United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT September 3, 2004
Charles R. Fulbruge III
Clerk
No. 03-31102
K. TRACY BERGQUIST,
ON BEHALF OF HERSELF AND ALL OTHER
SHAREHOLDERS OF FyBX CORPORATION,
Plaintiff-Appellee,
versus
FyBX CORPORATION; ET AL,
Defendants,
FyBX CORPORATION; MICHAEL P. ARATA;
HOFFMAN, SIEGEL, SEYDEL, BIENVENU, CENTOLA & CORDES,
A PROFESSIONAL LAW FIRM,
Defendants-Appellants.
Appeals from the United States District Court
for the Eastern District of Louisiana
USDC No. 02-CV-722
Before REAVLEY, JONES and DENNIS, Circuit Judges.
PER CURIAM:*
FyBX Corporation, its former attorney Michael Arata, and
its law firm Hoffman, Siegel, Seydel, Bienvenu, Centola & Cordes
appeal the denial of their motion for sanctions against Tracy
Bergquist pursuant to Rule 11 and 28 U.S.C. § 1927. FyBX and its
attorneys moved for sanctions on the grounds that Bergquist's
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5TH CIR. R. 47.5.4.
lawsuit, claiming damages for RICO violations and securities fraud,
was frivolous and without evidentiary support and demonstrated a
failure to make a reasonable inquiry into the law. The district
court denied the motion. The court found that, although the
federal claims were legally groundless, no improper purpose
underlay Bergquist's complaint. As we cannot say that the district
court abused its discretion, we affirm the denial of the motion for
sanctions under Rule 11 and 28 U.S.C. § 1927.
This case involves a corporate dispute between Bergquist,
a minority shareholder, and FyBX and its lawyers. The gravamen of
Bergquist’s complaint is that the FyBX Board of Directors engaged
in actions and issued stock in violation of Louisiana law and
FyBX’s Articles of Incorporation, thus rendering Bergquist’s stock
worthless.
This is not the first time that FyBX and its attorneys
have requested this court to sanction Bergquist. In Bergquist v.
FyBX Corp., No. 03-30946 (5th Cir. filed June 21, 2004), the
plaintiff unsuccessfully appealed the district court’s grant of
summary judgment in favor of the defendants.1 On appeal, FyBX and
its attorneys moved for sanctions and costs against Bergquist
pursuant to Federal Rule of Appellate Procedure 38, asserting that
the appeal was frivolous. This court declined to impose Rule 38
1
The district court granted the motion for summary judgment on several
federal law claims and dismissed without prejudice Bergquist’s remaining state
law claims for lack of jurisdiction. Bergquist v. FyBX Corp., No. Civ.A.02-722,
2003 WL 22384934, at *1 (E.D.La. Oct. 15, 2003).
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sanctions. Id. For the second time, we decline to order sanctions
against Bergquist.
Rule 11 provides that when a lawyer submits a pleading to
the court, the lawyer certifies that any representations made to
the court are not being presented for any improper purpose, that
the legal contentions are warranted by existing law or a
non-frivolous argument for the extension, modification, or reversal
of the law, and that any allegations made therein have evidentiary
support. Fed. R. Civ. P. 11. The district court may impose
appropriate sanctions, including attorneys’ fees and costs, on an
attorney who files a pleading in violation of Rule 11. Id. This
court reviews a district court's denial of Rule 11 sanctions for
abuse of discretion. Whitehead v. Food Max of Miss., Inc., 332
F.3d 796, 802 (5th Cir. 2003) (en banc); Friends for Am. Free
Enter. Ass'n v. Wal-Mart Stores, Inc., 284 F.3d 575, 577-78 (5th
Cir. 2002). Generally, an abuse of discretion only occurs where no
reasonable person could take the view adopted by the trial court.
Whitehead, 332 F.3d at 803.
The District Court denied the motions for sanctions under
Rule 11 and 28 U.S.C. § 1927 because the court “[did] not find any
improper purpose underlying [Bergquist’s] complaint.” Bergquist,
2003 WL 22384934, at *3. The court was convinced that Bergquist’s
complaint was the product of ineptitude and misguided legal
research rather than a failure to attempt a reasonable inquiry into
the law or an intent to harass. Id. The district court also noted
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that it had not ruled on Bergquist’s state law claims and thus
could not state that they were necessarily without merit or brought
with the intent to harass. Id.
Based on the record before us, the district court's
conclusion would be reasonable and would not constitute an abuse of
discretion.
AFFIRMED.
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