UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-1357
ALDMYR SYSTEMS, INC.; ZEGATO SOLUTIONS, INC.,
Plaintiffs – Appellants,
v.
STEPHEN A. FRIEDMAN, Esq.; JOSEPH, GREENWALD & LAAKE, PA,
Defendants - Appellees.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Peter J. Messitte, Senior District Judge.
(8:15-cv-00864-PJM)
Submitted: January 31, 2017 Decided: February 9, 2017
Before GREGORY, Chief Judge, and NIEMEYER and AGEE, Circuit Judges.
Affirmed by unpublished per curiam opinion.
James P. Chandler, CHANDLER LAW FIRM, PLLC, Washington, D.C., for
Appellants. Shirlie Lake, Daniel R. Hodges, ECCLESTON & WOLF,
P.C., Hanover, Maryland, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Aldmyr Systems, Inc., and Zegato Solutions, Inc.
(collectively “Appellants”), appeal the district court’s dismissal
of their complaint and the court’s determination that sanctions
were warranted against Appellants, their counsel, and Donald
Bailey, Sr. (“Mr. Bailey”), Appellants’ Chief Executive Officer.
Appellants filed suit against Stephen Friedman and Joseph,
Greenwald & Laake, P.A. (collectively “Appellees”), alleging
copyright infringement and misappropriation of trade secrets for
actions taken by Appellees during the state divorce proceedings
between Mr. Bailey and Appellees’ client, Geraldine Bailey (“Ms.
Bailey”). We affirm.
Appellants first argue that the district court erred in
granting Appellees’ motion to dismiss because Appellants alleged
sufficient facts to establish their claims. Because Appellants do
not challenge on appeal the district court’s dispositive
determination that the domestic relations exception to federal
jurisdiction 1 barred their claims, we conclude that Appellants have
waived review of that issue. See Suarez-Valenzuela v. Holder, 714
F.3d 241, 249 (4th Cir. 2013) (“[I]t is a well settled rule that
1
The domestic relations exception “divests the federal courts
of power to issue divorce, alimony, and child custody decrees,”
Ankenbrandt v. Richards, 504 U.S. 689, 703 (1992), and to rule on
any issues that are inextricably intertwined with those matters.
Kahn v. Kahn, 21 F.3d 859, 860-61 & n.1 (8th Cir. 1994).
2
contentions not raised in the argument section of the opening brief
are abandoned.” (brackets and internal quotation marks omitted)).
Consequently, we affirm the district court’s dismissal of
Appellants’ complaint.
Next, Appellants argue that the district court erred in
imposing sanctions. Appellants contend that Appellees failed to
comply with the safe-harbor provision of Fed. R. Civ. P. 11(c)(2),
by not identifying the conduct that warranted sanctions. However,
our review of the record on appeal leads us to conclude that
Appellees complied with the rule. See Brickwood Contractors,
Inc. v. Datanet Eng’g, Inc., 369 F.3d 385, 389 (4th Cir. 2004) (en
banc) (discussing Rule 11(c)(2)).
Appellants also assert the district court erred in concluding
that they filed their lawsuit for an improper purpose—
specifically, to harass Ms. Bailey and her counsel and to gain
leverage in Mr. Bailey’s state court divorce proceeding. See Fed.
R. Civ. P. 11(b)(1). 2 “We review a district court’s imposition of
Rule 11 sanctions for abuse of discretion.” In re Bees, 562 F.3d
284, 287 (4th Cir. 2009). “A district court . . . necessarily
2
“Rule 11 defines the term improper purpose to include
factors such as to harass or to cause unnecessary delay or needless
increase in the costs of litigation.” In re Kunstler, 914 F.2d
505, 518 (4th Cir. 1990) (internal quotation marks omitted). “[I]n
order to determine ‘improper purpose,’ a district court must judge
the conduct of counsel under an objective standard of
reasonableness rather than assessing subjective intent.” Id.
3
abuse[s] its discretion if it based its ruling on an erroneous
view of the law or on a clearly erroneous assessment of the
evidence.” Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405
(1990); see Andrews v. Am.’s Living Ctrs., LLC, 827 F.3d 306, 312
(4th Cir. 2016) (defining clear error); In re Kunstler, 914 F.2d
at 520 (reviewing finding of improper purpose for clear error).
We have carefully reviewed the parties’ briefs and the record on
appeal and conclude that the district court did not clearly err in
finding Appellants filed their action for an improper purpose.
Finally, Appellants challenge the application of sanctions
to Mr. Bailey as a violation of his due process rights. The
district court held Mr. Bailey liable for sanctions, jointly and
severally with Appellants and Appellants’ counsel, concluding that
Mr. Bailey represented the true party in interest in this suit and
acted as Appellants’ alter ego and that piercing the corporate
veil was appropriate. Notably, Appellants do not challenge on
appeal the district court’s piercing of the corporate veil and,
therefore, have waived review of that determination. See
Suarez-Valenzuela, 714 F.3d at 249. Appellants’ failure is fatal
to their due process claim. See Newport News Holdings Corp. v.
Virtual City Vision, Inc., 650 F.3d 423, 433 (4th Cir. 2011)
(holding that Due Process Clause is not violated when court
“exercise[s] personal jurisdiction over an individual [who] would
not ordinarily be subject to personal jurisdiction in that court
4
when the individual is an alter ego of a corporation that would be
subject to personal jurisdiction in that court”) (ellipses and
internal quotation marks omitted). Thus, we conclude that the
district court did not abuse its discretion in imposing sanctions.
Accordingly, we affirm the district court’s judgment. We
dispense with oral argument because the facts and legal contentions
are adequately presented in the materials before this court and
argument would not aid the decisional process.
AFFIRMED
5