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Powrzanas v. Jones Utility and Contracting Co Inc

United States District Court, N.D. Alabama, Southern Division

December 19, 2018




         On October 17, 2018, the plaintiff, Mandy Powrzanas, filed a motion for sanctions against the defendant and defendant's counsel, pursuant to Rule 11 of the Federal Rules of Civil Procedure. (Doc. 95). She contends that the counterclaims filed against her by the defendant and counsel violate Rule 11 as being both frivolous and offered for an improper purpose. Having carefully considered the evidence and arguments advanced by all counsel (docs. 97, 111, and 114), the court concludes that the motion is due to be denied.

         I. Factual Background

         This action commenced on June 9, 2017, when the plaintiff filed her complaint alleging that she had been constructively discharged from her employment with the defendant in violation of the Americans with Disabilities Act (“ADA”). The defendant, Jones Utility and Contracting Co., Inc., is a family business, owned and operated by the plaintiff's father, Richard “Ricky” Jones. Plaintiff and her sister, Shawna Stewart, worked in the office of the business and were authorized to write and sign checks in the ordinary course of the business. Although the plaintiff had worked in her father's business since 2006, the office atmosphere changed dramatically in late 2015, when Mr. Jones's wife and the plaintiff's mother, Donna Jones, passed away and Mr. Jones soon began a relationship with his current wife, Patricia Jones.

         To describe the office atmosphere from November 2015 until the plaintiff left in March 2016 as chaotic is an understatement. There were frequent arguments, descending into cursing and shouting, between the plaintiff, her sister, and Mr. Jones. On more than one occasion, Mr. Jones threatened suicide or to “whip Mandy's ass, ” although there is no evidence of any actual physical violence. In February 2016, the plaintiff quit her job, but was soon persuaded to return to work a few days later when Mr. Jones threatened suicide. When she returned in mid-February, she asked Mr. Jones to reduce the level of tension and discord, to avoid shouting and cursing, because it was making her sick. She left again permanently in early March 2016, after she, her sister, and Mr. Jones got into an a shouting argument during lunch at a restaurant, ultimately leading to Mr. Jones angrily throwing his leftover food on cars in the restaurant parking lot.

         On August 24, 2016, the plaintiff filed a charge of discrimination with the EEOC, contending that she was constructively discharged due to her disability from fibromyalgia and the defendant companies fail to reasonably accommodate her condition. On March 14, 2017, the EEOC closed the matter and gave the plaintiff a Notice of Right to Sue letter, and the instant action was filed on June 9, 2017.

         After service of process on the defendant (“Jones Utility”), a three-count counterclaim was filed on August 11, 2017. Count I alleged a claim for breach of contract against the plaintiff based on her failure to pay a promissory note dated April 20, 2011, in the face amount of $66, 000.00, which fully matured on April 20, 2016. Count II alleged conversion, based on a check written by the plaintiff to herself without authorization for $4, 000.00.[1] Count III alleged breach of fiduciary duty based on the conversion of the same check alleged in Count II. On August 31, 2017, the plaintiff filed her answer to the counterclaim, asserting that the promissory note was a fraudulent document, meant to cover up a scheme by Mr. Jones to transfer money between his businesses, and not evidence of a true loan to the plaintiff.

         Litigation proceeded, contentiously, for several months. On July 2, 2018, counsel for the plaintiff wrote a letter to defense counsel pursuant to Rule 11(c)(2), demanding that the counterclaims be dismissed within twenty-one (21) days, or the plaintiff would seek Rule 11 sanctions. On October 3, 2018, an Amended Counterclaim was filed, dropping Counts II and III, but retaining Count I for breach of contract on the promissory note. The instant motion was filed two weeks later, on October 17, 2018.

         II. Discussion

         Rule 11(b) of the Federal Rules of Civil Procedure states the following:

(b) Representations to the Court. By presenting to the court a pleading, written motion, or other paper-whether by signing, filing, submitting, or later advocating it-an attorney or unrepresented party certifies that to the best of the person's knowledge, information, and belief, formed after an inquiry reasonable under the circumstances:
(1) it is not being presented for any improper purpose, such as to harass, cause unnecessary delay, or needlessly increase the cost of litigation;
(2) the claims, defenses, and other legal contentions are warranted by existing law or by a nonfrivolous argument for extending, modifying, or reversing existing law or for establishing new law;
(3) the factual contentions have evidentiary support or, if specifically so identified, will likely have evidentiary support after a reasonable opportunity for ...

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