Civil Practice – Attorneys – Rule 11 Motion – Timeliness – Post-Appeal

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A motion for sanctions under Rule 11, SCRCP, filed by defendant nine days after remittitur from plaintiff’s unsuccessful appeal, was timely, especially since one part of the consolidated appeal involved the same conduct at issue in the Rule 11 motion.

We affirm the Court of Appeals’ ruling that defendant’s motion under the Frivolous Civil Proceedings Sanctions Act (FCPSA) was untimely. However, we reverse the Court of Appeals’ conclusion that the Rule 11 motion was untimely. We remand for consideration of plaintiff’s arguments as to the merits of the circuit court’s imposition of Rule 11 sanctions.

Background

The defendant-estate’s decedent was a doctor who worked for the plaintiff-medical clinic. Unbeknownst to plaintiff, the doctor was on the U.S. government’s list of excluded providers for Medicare and Medicaid. After the doctor left plaintiff’s employ, plaintiff was required to return $208,821 to the government as “overpayments” because those payments were for the excluded doctor’s services.

Plaintiff then sued the defendant-estate. The estate successfully sought to disqualify plaintiff’s counsel, Tony Megna, who also served as plaintiff’s CEO, on the basis that he was a necessary fact witness. Plaintiff appealed that and other orders (including summary judgment).

After the appeals were resolved in the estate’s favor, and nine days after the Court of Appeals issued the remittitur, the estate filed a motion for sanctions under the FCPSA and Rule 11. Without mentioning the FCPSA, the circuit court granted the estate’s motion for Rule 11 sanctions.

The Court of Appeals concluded that the estate’s motion was untimely under both the FCPSA and Rule 11.

Discussion

Our courts have interpreted S.C. Code Ann. § 15-36-10(C)(1) to require a party to file its motion for sanctions under the FCPSA within 10 days of the entry of judgment. Here, the circuit court granted summary judgment on Sept. 1, 2011, and the estate filed its motion for sanctions under the FCPSA on Jan. 16, 2014. The circuit court was correct to deny this untimely motion, and the Court of Appeals was correct to affirm.

However, Rule 11 does not contain any time limits for filing a motion for sanctions, and our appellate courts have never interpreted Rule 11 to include a specific time limit. Nevertheless, the law does not allow a person to sit on legal rights indefinitely.

In determining whether a motion for sanctions under Rule 11 is untimely, a circuit court must consider (1) whether the court still retains jurisdiction over the case, (2) the timing of the motion in light of the multiple purposes of Rule 11, (3) the doctrine of laches, and (4) reasonableness.

In this case, first, the circuit court had jurisdiction to “take . . . action consistent with the appellate court’s ruling,” which we find includes the estate’s Rule 11 motion.

Second, the timing of the estate’s motion is not inconsistent with the purposes of Rule 11. Defense counsel considered the circumstances of the case and concluded that filing an earlier motion for sanctions would not “deter future litigation abuse,” but rather would only encourage more abusive behavior, which counsel determined to be against his client’s interests in getting the litigation resolved quickly and inexpensively.

Third, laches does not apply to this case because there is no evidence the timing of the Rule 11 motion caused plaintiff to do anything different than what it otherwise would have done, or to suffer any prejudice.

Finally, counsel for the estate articulated sound reasons for not filing a Rule 11 motion while the case was pending in circuit court. Those reasons lost some of their strength after the circuit court entered summary judgment, but we cannot say they do not remain sound reasons.

We are also persuaded by the fact Rule 11 permits a trial court to award sanctions “upon its own initiative,” and there is no stated restriction on when the trial court must do so. Certainly it would be reasonable for a trial court that finds a party brought causes of action “without good grounds to support them” – as the circuit court found in this case – and that wishes to grant sanctions on that basis, to wait to see if its order on the merits is upheld on appeal before granting sanctions.

Considering the estate’s reasons for the timing of the Rule 11 motion in the context of our clear statement in Russell v. Wachovia Bank, N.A., 370 S.C. 5, 633 S.E.2d 722 (2006), “declin[ing] to address what time limit is proper,” in light of the practical fact that we allowed post-remittitur sanctions to be imposed in that case, and in light of the trial court’s apparent authority to award sanctions post-appeal “upon its own initiative,” we cannot say the circuit court abused its discretion in finding the estate’s counsel did not act unreasonably in waiting until after the appeals were resolved before filing the Rule 11 motion.

Affirmed in part, reversed in part, and remanded.

Concurrence

(Kittredge, J.) The only time limitation in filing a Rule 11 motion arises out of equitable considerations. While it was perhaps reasonable to delay filing the Rule 11 motion for sanctions in this case, I believe the filing of the motion nine days after the remittitur was transmitted from the appellate court to the circuit court is on the outer limits of reasonableness.

The better course of action is to file a Rule 11 motion for sanctions not later than 10 days following entry of judgment in the trial court.

Furthermore, I categorically reject any suggestion that a trial court may, on its own initiative, award Rule 11 sanctions post-remittitur. I would hold that a trial court’s authority to impose Rule 11 sanctions upon its own initiative ends 10 days following entry of judgment.

Pee Dee Health Care, P.A. v. Estate of Thompson (Lawyers Weekly No. 010-091-18, 18 pp.) (John Few, J.) (John Kittredge, J., joined by Acting Justice John Geathers, concurring) Appealed from the Circuit Court in Darlington County (J. Michael Baxley, J.) Jon Rene Josey and John James for petitioner; James Mixon Griffin and Ariail Elizabeth King for respondent. S.C. S. Ct.