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Lopez Garza v. Citigroup Inc

United States Court of Appeals, Third Circuit

February 2, 2018

MARIO ALBERTO LOPEZ GARZA, The Executor of the estate of Hans Jorg Schneider Sauter
v.
CITIGROUP INC, Appellant

          Argued September 27, 2017

         On Appeal from the United States District Court for the District of Delaware (Civil Action No. 1-15-cv-00537) District Judge: Honorable Sue L. Robinson

          Amy L. Barton, Esquire Bruce A. Birenboim, Esquire (Argued) Paul Weiss Rifkind Wharton & Garrison Stephen P. Lamb, Esquire Paul Weiss Rifkind Wharton & Garrison Counsel for Appellant

          Susan L. Burke, Esquire (Argued) Thomas G. Macauley, Esquire Counsel for Appellee

          Before: AMBRO, KRAUSE, Circuit Judges, and CONTI, [*] Chief District Judge

          OPINION

          CONTI, CHIEF DISTRICT JUDGE.

         Under Federal Rule of Civil Procedure 41(d), a district court may order a plaintiff who voluntarily dismisses an action and files a second action against the same defendant based upon a claim asserted in the first action to pay the "costs" incurred by the defendant in the first action. The issue presented (one of first impression in this Court) is whether a district court may award attorneys' fees as "costs" under Rule 41(d). We conclude that attorneys' fees may only be awarded as "costs" under Rule 41(d) when the substantive statute under which the lawsuit was filed defines costs to include attorneys' fees. Because no such statute is involved here, and no other basis upon which attorneys' fees may be awarded was properly raised with the United States District Court for the District of Delaware, [1] we will affirm the decision of the District Court denying the request for attorneys' fees.

         I. FACTUAL AND PROCEDURAL HISTORY

         A. The lawsuit filed in the Southern District of New York

         On July 29, 2014, the estate of Mexican national Hans Jorg Schneider Sauter (the "Estate") filed a complaint in the United States District Court for the Southern District of New York[2] against Citigroup Inc. ("Citigroup"), El Banco Nacional De Mexico S.A. ("Banamex") and Banamex U.S.A. The complaint contained various claims, [3] and the Estate requested, among other things, the following relief: "That the Court order Citibank, Banamex, and Banamex USA to turn over information pertaining to all accounts of Hans Jorg Schneider Sauter immediately…." (S.D.N.Y. Civ. Action No. 14-5812 (ECF No. 1 at 13).)

         The Estate filed an amended complaint that added Grupo Financiero Banamex, S.A. De C.V. ("Grupo Financiero") as a defendant and added a claim for "Racketeer Influenced and Corrupt Organizations Act ('RICO') Infractions, 18 U.S.C. §§ 1961-1968." (S.D.N.Y. Civ. Action No. 14-5812 (ECF No. 13 at 1, 21).) Citigroup, Banamex, Banamex U.S.A., and Grupo Financiero filed a motion to dismiss the amended complaint. The Estate did not respond to that motion; rather, on November 10, 2014, it filed a motion to amend/correct the amended complaint.

         The New York District Court held a hearing, denied the Estate's motion to amend/correct the amended complaint, and ordered the Estate to advise whether it intended to withdraw any of the claims in the amended complaint. On December 12, 2014, the Estate filed a notice of voluntary withdrawal pursuant to Rule 41(a)(1)(A)(i).

         The Estate's current counsel entered her appearance on behalf of the Estate in substitution for its former counsel. Citigroup, Banamex, Banamex U.S.A., and Grupo Financiero filed a motion to vacate the notice of voluntary dismissal and to dismiss the case with prejudice. They also requested sanctions against the Estate pursuant to: (1) 28 U.S.C. § 1927, which allows a court to tax excess costs to an attorney who "multiplies the proceedings in any case unreasonably and vexatiously[, ]" 28 U.S.C. § 1927; and (ii) the court's "inherent powers to impose sanctions as a deterrent against continued vexatious litigation[, ]" (S.D.N.Y. Civ. Action No. 14-5812 (ECF No. 63 at 2)). The Estate filed a declaration from its former counsel in which he averred that he represented the Estate because he was asked to do so by a "long-time friend[, ]" and that litigation "had not been a major focus of…[his] practice." (S.D.N.Y. Civ. Action No. 14-5812 (ECF No. 72 ¶¶ 1, 2).)

         The motion to vacate was denied and the notice of voluntary dismissal was held to be valid. The request for sanctions was denied because the Estate's conduct did "not rise to the level of bad faith." Estate of Sauter v. Citigroup, Inc., No. 14 Civ. 05812, 2015 WL 3429112, at *4 (S.D.N.Y. May 27, 2015). The New York District Court explained:

[T]he Federal Rules of Civil Procedure provide safeguards for Defendants if Plaintiff does commence a second action, including by barring Plaintiff from voluntarily dismissing the case without prejudice a second time and by permitting the court in the subsequent action to order Plaintiff to pay all of Defendants' costs and fees in this dismissed action. Fed.R.Civ.P. 41(a)(1)(B), (d).

Id. at *5.

         B. The Lawsuit Filed in the ...


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