Frank v. D'Ambrosi
| Citation | 4 F.3d 1378 |
| Decision Date | 22 September 1993 |
| Docket Number | 91-3385 and 91-3529,Nos. 91-3311,s. 91-3311 |
| Parties | -6242, 93-2 USTC P 50,625, RICO Bus.Disp.Guide 8408, Unempl.Ins.Rep. CCH (P) 17665A.38 Robert A. FRANK (91-3311/3385), Plaintiff-Appellant, v. Bernard D'AMBROSI, et al., Defendants-Appellees. and Bernard D'AMBROSI, Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellee, Robert A. Frank (91-3529), Defendant-Counterclaimant-Appellant, Michael L. Mogul, Attorney-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Michael L. Mogul (argued and briefed), Youngstown, OH, for plaintiff-appellant, Robert A. Frank.
Mark I. Wallach (briefed), Joseph A. Castrodale, Christopher S. Williams, Calfee, Halter & Griswold, Cleveland, OH, for defendants-appellees Bertin Steel Processing, Inc. and Bernard D'Ambrosi.
Anthony J. DiVenere (argued and briefed), McDonald, Hopkins, Burke & Haber, Cleveland, OH, for defendants-appellees Michtin, Inc., U.S.S., Inc., U.S.X., Inc., Robert Meyer and Robert K. Fravel.
William B. Leahy (argued and briefed), Thompson, Hine & Flory, Cleveland, OH, for defendant-appellee Atlas-Lederer Co.
Thomas R. Jones, U.S. Dept. of Justice, Tax Div., Gary R. Allen, Acting Chief (briefed), Richard Farber, Bridget M. Rowan, Charles Bricken (argued), Samuel R. Lyons, U.S. Dept. of Justice, Appellate Section Tax Div., Washington, DC, for defendant-appellee U.S.
Michael L. Mogul, pro se.
Before: BOGGS and SUHRHEINRICH, Circuit Judges; and GILMORE, Senior District Judge. *
Robert A. Frank appeals from the dismissal of his RICO suit against his former business partner, Bernard D'Ambrosi, and others. Frank also appeals from the dismissal, in another action, of his cross-claim against D'Ambrosi for contribution for unpaid taxes. In addition, Michael A. Mogul, Frank's counsel, appeals from the imposition of Rule 11 monetary sanctions against him as a result of documents he filed in the tax case. For the reasons given below, we affirm the district court on all issues.
Frank and D'Ambrosi were each 50% shareholders in an Ohio steel processing company named Lornic Corporation. Frank was the president, treasurer, and one of the two directors. D'Ambrosi was the vice president, secretary, and the other member of the board of directors.
From June 1984 through June 30, 1988, USX (a subdivision of USS) had contracted with Lornic to process steel. USX allowed Lornic to process USX's steel at USX's off-site facility in Wickliffe, Ohio, using equipment belonging to USX.
On June 29, 1988, without, according to D'Ambrosi, D'Ambrosi's prior knowledge or consent, Frank told Robert Fravel, then general manager of USX's Lorain works, that Lornic was going out of business. Furthermore, Frank assembled Lornic's employees and told them that the company was shutting down as of the end of the shift.
USX, through Fravel, notified Lornic in writing on July 1, 1988, that Frank's actions constituted repudiation of the contract. Also on July 1, 1988, D'Ambrosi filed suit in Ohio state court seeking judicial dissolution of Lornic. D'Ambrosi and Frank stipulated to the dissolution, and on March 24, 1989, the state trial court entered an order dissolving Lornic.
The RICO case. On June 29, 1990, Frank filed suit in federal court against Robert K. Fravel, Robert Meyer, USS Inc., USX Corporation, Bernard D'Ambrosi, Bertin Steel Processing, Michtin, and Atlas-Lederer Co. Fravel was the general manager of the USX Lorain, Ohio plant; Meyer was an employee of USX; 1 USX is the successor in interest to USS Inc., a steel manufacturing corporation. Bernard D'Ambrosi was Frank's business partner in their corporation, Lornic. Bertin Steel Processing is the company that D'Ambrosi formed around the time of the dissolution of Lornic. Michtin is a trucking firm related to Bertin, with which D'Ambrosi was affiliated. Atlas-Lederer is a company that had done business with Lornic. The ultimate complaint, after the court allowed various amendments, included both federal claims and pendent state claims.
Frank alleged that the defendants combined to form an association-in-fact enterprise through which they engaged in a pattern of racketeering activity, in violation of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. Secs. 1961 et seq. Frank claimed predicate acts including securities fraud, mail fraud, theft from interstate shipment of goods, and interstate transportation of stolen property. He also alleged that the defendants committed securities fraud, in violation of 15 U.S.C. Sec. 78j(b), arising from collusion between Fravel and D'Ambrosi. Frank included pendent state law claims of common law fraud against Fravel, USS, and USX.
On July 27, 1990, the district court entered a RICO case standing order, instructing Frank to file a RICO case statement explaining his RICO claims and the factual basis for them by August 16, 1990. At a status conference held on August 1, 1990, the district court entered an order establishing a discovery cut-off of December 14, 1990, and a dispositive motion cut-off of December 28, 1990.
Frank never filed the RICO case statement. Frank did not conduct discovery. Instead, Frank spent his time complaining about defendants' conduct, and making various wild and incoherent allegations about D'Ambrosi, Lornic, Bertin, and Michtin, triggering an application in state court by D'Ambrosi for a temporary restraining order. 2
On August 22, 1990, Fravel, USS, and USX filed a motion to dismiss the complaint. Also on August 22, 1990, Meyer filed a motion to dismiss or in the alternative for summary judgment. Frank submitted, over time, nine motions for an extension of time to respond, but never filed a brief in opposition to those motions. Nonetheless, on December 6, the district court overruled the motions after Frank contended there had been inadequate time in which to conduct discovery. However, the court stated that the discovery cut-off date of December 14 and the dispositive motion cut-off date of December 28 would both stand.
On December 14, 1990, Frank moved to extend the discovery period. He had not even begun discovery as of the date of his motion. Appellees again filed a motion for summary judgment. Notwithstanding his own December 6 admonition, the court extended discovery until February 1, 1991. In addition, at Frank's request the district court extended until February 4, 1991, the time for Frank to oppose the motions for summary judgment.
On February 4, 1991, Frank filed another motion seeking an additional 35 days to oppose the summary judgment motions. The district court denied the motion. Thus, as of the February 4, 1991 deadline, Frank had still not opposed the summary judgment motions with any substantive pleading.
In the meantime, Frank noticed nine depositions for February 1, but only conducted two depositions of nonparty witnesses. Frank filed a transcript of his own statement on February 8, 1991, which he had sworn to on February 1, and which he claimed he had delivered to a court reporter on February 1, 1991, the last day of the extended discovery period. Several appellees moved to strike the statement for untimeliness, but the district court overruled the motions and let the statement stand. Then, on February 20, 1991, the district court sustained all of the appellees' motions for summary judgment and dismissed all the claims in Frank's amended complaint. The district court found there were no facts adduced that could support either the alleged predicate offenses or the RICO claim generally.
On March 6, 1991, Frank filed a "Motion to Enlarge the Time to File an Affidavit under Federal Civil Rule 56(e)," and he attached a March 5 affidavit. 3 The case had already been dismissed. On March 11, 1991, Frank moved to alter or amend the judgment under Rule 59, Fed.R.Civ.P., or in the alternative to vacate the judgment under Rule 60, Fed.R.Civ.P. On March 19, Frank filed a motion to extend both the time to file a notice of appeal and (again) the time to file a Rule 56(e) affidavit. On April 8, the court denied Frank's March 6 and March 11 motions, but by marginal entry granted the March 19 motion without specifying which portion of the motion it was granting.
Frank appeals, contending that summary judgment was improper, and that he had insufficient time to conduct discovery. 4
The tax case. For four nonconsecutive quarters, Lornic did not remit to the federal government the social security and income tax money it withheld from employees' paychecks, amounting to $338,859.54. 26 U.S.C. Sec. 6672(a) allows for assessment of a 100% penalty against any responsible person who is required to collect, withhold, and remit monies to the government but willfully fails to do so. 5 The IRS sought personal assessments for the entire penalty amount against both Frank and D'Ambrosi.
D'Ambrosi paid a portion of the assessment, then made a refund claim. When the IRS denied the refund, D'Ambrosi filed suit on April 28, 1989, seeking a refund of the tax paid and an abatement of the balance of the assessment. The United States filed a counterclaim for the balance of the assessment, and filed a third-party complaint against Frank for the penalty amount. D'Ambrosi asserted affirmative defenses: that the counterclaim was subject to a setoff because the government had received partial payment, and that the counterclaim was barred by the statute of limitations.
Approximately eight months later, with no explanation as to its untimeliness, Frank filed a reply, which basically parroted D'Ambrosi's affirmative defenses.
On May 1, 1990, D'Ambrosi and the government entered settlement negotiations. The government also sought summary judgment against Frank. On June 12, 1990, Frank responded by conceding liability, but asserted the defense of partial payment and setoff and asserted a right of contribution against D'Ambrosi, who he claimed was a jointly and...
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