorneys had violated MRCP Rule 11(a) and held them jointly and severally liable with the plaintiff to pay Ricciardi’s attorneys’ fees and costs.

‘Virtually Identical’

Greaney observed that “[t]he Massachusetts Rules of Civil Procedure, adopted in 1974, were patterned on the Federal Rules of Civil Procedure, … and the text of our rule 11(a) continues to be virtually identical to the text of its Federal analog prior to the latter’s amendment in 1983.”The judge observed that, unlike the Massachusetts rule, the federal rule was significantly altered in a number of respects in 1983, including the following:

  • the word “wilful” was deleted;
  • language was added requiring attorneys to make “a reasonable inquiry” if a claim is well-grounded in fact; and
  • sanctions, including attorneys’ fees and costs, were made mandatory upon a showing of a violation of the rule.

Because the language of MRCP 11(a) continues to mirror the pre-1983 version of FRCP 11, Greaney concluded that “in applying [Massachusetts’] rule 11 (a), we shall rely on the pre-1983 version of [FRCP] 11.”Applying this standard, Greaney found that MRCP 11(a) authorizes a judge to impose attorneys’ fees and costs where an attorney has failed to show a subjective good faith belief that the pleading was supported both in fact and law.Examining the sanction imposed on attorney Padilla, Greaney noted that Padilla’s affidavit asserted that she “believed the complaint was well-grounded in law and fact, and that she “in good faith, believed” the allegations set forth in the complaint. Padilla supported these statements with a detailed and unchallenged explanation of the steps she took prior to filing the complaint, the judge added.“Under our rule, Padilla’s affirmations in her affidavit are sufficient to withstand Ricciardi’s motion for sanctions,” Greaney found.Padilla’s claim that Ricciardi violated his fiduciary duty to the plaintiff was not “so outlandish as to establish bad faith on her part,” the judge reasoned in finding attorneys fees and costs should not have been assessed against her.Turning to the sanctions imposed on Greenwood, Greaney found that the attorney had not “wilfully” violated Rule 11(a) and, therefore, was also not subject to sanctions.“On learning of the [plaintiff’s] storage facility, Greenwood immediately informed opposing counsel, and on discovering the missing LCS files at the facility, he promptly withdrew from his representation of [the plaintiff],” the judge explained.

Committee’s Domain

The judge observed that FRCP 11 was again amended in 1993 in an effort to remedy some problems that arose in the application of the 1983 amendments.“Had the amendments to the Federal rule been deemed appropriate for incorporation into our rule, we must assume that the [SJC’s standing advisory committee on the rules of civil procedure] would have proposed modifications to the rule,” Greaney wrote. “No such proposals have been made.”However, the judge noted, “[t]he committee may wish to review [MRCP] 11(a) in light of this decision and to consider whether any revisions are warranted.”