Court Opinion

ID: 2685389
Source: CourtListenerOpinion
Date Created: 2014-07-23 20:00:33.827828+00
Date Added: 2024-06-11T12:40:40.898219
License: Public Domain

Case: 13-15085   Date Filed: 07/23/2014   Page: 1 of 5

                                                        [DO NOT PUBLISH]

           IN THE UNITED STATES COURT OF APPEALS

                   FOR THE ELEVENTH CIRCUIT
                     ________________________

                           No. 13-15085
                       Non-Argument Calendar
                     ________________________

               D.C. Docket No. 6:13-cv-00472-RBD-GJK

HOWARD WALTHER,
DOROTHY B. WALTHER,

                                                         Plaintiffs-Appellants,

PHILLIPS PAUL O’SHAUGHNESSY,

                                                    Interested Party-Appellant,

                                 versus

ROBERT MCINTOSH,
Esq.,
STENSTROM MCINTOSH, ET AL, P.A.,
STEVEN KANE,
Esq.,
KANE & KOLTUN,
Attorneys at Law,

                                                       Defendants-Appellees.
              Case: 13-15085      Date Filed: 07/23/2014   Page: 2 of 5

                            ________________________

                    Appeal from the United States District Court
                        for the Middle District of Florida
                          ________________________

                                   (July 23, 2014)

Before PRYOR, MARTIN and BLACK, Circuit Judges.

PER CURIAM:

      Dorothy Walther, Howard Walther, and Phillips P. O’Shaughnessy appeal

the district court’s order imposing sanctions against O’Shaughnessy under Federal

Rule of Civil Procedure 11 for his conduct in pursuing a lawsuit in the district

court against attorney Robert McIntosh and his law firm. O’Shaughnessy, through

local counsel, filed a complaint against McIntosh and his firm, alleging McIntosh’s

conduct in a state court proceeding breached McIntosh’s fiduciary duties as a court

appointed co-trustee of the James Walther Revocable Life Insurance Trust (the

trust). O’Shaughnessy claimed that McIntosh failed to disclose to the state court

that his co-trustee, Patrick Walther, mishandled the trust and physically abused

Dorothy, that McIntosh lied to the state court when he reported that Dorothy would

not disclose her financial and medical records to him, and that McIntosh conspired

with the trustee and the trustee’s attorney to institute a guardianship over Dorothy

to deprive her of the ability to control her own assets.

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                Case: 13-15085        Date Filed: 07/23/2014       Page: 3 of 5

       After the district court granted summary judgment to McIntosh and his firm,

the court imposed Rule 11 sanctions against O’Shaughnessy in the amount of

$21,708.75. This interlocutory appeal of the district court’s Rule 11 order

followed.1 On appeal, O’Shaughnessy argues the district court abused its

discretion by imposing sanctions because (1) the case involved an issue of first

impression under Florida law regarding whether a trust beneficiary could sue a

court appointed trustee, and Rule 11 sanctions are not appropriate to punish an

attorney for advancing a legal theory on a question of first impression, (2) the

district court failed to resolve all doubts in O’Shaughnessy’s favor, and

(3) O’Shaughnessy conducted a reasonable investigation under the circumstances.

After a thorough review of the record and consideration of the parties’ briefs, we

affirm.

       The district court did not abuse its substantial discretion in imposing Rule 11

sanctions against O’Shaughnessy. See Cooter & Gell v. Hartmarx Corp., 496 U.S.
384, 405, 407 (1990) (holding that courts of appeals should review all aspects of

the district court’s Rule 11 determination for abuse of discretion and noting that

“the district court has broad discretion to impose Rule 11 sanctions”). Sanctions

are warranted when a party files a document that (1) has no reasonable factual
       1
         In addition to suing McIntosh and his law firm, O’Shaughnessy also pursued claims
against another attorney and that attorney’s law firm for their actions related to the state court
proceedings. Although those claims remain pending, we have jurisdiction over the instant appeal
under the collateral order doctrine. See DeSisto Coll., Inc. v. Line, 888 F.2d 755, 763 (11th Cir.
1989).
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              Case: 13-15085     Date Filed: 07/23/2014    Page: 4 of 5

basis; (2) is based on a legal theory that has no reasonable chance of success and

cannot be advanced as a reasonable argument to change existing law; or (3) is filed

in bad faith or for an improper purpose. Anderson v. Smithfield Foods, Inc., 353
F.3d 912, 915 (11th Cir. 2003); see also Fed. R. Civ. P. 11(b), (c). In addition,

Rule 11 imposes “an affirmative duty to conduct a reasonable inquiry into the facts

and the law before filing,” and “the applicable standard is one of reasonableness

under the circumstances.” Bus. Guides, Inc. v. Chromatic Commc’ns Enters., Inc.,

498 U.S. 533, 551 (1991).

      Contrary to O’Shaughnessy’s arguments, the district court did not sanction

him for pursuing an issue of first impression. Instead, the district court

acknowledged that prior case law was not directly controlling and that the legal

theory O’Shaughnessy advanced was not completely frivolous. The district court

considered the tenuous nature of the legal theory simply as a single factor among

many in concluding sanctions were warranted. In addition to the tenuous legal

basis for the claims, the district court explained that O’Shaughnessy failed to

thoroughly investigate the facts before filing the complaint in federal court, stating

that his investigation was “wholly insufficient” given the circumstances of the case

and numerous indicators that O’Shaughnessy should have done more to investigate

the facts of the case. The district court pointed to numerous specific facts and

circumstances that should have alerted a reasonable attorney to a need for further

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                 Case: 13-15085       Date Filed: 07/23/2014        Page: 5 of 5

investigation, and we cannot say the district court abused its broad discretion by

imposing sanctions for O’Shaughnessy’s failure to conduct a reasonable

investigation that would have demonstrated the frivolity of the factual allegations

in the complaint. See Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1254

(11th Cir. 1996) (“If the attorney failed to make a reasonable inquiry, then the

court must impose sanctions despite the attorney’s good faith belief that the claims

were sound.”); see also Cooter & Gell, 496 U.S. at 404 (explaining that

determining whether Rule 11 sanctions are warranted involves “fact-intensive,

close calls,” and that “[t]he district court is best acquainted with the local bar’s

litigation practices and thus best situated to determine when a sanction is warranted

to serve Rule 11’s goal of specific and general deterrence” (internal quotation

marks omitted)). 2

       Accordingly, the district court’s order imposing Rule 11 sanctions against

O’Shaughnessy is AFFIRMED. 3

       2
          O’Shaughnessy also briefly argues in a footnote in his initial brief that the district
court’s award of attorney’s fees as a sanction amounted to impermissible fee-shifting. That
argument lacks merit, as the Supreme Court has specifically held that Rule 11 sanctions do not
amount to fee shifting, Bus. Guides, Inc., 498 U.S. at 551-53, and the text of Rule 11 explicitly
authorizes the district court to award reasonable attorney’s fees as a sanction, Fed. R. Civ. P.
11(c)(4).
       3
      McIntosh’s motion for sanctions pursuant to Federal Rule of Appellate Procedure 38 is
DENIED.
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