United States District Court, D. New Jersey
B. SILVERSTEIN GREEN, SILVERSTEIN & GROFF, LLC On behalf
ABRAHAM BAHGAT THE PRIVACY FIRM PC On behalf of Defendant
L. HILLMAN, U.S.D.J.
Exporting Commodities International, LLC (“ECI”),
located in New Jersey among other places, filed a complaint
for breach of contract and related claims against Defendant,
Southern Minerals Processing, LLC (“SMP”), an
Alabama company, for SMP's alleged breach of the
parties' agreement that ECI purchase the remaining coal
stockpile at a closed power plant owned by Mississippi Power.
Previously, ECI filed a motion for default judgment against
SMP. SMP objected to the entry of default against it, opposed
ECI's motion for default judgment, and lodged a motion to
dismiss ECI's complaint, primarily on the basis that
ECI's complaint should be dismissed for lack of personal
resolving the pending motions, the Court vacated default and
dismissed ECI's complaint, finding that the exercise of
personal jurisdiction over SMP in this Court did not satisfy
the requirements of due process. The Court concluded that ECI
had not established that SMP had sufficient contacts to New
Jersey, or that SMP's presence in this Court would
comport with fair play and substantial justice. (Docket No.
the Court's decision, SMP filed a motion for sanctions
and attorney's fees. SMP argues that ECI brought its
complaint in bad faith and knew from the outset that not only
did no enforceable contract exist, personal jurisdiction over
SMP was completely and obviously lacking. ECI refutes
SMP's position, and also argues that SMP's motion is
procedurally barred under Fed.R.Civ.P. 11, and is not
appropriately brought under Fed.R.Civ.P. 54 and Local Civil
Rule 54.1 and 54.2.
sanctions requested by SMP typically cannot be imposed
through the wisdom of hindsight, and can only be assessed
through the lens of what was reasonable at the time.
Quiroga v. Hasbro, Inc., 934 F.2d 497, 502 (3d Cir.
1991) (“[The district court must resist the
understandable temptation to engage in post hoc reasoning by
concluding that, because a plaintiff did not ultimately
prevail, his action must have been unreasonable or without
foundation.” (citation omitted)). Sanctions in the form
of attorneys' fees and reimbursement of costs cannot be
used as a fee shifting device to contravene the American rule
that each litigant covers its own legal expenses. Gaiardo
v. Ethyl Corp., 835 F.2d 479, 483 (3d Cir. 1987)
(discussing sanctions pursuant to Fed.R.Civ.P. 11).
sanctions are not appropriate when a party's “only
sin was being on the unsuccessful side of a ruling.”
Id.; Ario v. Underwriting Members of Syndicate
53 at Lloyds for 1998 Year of Account, 618 F.3d 277, 297
(3d Cir. 2010) (citation omitted) (explaining that sanctions
“must not be used as an automatic penalty against an
attorney or party advocating the losing side of a dispute,
” and it “should not be applied to adventuresome,
though responsible, lawyering which advocates creative legal
theories”). Finally, the sanctions requested by SMP are
reserved for the exceptional circumstance where a claim is
patently unmeritorious or frivolous, even though not brought
in subjective bad faith. See Doering v. Union County Bd.
of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988)
(assessing Rule 11 sanctions); Hughes v. Rowe, 449
U.S. 5, 14 (1980) (assessing the imposition of attorneys'
fees and costs as a prevailing party under 42 U.S.C. §
1988, and stating that the plaintiff's action “must
be meritless in the sense that it is groundless or without
foundation”); Quiroga, 934 F.2d at 502-03
(assessing the imposition of attorneys' fees and costs as
a prevailing party under 42 U.S.C. § 2000e-5(k)).
case, the Court issued a detailed 25-page Opinion thoroughly
analyzing the relevant case law and the parties'
arguments on the personal jurisdiction issue. Even though the
Court concluded that there was “scant evidence that SMP
engaged in the kind of purposeful activity necessary for a
valid assertion of personal jurisdiction over a nonresident
defendant” (Docket No. 28 at 24), the Court reached
that conclusion after much deliberation and analysis. If the
personal jurisdiction issue were as straightforward from the
outset of the case as SMP argues, the Court's
deliberations on the issue would have been much more brief.
Court understands SMP's frustrations, particularly when
it ultimately prevailed on its position. The Court also
recognizes the procedural missteps by ECI in service and
docket filings, pointed out by SMP in support of its argument
that ECI unnecessarily prolonged the ligation which
ultimately should have been brought in Alabama - if at all.
“[w]herever the law draws a line there will be cases
very near each other on opposite sides.” U.S. v.
Wurzbach, 280 U.S. 396, 399 (1930). The Court concludes
that this case does not fall on the “patently
unmeritorious or frivolous” side of the line. SMP's
motion for the reimbursement of attorney's fees and costs
will be denied.
appropriate Order will be entered.