Grays v. Auto Mart USA, LLC

          OPINION AND ORDER ADOPTING RECOMMENDATION DENYING MOTION FOR SANCTIONS; AND DENYING SECOND MOTION FOR SANCTIONS

          Marcia S. Krieger, Senior United States District Judge.

         THIS MATTER comes before the Court pursuant to the September 25, 2019 Recommendation of the Magistrate Judge (# 90) that Plaintiff Tiffany Grays' (hereafter, “Ms. Grays”) Motion for Sanctions Pursuant to Fed.R.Civ.P. 11 and 28 U.S.C. § 1927 (# 68) be denied. No. objections to the Recommendation were filed.

         Also pending is Ms. Grays' second Motion for Sanctions Pursuant to Fed.R.Civ.P. 37 and 28 U.S.C. § 1927 (# 81), the Defendants Auto Mart USA, Jorge Pacheco, Auto Mart USA 2, Daniel Ramirez, Donnie McElroy, Marco Sandoval, Auto Mart, and Jay Barber's (hereafter, “the Defendants”) response (# 82), and Ms. Grays' reply (# 84).

         FACTS

         The Court assumes the reader's familiarity with the claims and underlying proceedings in this case. According to Ms. Gray's pro se^[1] Second Amended Complaint (# 16), on or about March 17, 2018, Ms. Grays went to Defendant Auto Mart, a used car dealer, to purchase a vehicle. However, despite the fact that Ms. Grays agreed to purchase a 2013 Dodge Journey and the parties executed both an Invoice/Purchase Agreement and a Sale Contract, the sale did not go through. (# 49 at 2-3). On March 20, 2018, Donnie McElroy, Auto Mart's Assistant Sales Manager, contacted Ms. Grays and advised her that Auto Mart was unable to obtain financing for her and instructed her to immediately return the Dodge Journey. (# 16 at 14). Ms. Grays returned the vehicle and filed the instant lawsuit.

         On April 29, 2019, the Court issued an Order granting in part and denying in part the Defendants' Motion to Compel Arbitration and Stay Proceedings (# 49). The Court ordered that Ms. Grays' claims against Defendant Auto Mart involving: (i) false promises by Auto Mart of “guaranteed credit acceptance” or the like, (ii) the failure of Auto Mart to assign the Sale Contract to a lender, and (iii) any claims that involve Auto Mart's failure to make disclosures or provide documents as part of the transaction represented by the Sale Contract will be resolved in arbitration. (# 49 at 13-14). The following claims, however, remain pending before this Court: (i) violations of the Fair Credit Reporting Act, (ii) violations of the Truth in Lending Act, (iii) fraudulent misrepresentation, (iv) violation of Colo. Rev. Stat. § 4-5-109(a), (v) fraud and forgery, and (vi) violation of 15 U.S.C. § 1638(a)(1), (b)(1)(B). (# 16, # 49).

         On July 7, 2019, Ms. Grays filed a Motion for Sanctions (# 68), which was referred to the Magistrate Judge. Then, on July 24, 2019, Ms. Grays filed a second Motion for Sanctions (# 81), which was not referred to the Magistrate Judge and remains pending before the Court. Thus, this Opinion addresses both motions.

         ANALYSIS

         I. Ms. Grays' Initial Motion for Sanctions (# 68)

         Ms. Grays moves for sanctions against the Defendants pursuant to Rule 11 and 28 U.S.C. § 1927 for numerous instances of misconduct including: (i) failing to follow court orders, (ii) advancing unsupported facts and arguments, (iii) submitting false information to the Court, (iv) filing improper motions, (v) failing to confer with Ms. Grays and timely respond to her requests, and (vi) generally acting unreasonably and vexatious. (# 68 at 5-12). Ms. Grays seeks reasonable costs and fees; an injunction against any future delays by Defendants; the striking of Defendants' Answer and entry of default against the Defendants; an order requiring defense counsel to respond to Ms. Grays' inquires within 24 hours; and various monetary sanctions. (#68 at 12-13). In response, the Defendants contend that the motion is groundless, frivolous, and devoid of any factual support that they engaged in sanctionable conduct. (# 74). This motion was referred to the Magistrate Judge by Memorandum dated July 24, 2019 (# 75) pursuant to 28 U.S.C. § 636(b) and Rule 72.

         On September 25, 2019, the Magistrate Judge issued a Recommendation that Ms. Grays' initial Motion for Sanctions be denied for failure to both comply with Rule 11(c)(2)'s safe harbor provision and put forth a sufficient factual basis that the Defendants engaged in sanctionable conduct under either Rule 11 or 28 U.S.C. § 1927. (# 90 at 7-8). No. objections to the Recommendation were filed.

         Under Rule 72, written objections are due within fourteen (14) days after service of a copy of the Recommendation. Here, no objections were filed to the Recommendation, thus, the Court is vested with discretion to review the Recommendation “under any standard it deems appropriate.” Summers v. Utah, 927 F.2d 1165, 1167 (10th Cir. 1991); see also Thomas v. Arn, 474 U.S. 140, 150 (1985) (stating that “[i]t does not appear that Congress intended to require district court review of a magistrate's factual or legal conclusions, under a de novo or any other standard, when neither party objects to those findings”). Nonetheless, though not required to do so, the Court reviews the Recommendation to “satisfy itself that there is no clear error on the face of the record . . . .” Fed.R.Civ.P. 72(b) Advisory Committee Notes. Upon such review, the Court agrees entirely with both the findings and reasoning of the Magistrate Judge.

         A. Sanctions Pursuant to Rule 11

         To be entitled to sanctions under Rule 11(b), Ms. Grays must show that the Defendants' pleadings submitted to the Court: (i) were intended “to harass, cause unnecessary delay, or needlessly increase the cost of litigation”; (2) contained legal positions that were not “warranted by existing law”; (iii) lacked evidentiary support; and (iv) contained denials of factual contentions not supported by the evidence. Fed. R. Civ. 11(b)(1)-(4). Rule 11 obligates Defendants' counsel to conduct an “inquiry reasonable under the circumstances” before filing any such pleading. That inquiry is judged by an objective standard-inquiring what a reasonable attorney would have ...