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Baker v. Wells Fargo Bank

United States District Court, E.D. California

April 11, 2017

KENNETH BAKER, Plaintiff,
v.
WELLS FARGO BANK, N.A., et al ., Defendants.

          ORDER SANCTIONING PLAINTIFF'S COUNSEL PURSUANT TO RULE 11 (ECF 14, 20)

          LAWRENCE J. O'NEILL UNITED STATES CHIEF DISTRICT JUDGE.

         I. INTRODUCTION

         On March 9, 2017, the Court issued a memorandum decision and order denying Plaintiff Kenneth Baker (“Plaintiff”)'s motion to remand this case to state court, granting Defendant Wells Fargo Bank (“Wells Fargo”)'s motion to dismiss for lack of standing, and ordering Plaintiff's counsel Laleh Ensafi (“Ms. Ensafi”) to show cause why the Court should not sanction her for violating Rule 11(b). ECF No. 14. Ms. Ensafi timely filed her response (ECF No. 20) and Wells Fargo did not avail itself of the opportunity to file an optional brief on this matter. See ECF No. 14 at 14.

         Upon review of Ms. Ensafi's response to its OSC, the Court has determined that a hearing is not necessary to resolve this matter. For the reasons the follow, the Court finds it appropriate to sanction Ms. Ensafi in the amount of $ 10, 000.

         II. STANDARD OF REVIEW

         Rule 11(b) of the Federal Rules of Civil Procedure[1] provides, in relevant part, that an attorney who presents to the Court a motion certifies that to the best of her knowledge, information and belief, “formed after an inquiry reasonable under the circumstances, ” that the motion “is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation, ” and “the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law.” “An attorney who signs the paper without such a substantiated belief shall be penalized by an appropriate sanction.” Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 392 (1990). If the Court determines that an attorney has violated Rule 11(b), the Court may impose appropriate monetary sanctions upon the attorney after issuing an order to show cause to the attorney and providing her notice and a reasonable opportunity to respond. Fed.R.Civ.P. 11(c); see also Christian v. Mattel, Inc., 286 F.3d 1118, 1126 (9th Cir. 2002) (“One of the fundamental purposes of Rule 11 is to ‘reduce frivolous claims, defenses or motions and to deter costly meritless maneuvers, … [thereby] avoid[ing] delay and unnecessary expense in litigation.”). Rule 11 does not require the Court to make a finding of subjective bad faith. See Zuniga v. United Can Co., 812 F.2d 443, 454 (9th Cir. 1987) (“[C]ounsel can no longer avoid the sting of Rule 11 sanctions by operating under the guise of a pure heart and empty head.”). Rather, in determining whether Rule 11 sanctions are appropriate, the Court's inquiry “is whether a reasonable attorney, having conducted an objectively reasonable inquiry into the facts and law, would have concluded that the offending paper[s] w[ere] well-founded.” Schutts v. Bentley Nev. Corp., 966 F.Supp. 1549, 1562 (D. Nev. 1997) (citing In re Keegan Mgmt. Co. Sec. Litig., 78 F.3d 431, 434 (9th Cir. 1996)). If the Court issues an order imposing sanctions, it must “describe the sanctioned conduct and explain the basis for the sanction.” See Fed. R. Civ. P. 11(c)(6).

         III. ANALYSIS

         This case, which commenced in Stanislaus County Superior Court on October 26, 2016, sought to stop a non-judicial foreclosure of real property commenced by Wells Fargo, and to void the previously recorded foreclosure notices related to that real property. See Complaint, ECF No. 1. Following Wells Fargo's removal of the case to this Court, Wells Fargo filed a motion to dismiss the Complaint pursuant to Rule 12(b)(6), setting the motion hearing for February 9, 2017. Following the expiration of the opposition and reply filing deadlines on February 3, 2017, the Court issued a minute order taking the motion to dismiss under submission for decision on the papers. ECF No. 8; see also E.D. Cal. L.R. 230(c), (d).

         On February 3, 2017, the same day the Court issued its minute order, Ms. Ensafi filed both a motion to remand the Complaint, setting the motion hearing for March 6, 2017 (ECF No. 9), and an untimely opposition to Wells Fargo's motion to dismiss (ECF No. 10). In the opposition, Ms. Ensafi apologized for her failure to file a timely opposition and stated that her failure to do so was on account of the fact that the Court had not yet ruled on the pending motion to remand-which she had just filed- and because she was never served with a copy of the motion to dismiss filed by Wells Fargo. ECF No. 10 at 2.[2] Ms. Ensafi signed the opposition and filed it on February 3, 2017. Id. at 12; see also E.D. Cal. L.R. 131(c) (“Anything filed using an attorney's name, login, and password will be deemed to have been signed by that attorney for all purposes, including Fed.R.Civ.P. 11”).

         Wells Fargo subsequently filed a reply in connection with its motion to dismiss, in which it contests both of Ms. Ensafi's assertions (ECF No. 11), and filed an opposition to Plaintiff's motion to remand (ECF No. 12).

         In its March 9, 2017 Order, this Court denied Plaintiff's motion to remand, granted Wells Fargo's motion to dismiss, and ordered Ms. Ensafi to show cause why she should not be sanctioned for violating Rule 11(b). ECF No. 14. Specifically, the Court noted that as follows, in reviewing the chronology of these proceedings:

It seems most likely that Ms. Ensafi filed the remand motion in order to stall the adjudication of this case when she failed to file a timely opposition to Wells Fargo's motion to dismiss. Furthermore, upon review of the motion to remand, it is difficult not to deduce that Ms. Ensafi has merely copied and pasted a brief from another motion to remand without even bothering to substitute in the correct names[3] and dates[4], or research whether remand was a legally supportable option in this case. It is also clear that Ms. Ensafi was not being forthright when she stated that she “was never served a copy of the Motion to Dismiss filed by Defendant Wells Fargo Bank, N.A.” ECF No. 10 at 2. According to the Court's CM/ECF system, Defense Counsel Scott Reigle filed the Motion to Dismiss at 2:50 PM PST on January 6, 2017, and notice was electronically mailed to Ms. Ensafi at two email addresses: lensafi@lpralc.com and ensafilaw@gmail.com. See ECF No. 6; see also E.D. Cal. L.R. 135(a) (“Service” as utilized in these Rules includes electronic service as set forth in the CM/ECF procedures in these Rules.”).

ECF No. 14 at 13. Because the Court found that the motion to remand caused unnecessary delay and presented claims not warranted by existing law, the Court ordered Ms. Ensafi to show cause why the Court should not sanction her for violating Rule 11(b). Id. at 14. Specifically, the Court ordered Ms. Ensafi's response to:

1) address her reasons for stating that she was not served with Wells Fargo's motion to dismiss, when the Court's review of the record indicates that she was ...

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