748 Fed.Appx. 588 (5th Cir. 2018), 17-40476, M2 Technology, Inc. v. M2 Software, Inc.

Docket Nº:17-40476
Citation:748 Fed.Appx. 588
Opinion Judge:PER CURIAM:
Party Name:M2 TECHNOLOGY, INCORPORATED, Plaintiff-Appellee v. M2 SOFTWARE, INCORPORATED Defendant King Law Group, P.L.L.C.; Richard C. King, Jr.; Mary Ellen King, Appellants
Attorney:John T. Gabrielides, Barnes & Thornburg, L.L.P., Chicago, IL, John F. Bufe, Attorney, Potter Minton, P.C., Tyler, TX, for Plaintiff-Appellee Richard Carroll King, Jr., Esq., King Law Group, P.L.L.C., Dripping Springs, TX, for Defendants-Appellants
Judge Panel:Before WIENER, GRAVES, and HO, Circuit Judges.
Case Date:August 31, 2018
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 588

748 Fed.Appx. 588 (5th Cir. 2018)

M2 TECHNOLOGY, INCORPORATED, Plaintiff-Appellee

v.

M2 SOFTWARE, INCORPORATED Defendant

King Law Group, P.L.L.C.; Richard C. King, Jr.; Mary Ellen King, Appellants

No. 17-40476

United States Court of Appeals, Fifth Circuit

August 31, 2018

UNPUBLISHED

Editorial Note:

Please Refer Federal Rule of Appellate Procedure Rule 32.1. See also U.S.Ct. of App. 5th Cir. Rules 28.7 and 47.5.

Appeal from the United States District Court for the Eastern District of Texas, USDC No. 4:12-CV-458

John T. Gabrielides, Barnes & Thornburg, L.L.P., Chicago, IL, John F. Bufe, Attorney, Potter Minton, P.C., Tyler, TX, for Plaintiff-Appellee

Richard Carroll King, Jr., Esq., King Law Group, P.L.L.C., Dripping Springs, TX, for Defendants-Appellants

Before WIENER, GRAVES, and HO, Circuit Judges.

OPINION

PER CURIAM:[*]

Page 589

Richard C. King, Jr., Mary Ellen King, and the King Law Group, PLLC, appeal an imposition of sanctions under Rule 11(b)(2) in the amount of $39,325.63. We affirm.

I.

This appeal is part of a series of three cases between M2 Technology, Inc. ("M2 Technology") and David Escamilla and his company, M2 Software, Inc. ("M2 Software"). M2 Technology sued M2 Software, seeking a declaratory judgment that M2 Software infringed the "M2" mark. M2 Software did not appear before the deadline to file an answer. As a result of M2 Software’s default, the district court entered a declaratory judgment for M2 Technology. The district court also awarded M2 Technology fees and costs. M2 Software appealed, and we affirmed. M2 Tech., Inc. v. M2 Software, Inc., 589 Fed.Appx. 671, 673 (5th Cir. 2014) (per curiam).

M2 Software moved to set aside the default judgment under Rule 60(b). M2 Technology filed a motion in opposition as well as a motion for sanctions under Federal Rule of Civil Procedure 11. The district court denied M2 Software’s motion. We affirmed. Escamilla v. M 2 Tech., Inc., 657 Fed.Appx. 318, 319 (5th Cir. 2016) (per curiam).

In the same order, the district court granted M2 Technology’s motion for sanctions under Rule 11(b)(2), concluding that "M2 Software’s motion to set aside the default judgment lack[ed] merit." The district court ordered M2 Software’s counsel to pay M2 Technology $39,325.63.

M2 Software’s counsel appealed, arguing that the district court abused its discretion by imposing Rule 11(b)(2) sanctions after counsel presented plausible legal grounds for its Rule 60(b) motion. In the alternative, appellants argue that the district court abused its discretion when it: (1) failed to assess what fees would have been incurred "but for" the alleged sanctionable conduct; (2) erred by using M2 Technology’s counsel’s Chicago-based rate to calculate the lodestar; and, (3) failed to provide an individualized analysis describing exactly which conduct of Ms. King was being sanctioned.

We begin with the imposition of Rule 11 sanctions, which we review for abuse of discretion. See Snow Ingredients, Inc. v. SnoWizard, Inc., 833 F.3d 512, 527 (5th Cir. 2016) (citing Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990) ). Sanctions are appropriate if counsel submits a "legally indefensible" filing. Id. at 528 (citing Whitehead v. Food Max of Miss., Inc., 332 F.3d 796, 802 (5th Cir. 2003) (en banc) ). A filing is legally indefensible if it is not "warranted by existing law or by a nonfrivolous argument." Id. (citing Fed.R.Civ.P. 11(b)(2) ). The trial court should "judge an attorney’s compliance with rule 11 by an objective standard of reasonableness under the circumstances." Smith v. Our Lady of the Lake Hosp., Inc., 960 F.2d 439, 444 (5th Cir. 1992) (citing

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Thomas v. Capital Sec. Servs., 836 F.2d 866, 873 (5th Cir. 1988) (en banc) ).

M2 Software presented multiple interrelated issues in its Rule 60(b) motion: (1) the district court lacked personal jurisdiction after insufficient service of process; (2) M2 Software’s failure to appear was because of a good faith belief that it had no obligation to appear; (3) the district court lacked subject-matter jurisdiction because Escamilla was the actual owner of the federal trademark; (4) the district court’s local rules are unconstitutional; (5) M2 Technology made a fraudulent misrepresentation to the Clerk that M2 Software had been served; (6) M2 Technology’s claims were barred by res judicata based on final decisions by the United States Patent and Trademark Office; and (7) the U.S. Supreme Court’s intervening decision in B & B Hardware, Inc. v. Hargis Indus., Inc., __ U.S. __, 135 S.Ct. 1293, 191 L.Ed.2d 222 (2015), gave preclusive effect to an earlier final judgment...

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