BANKRUPTCY CORNER
Rule 11 Sanctions Motion May be Filed After Entry of Judgment
JASON S . RIGOLI
On July 12 , 2022 , the Eleventh Circuit issued its opinion in Huggins v . Lueder , Larkin & Hunter , LLC , -- F . 4th -- , 2022 U . S . App . LEXIS 19169 , 2022 WL 2679024 ( 11th Cir . 2022 ), wherein it held that a motion for sanctions under Fed . R . Civ . P . 11 (“ Rule 11 ”) may be filed after the entry of judgment . In bankruptcy , the applicable rule of procedure is Fed . R . Bankr . P . 9011 (“ Rule 9011 ”). While Fed . R . Bankr . P . 9011 does not incorporate Fed . R . Civ . P . 11 , the language of Fed . R . Bankr . P . 9011 closely tracks the language of Fed . R . Civ . P . 11 and most importantly have identical “ safe harbor ” provisions .
Rule 11 ’ s safe harbor language reads as follows : Motion for Sanctions . A motion for sanctions must be made separately from any other motion and must describe the specific conduct that allegedly violates Rule 11 ( b ). The motion must be served under Rule 5 , but it must not be filed or be presented to the court if the challenged paper , claim , defense , contention , or denial is withdrawn or appropriately corrected within 21 days after service or within another time the court sets . If warranted , the court may award to the prevailing party the reasonable expenses , including attorney ' s fees , incurred for the motion .
Similarly Rule 9011 ’ s safe harbor language reads
By motion . A motion for sanctions under this rule shall be made separately from other motions or requests and shall describe the specific conduct alleged to violate subdivision ( b ). It shall be served as provided in Rule 7004 . The motion for sanctions may not be filed with or presented to the court unless , within 21 days after service of the motion ( or such other period as the court may prescribe ), the challenged paper , claim , defense , contention , allegation , or denial is not withdrawn or appropriately corrected , except that this limitation shall not apply if the conduct alleged is the filing of a petition in violation of subdivision ( b ). If warranted , the court may
award to the party prevailing on the motion the reasonable expenses and attorney ’ s fees incurred in presenting or opposing the motion . Absent exceptional circumstances , a law firm shall be held jointly responsible for violations committed by its partners , associates , and employees .
The language of Rule 11 became the crux of the Eleventh Circuit ’ s opinion . The court stated : “ Rule 11 by its own terms does not prohibit filing for sanctions after final judgment . And it never has . See Fed . R . Civ . P . 11 ( 1983 ) ( introducing Rule 11 motions ) ( amended 2007 ). The Rule contains no timing requirement beyond its safe harbor provision , which gives a party 21 days to withdraw or correct any pleading or motion challenged by an opponent .” Huggins , 2022 U . S . App . LEXIS 19169 at * 5 . “ So when a litigant identifies a filing that he believes violates Rule 11 — say , a frivolous pleading — he can draft a sanctions motion and serve it on the opposing party . But he cannot file that motion just yet . Instead , service of the motion notifies the opposing party of the possible violation and starts the 21-day safe harbor clock .” Id . ( citations omitted ). The court went on and stated that three things could happen after the motion was served on the opposing party : ( i ) “ the opponent withdraws or properly amends the challenged document ,” ( ii ) “ the court eliminates the opportunity to withdraw or correct the challenged filing by ruling on it before the safe harbor period expires , the same result occurs — the sanctions motion cannot be filed ,” or ( iii ) “ if the 21-day safe harbor period expires without action to cure the challenged filing or judgment on the issue from the court , the litigant may file the motion for sanctions .” Id . at * 5-6 ( citations omitted ).
While , at first glance , the second option may seem to be at odds with the ultimate holding it is not because as the long as the 21-day safe harbor period has been elapsed then the ultimate entry of judgment does not cut off the moving parties rights to seek the Rule 11 sanctions . However , if the judgment was entered prior to the 21- day safe harbor elapsing then the moving
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party ’ s rights under Rule 11 are cut off .
The remainder of the Huggins opinion addresses a conflict of prior Eleventh Circuit opinions on this specific issue , which Huggins purportedly resolves .
Conclusion For practitioners , the concern when dealing with a sanctions motion the safe harbor period is the key . Once the safe harbor period runs , the Court can entertain the motion and award Rule 9011 sanctions , when warranted .
This article was submitted by Jason S . Rigoli , Furr and Cohen , P . A ., 2255 Glades Road , Suite 419A , Boca Raton , FL 33431 , jrigoli @ furrcohen . com
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