Triantos v. Guaetta & Benson, LLC
| Decision Date | 27 October 2022 |
| Docket Number | 22-1034 |
| Court | U.S. Court of Appeals — First Circuit |
| Parties | NICHOLAS L. TRIANTOS, Plaintiff, v. GUAETTA & BENSON, LLC; AUDREY G. BENSON; PETER V. GUAETTA; SARAH T. FITZPATRICK, Defendants, Appellees, DEUTSCHE BANK NATIONAL TRUST COMPANY, as Trustee for Morgan Stanley ABS Capital I Inc. Trust 2004-HE4, Mortgage Pass-Through Certificates, Series 2004-HE4; SELECT PORTFOLIO SERVICING, INC.; COUNTRYWIDE HOME LOANS, INC.; BANK OF AMERICA, N.A., as Successor-in-Interest to Countrywide Home Loans, Inc.; NEW CENTURY MORTGAGE CORPORATION, Defendants. MICHAEL M. MCARDLE, Interested Party, Appellant. |
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. William G. Young, U.S. District Judge]
Lucas B. McArdle, with whom McArdle Law &Associates, PLLC was on brief, for appellant.
John F. Gallant, with whom Nancy A. Morency and Gallant &Ervin, LLC were on brief, for appellees.
Before Lynch, Thompson, and Gelpi, Circuit Judges.
In this case removed to the federal district court, Guaetta &Benson, LLC and Audrey Benson, Peter Guaetta, and Sarah Fitzpatrick, individual partners of that firm (collectively "G&B"), moved for sanctions against attorney Michael McArdle, counsel on the state court complaint, under Federal Rule of Civil Procedure 11. This sanctions motion was not served on McArdle under Rule 5 as required by Rule 11. At a hearing McArdle did not attend, the district court imposed Rule 11 sanctions against him on the court's understanding that (i) he had signed and filed an amended complaint in federal court and (ii) he had been properly served. However, the record refutes both of these bases for the order.
When McArdle learned of the district court's sanctions order several months later, he immediately moved the court for relief under Rule 60(b). The court summarily denied the Rule 60(b) motion. We reverse.
The following facts are drawn from the record and do not appear to be disputed on appeal. On February 7, 2017, Nicholas Triantos sued Deutsche Bank National Trust Company and other mortgage lenders and servicers in Massachusetts Superior Court, asserting various claims arising out of a foreclosure on his property. The complaint unusually also named as defendants Guaetta &Benson, LLC, the firm that had conducted the foreclosure sale on behalf of Deutsche Bank, and three individual partners of that firm, alleging that their actions violated the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692-1692p, and the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1961-1968.
McArdle was counsel of record for Triantos in Massachusetts Superior Court and signed the state court complaint. On March 16, 2017, G&B sent McArdle a "safe harbor" letter under Massachusetts Rule of Civil Procedure 11. The letter questioned the merit of the claims against G&B, demanded that McArdle either furnish a legal basis for these claims or dismiss them, and warned that if he did not do so, G&B would pursue relief against both him and Triantos.
On March 31, 2017, Deutsche Bank removed the case to federal district court. Following removal, McArdle did not enter a notice of appearance in the district court,[1] but he communicated with G&B as counsel for Triantos and, at the request of the defendants, assented to several motions to extend the defendants' time to file responsive pleadings.
On May 9, 2017, Triantos (himself a lawyer) entered a pro se notice of appearance in the district court. On May 23, Triantos signed and filed an amended complaint. This complaint was also signed by Alex Hess as co-counsel for Triantos.[2] McArdle did not sign or file this complaint, and his name does not appear on it.
On May 31, 2017, McArdle filed a notice of withdrawal of his appearance as counsel in the case. In the two months between removal and his withdrawal as counsel, McArdle did not sign or file any pleadings or other papers in district court, nor did he present argument to the court.
On September 14, 2017, the district court dismissed the amended complaint for failure to state a claim.[3] On November 21, G&B moved for sanctions against Triantos and McArdle under Federal Rule of Civil Procedure 11, seeking attorney's fees and costs and expenses. G&B certified to the court that all parties were being served with the motion but never served the motion on McArdle under Rule 5 as required by Rule 11. As the basis for sanctions, G&B stated that the complaint "which the Court dismissed under Fed.R.Civ.P. 12(b)(6)" -- i.e., the amended complaint -- was signed by both Triantos and McArdle. G&B also stated that McArdle, rather than Triantos, had filed the amended complaint. The district court stayed the motion for sanctions pending the outcome of Triantos's appeal of the decision dismissing his case.
On September 16, 2020, this court affirmed the district court's decision dismissing the amended complaint. Triantos v. Deutsche Bank Nat'l Tr. Co., No. 17-1938 (1st Cir. Sept. 16, 2020) .
On September 30, 2020, G&B renewed its motion for sanctions against Triantos and McArdle. G&B again certified to the court that all parties were being served with the motion but never served the motion on McArdle under Rule 5 as required by Rule 11. The renewed motion repeated the statements that McArdle had "signed" and "filed" the amended complaint dismissed by the district court.
On November 2, 2020, after not seeing a docketed response to the sanctions motion from McArdle, Triantos contacted McArdle. McArdle (through counsel) immediately contacted G&B to discuss the motion. In an email, McArdle informed G&B that he "was not involved in the subject federal case whatsoever, [and] was just carried over as counsel of record in the state court matter," that he "specifically advised Triantos not to pursue the claims against G&B," and that he "withdrew when it was clear [he] needed to create distance from [Triantos]." McArdle also requested that, should G&B intend to continue pursuing sanctions against him despite this information, he be given "time to properly respond."
On a phone call later that day, the parties discussed a negotiated resolution whereby G&B would drop the sanctions motion against McArdle. McArdle followed up with G&B via email regarding the specifics of this resolution on November 5 and November 10. G&B did not respond. At this point the parties apparently let the issue lie.
Eight months passed. On July 1, 2021, the district court set a hearing date for G&B's sanctions motion. In the following months, G&B filed materials in support of its motion and Triantos filed a supplemental opposition. McArdle did not receive these filings and never filed an opposition. On September 15, 2021, the district court heard argument on G&B's motion. McArdle was not present. The following colloquy took place at the beginning of the hearing:
G&B did not inform the district court that it had never served McArdle with the motion under Rule 5 as required by Rule 11. McArdle's absence was not discussed further. His level of involvement in the federal proceeding was not discussed either. The district court concluded that the claims against G&B in the amended complaint were "clearly without merit." On that basis, the court entered a minute order imposing $10,000 in attorney's fees and $32 in costs jointly and severally against Triantos and McArdle pursuant to Rule 11. The court did not state any other basis for the imposition of Rule 11 sanctions against McArdle.
McArdle became aware of the district court's sanctions order two-and-a-half months later, on November 29, 2021. On December 8, he moved for relief from this order under Rule 60(b).[4]McArdle's verified motion stated that the amended complaint was filed by Triantos and signed by Triantos and Hess, and that McArdle lacked notice of both the sanctions hearing and the fact that G&B was proceeding with its motion for sanctions. In its opposition, G&B repeated the statement that McArdle had "signed and filed" the amended complaint. The district court summarily denied McArdle's Rule 60(b) motion without hearing argument.
McArdle timely appealed the district court's order denying his Rule 60(b) motion.
We review the district court's decision to deny relief under Rule 60(b) for abuse of discretion. Giroux v. Fed. Nat 'l Mortg. Ass'n, 810 F.3d 103, 106 (1st Cir. 2016). "This standard is not monolithic: within it, embedded findings of fact are reviewed for clear error, questions of law are reviewed de novo, and judgment calls are subjected to classic abuse-of-discretion review." Ungar v. Palestine Liberation Org., 599 F.3d 79, 83 (1st Cir. 2010). Abuse of discretion with respect to judgment calls occurs where the district court "commit[s] a meaningful error in judgment." Anderson v. Cryovac, Inc., 862 F.2d 910, 923 (1st Cir. 1988). "[W]e are 'conscious of the impact of sanctions on attorneys and take our oversight role seriously.'" Lamboy-Ortiz v. Ortiz-Velez, 630 F.3d 228, 243 (1st Cir. 2010) (quoting Nw. Bypass Grp. v. U.S. Army Corps of Eng'rs, 569 F.3d 4, 6 (1st Cir. 2009)).
Under Rule 60(b), a court "may relieve a party or its legal representative from a final...
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