WILLIAMS v. MARTIN III (1999)

SUPPLEMENTAL OPINION ON DENIAL OF PETITION FOR REHEARING.

It is the contention of the appellant in his petition for rehearing that the majority opinion did not address the issue of whether Rule 11 of the Arkansas Rules of Civil Procedure authorizes a monetary sanction that exceeds the cost and attorney's fee.   This issue was not raised by appellant in his initial appeal;  however, the Court did uphold the trial court's assessment of $5,000.00 in sanctions.   While Judge Dawson erroneously used the term “exemplary damages” in his findings, it was apparent from the record that he was applying sanctions under Rule 11.   Unlike Federal Rule 11, our Rule 11 places no limit on the amount of sanctions that may be imposed.

Therefore, appellant's petition for rehearing is denied.

The supplemental opinion states that, unlike federal Rule 11, Arkansas's Rule 11 places no limit on the amount of sanctions that may be imposed.   However, in Crockett & Brown, P.A. v. Wilson, 321 Ark. 150, 901 S.W.2d 826 (1995), this court decided the following:

Upon finding a violation of Rule 11, the trial court must impose an appropriate sanction, which may include an order for the violating party to pay the opposing party or parties the amount of the reasonable expenses they had incurred, including an attorney's fee.   While this court has not established a standard of review in deciding whether a trial court has imposed an appropriate sanction, the Supreme Court has settled the issue for federal courts, holding that district courts have broad discretion not only in determining whether sanctionable conduct has occurred, but also what an appropriate Rule 11 sanction should be.   See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990).   We believe the standard should be applied here.

The federal courts have held that the primary purpose of Rule 11 sanctions is to deter future litigation abuse.   See Id.;  In Re Kunstler, 914 F.2d 505 (4th Cir.1990).   It has also been held that the least severe sanction adequate to serve the purposes of Rule 11 should be imposed, and the award of fees is but one of the methods of achieving the various goals of Rule 11.  Id.;  White v. General Motors Corp., Inc., 908 F.2d 675 (10th Cir.1990).   In addition, the court in In Re Kunstler further held that, when a monetary award is issued, the trial court should explain the basis of the sanction so a reviewing court may have a basis to determine whether the chosen sanction is appropriate.   The trial court should consider (1) the reasonableness of the opposing party's attorney's fees, (2) the minimum to deter, (3) the ability to pay and (4) factors relating to the severity of the Rule 11 violation.   The Kunstler court further related the following:

Because the sanction is generally to pay the opposing party's “reasonable expenses ․ including a reasonable attorney's fee,” Fed.R.Civ.P. 11, incurred because of the improper behavior, determination of this amount is the usual first step.   The plain language of the rule requires that the court independently analyze the reasonableness of the requested fees and expenses.   The injured party has a duty to mitigate costs by not overstaffing, overresearching or overdiscovering clearly meritless claims.   In evaluating the reasonableness of the fee request, the district court should consider that the very frivolousness of the claim is what justifies the sanctions.  (Emphasis added.)

After setting forth the above, the Wilson court reversed the Pulaski County Chancery Court because the chancery court had failed to follow the federal Rule 11 standards this court adopted;  nor did it specify in its order how the chancery court determined why the $15,000.00 sanction imposed against attorneys, Crockett & Brown, P.A., was appropriate to the circumstances.   Accordingly, the Wilson court remanded the case to permit the parties and the chancery court to proceed solely on the issue of the appropriateness or amount of the sanction to be imposed, by employing the federal Rule 11 standards adopted in the Wilson decision.

In my view, this case is indistinguishable from this court's Wilson holding, and we should return it to the trial court to apply the federal sanction standards we adopted there.   If we have decided not to follow the federal Rule 11 guidelines or standards, we should say so.

W.H. DUB” ARNOLD, Chief Justice.

GLAZE, IMBER and SMITH, JJ., dissent.