RECTOR V. APPROVED FEDERAL SAVINGS BANK 265 F.3d 248 (4th Cir. 2001) CASE BRIEF

RECTOR V. APPROVED FEDERAL SAVINGS BANK

265 F.3d 248 (4th Cir. 2001)

NATURE OF THE CASE: Rector (P), attorney, personally and as a trustee, sued Approved (D), bank, alleging conspiracy, Racketeer Influenced and Corrupt Organizations Act, and fraud claims. The case was dismissed and D moved for sanctions. The motion was granted and D appealed. The court of appeals vacated and remanded. On remand, the District Court again imposed sanctions. P appealed.

FACTS: On April 9, 1999, P filed suit against D seeking 'at least 60 billion dollars' in compensatory damages and an additional 20 billion dollars in punitive damages. The suit arose from a 1995 agreement in which P agreed to sell to D all of P's majority interest in First Security Federal Savings Bank. Closing occurred on September 11, 1996. P claimed that the contract required D to pay 'at least 20 billion dollars' more than the $3,157,743 purchase price. The district court dismissed P's conspiracy, RICO, and fraud claims, finding that they failed to state fraud and RICO with particularity and that no private right of action existed for bank fraud under 18 U.S.C. 1344. P amended the complaint by changing the ad damnum clause from 60 billion dollars to 'an infinite amount of money.' The district court granted D's motion to dismiss all claims. D filed a motion for sanctions under Fed. R. Civ. P. 11 served on June 11, 1999. P contends that he did not receive the motion until September 27, 1999, in contravention of the 21-day 'safe harbor' provision of Rule 11. D concedes that it 'cannot now confirm the notice was [served] as intended.' P's only opposition to the motion for sanctions was that he conducted an appropriate pre-filing investigation. P did not argue that the motion failed to comply with the 21-day 'safe harbor' provision of Rule 11. On January 14, 2000, the district court granted D's motion for sanctions and attorney's fees ordering P to pay D $33,503.82. On appeal, the Court vacated and remanded the suit, explaining that the district court applied an incorrect standard in assessing the amount of the sanction. P still did not argue that the sanctions motion failed to comply with the Rule's 'safe harbor' provision. The district court once again imposed a sanction of $33,503.82. P appealed again.

ISSUE:

RULE OF LAW:

HOLDING AND DECISION:

LEGAL ANALYSIS:

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