Court Opinion

ID: 36369
Source: CourtListenerOpinion
Date Created: 2010-04-25 19:39:40+00
Date Added: 2024-06-11T17:15:01.833034
License: Public Domain

United States Court of Appeals
                                                                      Fifth Circuit
                                                                   F I L E D
                IN THE UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT                     September 3, 2004

                                                               Charles R. Fulbruge III
                                                                       Clerk
                               No. 03-31102

                          K. TRACY BERGQUIST,
                  ON BEHALF OF HERSELF AND ALL OTHER
                   SHAREHOLDERS OF FyBX CORPORATION,

                                                      Plaintiff-Appellee,

                                  versus

                        FyBX CORPORATION; ET AL,
                                                      Defendants,

                  FyBX CORPORATION; MICHAEL P. ARATA;
         HOFFMAN, SIEGEL, SEYDEL, BIENVENU, CENTOLA & CORDES,
                        A PROFESSIONAL LAW FIRM,

                                                  Defendants-Appellants.

            Appeals from the United States District Court
                for the Eastern District of Louisiana
                          USDC No. 02-CV-722

Before REAVLEY, JONES and DENNIS, Circuit Judges.

PER CURIAM:*

            FyBX Corporation, its former attorney Michael Arata, and

its law firm Hoffman, Siegel, Seydel, Bienvenu, Centola & Cordes

appeal the denial of their motion for sanctions against Tracy

Bergquist pursuant to Rule 11 and 28 U.S.C. § 1927.           FyBX and its

attorneys moved for sanctions on the grounds that Bergquist's

     *
            Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
lawsuit, claiming damages for RICO violations and securities fraud,

was frivolous and without evidentiary support and demonstrated a

failure to make a reasonable inquiry into the law.               The district

court denied the motion.           The court found that, although the

federal    claims   were    legally    groundless,     no   improper    purpose

underlay Bergquist's complaint. As we cannot say that the district

court abused its discretion, we affirm the denial of the motion for

sanctions under Rule 11 and 28 U.S.C. § 1927.

            This case involves a corporate dispute between Bergquist,

a minority shareholder, and FyBX and its lawyers.             The gravamen of

Bergquist’s complaint is that the FyBX Board of Directors engaged

in actions and issued stock in violation of Louisiana law and

FyBX’s Articles of Incorporation, thus rendering Bergquist’s stock

worthless.

            This is not the first time that FyBX and its attorneys

have requested this court to sanction Bergquist.              In Bergquist v.

FyBX Corp., No. 03-30946 (5th Cir. filed June 21, 2004), the

plaintiff unsuccessfully appealed the district court’s grant of

summary judgment in favor of the defendants.1            On appeal, FyBX and

its attorneys moved for sanctions and costs against Bergquist

pursuant to Federal Rule of Appellate Procedure 38, asserting that

the appeal was frivolous.         This court declined to impose Rule 38

      1
            The district court granted the motion for summary judgment on several
federal law claims and dismissed without prejudice Bergquist’s remaining state
law claims for lack of jurisdiction. Bergquist v. FyBX Corp., No. Civ.A.02-722,
2003 WL 22384934, at *1 (E.D.La. Oct. 15, 2003).

                                       2
sanctions.     Id.   For the second time, we decline to order sanctions

against Bergquist.

              Rule 11 provides that when a lawyer submits a pleading to

the court, the lawyer certifies that any representations made to

the court are not being presented for any improper purpose, that

the   legal     contentions    are    warranted     by   existing   law    or   a

non-frivolous argument for the extension, modification, or reversal

of the law, and that any allegations made therein have evidentiary

support.      Fed. R. Civ. P. 11.             The district court may impose

appropriate sanctions, including attorneys’ fees and costs, on an

attorney who files a pleading in violation of Rule 11.               Id.    This

court reviews a district court's denial of Rule 11 sanctions for

abuse of discretion.         Whitehead v. Food Max of Miss., Inc., 332
F.3d 796, 802 (5th Cir. 2003) (en banc);                 Friends for Am. Free

Enter. Ass'n v. Wal-Mart Stores, Inc., 284 F.3d 575, 577-78 (5th

Cir. 2002). Generally, an abuse of discretion only occurs where no

reasonable person could take the view adopted by the trial court.

Whitehead, 332 F.3d at 803.

              The District Court denied the motions for sanctions under

Rule 11 and 28 U.S.C. § 1927 because the court “[did] not find any

improper purpose underlying [Bergquist’s] complaint.”               Bergquist,

2003 WL 22384934, at *3.        The court was convinced that Bergquist’s

complaint     was    the   product   of   ineptitude     and   misguided   legal

research rather than a failure to attempt a reasonable inquiry into

the law or an intent to harass.           Id.   The district court also noted

                                          3
that it had not ruled on Bergquist’s state law claims and thus

could not state that they were necessarily without merit or brought

with the intent to harass.   Id.

          Based on the record before us, the district court's

conclusion would be reasonable and would not constitute an abuse of

discretion.

          AFFIRMED.

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