Sanctions Against Lawyer Suing Insurance Broker Affirmed

Published: Oct. 24, 2022, 1:57 p.m.

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It is Frivolous to File Same Suit Against Another Defendant After First  is Dismissed  

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Dimitri Enterprises, Inc. ("Dimitri") and its attorney, Richard J.  Flanagan, appealed from the district court\'s June 24, 2021 order  imposing $24,675.00 in sanctions pursuant to Federal Rule of Civil  Procedure 11. Dimitri, a roofing contractor, filed this lawsuit in  connection with a dispute regarding insurance coverage for an employee\'s  injuries on a construction project.  In Dimitri Enterprises, Inc. v. Spar Insurance Agency LLC, NIF Services  of New Jersey, Inc., and Scottsdale Insurance Company, No. 21-1722-cv,  United States Court of Appeals, Second Circuit (October 6, 2022) the  complaint asserted claims against defendant Scottsdale Insurance Company  ("Scottsdale"), which was Dimitri\'s commercial general liability  insurance carrier, and defendant NIF Services of New Jersey, Inc.  ("NIF"), which was originally alleged to be Dimitri\'s broker. 

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ORIGINAL CLAIM DISMISSED AS TIME BARRED  The district court granted NIF\'s motion to dismiss both claims against  it, reasoning that the negligence claim was time-barred, and the breach  of contract claim was inadequately pled because Dimitri did not allege  any contractual terms that NIF breached. Dimitri then filed a second  amended complaint (the "SAC") against an additional defendant, Spar  Insurance Agency, LLC ("Spar"), which was the retail insurance broker  for Dimitri\'s policy.  In its SAC, Dimitri brought claims against Spar for negligence and  breach of contract that were identical to the negligence and breach of  contract claims that the district court already dismissed against NIF.  The district court granted Spar\'s Motion to dismiss.  In addition, the district court granted Spar\'s subsequent motion for  sanctions, explaining that "plaintiff\'s counsel knew or should have  known that the claims against Spar were likewise subject to dismissal"  because "identical claims against NIF were previously dismissed as  either time-barred or inadequately pled." 

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 DISCUSSION  The Second Circuit reviewed the district court\'s imposition of sanctions  pursuant to Rule 11 of the Federal Rules of Civil Procedure for an  abuse of discretion. This deferential standard is applicable to the  review of Rule 11 sanctions because the district court is familiar with  the issues and litigants and is thus better situated than the court of  appeals to marshal the pertinent facts and apply a fact-dependent legal  standard. An abuse of discretion only occurs if the district court based  its ruling on an erroneous view of the law or on a clearly erroneous  assessment of the evidence or rendered a decision that cannot be located  within the range of permissible decisions.  RULE 11 SANCTIONS  Rule 11 explicitly and unambiguously imposes an affirmative duty on each  attorney to conduct a reasonable inquiry into the viability of a  pleading before it is signed. The standard for triggering the award of  fees under Rule 11 is objective unreasonableness and is not based on the  subjective beliefs of the person making the statement.  Under Rule 11, a litigant\'s obligations with respect to the contents of  filings are not measured solely as of the time they are filed with

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