1. Pleadings--Rule 11 sanctions--time for filing motion
A motion for Rule 11 sanctions was not filed within a
reasonable time where defendant obviously formed an opinion of
the alleged impropriety of plaintiff's pleadings long before the
filing of its motion for sanctions. The Court of Appeals
declined to impose any time limits contrary to the plain language
of the rules, which do not contain explicit time limits for Rule
11 motions; however, a party should make a the motion within a
reasonable time after discovering an alleged impropriety.
2. Pleadings--Rule 11 sanctions--effect of jury verdict
The fact that the jury found against plaintiff is not proof
as a matter of law that her pleadings were unfounded, baseless,
improper, or interposed for an improper purpose.
3. Costs--fees denied--no abuse of discretion
The trial court was well within its discretionary powers in
denying defendant's motion for attorney fees under N.C.G.S. § 95-
25.22(d) where the court had presided over a week-long jury trial
as well as these post-judgment matters, had the advantage of
being able to consider the evidence presented at the trial, and
had concluded that plaintiff's action was not frivolous.
4. Appeal and Error--notice of appeal--timeliness--motion for
attorney fees--separate proceeding
The trial court did not err in dismissing plaintiff's appeal
from a judgment on a jury verdict where plaintiff did not deny
that her notice of appeal from that judgment was entered more
than one year after entry but contended that she did not have to
appeal from the judgment on the verdict until all claims arising
from the action were determined. Defendant's motion for attorney
fees was a separate proceeding which did not toll the time in
which plaintiff had to give notice of appeal.
5. Appeal and Error--notice of appeal from sanctions--
timeliness
Plaintiff's appeal from an order denying Rule 11 sanctions
must be dismissed where plaintiff did not give notice of appeal
until more than 30 days after denial of her motion, although she
did file a notice of appeal within ten days of defendant's notice
of appeal of the denial of its motion for sanctions. Plaintiff's
motion for sanctions was an independent motion and the 10-day
extension provided by Rule 3 of the Rules of Appellate Proceduredoes not apply. Appeal by plaintiff from orders entered 19 November 1997, 23
December 1997, and 17 April 1998 by Judge Edward H. McCormick in
Lee County District Court; and appeal by defendant from order
entered 23 December 1997 by Judge Edward H. McCormick in Lee
County District Court. Heard in the Court of Appeals 23 February
1999.
On 19 October 1995, Jennifer P. Rice (plaintiff) filed a
complaint against her former employer, Danas, Incorporated
(defendant), seeking unpaid wages and attorney fees pursuant to
the Wage and Hour Act, and damages for her funds and property
allegedly retained by defendant. Defendant filed an answer and
counterclaims for unfair and deceptive acts and practices,
constructive fraud, and punitive damages on 3 January 1996. The
case was tried before a jury for almost eight days beginning 12
November 1996. The jury returned a verdict favorable to
defendant upon its counterclaims finding that plaintiff breached
her employment with defendant by diverting business which she
was hired to produce for defendant, finding that defendant was
actually damaged in the sum of $2,489.32, and awarding punitive
damages in the sum of $12,500.00 to defendant. On 5 December
1996, the trial court entered judgment on the jury verdict in the
above amounts of actual and punitive damages, and taxed plaintiff
with the costs.
On 10 December 1996, defendant moved that the costs of this
action, including deposition costs, be taxed to plaintiff. On 30
June 1997, defendant filed an amendment to its motion for costs,
asking that the trial court require plaintiff to pay defendant'sattorney fees pursuant to provisions of the Wage and Hour Act.
On the same date, defendant also filed a motion for sanctions
against plaintiff and her counsel pursuant to the provisions of
Rule 11 of the North Carolina Rules of Civil Procedure. On 22
July 1997, plaintiff filed a Rule 11 motion for sanctions against
defendant's counsel based on defendant's motion for sanctions
against plaintiff and her counsel. The trial court heard all the
post-judgment motions on 17 November 1997, denying plaintiff's
motion for sanctions by order entered 19 November 1997. The
trial court allowed defendant's motion for recovery of its
deposition costs, but denied defendant's motion for sanctions and
attorney fees by order entered 23 December 1997.
On 21 January 1998 defendant appealed from the denial of its
motions. On 2 February 1998, plaintiff attempted to appeal from
the denial of her motion for sanctions, from the order taxing
deposition costs, and from the judgment on the verdict entered 5
December 1996. Defendant then moved to dismiss plaintiff's
appeal from the judgment entered on the jury verdict and moved to
dismiss plaintiff's appeal from the denial of her motion for
sanctions. On 20 April 1998, the trial court allowed defendant's
motion to dismiss plaintiff's appeal from the judgment on the
jury verdict, but denied defendant's motion to dismiss
plaintiff's appeal from the denial of plaintiff's motion for
sanctions. Plaintiff appealed from the trial court's order
partially dismissing her appeal. On 18 August 1998, defendant
moved in this Court to dismiss plaintiff's appeal from the denial
of her motion for sanctions on the grounds that notice of appealwas given more than 30 days from the entry of the order denying
sanctions.
G. Hugh Moore for plaintiff appellant/appellee.
Wilson & Waller, P.A., by Betty S. Waller, for defendant
appellant/appellee.
HORTON, Judge.
The following issues are raised by the parties on appeal:
(I) whether the trial court erred in denying defendant's motion
for sanctions; (II) whether the trial court erred in denying
defendant's motion for attorney fees; (III) whether the plaintiff
(A) appealed in apt time from the 5 December 1996 judgment
entered on the jury verdict, and (B) from the 19 December 1997
order of the trial court denying her motion for sanctions. We
note that despite her notice of appeal, the plaintiff did not
assign error to the trial court's award of costs, including
deposition costs, to defendant nor did plaintiff make any
argument or advance any authority on the propriety of the award
of costs. Therefore, plaintiff has abandoned her appeal as to
that aspect of the 23 December 1997 order. N.C.R. App. P.
28(b)(5).
On 27 June 1997, almost seven months after judgment was
entered on the jury verdict, defendant filed a motion for
sanctions against plaintiff and her counsel, alleging that
counsel for plaintiff commenced this action without investigating
to determine whether it was well grounded in fact and in law;
that early in the course of litigation, information was presentedto counsel for plaintiff which demonstrated the fraudulent nature
of plaintiff's conduct, but counsel never investigated the
information or talked with available witnesses; that counsel for
plaintiff pursued the unfounded claims of plaintiff to a jury
verdict, even calling plaintiff as a witness and eliciting
testimony which any reasonable attorney experienced in civil
litigation would have known to be patently false; that counsel
for plaintiff filed documents with the trial court in an effort
to interfere with defendant's discovery efforts, and refused to
cooperate with the efforts of defendant's counsel to carry out
meaningful discovery. Defendant further alleged that the Rule 11
violations were the result of collaboration between plaintiff
and her counsel, however her counsel's conduct was at least equal
to plaintiff's . . . .
Defendant's motion for sanctions was presented to the same
trial judge who presided at the jury trial of this matter. After
hearing the arguments of counsel and considering the record in
the case including the testimony offered at the trial of this
case, the trial court made findings of fact and concluded that:
(a) The papers were well grounded in
fact with factual disputes having been
submitted to the jury.
(b) The papers filed by plaintiff
presented claims warranted by existing law or
a good faith argument for the extension of
existing law.
(c) The papers filed by plaintiff were
not interposed for an improper purpose.
(d) The action filed by plaintiff was
not frivolous.
(e) The defendant should recover itsdeposition and court costs.
The trial court then awarded defendant court costs in the amount
of $2,078.08, but denied defendant's claims for attorney fees and
for sanctions.
[1]In this case, a preliminary question about the
timeliness of defendant's motion for sanctions must be examined
first. The North Carolina Rules of Civil Procedure do not set
forth explicit requirements about when a motion for Rule 11
sanctions must be filed. Here, the record reflects that the
judgment on the jury verdict was entered on 5 December 1996. On
10 December 1996, defendant moved that it recover its costs,
including deposition costs. Apparently, there was no further
action in the case until 27 June 1997 when defendant moved to
amend her motion for costs to include attorney fees under the
Wage and Hour Act, and filed a separate motion for Rule 11
sanctions.
This Court dealt with the question of the timeliness of a
Rule 11 motion in Renner v. Hawk, 125 N.C. App. 483, 481 S.E.2d
370, disc. review denied, 346 N.C. 283, 487 S.E.2d 553 (1997).
In Renner, defendant Hawk filed a motion for sanctions and
attorney fees one month after plaintiff Renner voluntarily
dismissed his complaint. Id. at 488, 481 S.E.2d at 373.
Plaintiff argued that the trial court had no jurisdiction to
enter sanctions against him following the entry of the voluntary
dismissal, and noted that in prior North Carolina appellate
decisions, the motion for sanctions was pending at the time of
the voluntary dismissal. Id. See also, e.g., Bryson v.Sullivan, 330 N.C. 644, 412 S.E.2d 327 (1992). The Renner Court
declined to set time limits for filing Rule 11 motions, noting
that [n]either Rule 11 nor Rule 41 of the North Carolina Rules
of Civil Procedure contains explicit time limits for filing Rule
11 sanctions motions. We find the reasoning in Cooter [& Gell v.
Hartmarx Corp., 496 U.S. 384, 110 L. Ed. 2d 359 (1990)]
persuasive and decline to impose any time limits contrary to the
plain language of the rules. We agree, though, that 'a party
should make a Rule 11 motion within a reasonable time' after he
discovers an alleged impropriety. Renner, 125 N.C. App. at 491,
481 S.E.2d at 374 (quoting Muthig v. Brant Point Nantucket, Inc.,
838 F.2d 600, 604 (1st Cir. 1988)).
In Renner, defendant argued that the alleged impropriety
became apparent not when the complaint was filed, but only during
the course of discovery. Id. at 491, 481 S.E.2d at 375. We
held, based on that line of argument, that defendant [Hawk]
filed her Rule 11 sanctions motion within a reasonable time of
detecting her alleged impropriety. Id. (emphasis added).
Applying the reasoning of Renner to the present case, we
conclude as a matter of law that defendant's motion for Rule 11
sanctions was not filed within a reasonable time of detecting
[the] alleged impropriet[ies]. In its motion for sanctions,
defendant alleged that [e]vidence abounded at the time of filing
plaintiff's complaint to suggest to a reasonable attorney,
experienced in civil litigation, that the claims of plaintiff
were baseless. Further, defendant alleged that prior to filing
its answer, information was given to plaintiff's counsel whichcast doubt on the validity of plaintiff's claim against
defendant. Defendant further alleged that [b]y the time this
matter was tried to a Lee County jury, numerous instances of
plaintiff's untruthfulness under oath and falsification in the
preparation of documentary evidence had been disclosed through
discovery and by other witnesses. Nevertheless, counsel pursued
the unfounded claims of plaintiff to a jury verdict . . . .
Defendant obviously formed an opinion of the alleged impropriety
of plaintiff's pleadings long before the filing of its motion for
sanctions. Indeed, the suspect pleadings were signed months
before trial by plaintiff and/or her counsel. Yet, no motion for
sanctions was filed until well after the verdict of the jury was
rendered.
[2]The fact that the jury found against plaintiff is not
proof, as a matter of law, that her pleadings were unfounded,
baseless, improper, or interposed for an improper purpose. We
must be cautious not to allow an adverse jury verdict to dictate
the decision on a sanctions motion, as that would amount to
taxing the costs of litigation to the losing party, an approach
that our legislature has not seen fit to embrace. Therefore,
this assignment of error is overruled.
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