GOMEZ LOPEZ’S MOTION FOR SANCTIONS AGAINST BLI AND CGSH IS GRANTED 16 day of January, 2001 (ENGLISH)
Final Order, Favorable to Gustavo Gómez López. United States District Court – Southern District Of Florida – Case No. 95-1300-Civ-Highsmith/Garber
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No. 95-1300-CIV-HIGHSMITH/GARBER
BANCO LATINO INTERNATIONAL
Plaintiff
V GUSTAVO GÓMEZ LÓPEZ et al..
Defendant.
ORDER
THIS CAUSE is before for review of United States Magistrate Judge Barry L. Garber’s report and recommendation (The “R & R”). The R & R advises that both Plaintiff Banco Latino International (“BLI”) and the law firm that represented it throughout this litigation, Cleary, Gottlieb, Steen & Hamilton, (“CGSH”), be sanctioned. Also before the Court are two motions to strike, relating to a March 25, 2000 memorandum (The “FOGADE memorandum”) from Alfredo Vetencourt De lima, BLI’s corporate representative, to the board of director of the Fondo De Guarantia De Depositos Y Proteccion Banacaria (FOGADE) –sic-, the Venezuelan government’s deposit insurance agency. The FOGADE memorandum was submitted as an exhibit during the sanction proceedings before Magistrate Judge Garber. For the reasons that follow, the Court adopts the R & R.
I. – BACKGROUND
On April 20, 2000 the undersigned entered an order and memorandum opinion granting the remaining defendants summary judgment, in this long-running litigation arising out of the collapse of the Venezuelan Banking industry in the 1990’s.See Banco Latino Int’l v Gomez Lopez, 95 F Supp. 2d. 1327 (S.D. Fla.2000). While that order disposed of all of the substantial legal claims in the case, considerable litigation was still in the offing over the issue sanctions. Defendant Gustavo A. Gomez Lopez (“Lopez”) filed a motion for sanctions and cost against BLI and CGSH , and BLI and CGSH reciprocated with a cross-motion for sanctions against Lopez. The matter was referred to Magistrate Judge Garber, who after holding a hearing issued the R & R.
Attached as an exhibit to Lopez’s reply in support of his sanctions motion was the FOGADE memorandum. In 1994, FOGADE intervened and placed BLI’s parents bank in Venezuela into receivership. Both FOGADE and BLI’s parent bank were originally plaintiff in this action; however, they were dismissed from the case in 1998, on the basis that their claims should be adjudicated in Venezuela. See 17F Supp 2d 1327 (S.D. Fla. 1998) The FOGADE memorandum addresses the legal viability of BLI’s claims as of March 25, 2000.
The R & R does not rely upon the FOGADE memorandum. Nonetheless, Magistrate Judge Garber concluded that BLI and CGSH continued to prosecute this case after it had become evident that there was no evidentiary basis supporting BLI’s claims. See R & R at 4. Magistrate Judge Garber also recommended that BLI and CGSH’s cross-motion for sanctions be denied. BLI and CGSH vigorously object to Magistrate Judge Garber’s findings with regard to Lopez’s motion for sanctions, asserting that they had a good faith in law and fact for all the claims asserted in this action . In addition to its objections to the R & R, BLI has moved to strike the FOGADE memorandum, arguing that it is a privileged communication. Lopez, in turn, has filed a motion to strike BLI’s motion to strike.
II.- DISCUSSION
A.- BLI’s Motion to Strike.
As note above, BLI moved, after Magistrate Judge Garber issued the R & R, to strike the FOGADE memorandum. The FOGADE memorandum, however, was a part of the record before Magistrate Judge Garber. Therefore, it is not appropriate, at this juncture (i.e. the review of Magistrate Judge Garber’s findings), to strike it from the record. See Application of Kingsley, 802 F 2d 571, 577 (1st. Cir. 1986) (“It was part of the record before the magistrate, and is, therefore, now properly before us”) Accordingly, BLI’s motion to strike is denied and Lopez’s motion to strike the motion to strike is denied as moot.
B.- The Conduct of BLI and CGSH Warrants Sanctions Under Rule 11(b)(3)
Magistrate Judge Garber found that sanctions were appropriate because: “1)BLI failed to conduct the adequate factual and legal inquiry required by Rule 11; 2) no factual basis existed from which BLI could base its claims; and 3) no legal basis existed to support BLI’s claims against Mr. Lopez” R & R at 3-4. After a careful de novo review of the R & R, the pertinent portions of the record, and the parties objections, the Court concurs with Magistrate Judge Garber’s factual findings and his conclusion that no factual basis existed to support BLI’s claims. The Court notes, for purposes of clarification, that it was no until the filing of the summary judgment motions that BLI & CGSH had (1) notice of the lack of a factual basis supporting BLI’s claims and (2) an opportunity to withdraw the claims. Therefore, it was on March 24, 2000, when BLI filed its response to the motions for summary judgment, that BLI and CGSH engaged in sanctionable conduct, by continuing to prosecute the case despite the absence of a factual basis supporting BLI’s claims. See Univ. Creek Ass’n v. Boston Am. Fin. Group, Ltd, 101 F. Supp. 2d 1370, 1373 (S.D. Fla. 2000) (Rule 11 (c) provides for the imposition of sanctions upon attorneys, law firms or parties who violate subsection (b), after notice and a reasonable opportunity to respond”)(emphasis supplied). Accordingly, the R & R’s conclusion that sanctions should be imposed is adopted.
III.- CONCLUSION
For the reasons set forth above, it is ORDERED that:
(1) BLI’s motion to strike is DENIED.
(2) Lopez’s motion to strike the motion to strike is DENIED AS MOOT;
(3) The R & R’s conclusion that sanctions should be imposed against BLI and CGSH pursuant to Rule 11 is ADOPTED.
(4) Lopez’s motion for sanctions against BLI and CGSH is GRANTED
(5) BLI and CGSH’s cross-motion for sanctions is DENIED; and
(6) The case is Re-Referred to Magistrate Judge Garber for determination of the appropriate sanctions against BLI and CGSH for continuing to prosecute this action after March 24, 2000
DONE AND ORDERED in Chambers at Miami, Florida, this 16(hand written) day of January, 2001
SHELBY HIGHSMITH
UNITED STATES DISTRICT JUDGE
United States Magistrate Judge Barry L. Garber.
Peter Homer.
Luis Delgado
David Gelfand
Thomas Scott.
Michael Tein
Marty Steinberg.