Court Opinion

ID: 4124835
Source: CourtListenerOpinion
Date Created: 2017-02-09 20:01:19.566068+00
Date Added: 2024-06-11T14:37:18.073619
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                            No. 16-1357

ALDMYR SYSTEMS, INC.; ZEGATO SOLUTIONS, INC.,

                Plaintiffs – Appellants,

          v.

STEPHEN A. FRIEDMAN, Esq.; JOSEPH, GREENWALD & LAAKE, PA,

                Defendants - Appellees.

Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, Senior District Judge.
(8:15-cv-00864-PJM)

Submitted:   January 31, 2017              Decided:   February 9, 2017

Before GREGORY, Chief Judge, and NIEMEYER and AGEE, Circuit Judges.

Affirmed by unpublished per curiam opinion.

James P. Chandler, CHANDLER LAW FIRM, PLLC, Washington, D.C., for
Appellants.   Shirlie Lake, Daniel R. Hodges, ECCLESTON & WOLF,
P.C., Hanover, Maryland, for Appellees.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

       Aldmyr         Systems,      Inc.,     and      Zegato     Solutions,       Inc.

(collectively “Appellants”), appeal the district court’s dismissal

of their complaint and the court’s determination that sanctions

were       warranted    against     Appellants,      their    counsel,    and    Donald

Bailey, Sr. (“Mr. Bailey”), Appellants’ Chief Executive Officer.

Appellants          filed    suit   against       Stephen    Friedman    and    Joseph,

Greenwald       &    Laake,    P.A.    (collectively        “Appellees”),      alleging

copyright infringement and misappropriation of trade secrets for

actions taken by Appellees during the state divorce proceedings

between Mr. Bailey and Appellees’ client, Geraldine Bailey (“Ms.

Bailey”).       We affirm.

       Appellants first argue that the district court erred in

granting Appellees’ motion to dismiss because Appellants alleged

sufficient facts to establish their claims.                   Because Appellants do

not    challenge        on    appeal    the       district    court’s    dispositive

determination that the domestic relations exception to federal

jurisdiction 1 barred their claims, we conclude that Appellants have

waived review of that issue.            See Suarez-Valenzuela v. Holder, 714
F.3d 241, 249 (4th Cir. 2013) (“[I]t is a well settled rule that

       1
      The domestic relations exception “divests the federal courts
of power to issue divorce, alimony, and child custody decrees,”
Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992), and to rule on
any issues that are inextricably intertwined with those matters.
Kahn v. Kahn, 21 F.3d 859, 860-61 & n.1 (8th Cir. 1994).

                                              2
contentions not raised in the argument section of the opening brief

are abandoned.” (brackets and internal quotation marks omitted)).

Consequently,       we    affirm   the   district   court’s    dismissal   of

Appellants’ complaint.

       Next, Appellants argue that the district court erred in

imposing sanctions.         Appellants contend that Appellees failed to

comply with the safe-harbor provision of Fed. R. Civ. P. 11(c)(2),

by not identifying the conduct that warranted sanctions.             However,

our review of the record on appeal leads us to conclude that

Appellees complied with the rule.             See Brickwood Contractors,

Inc. v. Datanet Eng’g, Inc., 369 F.3d 385, 389 (4th Cir. 2004) (en

banc) (discussing Rule 11(c)(2)).

       Appellants also assert the district court erred in concluding

that       they   filed   their    lawsuit   for    an    improper   purpose—

specifically, to harass Ms. Bailey and her counsel and to gain

leverage in Mr. Bailey’s state court divorce proceeding.             See Fed.

R. Civ. P. 11(b)(1). 2       “We review a district court’s imposition of

Rule 11 sanctions for abuse of discretion.”              In re Bees, 562 F.3d
284, 287 (4th Cir. 2009).           “A district court . . . necessarily

       2
       “Rule 11 defines the term improper purpose to include
factors such as to harass or to cause unnecessary delay or needless
increase in the costs of litigation.” In re Kunstler, 914 F.2d
505, 518 (4th Cir. 1990) (internal quotation marks omitted). “[I]n
order to determine ‘improper purpose,’ a district court must judge
the   conduct   of  counsel   under   an  objective   standard   of
reasonableness rather than assessing subjective intent.” Id.

                                         3
abuse[s] its discretion if it based its ruling on an erroneous

view of the law or on a clearly erroneous assessment of the

evidence.”   Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405

(1990); see Andrews v. Am.’s Living Ctrs., LLC, 827 F.3d 306, 312

(4th Cir. 2016) (defining clear error); In re Kunstler, 914 F.2d

at 520 (reviewing finding of improper purpose for clear error).

We have carefully reviewed the parties’ briefs and the record on

appeal and conclude that the district court did not clearly err in

finding Appellants filed their action for an improper purpose.

      Finally, Appellants challenge the application of sanctions

to Mr. Bailey as a violation of his due process rights.                       The

district court held Mr. Bailey liable for sanctions, jointly and

severally with Appellants and Appellants’ counsel, concluding that

Mr. Bailey represented the true party in interest in this suit and

acted as Appellants’ alter ego and that piercing the corporate

veil was appropriate.        Notably, Appellants do not challenge on

appeal the district court’s piercing of the corporate veil and,

therefore,   have   waived    review       of    that      determination.     See

Suarez-Valenzuela, 714 F.3d at 249.             Appellants’ failure is fatal

to their due process claim.        See Newport News Holdings Corp. v.

Virtual City Vision, Inc., 650 F.3d 423, 433 (4th Cir. 2011)

(holding   that   Due   Process   Clause        is   not   violated   when   court

“exercise[s] personal jurisdiction over an individual [who] would

not ordinarily be subject to personal jurisdiction in that court

                                       4
when the individual is an alter ego of a corporation that would be

subject to personal jurisdiction in that court”) (ellipses and

internal quotation marks omitted).    Thus, we conclude that the

district court did not abuse its discretion in imposing sanctions.

     Accordingly, we affirm the district court’s judgment.      We

dispense with oral argument because the facts and legal contentions

are adequately presented in the materials before this court and

argument would not aid the decisional process.

                                                          AFFIRMED

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