Renaissance Marketing, Inc. v. Monitronics Intern.

673 F.Supp.2d 79

RENAISSANCE MARKETING, INC., Plaintiff v. MONITRONICS INTERNATIONAL, INC.; Alpha One Security Solutions, Inc.; Jorge Javier Marerro; Jane Doe; John Doe; ABC Company; XYZ Insurance Company, Defendants.

Civil No. 08-1823 (SEC).

United States District Court, D. Puerto Rico.

December 15, 2009.

COPYRIGHT MATERIAL OMITTED

Ramon L. Garay-Medina, Garay Medina Law Office, San Juan, PR, for Plaintiff.

Luis Cotto-Roman, Yolanda Benitez-Sanchez, Yolanda Benitez Law Office, San Juan, PR, for Defendants.

OPINION and ORDER

SALVADOR E. CASELLAS, District Judge.

Pending before this Court is Co-Defendant's Monitronics International Inc. ("Defendant") motion for attorney's fees. Docket # 46. In light of Plaintiff Renaissance Marketing, Inc.'s ("Plaintiff") failure to file an opposition, Defendant requested that the bill of costs and request for attorney's fees be deemed unopposed. Docket # 47. After reviewing the filings, and the applicable law, Defendant's motion is GRANTED in part and DENIED in part.

Factual Background

The facts and procedural background of this case were already set forth in this Court's March 31, 2009 Opinion and Order. Docket # 42. Therein, this Court denied Plaintiff's motion to remand the case to state court, finding that Co-Defendants Alpha One Security Solutions, Inc. ("Alpha One") and Jorge Javier Marrero ("Marrero") were fraudulently joined for the sole purpose of depriving this Court of diversity jurisdiction. In said Opinion, this Court also granted Defendants' motion to dismiss, concluding that the contract between the parties contained a valid forum selection clause that designated either the state of Texas, or the Federal District Court of Dallas County, Texas, as the proper forums for suits arising out of said contract. Id. The accompanying Judgment, rendered on the same date, held that "[e]ach party shall bear its own costs and attorney's fees." Docket # 43.

On May 15, 2009, Defendant filed the instant motion requesting attorney's fees. According to Defendant, Plaintiff acted obstinately in fraudulently joining Alpha One and Marrero as co-defendants to deprive this Court of jurisdiction. Moreover, Defendant avers that Plaintiff willfully ignored the contract's forum selection clause, despite its clear language. Based on the foregoing, and Puerto Rico Rule of Civil Procedure 44.1(d), Defendant argues that the imposition of attorney's fees is warranted. Docket # 46. Plaintiff has not filed an opposition. Accordingly, on July 30, 2009, Defendant filed a motion requesting that the bill of costs (Docket # 44), and request for attorney's fees (Dockets # 45 & 48) be adjudicated without opposition. Docket # 47.

Standard of Review

Attorney's Fees

Under the "American Rule," practiced in the United States, "parties are ordinarily required to bear their own attorney's fees—the prevailing party is not entitled to collect from the loser." Buckhannon v. West Va. Dept. Of Health, 532 U.S. 598, 602, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001); see Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975). Thus absent explicit statutory authority, a prevailing party is not automatically entitled to attorney's fees. Buckhannon, 532 U.S. at 602, 121 S.Ct. 1835 (citing Key Tronic Corp. v. United States, 511 U.S. 809, 819, 114 S.Ct. 1960, 128 L.Ed.2d 797 (1994)). Notwithstanding, when jurisdiction in a case before the United States District Court "is premised on diversity of citizenship, the applicable standard of law for the determination of attorney's fees is the state law." Rodriguez-Lopez v. Institucion Perpetuo Socorro, Inc., 616 F.Supp.2d 200, 202 (D.P.R.2009); see also Correa v. Cruisers, a Div. of KCS Int'l, Inc., 298 F.3d 13, 30 (1st Cir.2002) (citing Grajales-Romero v. Am. Airlines, Inc., 194 F.3d 288, 301 (1st Cir.1999)); Colon v. Rinaldi, 547 F.Supp.2d 122, 124 (D.P.R. 2008); Fajardo Shopping Ctr., S.E. v. Sun Alliance Ins. Co. of Puerto Rico II, 167 F.3d 1, 14 (1st Cir.1999); Taber Partners I v. Insurance Co. of North America, Inc., 926 F.Supp. 36, 38 (D.P.R.1996) (citing Peckham v. Continental Casualty Ins. Co., 895 F.2d 830, 841 (1st Cir.1990)); Navarro de Cosme v. Hospital Pavia, 922 F.2d 926, 934 (1st Cir.1991); (Pan American World Airways, Inc. v. Ramos, 357 F.2d 341, 342 (1st Cir.1966)). It is well established that Puerto Rico's Civil Procedure Rule 44.1(d) is substantive for Erie doctrine purposes. Fajardo Shopping Ctr., S.E., 167 F.3d at 14; Servicios Comerciales Andinos, S.A. v. Gen. Elec. Del Caribe, Inc., 145 F.3d 463, 478 (1st Cir.1998). Therefore, "Puerto Rico law governs the state law claim for attorneys' fees in this diversity action." Citibank Global Mkts., Inc. v. Santana, 573 F.3d 17, 30 (1st Cir.2009); see Mass. Eye & Ear Infirmary v. QLT Phototherapuetics, Inc., 552 F.3d 47, 74 (1st Cir. 2009); Newell P.R. Ltd. v. Rubbermaid Inc., 20 F.3d 15, 24 (1st Cir.1994).

Rule 44.1(d) of the Puerto Rico Rules of Civil Procedure provides that "[i]n the event any party or its lawyer has acted obstinately or frivolously, the court shall, in its judgment, impose on such person the payment of a sum for attorney's fees which the court decides corresponds to such conduct."¹ The Puerto Rico Supreme Court has stated that "`[t]he main purpose of awarding attorney's fees in cases of obstinacy is to impose a penalty upon a losing party that because of his stubbornness, obstinacy, rashness, and insistent frivolous attitude has forced the other party to needlessly assume the pains, costs, efforts, and inconveniences of a litigation.'" Top Entm't, Inc. v. Torrejon, 351 F.3d 531, 533 (1st Cir.2003) (citing Fernandez Marino v. San Juan Cement Co., 18 P.R. Offic. Trans. 823, 830, 118 P.R. Dec. 713 (1987)). As such, awards of attorney's are proper if they are awarded (1) against the defeated party that (2) acted in an obstinate or frivolous manner. Reyes v. Banco Santander de P.R., N.A., 583 F.Supp. 1444, 1445 (1984); see Vazquez-Filippetti v. Banco Popular de P.R., 504 F.3d 43, 55 (1st Cir.2007) (finding that an award of attorney's fees is appropriate only when the losing party had been obstinate or frivolous); Corpak, Inc. v. Ramallo Bros. Printing Inc., 1990 P.R.-Eng. 710162, 125 P.R. Dec. 724 (1990) (holding that "in our system of justice, the assessment or award of attorney's fees does not lie in all cases; it is appropriate only ... in those cases where the court believes that the losing party, or his counsel, has been obstinate or frivolous." (emphasis added)). This rule was "not designed as a premium to successful litigants, but rather as a penalty to be imposed on those litigants whose conduct in pursuing a course of action borders on unreasonable pertinaciousness."² Banco Santander, 583 F.Supp. at 1446; see also Rinaldi, 547 F.Supp.2d at 124.³

The First Circuit has held that "[t]he basic parameters that should guide the district court in applying Rule 44.1(d) are well established." Top Entm't, 351 F.3d at 533; see Correa, 298 F.3d at 30-31. In order to determine whether a party or its lawyer was obstinate, a court must examine whether "`a litigant was unreasonably adamant or stubbornly litigious beyond the acceptable demands of the litigation, thereby wasting time and causing the Court and the other litigants unnecessary expense and delay.'" Rodriguez-Lopez v. Institucion Perpetuo Socorro, Inc., 616 F.Supp.2d 200, 202 (D.P.R.2009)(quoting De Leon Lopez v. Corporacion Insular de Seguros, 931 F.2d 116, 126 (1st Cir. 1991)); see also Top Entm't, 351 F.3d at 533; Correa, 298 F.3d at 30; Citibank v. Rodriguez Santana, 573 F.3d 17, 30 (1st Cir.2009). Accordingly, an award of attorney's fees is proper where a party engages in actions "which result in a litigation that could have been avoided, which prolongs it needlessly, or that obliges the other party to embark on needless procedures." Fernández Marino, 118 P.R. Dec. at 718-791.

Courts possess inherent equitable powers to award attorney's fees against a party that "has `acted in bad faith, vexatiously, wantonly, or for oppressive reasons.'" Mullane v. Chambers, 333 F.3d 322, 337-38 (1st Cir.2003) (citations omitted). Moreover, the "determination of obstinacy is dependent on the particular facts of each case and lies in the sound discretion of the court." Institucion Perpetuo Socorro, Inc., 616 F.Supp.2d at 202 (citing Banco Santander, 583 F.Supp. at 1445); Correa, 298 F.3d at 30. However, once the court concludes that a party has been obstinate, the assessment of attorneys' fees is mandatory. Fajardo Shopping Ctr., S.E. II, 167 F.3d at 14; De Leon Lopez, 931 F.2d at 126; Top Entm't, 351 F.3d at 533.

Applicable Law and Analysis

In the present case, Defendant seeks the imposition of attorneys' fees pursuant to Rule 44.1(d) on the grounds that Plaintiff acted obstinately. Therefore, this Court must determine whether Plaintiff's fraudulent joinder of parties to defeat diversity jurisdiction, and filing suit in this Court despite the forum selection clause's clear language, constitutes obstinate conduct which merits the imposition of attorney's fees.

As mentioned above, determining whether a litigant acted obstinately or frivolously is "dependent on the particular facts of each case and lies in the sound discretion of the court." Institucion Perpetuo Socorro, Inc., 616 F.Supp.2d 200, 202 (citing Reyes, 583 F.Supp. at 1445); Correa, 298 F.3d at 30; Dopp v. Pritzker, 38 F.3d 1239, 1253 (1st Cir.1994); Banco Santander, 583 F.Supp. at 1445. Courts may consider several factors, such as, whether a litigant's conduct needlessly prolonged the litigation, wasted the other party's and the court's time, and if the other party and the court incurred in needless procedures, unreasonable efforts and expenses. Rodriguez-Lopez, 616 F.Supp.2d 200, 202; De Leon Lopez, 931 F.2d at 126; Fernández Marino, 118 D.P.R. at 718-719. Although "the degree of obstinacy is the critical factor in determining...