United States District Court for the District of Columbia
January 3, 2005.
TIMOTHY D. NAEGELE, Plaintiff,
DEANNA J. ALBERS, RAYMOND H. ALBERS II, LLOYD J. MICHAELSON, and Does 1-10, Defendants.
The opinion of the court was delivered by: RICARDO URBINA, District Judge
GRANTING IN PART AND DENYING IN PART DEFENDANT MICHAELSON'SMOTION
TO DISMISS; DENYING THE PLAINTIFF'S MOTIONS FOR SANCTIONS; DENYING
THE PLAINTIFF'S MOTION TO STRIKE DEFENDANT
MICHAELSON'SRESPONSEDOCUMENT; DENYING THE PLAINTIFF'S MOTION TO
STRIKE THE NOTICE OF AUTOMATIC STAY; GRANTING THE DEFENDANTS'
MOTION TO STAY; AND DENYING ALL REMAINING MOTIONS AS MOOT
The plaintiff brings this eight count complaint against Deanna
Albers, Raymond Albers, II, Lloyd Michaelson, and Does 1 through
10 (collectively, "the defendants") alleging, inter alia,
breach of contract, anticipatory breach of contract, fraud and
deceit, common law conspiracy to commit fraud and deceit,
negligent misrepresentation, tortious interference with contract,
and conspiracy to commit tortious interference with contract. The
parties bombarded the court with a multitude of motions before
even sufficiently addressing the subject-matter jurisdiction of
this court to hear any of their sundry claims. Currently pending
before the court are the defendants' notices of automatic stay,
which the court treats as a collective motion for stay; the
plaintiff's motion to strike the defendants notices of automatic
stay ("plaintiff's motion to strike stay"); defendant Michaelson's motion to dismiss; the plaintiff's motion
for sanctions; defendant Michaelson's motion to continue the
summary judgment hearing ("defendant Michaelson's motion to
continue"); the plaintiff's motion to quash notice of deposition
by defendant Michaelson ("plaintiff's motion to quash"); the
plaintiff's second motion for sanctions; and the plaintiff's
motion to strike the defendant's response to the court's June 18,
2004 order ("plaintiff's motion to strike"). Before ruling on the
pending motions, the court takes a moment to review the somewhat
tangled procedural posture of this case.
The court faces a contractual dispute between two parties, each
tugging for jurisdiction either in California or in the
District of Columbia. With a suit filed in this court and
arbitration proceedings commencing in California, the parties
have refused to play in the same judicial ballpark. Instead, they
have engaged in Rambo-style litigation tactics, each arguing for
proceedings to commence in his respective venue, and bombarded
the court with a series of motions, including oppositions to
motions that do not exist and multiple oppositions to a single
motion. The court has ruled only on a motion to seal documents
and a motion for extension of time. After wading through the
flood of submissions offered by the parties, the court denies
defendant Michaelson's motion to dismiss for lack of subject
matter jurisdiction, but grants his motion for lack of personal
jurisdiction; denies both of the plaintiff's motions for
sanctions; denies the plaintiff's motion to strike the
defendants' notices of automatic stay; denies the plaintiff's
motion to strike defendant Michaelson's response document; grants
the defendants Albers' motion to stay; and denies all remaining
motions as moot. Moreover, the court dismisses defendant
Michaelson from this action and stays all proceedings pending
arbitration in California. By providing the parties with a single forum for debate, that
is, arbitration in California, the court hopes that the parties
will resolve at least some of their issues before returning to
this jurisdiction. The parties are required to jointly notify the
court of the results of the arbitration in California.
Furthermore, should the parties return to this court, the parties
are on notice that the first matters of inquiry will again be the
subject matter jurisdiction of this court and the real parties in
interest. The court now addresses the convoluted background of
Timothy D. Naegele brings this action against Deanna J. Albers
("D. Albers"), Raymond H. Albers II ("R. Albers"), Lloyd J.
Michaelson, and John Does #1-10 to recover fees and damages for
legal services he claims his firm rendered to the Albers. Pl.'s
Am. Compl. ¶¶ 4-6. All of the defendants are citizens of
California, see id., and the plaintiff is an attorney licensed
to practice law in California and the District of Columbia. Pl.'s
Opp'n to Mot. to Dismiss ("Pl.'s Opp'n to MTD") at ¶ 2. In
December 1998, the Albers asked the plaintiff to represent them
in a separate legal dispute ("the Suit"). Pl.'s Am. Compl. ¶ 7.
They signed a contract ("the Fee Agreement") on December 18,
1998, with three subsequent addenda detailing costs. Id. ¶ 8.
These addenda included a forum-selection clause that states that
"a court of the District of Columbia and/or . . . the United
States District Court for the District of Columbia" shall be the
forum for the resolution of any dispute or litigation arising
from the attorney-client agreement. Pl.'s Resp. to MTD, Ex. A
(Fee Agreement) at 3.
The plaintiff claims that in December 2002, attorney Lloyd J.
Michaelson and other agents and/or lawyers (Does #1-10)*fn1 advised the Albers to
take certain actions or engage in inaction which resulted in
injuries to the plaintiff. Pl.'s Am. Compl. ¶ 10. But the Albers
signed the third and final addendum in January 2003, with one
extra stipulation: an $82,000 retainer that required them to sign
a note placing a lien on their home. Pl.'s Resp. to MTD, Attach.
A (Third Addendum). In August 2003, Michaelson notified the
plaintiff that he was now representing the Albers in the Suit.
Pl.'s Resp. to MTD at ¶ 8(D)(6). The plaintiff responded by suing
the defendants for breach of contract, conspiracy, and tortious
interference with the contract. Pl.'s Am. Compl. ¶¶ 11-48.
Back in their home state, California, the defendants filed a
notice of automatic stay under the California Business and
Professions Code ("Cal. Prof. & Bus. Code"), § 6201(c), to halt
the current suit and allow the parties to arbitrate this fee
dispute in Los Angeles. Yet, the plaintiff is denying the terms
of the California stay and attempting to proceed with this suit.
He first filed a motion to strike the notice of automatic stay,
setting off an avalanche of successive motions that now inundate
this court. The defendants, all filing pro se, continue to
insist the stay freezes any further court action. Reply to Opp'n
to Pl.'s Mot. to Strike Not. of Automatic Stay at 4.
In May 2004, pro se defendant Michaelson filed a motion to
dismiss for lack of subject matter and personal jurisdiction.
Def. Michaelson's Mot. to Dismiss ("Def. Michaelson's MTD"). On
June 18, 2004, this court directed the plaintiff to show cause
that the court has subject matter jurisdiction over the present
suit. Order dated June 18, 2004. In the plaintiff's declaration
and in his supplemental memorandum, he claims that diversity
jurisdiction exists and requests the dismissal of Michaelson's motion with prejudice. The
parties continued to fire motions directed at one another, and
currently have six motions pending before the court. The court
faces a tangle of issues all blinking for attention, and the
court now addresses each motion in turn.
A. The Court Grants in Part and Denies in Part the Defendant
Michaelson's Motion to Dismiss
1. Legal Standard for Diversity Jurisdiction
A federal district court has subject-matter jurisdiction over a
suit when the amount in controversy exceeds $75,000 and the
parties are diverse in citizenship. 28 U.S.C. § 1332(a); DeBerry
v. First Gov't Mortgage & Investors Corp., 170 F.3d 1105
n. 1 (D.C. Cir. 1999); see also Stevenson v. Severs,
158 F.3d 1332
, 1334 (D.C. Cir. 1998) (per curiam) (identifying the $75,000
amount-in-controversy requirement for federal diversity
jurisdiction under 28 U.S.C. § 1332(a)). The amount in
controversy is established at the commencement of the action.
28 U.S.C. § 1335(a). Subsequent events reducing the amount in
controversy will not divest the court of its jurisdiction. St.
Paul, 303 U.S. at 289-90. If it becomes apparent during the
course of litigation that from the outset the maximum conceivable
amount in controversy was less than the jurisdictional minimum,
the court must dismiss the case for lack of subject matter
jurisdiction. Watson v. Blankinship, 20 F.3d 383
, 387-88 (10th
Cir. 1994); Jones v. Knox Exploration Corp., 2 F.3d 181, 182-83
(6th Cir. 1993). Where the plaintiff has alleged a sum certain
that exceeds the requisite amount in controversy, that amount
controls if made in good faith. St. Paul, 303 U.S. at 289-90.
Additionally, to justify dismissal, it must appear to a legal certainty that the claim is for less than the jurisdictional
amount. Id. at 288-89; Hartigh v. Latin, 485 F.2d 1068, 1071
(D.C. Cir. 1973) (citing Gomez v. Wilson, 477 F.2d 411 (D.C.
Punitive damages are properly considered as part of the amount
in controversy. Hartigh, 485 F.2d at 1072 (citing Bell v.
Preferred Life Assurance Soc'y, 320 U.S. 238, 240, (1943)). In
considering punitive damages to satisfy the jurisdictional
minimum in a diversity case, the court must conduct a two-part
inquiry. Bell, 320 U.S. at 240; Cadek v. Great Lakes Dragaway,
Inc., 58 F.3d 1209 (7th Cir. 1995). First, the court must
determine whether the plaintiff can recover punitive damages as a
matter of governing substantive law. Bell, 320 U.S. at 240. If
so, the court has subject-matter jurisdiction unless it is clear
beyond a legal certainty that the plaintiff would under no
circumstances be entitled to recover the jurisdictional amount.
Cadek, 58 F.3d at 1212. In this second step, the plaintiff must
present some factual evidence of entitlement to punitive damages.
Larkin v. Brown, 41 F.3d 387, 388-89 (8th Cir. 1994) (citing
Esler v. Northrop Corp., 86 F.R.D. 20, 28 (W.D. Mo. 1979)
(recognizing that "when the plaintiff's allegation of the amount
in controversy is challenged . . . existence of the required
amount must be supported by competent proof") (citing
Hulsenbusch v. Davidson Rubber Co., 344 F.2d 730 (8th Cir.
2. The Plaintiff Adequately Demonstrates That This Court has
Subject Matter Jurisdiction
The defendant argues that the court lacks subject matter
jurisdiction to hear this claim for the following reasons: (1)
there is not complete diversity between the parties because the
defendants are all domiciled in the State of California, see
Def. Michaelson's MTD at 3, and the plaintiff moved to California
in 1995 and has since resided there, see id. at 3-4; and (2)
the plaintiff's claim does not meet the amount in controversy
requirement, that is, the amount claimed does not exceed $75,000.*fn2
Def. Michaelson's Reply
to Pl.'s Opp'n to Def. Michaelson's MTD ("Def. Michaelson's
Reply") at 3-4.
The plaintiff argues that there is diversity of citizenship
between the parties because he is a citizen of Florida, see
Pl.'s Resp. to MTD at ¶ 2, while the defendants are all residents
of California. Pl.'s Opp'n to Def.'s MTD ("Pl.'s Opp'n to MTD")
at 7-10. Additionally, the plaintiff contends that he is entitled
to judgment in the sum of $7,411,477.14, see Pl.'s Opp'n to MTD
at 40, which is an amount that exceeds the statutory requirement
For the purpose of diversity jurisdiction, "[d]omicile is
determined by two factors: physical presence in a state, and
intent to remain there for an unspecified or indefinite period of
time." Prakash v. Am. Univ., 727 F.2d 1174, 1180 (D.C. Cir.
1984) (citations omitted). "Citizenship depends upon domicile,
and, as domicile and residence are two different things, it
follows that citizenship is not determined by residence." Shafer
v. Children's Hosp. Soc. of Los Angeles, Cal., 265 F.2d 107, 122
(D.C. Cir. 1959) (quotations omitted); see also Williams v.
Wash. Post Co., 1990 U.S. Dist. LEXIS 11183, at *5 (D.D.C. 1990)
(stating that "[d]omicile, a concept drawn from conflicts of law,
is more narrow than the concept of residency . . . one can reside
in one place but be domiciled in another"). Hence, a mere
allegation of residence in a state is not an assertion of
citizenship therein. Id. at 121. While residency is indicative
of domicile, it is not determinative; therefore, a "prolonged
absence from one's domicile is not determinative of abandonment."
Wagshal v. Rigler, 947 F. Supp. 10, 13 (D.D.C. 1996).
"The question of domicile is a mixed question of law and fact."
Hicks v. Hicks, 80 F. Supp. 219, 220 (D.D.C. 1940). In many instances, a party's intent
to remain in a particular state for an indefinite period of time
will be clear from the factual evidence presented to the court.
See Mayo v. Questech, Inc., 1989 U.S. Dist. LEXIS 4267, at *2
(D.D.C. 1989). A plaintiff may submit "a number of generally
accepted indicia of domiciliary status," including sworn
declaration of domicile; voting registration; state driver's
license; ownership of personal property in a given state; bank
accounts and club membership. Wagshal, 947 F. Supp. at 13. Once
a party presents to the court evidence of substantial indicia of
domiciliary status, the party is entitled to a presumption that
it has established a domicile. Id. An evidentiary hearing is
necessary, however, when the opposing party's written submissions
contradict the stated intent of the party whose domicile is in
dispute. See Prakash, 727 F.2d at 1179. Finally, it is the
plaintiff that bears the burden of proof when jurisdictional
facts are challenged. McNutt v. General Motors Acceptance
Corp., 298 U.S. 178, 188-89 (1936); Mayo, 1989 U.S. Dist. LEXIS
4267, at *2 (citing Thompson v. Gaskill, 315 U.S. 442, 446
The plaintiff declares that he was a citizen of Florida at the
time of filing of the lawsuit and that he currently remains a
domiciliary of Florida. Naegele Decl. in Support of Pl.'s Opp'n
to Def. Michaelson's MTD ("Naegele Decl. dated Aug. 2, 2004") ¶
7. In support of his claim, the plaintiff has submitted a copy of
his Florida driver's license; a copy of the Declaration of
Domicile and Citizenship filed with the Clerk of the Circuit
Court of Monroe County, Florida; and proof of his membership in
the Ocean Reef Club, located in the Florida Keys. Naegele Decl.
dated Aug.2, 2004, Attach. A, B. He further asserts that he is
registered to vote in Florida and that he maintained two bank
accounts at Florida bank branches. Naegele Decl. dated Aug. 2,
2004, ¶¶ 5, 7. Defendant Michaelson alleges that the plaintiff's
domicile is California because he maintained offices in
California. Def. Michealson's Mot. to Dismiss at 3. The defendant further argues that the co-defendants, the Albers, assert that
the plaintiff had "resided in the Malibu/Calabasas area in Los
Angeles County" between 1998 and March 2003. R. Albers Decl., ¶
Because the plaintiff has presented substantial evidence that
his domicile is Florida and that he has an intent to remain there
for an indefinite period of time, and the defendant has only
proffered unsupported allegations to contest the plaintiff's
domicile, the plaintiff is entitled to the presumption that he
successfully established Florida as his domicile. Wagshal,
947 F. Supp. at 13. Based on the evidence presented by the parties,
the court finds it unnecessary to engage in an evidentiary
hearing to determine the plaintiff's domicile. The court is
persuaded that the plaintiff's domicile is indeed Florida and the
domicile of all the named defendants is California; thus, there
is complete diversity between the plaintiff and the defendants.
Diversity jurisdiction, however, requires not only diversity in
citizenship but also that the amount in controversy exceed
$75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a);
DeBerry, 170 F.3d at 1106 n. 1. The plaintiff's claim for money
damages in the amount of $69,018.37 towards prejudgment interest
and an amount of $8,237.82 towards attorney fees and costs would
not contribute to the amount in controversy. 28 U.S.C. § 1332(a),
see also Velez v. Crown Life Ins. Co., 599 F.2d 471, 473 (1st
Cir. 1979) (stating that "[i]nterest is specifically excluded . . .
as part of the jurisdictional amount"); 15-102 Moore's Federal
Practice § 102.106 (2004). The court, however, finds that the
plaintiff has a right to claim an amount of $160,071.74 in legal
fees and expenses incurred by his representation of the Albers
with respect to the Albers' appeal. Additionally, the D.C.
Circuit has instructed that a plaintiff's punitive damages claim,
which here is an amount of $4 million, is properly considered as
part of the amount in controversy when the plaintiff proffers
factual evidence that he is entitled to punitive damages and it is not clear beyond a legal certainty that the
plaintiff would be unable to recover such damages. Hartigh,
485 F.2d at 1072 (citing Bell v. Preferred Life Assurance Soc'y,
320 U.S. 238, 240, (1943)). Because the plaintiff meets the
amount in controversy requirement even excluding the punitive
damages claim, the court deems it unnecessary to decide the issue
of whether the punitive damages claim in the instant case
contributes to the amount in controversy. Therefore, the
plaintiff met his burden in proving that the two prongs of
diversity jurisdiction exist, diversity of citizenship and amount
in controversy. Accordingly, the court concludes that it has
subject matter jurisdiction over this action.
3. Legal Standard for a Motion to Dismiss for Lack of Personal
On a motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(2), the plaintiff has the burden of establishing
a prima facie case that personal jurisdiction exists. E.g.,
Second Amendment Found. v. U.S. Conference of Mayors,
274 F.3d 521
, 524 (D.C. Cir. 2001). A prima facie case in this context
means that the plaintiff must present evidence sufficient to
defeat a motion for judgment as a matter of law. See Cable/Home
Communication Corp. v. Network Productions, Inc., 902 F.2d 829
855 (11th Cir. 1990); Carter v. Duncan-Huggins, Ltd.,
727 F.2d 1225, 1227 (D.C. Cir. 1984) (indicating, under a differently
labeled but similar standard, that such motions should be denied
unless "the evidence, together with all inferences that can
reasonably be drawn therefrom is so one-sided that reasonable men
could not disagree on the verdict").
To determine if a basis for personal jurisdiction exists, the
court should resolve factual discrepancies in the complaint and
affidavits in favor of the plaintiff. Crane v. New York
Zoological Soc., 894 F.2d 454, 456 (D.C. Cir. 1990). However,
the court need not treat all of the plaintiff's allegations as
true. United States v. Philip Morris Inc., 116 F. Supp. 2d 116,
120 n. 4 (D.D.C. 2000); GTE New Media Servs. v. BellSouth Corp.,
199 F.3d 1343, 1349 (D.C. Cir. 2000) (stating that courts should not
accept bare allegations and conclusory statements). Moreover, the
court "may receive and weigh affidavits and any other relevant
matter to assist it in determining the jurisdictional facts."
Arista Records, Inc. v. Sakfield Holding Co. S.L.,
314 F. Supp. 2d 27, 30 (D.D.C. 2004) (internal quotations omitted).*fn3
"To establish personal jurisdiction over a non-resident, a
court must engage in a two-part inquiry: A court must first
examine whether jurisdiction is applicable under the state's
long-arm statute and then determine whether a finding of
jurisdiction satisfies the constitutional requirements of due
process." GTE New Media Servs., 199 F.3d at 1347.
First, a plaintiff must show that the personal jurisdiction may
be grounded in one of the several bases provided by the District
of Columbia's Long-Arm statute. D.C. CODE § 13-423 (2001); GTE
New Media Servs., 199 F.3d at 1347. That statute provides,
inter alia, that personal jurisdiction exists over a person
acting directly or by an agent for a claim for relief arising
from the person's
(1) transacting any business in the District of
(2) contracting to supply services in the District of
(3) causing tortious injury in the District of
Columbia by an act or omission in the District of
(4) causing tortious injury in the District of
Columbia by an act or omission outside the District
of Columbia if he regularly does or solicits
business, engages in any other persistent course of
conduct, or derives substantial revenue from goods
used or consumed, or services rendered, in the
District of Columbia[.]
D.C. CODE § 13-423(a). Subsection (b) qualifies the reach of the
statute by noting that "[w]hen jurisdiction over a person is based solely upon this section,
only a claim for relief arising from acts enumerated in this
section may be asserted against him." Id. § 13-423(b).
Second, the Due Process Clause of the Fifth Amendment requires
the plaintiff to demonstrate "`minimum contacts' between the
defendant and the forum establishing that `the maintenance of the
suit does not offend traditional notions of fair play and
substantial justice.'" GTE New Media Servs., 199 F.3d at 1347
(quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316
(1945)); Price v. Socialist People's Libyan Arab Jamahiriya,
294 F.3d 82, 95 (D.C. Cir. 2002). It is "`essential in each case
that there be some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the forum
State, thus invoking the benefits and protections of its laws.'"
Creighton Ltd. v. Government of State of Qatar, 181 F.3d 118
(D.C. Cir. 1999) (quoting Hanson v. Denckla, 357 U.S. 235, 253
(1958)). In short, "the defendant's conduct and connection with
the forum State [must be] such that he should reasonably
anticipate being haled into court there." GTE New Media Servs.,
199 F.3d at 1347 (quoting World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980)).
4. The Court Dismisses Defendant Michaelson for Lack of Personal
Defendant Michaelson, a resident of California, contends that
this court may not exercise personal jurisdiction over him
because he is not a citizen of the District of Columbia, he was
served with process in the State of California, and the District
of Columbia's Long Arm Statute does not provide a basis of
personal jurisdiction over him. Def. Michaelson's MTD at 4-5. He
further contends that he has never resided in the District of
Columbia, see id., and has had "no contacts whatsoever with the
District of Columbia." Id. at 5. Moreover, defendant Michaelson
contends that the plaintiff has failed to prove the
constitutional requirements to exercise personal jurisdiction
over him; specifically, the plaintiff did not show that defendant
Michaelson has had "minimum contacts" with the forum state, the District of
Columbia. Def. Michaelson's Reply to MTD at 4.
The court begins its analysis of whether or not it may properly
exercise personal jurisdiction over defendant Michaelson by way
of the District of Columbia's Long-Arm Statute. The court agrees
with the defendant that the statute does not confer this court
with jurisdiction over Michaelson. The court concludes that the
plaintiff, who bears the burden of proof, has failed to show that
the defendant transacted any business in the District, contracted
to supply services in the District, caused tortious injury to him
in the District, or that the defendant caused a tortious injury
to him outside of the District but nevertheless solicits business
or derives a substantial income from services rendered in the
District. In fact, the defendant derives his income solely from
his law business in California and has neither transacted
business nor caused tortious injury in the District of Columbia.
Def. Michaelson's MTD at 4. Therefore the plaintiff has failed to
meet his burden that the District of Columbia's Long Arm statute
confers this court with jurisdiction over defendant Michaelson.
D.C. Code § 13-423(a).
The plaintiff has also failed to show that the constitutional
requirements for personal jurisdiction have been met. Here, the
plaintiff focuses on the fee agreement rather than contesting the
defendant's argument that minimum contacts lack between defendant
Michaelson and the District of Columbia. The Due Process Clause
of the Fifth Amendment mandates that the defendant must have
"minimum contacts" with the forum so as not to "offend
traditional notions of fair play and substantial justice." GTE
New Media Servs., 199 F.3d at 1347 (citations omitted). Because
the plaintiff has failed to show that defendant Michaelson
purposely availed himself of this court's jurisdiction and that
he could reasonably anticipate being haled into this court, the
plaintiff has not shouldered his burden for the constitutional
requirements for this court to exercise personal jurisdiction over him. Asahi Metal Indus.
v. Super. Ct. of Cal., 480 U.S. 102, 109 (1988); GTE New Media
Servs., 199 F.3d at 1347. Based on the foregoing reasons, the
court concludes that the plaintiff has failed to establish this
court's personal jurisdiction over the non-resident defendant
The court next turns to the plaintiff's chief argument that
defendant Michaelson consented to the jurisdiction of this court.
That is, the plaintiff claims that the fee agreement, between
himself*fn4 and the co-defendants, the Albers, including the
forum-selection clause therein, applies equally to defendant
Michaelson because the agreement explicitly states that the
courts of the District of Columbia have exclusive jurisdiction
over any dispute or litigation arising out of the agreement.
Pl.'s Opp'n to MTD at 13, 23.
Defendant Michaelson argues that he was not a party to and is
therefore not bound by the Fee Agreement between the plaintiff
and the co-defendants, the Albers, which contains a forum
selection clause. Def. Michaelson's MTD at 5. He further argues
that the forum selection clause is not enforceable against him, a
third party, and that there is no authority for such a
proposition. Def. Michaelson's Reply at 4.
In determining the issue of personal jurisdiction over a
non-resident defendant, this court must ascertain if the
defendant has already consented to the personal jurisdiction of
this court. In this case, the issue is whether the forum
selection clause in the contractual agreement is enforceable
against defendant Michaelson. The plaintiff makes a bald
assertion that the contract is enforceable against a third party
and defendant Michaelson is therefore obligated to subject himself to the jurisdiction of this court for any dispute or
litigation arising out of the Fee Agreement. The court is not
persuaded by the plaintiff's argument. In fact, the plaintiff has
failed to allege specific facts connecting the defendant with the
forum state and his arguments are grounded on "bare allegations
or conclusory statements." Schwartz v. CDI Japan, Ltd.,
938 F. Supp. 1, 4 (D.D.C. 1996). Under contractual law, a contract is
enforceable against a third party if the third party is the
intended beneficiary. See 9-41 Corbin on Contracts § 776. In
this case, the court concludes by looking at the four-corners of
the contractual agreement that the parties to the contract the
plaintiff and the Albers did not intend defendant Michaelson to
be a beneficiary. Thus, while a forum selection clause in a
contract agreement is valid and enforceable if it is "not
obtained through fraudulent or coercive means [and] is not
unconscionable or contrary to public policy," Nat'l Dev. Corp.
v. Fenetres MQ, 1998 U.S. Dist. LEXIS 9768 (D.D.C. 1998), the
forum selection clause in the case at hand is unenforceable
against the third party, defendant Michaelson. See 9-41 Corbin
on Contracts § 776.
Finally, the plaintiff contends that the laws of the District
of Columbia apply to the defendant since he "acts as an agent of
the Albers" and his actions resulted in injuries to the
plaintiff. Pl.'s Opp'n to MTD at 18, 22. Under agency principles,
an authorized agent's acts may be attributed to the principal for
jurisdictional purposes. See Daynard v. Ness, Motley, Loadholt,
Richardson & Poole, P.A., 290 F.3d 42, 55-60 (1st Cir. 2002);
see, e.g., Williamson v. Petrosakh Joint Stock Co.,
952 F. Supp. 495, 498 (S.D. Tex. 1997) (stating that actions by agents
may be used to assert jurisdiction over a principal if an agency
relationship is established). Where, as here, the plaintiffs can
at best argue that defendant Michaelson acted as an agent for his
clients, the Albers, then the actions of the agent, defendant
Michaelson can be used to assert jurisdiction over the
principals, the Albers, and not vice versa. The plaintiff,
however, cites this court's decision in Schwartz, to assert that the agency principles
confer jurisdiction over defendant Michaelson. Pl.'s Opp'n to MTD
at 22-23 (citing Schwartz, 938 F. Supp. 1). The plaintiff's
reliance on this case is misplaced. In Schwartz, the court held
that the non-resident defendant had transacted business in the
District of Columbia because he had co-signed the assignment of
the contract which called "for the performance of work within the
District." Schwartz, 938 F. Supp. at 6. Here, defendant
Michaelson has neither co-signed the fee agreement nor has he
performed any work in the District. Therefore, this court
concludes that it cannot exercise jurisdiction over the defendant
on agency principles.
In sum, the plaintiff fails to persuade the court that
defendant Michaelson consented to this court's jurisdiction or
that agency principles somehow bestow the court with the power to
exercise jurisdiction. Because the plaintiff fails to shoulder
his burden, the court grants defendant Michaelson's motion to
dismiss for lack of personal jurisdiction.
B. The Defendants' Notices of Stay, Treated by the Court as a
Collective Motion to Stay
From the outset of this litigation, all three defendants filed
a notice of automatic stay in response to the original complaint,
as well as in response to the amended complaint. See Def. D.
Albers's Notice of Automatic Stay dated Jan. 1, 2004; Def. R.
Albers's Notice of Automatic Stay, dated Jan. 1, 2004; Def.
Michaelson's Notice of Automatic Stay dated Jan. 1, 2004; Def. D.
Albers's Notice of Automatic Stay, dated May 3, 2004; Def. R.
Albers's Notice of Automatic Stay, dated May 3, 2004; Def.
Michaelson's Notice of Automatic Stay, dated May 3, 2004. This
lawsuit involves an attorney fee dispute, which is currently
being arbitrated in California. Pursuant to California law,
arbitration is mandatory where the client in an attorney fee
dispute elects for arbitration. Accordingly, the court stays the
case pending the completion of arbitration in California. 1. Legal Standard for Stay
A trial court has broad discretion to stay all proceedings in
an action pending the resolution of independent proceedings
elsewhere. See Landis v. N. Am. Co., 299 U.S. 248, 254 (1936).
"The power to stay proceedings is incidental to the power
inherent in every court to control the disposition of the causes
on its docket with economy of time and effort for itself, for
counsel, and for litigants." Airline Pilots Ass'n v. Miller,
523 U.S. 866, 879 n. 6 (1998) (quoting Landis,
299 U.S. at 254-55). Indeed, "[a] trial court may, with propriety, find it is
efficient for its own docket and the fairest course for the
parties to enter a stay of an action before it, pending
resolution of independent proceedings which bear upon the case."
Levya v. Certified Grocers of Cal., Ltd., 593 F.2d 857, 863-64
(9th Cir. 1979).
2. The Court Stays the Remainder of This Litigation Pending the
Completion of Arbitration in California
The instant case involves, in part, a fee dispute arising out
of an attorney-client relationship that originated in California
between the plaintiff attorney and the defendant clients. See
generally Am. Compl. The California Business and Professions
Code ("Cal. Bus. & Prof. Code"), §§ 6200, et seq., provides the
statutory procedure for resolving attorney-client fee disputes.
See Meis and Waite v. Parr, et al., 654 F. Supp. 867, 868 (N.D.
Cal. 1987) (citing Cal. Bus. & Prof. Code §§ 6200, et seq.).
Specifically, if there is an attorney-client fee dispute, the
client has a statutory right to elect arbitration to resolve the
fee dispute, which then becomes mandatory for the attorney. Cal.
Bus. & Prof. Code §§ 6200(b), 6200(c), 6201; see also Meis and
Waite, 654 F. Supp. at 686. The policy purpose for these
statutes is to "alleviate[s] `the disparity in bargaining power
in attorney fee matters which favors the attorney by providing an
effective inexpensive remedy to a client which does not
necessitate the hiring of a second attorney.'" Meis and Waite, 654 F. Supp. at 686 (quoting Manatt,
Phelps, Rothenberg & Tunney v. Lawrence, 151 Cal.App.3d 1165,
1175 (Cal.App. 2d Dist. 1984)). According to the
Cal. Bus. & Prof. Code, an automatic stay suspends all such proceedings;
specifically, "[u]pon filing and service of the request for arbitration,
the action or other proceeding shall be automatically stayed until the
award of the arbitrators is issued or the arbitration is otherwise
terminated." Calif. Bus. & Prof. Code, § 6201(c).
On September 4, 2003, defendants D. Albers and R. Albers, as
former clients of the plaintiff lawyer, invoked their statutory
right to mandatory arbitration for an attorney-client fee dispute
pursuant to Calif. Bus. & Prof. Code § 6201. Prior to this,
defendant Michaelson, as the Albers' new attorney, informed the
plaintiff that the Albers intended to initiate the mandatory
arbitration. See Def. Michaelson's Opp'n to Sanctions,
Michaelson's Decl., Ex. A. The defendants further aver that the
Albers filed a petition for fee arbitration with the Los Angeles
County Bar Association's Dispute Resolution Services on September
20, 2003, also forwarding a copy of this petition to the
plaintiff. Def. Michaelson's Opp'n to Mot. For Sanctions ("Def.
Michaelson's Opp'n to Sanctions"); Michaelson Decl. ¶ 3. On
December 8, 2003, the plaintiff filed the present action in this
court. See generally Am. Compl. The very next day, the Dispute
Resolution Services forwarded the plaintiff notification of the
automatic stay and its power to halt any court proceedings
related to the fee dispute, such as the instant one. Def.
Michaelson's Opp'n to Sanctions, Attach. Letter dated Dec. 9,
2003 (stating, on behalf of the Los Angeles County Bar
Association, Attorney-Client Mediation and Arbitration Services,
that "[u]nder Business and Professions Code 6201, subdivision
(c), when a client commences arbitration of a fee dispute, any
court action between you [Mr. Naegele] and the client [the
Albers] concerning the fee dispute is automatically stayed. The
automatic stay arises without necessity of court order. However, it is your responsibility not to violate the
stay, and if appropriate, to notify the court of the stay").
The court recognizes that states are generally responsible for
the regulation of lawyers. See Leis v. Flynt, 439 U.S. 438, 442
(1979) (stating that "[s]ince the founding of the Republic, the
licensing and regulation of lawyers has been left exclusively to
the States and the District of Columbia within their respective
jurisdictions. The States prescribe the qualifications for
admission to practice and the standards of professional conduct.
They also are responsible for the discipline of lawyers"). The
court further recognizes California's substantial interest in
providing clients with prophylactic tools to deal with
attorney-client fee disputes, that is, with an "effective
inexpensive remedy . . . which does not necessitate the hiring of
a second attorney." Meis and Waite, 654 F. Supp. at 686
(citation omitted). For litigation to occur simultaneously with
such arbitration would not only frustrate California's policy
reasons for these statutes, but would completely defeat them.
See e.g., id. Because the plaintiff is an attorney licensed to
practice law in California and the events that gave rise to this
fee dispute and the instant ligation also arose in California,
the court stays the litigation of the attorney-client fee dispute
pending the completion of arbitration in California.
The plaintiff has brought numerous other counts against the
defendants, namely, tortious interference, conspiracy, and breach
of contract. Am. Compl. ¶¶ 11, 13, 15, 23-24, 28-29, 36, 42-43 &
47-48. Because these counts are dependent on the outcome of the
fee dispute, the court cannot sever them into separate
proceedings without frustrating the above-mentioned policy
reasons for California's mandatory arbitration of fee disputes.
Furthermore "litigating essentially the same issues in two
separate forums is not in the interest of judicial economy or in
the parties' best interests." Nat'l Shopmen Pension Fund v.
Folger Adam Sec., Inc., 2002 U.S. Dist. LEXIS 3079, *3 (D.D.C. Feb. 11, 2002); see also Airline Pilots Ass'n,
523 U.S. at 879 n. 6. The court also notes that there are
remaining questions, especially regarding the proper
amount-incontroversy and the real party in interest, that the
current arbitration in California may impact. Given that the fee
in controversy is a central issue to this case, the court
concludes that all of the plaintiff's counts fall under the
umbrella of the stay pending the completion of arbitration in
Accordingly, the court stays the remainder of this case pending
the completion of the arbitration in California. The parties are
not to file any motions in this case until so directed by this
court. Within 30 calendar days of the completion of the
arbitration proceedings in California, the parties are hereby
directed to submit a joint status report informing the court of
the outcome of the arbitration proceedings, whether they wish to
continue with this case in this venue, and their proposed
briefing schedule and deadlines for how this case will proceed
from that point forward, if at all.
C. The Plaintiff's Motion to Strike
1. Legal Standard for a Motion to Strike
The decision to grant or deny a motion to strike is vested in
the trial judge's sound discretion. Talbot v. Robert Matthews
Distrib. Co., 961 F.2d 654, 664-65 (7th Cir. 1992) (citing
Alvarado-Morales v. Digital Equip. Corp., 843 F.2d 613, 618
(1st Cir. 1988)). On its own initiative or on a party's motion,
the court may strike from a pleading any insufficient defense or
any redundant, immaterial, impertinent, or scandalous matter in
order to avoid the time, effort, and expense necessary to
litigate spurious issues. FED. R. CIV. P. 12(f); Fantasy, Inc.
v. Fogerty, Inc., 984 F.2d 1524, 1527 (9th Cir. 1993), rev'd on
other grounds, 510 U.S. 517 (1994). A "pleading" includes a
complaint, answer, reply to a counterclaim, answer to a
cross-claim, third-party complaint, or third-party answer. FED. R. CIV. P.
7(a). Motions to strike are a drastic remedy, which courts
generally disfavor. Stabilisierungsfonds Fur Wein v. Kaiser
Stuhl Wine Distribs. Pty. Ltd., 647 F.2d 200, 201 (D.C. Cir.
1981) (citing 5C FED. PRAC. & PROC. 2d § 1380 at 783); accord
Morse v. Weingarten, 777 F. Supp. 312, 319 (S.D.N.Y. 1991);
Mirshak v. Joyce, 652 F. Supp. 359, 370 (N.D. Ill. 1987);
Schramm v. Krischell, 84 F.R.D. 294, 299 (D. Conn. 1979).
In considering a motion to strike, the court will draw all
reasonable inferences in the pleader's favor and resolve all
doubts in favor of denying the motion to strike. Wailua Assocs.
v. Aetna Cas. & Sur. Co., 183 F.R.D. 550, 553-54 (D. Haw. 1998);
Joe Hand Promotions, Inc. v. Nekos, 18 F. Supp. 2d 214, 218
(N.D.N.Y. 1998); Seibel v. Society Lease, Inc., 969 F. Supp. 713,
715 (M.D. Fla. 1997). Consequently, the burden lies
with the movant. Vakharia v. Little Co. of Mary Hosp. & Health Care
Ctrs., 2 F. Supp. 2d 1028, 1033 (N.D. Ill. 1998).
2. The Court Denies the Plaintiff's Motion to Strike
The plaintiff requests that the court strike the "latest
filings," specifically, document number 56, defendant
Michaelson's response to the court's June 18, 2004 court order
directing the plaintiff to show cause that this court enjoys
subject matter jurisdiction over this suit. Pl.'s Mot. to Strike.
As noted above, a motion to strike is a vehicle to strike a
complaint, answer, reply to a counterclaim, answer to a
cross-claim, third-party complaint, or third-party answer. FED.
R. CIV. P. 12(f); FED. R. CIV. P. 7(a). Because defendant
Michaelson's response is not a pleading, as defined in Federal
Rule of Civil Procedure 7(a), and motions to strike apply only to
pleadings, the plaintiffs' motion to strike is improper. Pilgrim
v. Trustees, 118 F.3d 864, 868 (1st Cir. 1997) (stating that
Rule 12(f) does not apply to motions or supporting affidavits);
Knight v. U.S., 845 F. Supp. 1372, 1373-74 (D. Ariz. 1993)
(stating that motions to strike solely apply to pleadings, and not to motions); Jones v. City of Topeka,
764 F. Supp. 1423, 1425 (D. Kan. 1991) (stating that motions to strike
cannot be used to strike a plaintiffs' motion for partial summary
judgment because motions to strike are properly directed at
pleadings). Furthermore, even a proper motion to strike is a
drastic remedy and generally disfavored by courts.
Stabilisierungsfonds, 647 F.2d at 201 (citing 5C FED. PRAC. &
PROC. 2d § 1380 at 783). Because the plaintiff is seeking to
strike a response document, not a pleading, the court denies the
plaintiff's motion to strike.
D. The Court Denies the Plaintiff's Two Motions for Sanctions
The plaintiff filed two motions for sanctions. First, on June
16, 2004, the plaintiff filed a motion for sanctions against
defendants R. Albers, D. Albers, and Michaelson. See generally
Pl.'s Mot. for Sanctions. Then, on November 11, 2004, the
plaintiff filed a second motion for sanctions against defendant
Michaelson in connection with the plaintiff's motion to strike
defendant Michaelson's response to the court's June 18, 2004
court order directing the plaintiff to show cause that this court
enjoys subject matter jurisdiction over this suit. See
generally Pl.'s Mot. for Sanctions dated Nov. 11, 2004 ("Pl.'s
2d Mot. for Sanctions").
1. Legal Standard for Rule 11 Sanctions
Under Federal Rule of Civil Procedure 11, the court may impose
sanctions on attorneys or unrepresented parties if "a pleading,
written motion, or other paper . . . [is] presented for any
improper purpose[;] . . . the claims, defenses, and other legal
contentions therein are [un]warranted by existing law[;] . . .
the allegations and other factual contentions have [no]
evidentiary support[; or] the denials of factual contentions are
[un]warranted on the evidence[.]" FED. R. CIV. P. 11(b). There
are procedural and substantive requirements set forth in the Rule
that must be met before a court may impose sanctions. See Edmond
v. United States Attorney, 959 F. Supp. 1, 5 (D.D.C. 1997); see generally 2-11 Moore's
Federal Practice § 11.23 (2004).
Rule 11 mandates that sanctions be imposed only "after notice
and a reasonable opportunity to respond[.]" FED. R. CIV. P.
11(c); see also Nuwesra v. Merrill Lynch, Fenner & Smith, Inc.,
174 F.3d 87, 92 (2d Cir. 1999) (discussing the due process
requirements prior to imposing sanctions that "a sanctioned
attorney must receive specific notice of the conduct alleged to
be sanctionable and the standard by which that conduct will be
assessed, and an opportunity to be heard on that matter"). Rule
11 also requires that "[a] motion for sanctions . . . shall be
served [on the opposing party] . . . and shall not be filed
unless, within 21 days after service of [such] motion, . . . the
challenged paper, claim, defense, contention, allegation, or
denial is not withdrawn or appropriately corrected." FED. R. CIV.
P. 11(c)(1)(A); Elliott v. Tilton, 64 F.3d 213, 216 (5th Cir.
1995) (holding that the court was precluded from granting the
plaintiff's Rule 11 sanctions motion because the plaintiff failed
to serve the motion on the defense counsel, which deprived the
defense counsel of the 21 day safe harbor to withdraw or correct
the alleged offending conduct); U.S. v. BCCI Holdings
(Luxembourg), S.A., 176 F.R.D. 1, 2 (D.D.C. 1997) (concluding
that "the government's letter to petitioners' counsel [was] too
tentative to provide the functional equivalent of `safe harbor'
Rule 11 also requires that a motion for sanctions be filed
separately from other motions or requests and describe the
specific conduct that is allegedly deserving of sanctions. FED.
R. CIV. P. 11(c)(1)(A); see also Hadges v. Yonkers Racing
Corp., 48 F.3d 1320, 1323, 1328 (2d Cir. 1995) (denying a
request for sanctions that the movant included in his motion to
dismiss); S.E.C. v. Rivlin, No. 99-1455, 1999 WL 1455758, at *6
(D.D.C. 1999) (denying Rule 11 sanctions because the motion was
added to the end of the amended answer).
As for the substantive requirements of Rule 11, the court
applies "an objective standard of reasonable inquiry on represented parties who sign papers or
pleadings." Bus. Guides, Inc. v. Chromatic Communications
Enterprises, 498 U.S. 533, 554 (1991). The imposition of Rule 11
sanctions is not something the court takes lightly; Rule 11 sanctions are
an extreme punishment for filing pleadings that frustrate judicial
proceedings. Trout v. Garrett, 780 F. Supp. 1396,
1428 (D.D.C. 1991) (noting that "the blunt
instrument of sanctions against individual attorneys ought to be applied
with restraint"). When a party's motion is "sufficiently well grounded
and warranted by existing law," the party's failure to sustain
his or her burden of proof on the motion "does not ipso facto
violate the standards of Rule 11." Bantefa v. Tyson, No. CIV.A.
84-3937, 1987 WL 8710, at *1 (D.D.C. 1987) (denying the
defendant's motion for sanctions that was filed in response to
plaintiff's unsuccessful motion for relief from judgment).
Similarly, where a party's "request for a stay of proceedings is
based upon good faith assessments and due diligence efforts,"
sanctions are inappropriate under the substantive requirements of
Rule 11. Edmond, 959 F. Supp. at 5 (finding that there was a
lack of malicious motive in the defendant's request for a stay of
the proceedings). On the other hand, a district court does not
abuse its discretion when it imposes Rule 11 sanctions against a
defendant whose counterclaims are designed primarily to harass
the plaintiff. Marina Mgmt. Services, Inc. v. Vessel My Girls,
202 F.3d 315, 325 (D.C. Cir. 2000) (finding sanctionable a
defamation counterclaim "which included allegations not
necessarily integrally linked to the legitimacy of the debt
recovery action"); see also Hilton Hotels Corp. v. Banov,
899 F.2d 40, 43-44 (D.C. Cir. 1990) (affirming the district court's
finding that the defendant "failed to make a reasonable inquiry
into the factual basis of the amended complaint" and upholding
the imposition of Rule 11 sanctions).
The court also has the authority to impose Rule 11 sanctions
sua sponte. FED. R. CIV. P. 11(c)(1)(B). This inherent power,
as the D.C. Circuit recognized, "guard[s] against abuses of the judicial process." Shepherd v. Am. Board. Co., 62 F.3d 1469,
1472 (D.C. Cir. 1995). In this regard, Rule 11 serves the purpose
of protecting the court from "frivolous and baseless filings that
are not well grounded, legally untenable, or brought with the
purpose of vexatiously multiplying the proceedings." Cobell v.
Norton, 211 F.R.D. 7, 10 (D.D.C. 2002) (quoting Cobell v.
Norton, 157 F. Supp. 2d 82, 86 n. 8 (D.D.C. 2001)). If the court
determines that the motive and intent of the offending party is
to harass the other party, or that a party has otherwise violated
Rule 11(b), it has the inherent power to consider a Rule 11
sanctions motion sua sponte by issuing an order directing the
offending party to show case why it has not violated Rule 11(b).
FED. R. CIV. P. 11(c)(1)(B); see McLaughlin v. Brandlee,
602 F. Supp. 1412 (D.D.C. 1985), aff'd 803 F.2d 1197 (D.C. Cir. 1986).
When the court exercises its discretion and imposes sanctions
sua sponte, it is not required to provide the party with the
safe harbor period, as is required in Rule 11(c)(1)(A). Compare
FED. R. CIV. P. 11(c)(1)(B) (containing no explicit safe harbor
provision) with FED. R. CIV. P. 11(c)(1)(A) (containing an
explicit safe harbor provision); see, e.g., Elliot v. Tilton,
64 F.3d 213, 216 (5th Cir. 1995) (distinguishing between the safe
harbor required when sanctions are requested by motion and the
absence of the safe harbor requirement when the court is acting
sua sponte). The court further notes that a frivolous Rule 11
sanction motion may itself be a violation of Rule 11. FED. R.
CIV. P. 11.
Finally, this court has the "discretion to determine both
whether a Rule 11 violation has occurred and what sanctions
should be imposed if there has been a violation. Cobell,
211 F.R.D. at 10 (citations omitted). This court's grant or denial of
a Rule 11 motion for sanctions is reviewed under an abuse of
discretion standard. Cooter & Gell v. Hartmarx Corp.,
496 U.S. 384, 405 (1990); Geller, 40 F.3d at 1303. 2. Legal Standard for 28 U.S.C. § 1927 Sanctions
The court may also impose sanctions pursuant to
28 U.S.C. § 1927. This statute provides that:
[a]n attorney or other person admitted to conduct
cases in any court of the United States or any
Territory thereof who so multiplies the proceedings
in any case unreasonably and vexatiously may be
required by the court to satisfy personally the
excess costs, expenses, and attorneys' fees
reasonably incurred because of such conduct.
28 U.S.C. § 1927. The purpose of § 1927 is to allow the court "to
assess attorney's fees against an attorney who frustrates the
progress of judicial proceedings." U.S. v. Wallace,
964 F.2d 1214, 1218 (D.C. Cir. 1992). Before imposing sanctions on an
attorney, the court must evaluate whether the attorney's conduct
has been "at least reckless[.]" Wallace, 964 F.2d at 1217.
(emphasis in original). "[U]nintended, inadvertent, and negligent
acts[, however,] will not support an imposition of sanctions
under section 1927." Wallace, 964 F.2d at 1219 (quoting Cruz
v. Savage, 896 F.2d 626
, 631 (1st Cir. 1990)). For an act to be
considered reckless misconduct, there must be a "conscious choice
of a course of action, either with knowledge of the serious
danger to others involved in it or with knowledge of facts which
would disclose this danger to any reasonable man." Wallace,
964 F.2d at 1220 (quoting Restatement (Second) of Torts § 500 cmt. g
(1964)). A showing by the moving party that counsel acted
recklessly or deliberately "in the face of a known risk" is
required. Healey v. Labgold, 231 F. Supp. 2d 64, 68 (D.D.C.
2002) (citing Wallace, 964 F.2d at 1219). Once the moving party
has met its burden, then the court may impose sanctions under
28 U.S.C. § 1927.
3. The Court Denies the Plaintiff's Motions for Sanctions Under
Rule 11 and 28 U.S.C. § 1927
On May 20, 2004, the plaintiff served his motion for sanctions
on all the defendants. Pl.'s Mot. for Sanctions at 1. The plaintiff requests that the court
impose sanctions on the defendants for violations of Rule 11 as a
result of their failure to withdraw or correct their filings at
issue in his motion. Id. at 2. Further, the plaintiff requests
the court to sanction defendant Michaelson under 28 U.S.C. § 1927
for multiplying the proceedings "unreasonably and vexatiously."
In his motion for sanctions, the plaintiff argues that the
defendants' filings with this court have violated Rule 11 and
28 U.S.C. § 1927 for the following reasons: (1) defendant Michaelson
"engaged in the unauthorized practice of law in the District" by
preparing the filings for his codefendants, the Albers; (2) the
defendants are misrepresenting themselves by availing themselves
of the automatic stay provision of Cal. Bus. & Prof. Code § 6201;
(3) the defendants materially misrepresented to the court by
disputing the "consent" provisions of the Fee Agreement; and (4)
the defendants filed an Opposition to Plaintiff's Request for
Entry of Default, despite the lack of such provision under Rule
55, and caused unnecessary delay. Pl.'s Mot. for Sanctions,
Defendant Michaelson argues that each of the defendants filed
"all documents as `Pro Se' defendants." Def. Michaelson's Opp'n
to Mot. for Sanctions at 7. Defendant D. Albers makes the
following arguments: (1) she filed a Notice of Automatic Stay
pursuant to California Business & Professions Code § 6201(c) and
the court should honor the request for stay; (2) the "court has
the discretion to dismiss the action due to [the plaintiff's]
failure to provide the required notice" prior to the commencement
of this action; and (3) all of the defendants are pro se
litigants. Def. D. Albers' Opp'n to Mot. for Sanctions at 2-6.
Defendant R. Albers makes the same arguments as defendant D.
Albers. Def. R. Albers' Opp'n to Mot. for Sanctions at 2-6.
The court analyzes a Rule 11 motion to determine if it meets
both the procedural and substantive fairness requirements called
for by Rule 11. The procedural fairness is determined by the two-prong test of notice and an opportunity to respond. FED.
R. CIV. P. 11(c). Here, the plaintiff served all of the
defendants with the motion for sanctions and in doing so, placed
the defendants on notice. Under the safe harbor provisions of
Rule 11, the defendants had 21 days to either withdraw or correct
the documents at issue. See FED. R. CIV. P. 11(c)(1)(A). But
the defendants chose not to withdraw or correct the challenged
documents within the safe harbor period. Subsequently, the
plaintiff filed the motion for sanctions, as a separate motion,
with the court and described the specific conduct of the
defendants that the plaintiff believes is deserving of sanctions.
Based on the legal framework set forth earlier, the court
concludes that the plaintiff's motion for sanctions satisfies
procedural requirements of Rule 11.
In addition to these procedural requirements, the moving party
has the burden to meet the substantive fairness requirement
placed on it by the court. In ascertaining substantive fairness,
the court applies an objective standard of reasonable inquiry.
Bus. Guides, Inc., 498 U.S. at 554. Using this standard, the
court will evaluate the alleged "specific conduct" by the
defendants that the plaintiff argues are deserving of sanctions.
First, the plaintiff alleges that defendant Michaelson prepared
the filings for the Albers and thus, engaged in "unauthorized
practice of law" proscribed under the D.C. Rule of Professional
Conduct. See D.C. Rule of Professional Conduct 5.5. But the
defendants rebut this argument by stating that they are all pro
se litigants. Mere allegations are insufficient to support a
finding that defendant Michaelson prepared the filings for the
Albers in this proceeding and thereby violated the rules of
professional conduct. Thus, the court rejects the plaintiff's
allegation that defendant Michaelson is unlawfully practicing law
and thus deserving of Rule 11 sanctions. Second, the plaintiff alleges that the defendants are
misrepresenting themselves by availing themselves of the
automatic stay provision of Cal. Bus. & Prof. Code § 6201. The
Albers argue that they filed a Notice of Automatic Stay pursuant
to Cal. Bus. & Prof. Code § 6201(c) and that the court should
honor their request to stay the current proceedings. This court
has held that a party's good faith request stay of proceedings is
not sanctionable under Rule 11. See Edmond, 959 F. Supp. at 5.
Here, the Albers have initiated an arbitration proceeding in
California against the plaintiff disputing the fees charged by
the plaintiff for services rendered to the Albers. A request for
stay of the proceedings based on an impending arbitration
proceeding in another state can hardly be deemed as an action
taken in bad faith. The court therefore concludes that the
Albers' request for stay fails the substantive requirements of
Rule 11 and therefore is not sanctionable.
In his motion for sanctions, the plaintiff highlighted
defendant Michaelson's inappropriate use of the automatic stay,
stating that the fee dispute and any related arbitration or stays
are confined solely to the plaintiff and the defendants Albers.
Pl.'s Mot. for Sanctions at 7-8, 14; Pl.'s Decl. in Support of
Pl.'s Opp'n to the Mot. to Dismiss ¶ 8(D)(9). The court agrees,
and the defendant attorney admits in his reply to the opposition
to his motion to dismiss, that the defendant attorney cannot
partake of the automatic stay given that he is not a party to
that dispute. Def. Michaelson's Opp'n to Mot. for Sanctions at
4-5. However, as the court has already indicated, it elects to
dismiss defendant Michaelson for an alternative reason: lack of
personal jurisdiction. The court moreover notes that the
plaintiff sought to hold defendant Michaelson bound by the forum
selection clause in the fee agreement between the plaintiff and
the Albers, a contract defendant Michaelson was not a party to.
Pl.'s Opp'n to Def. Michaelson's MTD, Ex.2 ¶ 6. That is, the plaintiff represented to this court
that defendant Michaelson should be bound by the contract signed
by the Albers, but not enjoy the automatic stay provided by the
California legislature for disputes arising out of this contract.
Next, the plaintiff argues that the defendants made material
misrepresentions to the court by contesting the "consent"
provisions of the Fee Agreement. Pl.'s Mot. for Sanctions at 14.
The fee agreement called for D.C. law to govern "the rights and
obligations" of the parties to the agreement and the District of
Columbia to serve as "venue for any disputes or litigations
arising out of this agreement." Id. (emphasis in original). The
defendants contend, however, to the extent of their knowledge
that the fee agreements were not executed. Def. Michaelson's
Opp'n to Mot. for Sanctions at 5. In addition, they argue that
even if the various fee agreements were executed, these documents
do not prohibit fee arbitration in California. Def. Michaelson's
Opp'n to Mot. for Sanctions, Ex. F (Statement of Kirtley
Thiesmeyer, Deputy Chair of the Attorney-Client Mediation and
Arbitration Services Executive Committee of the Los Angeles
County Bar Association). Nothing in the defendants' decision to
bring this attorney-client fee dispute for arbitration in
California suggests that they acted in bad faith. Accordingly,
the court concludes that the defendants' have not made material
misrepresentations to this court deserving of Rule 11 sanctions.
Finally, the plaintiff argues that the defendants filed an
opposition to the plaintiff's request for entry of default,
despite a lack of such provision under Rule 55, and caused
unnecessary delay. Pl.'s Mot. for Sanctions at 17. The
defendants, however, assert that their filings were "necessitated
by Naegele's failure to honor the Notice of Automatic Stay[.]"
Def. Michaelson's Opp'n to Mot. for Sanctions at 6. This court
has held that when a party's motion is "sufficiently well grounded and warranted by existing law," the
party's failure to sustain the burden of proof on the motion
"does not ipso facto violate the standards of Rule 11."
Bantefa, 1987 WL 8710, at *1. The court concludes, therefore,
that the defendants' filing of an opposition to the plaintiff's
Request for Entry of Default is not sanctionable under Rule 11.
The court's analysis is not over yet. The plaintiff petitions
the court to impose sanctions on defendant Michaelson under
28 U.S.C. § 1927 because Michaelson allegedly made frivolous factual
and legal representations and encouraged the Albers to do the
same. Pl.'s Mot. for Sanctions at 18. Under D.C. law, however,
sanctions may be imposed only for reckless conduct, not
negligence or inadvertent acts. See Wallace, 964 F.2d at 1219.
The plaintiff bears the burden of showing that opposing counsel
acted recklessly, namely that opposing counsel deliberately acted
in disregard of a danger or known risk to others. Healey,
231 F. Supp. 2d at 68. Here, the plaintiff only made allegations
concerning the defendants' filings as being "unreasonable" and
"vexatious," rather than making an attempt to prove his case for
recklessness against defendant Michaelson. Defendant Michaelson
rebuts by arguing that his filings have been "defensive" to the
plaintiff's pleadings and motions. Def. Michaelson's Opp'n to
Mot. for Sanctions at 6. Based on these arguments, the court
concludes that the plaintiff failed to meet his burden of proof.
The court also concludes that defendant Michaelson's behavior
does rise to the level of recklessness, as required under D.C.
law, to be subject to sanctions under 28 U.S.C. § 1927.
4. The Court Denies the Plaintiff's Second Motion for Sanctions
The plaintiff, in his second motion for sanctions, submits
arguments repetitious of his first motion for sanctions,
compare Pl.'s Mot. for Sanctions with Pl.'s 2d Mot. for
Sanctions, with the additional argument that defendant Michaelson
inappropriately filed his response to the court's June 18, 2004 order. See generally Pl.'s 2d Mot. for
Sanctions. As stated above, the plaintiff's motion to strike
defendant Michaelson's response document is inappropriate and
denied by the court. See supra Discussion III.C. Furthermore,
the court denies the plaintiff's second motion for sanctions for
the same reasons it denies the plaintiff's motion for sanctions.
See supra Discussion III.D. The court seizes this opportunity
to warn the parties that their repeated filing of duplicative
motions border on the very tactics that abuse the judicial system
and multiply the proceedings unreasonably and vexatiously. See
FED. R. CIV. P. 11; 28 U.S.C. § 1927.
For all of these reasons, the court denies defendant
Michaelson's motion to dismiss for lack of subject matter
jurisdiction, but grants his motion to dismiss for lack of
personal jurisdiction; denies both of the plaintiff's motions for
sanctions; denies the plaintiff's motion to strike the
defendants' notices of automatic stay; denies the plaintiff's
motion to strike defendant Michaelson's response document; grants
the defendants Albers' motion to stay; and denies all remaining
motions as moot. An order directing the parties in a manner
consistent with this Memorandum Opinion is separately and
contemporaneously issued this 3rd day of January 2005.