Schewel Furniture Co., Inc. v. Warranty Corp. of America, Inc., 91-1637

Decision Date01 June 1992
Docket NumberNo. 91-1637,91-1637
PartiesNOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. SCHEWEL FURNITURE COMPANY, INCORPORATED, Plaintiff-Appellee, Alexander Wayne BELL, Appellee, v. WARRANTY CORPORATION OF AMERICA, INCORPORATED; Glen H. Hammer, Defendants-Appellants, and EXTENDED SERVICE OF AMERICA, INCORPORATED; Larry V. Peterson; Richard E. Peterson; Gary Proctor; Keith D. Williamson; Larry M. Higbee; Chandler Craig Browning; Martin J. Blank; Larry I. Dorfman; Danny C. Wright, American Fidelity Insurance Company; Financial Guardian, Incorporated; F. G. Reinsurance, Limited; Doran R. Oneale; American Hardware Mutual Insurance Company; Commercial Casualty Insurance Company; A. R. Custard; John Doe; Jane Doe, Defendants. . Argued:
CourtU.S. Court of Appeals — Fourth Circuit

Argued: John Merlin Bruce, Weinstock & Scavo, P.C., Atlanta, Georgia, for Appellant.

Donna Helene Schewel, Davidson, Sakolosky & Richards, P.C., Lynchburg, Virginia, for Appellee.

On Brief: Michael Weinstock, Weinstock & Scavo, P.C., Atlanta, Georgia, for Appellant.

James J. Sakolosky, Davidson, Sakolosky & Richards, P.C., Lynchburg, Virginia, for Appellee.

Before ERVIN, Chief Judge, and HALL and MURNAGHAN, Circuit Judges.

PER CURIAM:

OPINION

The case arises as an appeal of the district court's denial of a motion for Rule 11 sanctions brought by Warranty Corporation of America, and its president Glen H. Hammer ("appellant"), against Schewel Furniture Company, Inc. ("appellee"). On February 13, 1991, after three days of a trial involving appellee's claim that appellant had made fraudulent and harmful representations in their past business relationship, appellee sought and was granted a dismissal of its own action. While, in the form in which it was granted, the dismissal was stated to be without prejudice, the trial court indicated that the grant of the motion was conditioned on an agreement by the parties that there would be no further suits arising out of the issues involved in the trial.

Despite such an agreement by the parties, on March 28, 1991, the appellant filed a motion for Rule 11 sanctions against appellee citing as its basis for relief activities of appellee counsel in connection with the dismissed cause of action. On April 22, and again on May 20, the district court denied the motion stating that irrespective of the merit of the claim, the motion could not be granted because all potential causes of action between the parties were released at the time of the dismissal without prejudice.

Appellant clearly agreed to the conditions set out by the district court in its dismissal. The appellant's filing of a motion for Rule 11 sanctions violated the dismissal order, and the district court properly denied the motion.

The appellee is a Virginia corporation with sales throughout the southeast United States. The appellant is a Georgia corporation engaged in the business of selling and administering extended warranty service contracts for home appliances. The appellant and appellee first entered into a contractual relationship in June of 1989. In November of that year, the appellee filed a complaint in federal district court against nineteen parties, including the appellant, alleging violations of federal and state law arising out of promises claimed to be fraudulent that the appellant would insure extended warranty contracts issued by the appellee.

Ultimately, a trial ensued with the appellant and the appellee as exclusive parties. On February 13, 1991, the third day of the trial, counsel for the appellee stated that it would be prepared to move for dismissal without prejudice of that action against the appellant pursuant to Fed. R. Civ....

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