de Borja v. Razon

• Decision Date: 21 December 2021
• Docket Number: 3:18-cv-01131-YY
• Court: U.S. District Court — District of Oregon
• Parties: PATRICK R. DE BORJA, individually and MAKILING FARMS, INC., a Philippine corporation, Plaintiffs, v. ENRIQUE K. RAZON, JR., individually; INTERNATIONAL CONTAINER TERMINAL SERVICES, INC., a Philippine corporation; ICTSI OREGON INC., an Oregon corporation; and JOHN AND/OR JANE DOES 1-20, Defendants.

PATRICK R. DE BORJA, individually and MAKILING FARMS, INC., a Philippine corporation, Plaintiffs,
v.
ENRIQUE K. RAZON, JR., individually; INTERNATIONAL CONTAINER TERMINAL SERVICES, INC., a Philippine corporation; ICTSI OREGON INC., an Oregon corporation; and JOHN AND/OR JANE DOES 1-20, Defendants.

No. 3:18-cv-01131-YY

United States District Court, D. Oregon, Portland Division

December 21, 2021

OPINION AND ORDER

Youlee Yim You United States Magistrate Judge

In this case, plaintiffs Patrick R. de Borja (“de Borja”) and Makiling Farms, Inc. (“MFI”) brought suit against defendants Enrique K. Razon, Jr., International Container Terminal Services, Inc. (“ICTSI”) (collectively “foreign defendants”), and ICTSI Oregon, Inc., over four fraudulent stock transfers made in 1989 and 1991. By prior order, this court dismissed the action without prejudice under the doctrine of forum non conveniens because the Philippines constitutes an adequate alternative forum and the private and public interest factors weighed heavily toward

1

dismissal. Findings and Recommendations (“F&R”), ECF 83, adopted by Order, ECF 90. The Ninth Circuit affirmed that decision in De Borja v. Razon, 835 Fed.Appx. 184 (9th Cir. 2020).

This court then considered defendants' motion for sanctions (ECF 73) and found that, in violation of Federal Rule of Civil Procedure 11, the complaint was legally and factually baseless from an objective perspective for lack of subject matter jurisdiction and no reasonable and competent inquiry was made into subject matter jurisdiction. Opinion and Order 4, 39, ECF 102. As detailed in that decision, the court found that plaintiffs inexplicably failed to address nearly all of defendants' arguments regarding subject matter jurisdiction despite having multiple opportunities. Id. at 15. Defendants argued plaintiffs' silence should be treated as a concession that their position lacked merit. Still, this court “explored any basis for subject matter jurisdiction to give plaintiffs and their counsel the benefit of the doubt.” Id. at 40. After finding no basis for subject matter jurisdiction, the court ordered a hearing to determine whether sanctions should be imposed and whether plaintiffs' counsel had acted in bad faith in violation of Rule 11 and 28 U.S.C. § 1927. Id. at 53-54.

Attorney Peter Jarvis thereafter filed a notice of appearance on behalf of one of plaintiffs' attorneys, Joshua Ross, and his law firm, and requested leave to file supplemental briefing. The court allowed the parties to submit supplemental briefing and additional declarations, and held oral argument. Plaintiffs and plaintiffs' other attorney, Walter Scott, joined in the supplemental briefing filed by Ross and his law firm. Joinder Notice, ECF 123. For the sake of clarity, plaintiffs, plaintiffs' counsel, and plaintiffs' counsels' law firms are referred to collectively as plaintiffs unless otherwise separately identified.

After considering all of the briefing and arguments of the parties and counsel, the court WITHDRAWS its September 30, 2020 Opinion and Order (ECF 102), DENIES defendants'

2

Motion for Imposition of Sanctions (ECF 73), and DENIES plaintiffs' motion for countersanctions (ECF 75).

I. The Court's Authority to Reconsider Prior Rulings

Plaintiffs argue, “[w]hether this Memorandum and supporting materials are accepted as supplemental briefing, as a motion for reconsideration or on other grounds, there is no basis for sanctions against Plaintiffs or their counsel.” Suppl. Sanctions Br. 24, ECF 116.

A motion for reconsideration is “appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law.” Sch. Dist. No. 1J v. AC & S, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993) (citation omitted). “Clear error occurs when ‘the reviewing court on the entire record is left with the definite and firm conviction that a mistake has been committed.'” Smith v. Clark Cty. Sch. Dist., 727 F.3d 950, 955 (9th Cir. 2013) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). “A ‘manifest injustice' is defined as ‘an error in the trial court that is direct, obvious, and observable.'” Brooks v. Tarsadia Hotels, No. 3:18-CV-2290-GPC-KSC, 2020 WL 601643, at *5 (S.D. Cal. Feb. 7, 2020) (quoting Smith v. City of Quincy, No. CV-09-328-RMP, 2011 WL 1303293, at *1 (E.D. Wash. Apr. 5, 2011)); see also Manifest Injustice, Black's Law Dictionary (11th ed. 2019)) (defining “manifest injustice” as an error in the trial court that is “direct, obvious, and observable”).

“Reconsideration is an ‘extraordinary remedy, to be used sparingly in the interests of finality and conservation of judicial resources.'” Adidas Am., Inc. v. Payless Shoesource, Inc., 540 F.Supp.2d 1176, 1179 (D. Or. 2008) (quoting Kona Enterprises, Inc. v. Estate of Bishop, 229 F.3d 877, 890 (9th Cir. 2000)). “[A] motion for reconsideration should not be granted, absent highly unusual circumstances.” 389 Orange St. Partners v. Arnold, 179 F.3d 656, 665

3

(9th Cir. 1999). “Motions for reconsideration are generally disfavored, and may not be used to present new arguments or evidence that could have been raised earlier.” Fuller v. M.G. Jewelry, 950 F.2d 1437, 1442 (9th Cir. 1991); see also Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 880 (9th Cir. 2009) (“A motion for reconsideration ‘may not be used to raise arguments or evidence for the first time when they could reasonably have been raised earlier in the litigation.'”) (quoting Kona Enterprises, 229 F.3d at 890).

Plaintiffs argue the court erred in concluding that plaintiff de Borja is stateless. Suppl. Sanctions Br. 8, ECF 116; see Opinion and Order 18-19, ECF 102. Defendants argued de Boja is a “stateless person” in their reply in support of the motion for sanctions. ICTSI Oregon's Reply Mot. Dismiss 5, ECF 7. At the August 26, 2020 hearing on the motion, plaintiff's counsel stated that “California is [de Borja's] home, ” and if “clarification [was] needed . . . that's something that we would like the opportunity to do.” August 26, 2020 Tr. 14, ECF 101. However, the court did not expressly give plaintiffs leave to file a supplental declaration before issuing its opinion and order on September 30, 2020. That constitutes clear error and was manifestly unjust.

Plaintiffs also assert that the court went too far in “sua sponte” considering the collusive stock transfer issue when it was not an argument asserted by defendants. Suppl. Sanctions Br. 16, ECF 116. The court disagrees with the characterization that it acted sua sponte. As this court stated before, while “[d]efendants did not develop this argument in their motion for sanction, . . . they raised it in their motion to dismiss.” Opinion and Order 29, ECF 102 (citing ICTSI Oregon's Mot. Dismiss 26, ECF 31). Where defendant raised the issue, this court could not ignore it and had to analyze it through to its logical conclusion. Nevertheless, defendants did not reassert the argument in its motion for sanctions. This constitutes another basis for the court

4

to allow further briefing to reconsider its ruling in that regard. Under the circumstances, disallowing plaintiffs the opportunity to fully address the collusion issue would constitute a “manifest injustice.”^[1]

The court appreciates the frustration that defendants undoubtedly feel as a result of having to relitigate the motion for sanctions, as well as the time and cost of doing so. Yet, the imposition of sanctions is arguably the most serious action the court can take against the parties or counsel in a case. Here, providing plaintiffs with the fullest opportunity to respond to the motion for sanctions ensures that a fair and correct decision is reached.

II. Authority for Sanctions

The court has authority to sanction both litigants and attorneys under Rule 11 and its inherent power. Additionally, 28 U.S.C. § 1927 provides the court with authority to sanction attorneys.^[2] An “entry of sanctions is reviewed for an abuse of discretion.” Primus Automotive Fin. Services, Inc. v. Batarse, 115 F.3d 644, 648 (9th Cir. 1997).

5

A. Rule 11

Rule 11 governs papers filed with the court. Chambers v. NASCO, Inc., 501 U.S. 32, 41 (1991).

By presenting to the court a pleading, written motion, or other paper[, ] . . . an attorney . . . certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:

(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;

(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;

(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for further investigation or discovery;

(4) the denials of factual contentions are warranted on the evidence or, if specifically so identified, are reasonably based on belief or a lack of information.

Fed. R. Civ. P. 11(b).

Rule 11 sanctions are governed by “an objective standard of reasonable inquiry.” Chambers, 501 U.S. at 47. The court considers whether the complaint is legally or factually baseless from an “objective perspective.” Christian v. Mattel, Inc., 286 F.3d 1118, 1131 (9th Cir. 2002).

Under Rule 11, motions for sanctions “must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11(b).” Fed. R. Civ. P.11(c)(2).

6

The rule also contains a safe harbor: the party served with the motion must be given 21 days after service to withdraw or correct...