United States Court of Appeals

For the First Circuit

No. 02-2703

TOP ENTERTAINMENT, INC., ANGELO MEDINA, and 

STAR ENTERTAINMENT, INC.,

Plaintiffs, Appellees,

v.

WATSSON HEBERT TORREJON,

as Assignee for Maria Ortega,

Defendant, Appellant.

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF PUERTO RICO

[Hon. Jaime Pieras, U.S. District Judge]

Before

 Boudin, Chief Judge,

Torruella, Circuit Judge,

and Lynch, Circuit Judge.

Kevin Little with whom Law Offices of David Efron was on brief

for appellees.

Manuel R. Lopez with whom Wilson Suarez & Lopez was on brief

for appellant.

November 20, 2003
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LYNCH, Circuit Judge. Watsson Hebert Torrejon, as

assignee defendant for Maria Ortega, appeals the district court's

denial of sanctions under Puerto Rico R. Civ. P. 44.1(d). For the

reasons that follow, we vacate and remand.

Plaintiffs Top Entertainment, Inc., Angelo Medina (d/b/a

Producciones Angelo Medina), and Star Entertainment, Inc. brought

a contract action in September 1999 against Maria Ortega (d/b/a

Servitel) in federal district court in Puerto Rico. The district

court found that the original complaint was vague and cursory and

ordered plaintiffs, in an Initial Scheduling Order, to detail the

terms of the parties' contractual relationship and how those terms

were breached. Plaintiffs neither complied with this order nor

sought an extension. The court then ordered plaintiffs to show

cause why the case should not be dismissed for noncompliance with

the scheduling order. Plaintiffs filed a lame response in which

they offered a string of implausible excuses and added new factual

allegations that were completely inconsistent with the allegations

in the original complaint. The court found that plaintiffs had

engaged in extreme misconduct in failing to comply with the

scheduling order and dismissed the action with prejudice.

In Top Entm't Inc. v. Ortega, 285 F.3d 115 (1st Cir.

2002), this court addressed plaintiffs' appeal from that dismissal

for failure to comply with the Initial Scheduling Order. This

court noted that plaintiffs had made a complete about-face in the
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district court from the position stated in their complaint when

they belatedly attempted to revise their allegations in response to

the court's order to show cause. 285 F.3d at 117, 118.

Furthermore, plaintiffs' counsel admitted that the allegations in

the original complaint were false. Id. at 120. This court noted

that it was "apparent that the complaint violated Rule 11." Id. at

118. We also noted that plaintiffs' counsel had made

misrepresentations to the district court and had willfully

disobeyed the district court's order. Id. at 119. Accordingly, we

affirmed the dismissal and awarded double costs and attorney's fees

of $2,000 to defendant because plaintiffs' appeal was frivolous.

Id. at 119-20. The opinion issued on April 5, 2002. Mandate

issued on May 17, 2002.

Plaintiffs did not pay the sums ordered by this court.

On September 30, 2002, Watsson Hebert Torrejon, Ortega's assignee,

filed a Motion to Compel Compliance with Mandate of First Circuit

Court of Appeals and for Contempt. That same day, Torrejon filed

a Motion for Sanctions under Rule 44.1(d) of the Puerto Rico Rules

of Civil Procedure. The motion alleged that plaintiffs and their

attorney had acted, in the language of Rule 44.1(d), "obstinately

or frivolously" in bringing a baseless claim, in pursuing a

frivolous appeal, and in refusing to comply with this court's

order. Defendant sought to recover over $150,000 in attorney's
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fees, travel costs, and other litigation expenses. Plaintiffs

filed no opposition to this motion.

On October 23, 2002, the district court ordered

plaintiffs and their counsel to pay the sanctions imposed by this

court by November 21, 2002 or face further sanctions. The district

court denied the motion for contempt and denied defendant's

application for the further fees that resulted from plaintiffs'

failure to comply with this court's order. On November 20,

plaintiffs and their counsel finally complied with this court's

sanctions order.

Also on October 23, 2002, the district court responded to

defendant's Motion for Sanctions with the following order:

Defendants' request for further sanctions is hereby

DENIED as the Court views the sanctions already imposed

on Plaintiffs as adequate.

Torrejon appeals from this denial of his Rule 44.1(d) motion.

I.

The gist of defendant's appeal is that once a

determination has been made that a party or its lawyer has acted

obstinately or frivolously, then under Puerto Rico R. Civ. P.

44.1(d), the district court must impose sanctions in the amount of

the moving party's attorney's fees. Defendant argues that this

court's determination that the original complaint violated Rule 11

and the district court's earlier dismissal of the action must mean
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that plaintiffs acted obstinately and frivolously, thus satisfying

the preconditions of the rule.

Rule 44.1(d) provides:

(d) Attorney's Fees. -- In the event any party or its

lawyer has acted obstinately or frivolously, the court

shall, in its judgment, impose on such person the payment

of a sum for attorney's fees which the court decides

corresponds to such conduct.

Our review of the district court's denial of the Rule 44.1(d)

motion is for abuse of discretion. Newell P.R., Ltd. v. Rubbermaid

Inc., 20 F.3d 15, 24 (1st Cir. 1994). Where a legal error is

committed, there is by definition an abuse of discretion. Goya

Foods, Inc. v. Wallack Mgmt. Co., 290 F.3d 63, 75 (1st Cir. 2002).

The basic parameters that should guide the district court

in applying Rule 44.1(d) are well established. See Correa v.

Cruisers, A Division of KCS Int'l, Inc., 298 F.3d 13, 30-31 (1st

Cir. 2002). The Supreme Court of Puerto Rico has stated: "The

main purpose of awarding attorney's fees in cases of obstinacy is

to impose a penalty upon a losing party that because of his

stubbornness, obstinacy, rashness, and insistent frivolous attitude

has forced the other party to needlessly assume the pains, costs,

efforts, and inconveniences of a litigation." Fernández Mariño v.

San Juan Cement Co., 18 P.R. Offic. Trans. 823, 830 (1987).

This court has explained that under Rule 44.1(d), "[a]

finding of obstinacy requires that the court determine a litigant

to have been unreasonably adamant or stubbornly litigious, beyond
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the acceptable demands of the litigation, thereby wasting time and

causing the court and the other litigants unnecessary expense and

delay." De León López v. Corporación Insular de Seguros, 931 F.2d

116, 126 (1st Cir. 1991). Once the court has determined that a

party has engaged in obstinate conduct, the case law holds that

imposition of attorney's fees is mandatory. Fernández Mariño, 18

P.R. Offic. Trans. at 829; Correa, 298 F.3d at 30; Dopp v.

Pritzker, 38 F.3d 1239, 1252 (1st Cir. 1994); cf. P.R. R. Civ. P.

44.1(d) (stating that the court "shall" impose attorney's fees in

cases of obstinacy). However, the court, in its discretion, may

determine the amount of fees awarded. Correa, 298 F.3d at 30;

Dopp, 38 F.3d at 1252. 

The language of Rule 44.1(d) itself does not require an

award of "reasonable" attorney's fees; the rule leaves it to the

judgment of the court to pick a sum that "corresponds to such

conduct." Still, given the purposes of the statute, the

reasonableness of the fees awarded in light of the misconduct that

took place is surely a factor in evaluating whether there was an

abuse of discretion.

There are several possible interpretations of the

district court's order denying Torrejon's Motion for Sanctions.

Plaintiffs maintain that the district court denied sanctions

because their conduct was not obstinate or frivolous. They point

to the fact that defendant's Motion for Sanctions was denied, not
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granted, and to the court's finding that the existing sanctions

were adequate. But if the basis for the district court's order was

that none of plaintiffs' conduct was obstinate or frivolous, that

would be hard to square with plaintiffs' admission that the

original complaint was false and with this court's conclusion that

the filing of that complaint violated Rule 11. Plaintiffs argue

that their late-tendered revision of the complaint was proper;

defendant strenuously asserts that it was not and that, in

addition, plaintiffs consistently failed to comply with discovery

deadlines and other court orders. In any event, there was no

determination by the district court of the adequacy of the belated

filing because the case was dismissed for failure to comply with

the Initial Scheduling Order.

Alternatively, the district court may have implicitly

concluded that the plaintiffs' actions were obstinate or frivolous,

but thought that the sanctions imposed by this court for the

frivolous appeal were adequate to cover any misconduct in the trial

court as well. If so, that would be problematic. The sanctions

imposed by this court were for conduct on appeal, not conduct in

the trial court. See Top Entm't, 285 F.3d at 119 (imposing

sanctions "based on the frivolity of this appeal").

Another alternative is that the district court implicitly

found the plaintiffs' actions in the district court to be obstinate

or frivolous, properly did not consider the sanctions imposed for
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the frivolous appeal, and nevertheless concluded that the sanction

of dismissal imposed by the district court was alone enough. That,

too, would be problematic. The district court's dismissal was

entered under Fed. R. Civ. P. 37(b)(2) and 41(b) and Rule 314(4) of

the Local Rules for the District Court for the District of Puerto

Rico. The dismissal did not purport to be related to Rule 44.1(d).

Rule 44.l(d) embodies a policy judgment by the Puerto Rico

legislature that obstinate and frivolous actions require the

imposition of some attorney's fees as a sanction.

II.

This leaves one more issue. Watsson Hebert Torrejon has

sought attorney's fees against plaintiffs' counsel, David Efron,

for having filed a motion with this court to dismiss the appeal,

inter alia, for lack of standing on the grounds that there was no

valid assignment from Ortega to Torrejon, and for purported

misconduct. We agree that the motion was baseless and frivolous

and that the actions of plaintiffs' counsel deserve sanction. In

the earlier appeal, this court granted the assignee's motion to

substitute parties on his filing of copies of a January 7, 2002

Irrevocable Assignment and of Ortega's January 16, 2002 death

certificate. The district court also permitted substitution. The

issue raised by the motion had been twice decided against

plaintiffs when the motion was filed. This conduct "unreasonably

and vexatiously" multiplied the proceedings in this case and thus
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violated 28 U.S.C. § 1927. We award Torrejon $4,000 to cover

reasonable attorney's fees, costs, and expenses generated by the

baseless motion to dismiss filed by plaintiffs' attorney. The

award is against attorney David Efron.

III.

For these reasons, we vacate the order and remand to the

district court for reconsideration of defendant's Rule 44.1(d)

motion, which is premised on very serious allegations. Costs of

appeal are awarded to Watsson Hebert Torrejon.

In addition, Watsson Hebert Torrejon is awarded

attorney's fees, costs, and expenses under 28 U.S.C. § 1927 against

attorney David Efron in the amount of $4,000.

So ordered.