COLLEEN MACORT ACCESS NOW INC v. PREM INC (2005)

JUDGMENT

It is hereby ordered, adjudged, and decreed that the attached opinion included herein by reference, is entered as the judgment of this Court.

For the Court: Thomas K. Kahn, Clerk

By: Jackson, Jarvis

Prem, Inc., which is more commonly known as Budget Inn of Sarasota, appeals the decision of the district court denying its motion to vacate the final judgment and its motion for sanctions and fees against Colleen Macort and Access Now, Inc. We affirm in part and reverse and remand in part for further proceedings consistent with this opinion.

I.

On August 12, 2003, Macort and Access Now sued Budget Inn in the Middle District of Florida for failure to comply with the Americans with Disabilities Act. In her complaint, Macort alleged that she visited Budget Inn and, because of her disability (Macort is in a wheelchair), she was “denied full, safe, and equal access to the property.” Specifically, Macort alleged that Budget Inn was not in compliance with the ADA because: there was no accessible parking; the front door did not have “a proper level landing”; the service counter was too high; there were no accessible rooms; and the rooms that were designated as accessible actually were not. Macort stated that she “continues to desire and intend[s] to visit” Budget Inn, but, “[t]o date, the readily achievable barriers and other violations of the ADA still exist and have not been remedied.” Thus, because she wanted to visit Budget Inn, but could not because of its noncompliance with the ADA, Macort alleged that she has been discriminated against for being disabled. Macort asked the district court to find Budget Inn in violation of the ADA, to issue an injunction ordering Budget Inn to make its facilities compliant with the ADA, and for “reasonable attorney's fees, costs (including expert fees) and other expenses of suit.”

Six months later, after little had happened to prosecute the lawsuit, Macort offered to settle the claim for $ 10,050.00 in attorney's fees and costs. Budget Inn rejected the offer.

Then Macort was deposed on April 15, 2004, and testified to the following regarding her claim: She met attorneys at the law firm of Schwartz, Zweben & Associates at a Mrs. Wheelchair pageant in July 2002. Attorneys at the Schwartz firm were hosting a seminar on the rights of the disabled under the ADA. The attorneys asked the seminar attendees, including Macort, to call them if they ran into noncompliance issues at public accommodations like restaurants and hotels.

Starting in March 2003, Macort began calling the Schwartz firm every time she encountered a public accommodation that she found “inaccessible” because of her disability. It was her practice to call the Schwartz firm and have them file a lawsuit on her behalf immediately, rather than contact the owner and ask that the alleged “barrier” be fixed. From March 2003 to September 2003, the Schwartz firm filed fifty-seven lawsuits in the Middle District of Florida on Macort's behalf against hotels, restaurants, and other public accommodations because of alleged violations of the ADA.

One such suit was this one against Budget Inn in Sarasota, Florida. Macort was planning a move from her home in Bradenton, Florida to Hebron, Indiana on June 14, 2003. Because her parents, son, and grandchild still lived in Bradenton, she wanted to find hotels in the area that she could use on return visits. In the weeks before her move, Macort inspected twenty to fifty hotels in the Bradenton area, including Budget Inn, in Sarasota, to find one that was ADA compliant. According to Macort, none were. (Lawsuit's are pending against all of the hotels she visited.)

This was Macort's only visit to Budget Inn in Sarasota. She did not go back at any point to see if the alleged accessibility problems were fixed. Macort did not know the address of the Budget Inn or specifically where it was.

Macort said in her complaint that Budget Inn had four barriers to “full, safe, and equal” access: there were no lanes next to parking spots to maneuver her wheelchair in and out of her car; the landing leading up to the front door was overly sloped; the front desk was too tall; and there were no wheelchair friendly rooms. Yet, Marcot testified in her deposition that: she had no problem getting in and out of her car in the Budget Inn parking lot; she did know how sloped the front-door landing was (she was able to enter the hotel without help); she did not know how high the front desk was (she was able to talk to the attendant at the front desk); and she did not remember who she spoke with about wheelchair accessible rooms or even whether that person was a man or a woman. She remembered little about the hotel, explaining that because she inspected so many of them, she forgot most of the details.

Marcot said that she was planning on returning to Bradenton temporarily in the summer. But, she did not know exactly when, and did not have flight or hotel reservations. Macort said that she would like to stay near the beach on her summer trip to Bradenton. She said that she would stay in one of the twenty to fifty hotels she inspected before she left for Indiana, possibly including Budget Inn, but did not know which one. Budget Inn is not near the beach.

Moreover, on her first trip back to Bradenton after her move, which was for the purpose of giving a deposition in this case and two others, Macort stayed with her parents. Before she had moved to Indiana, Macort had lived with her parents and her driver's license listed her parents' home as her permanent residence. She did not intend to stay at the Budget Inn or any other hotel while she was in Bradenton for the week of depositions.

On May 12, 2004, which was about a month after Macort's deposition, Budget Inn filed a motion to dismiss her ADA claim because she lacked standing to sue. As grounds for the motion, Budget Inn wrote:

Where as here the circumstances are so apparently contrived, there is no bona fide case or controversy. Other than a return to Florida for her ADA lawsuit in which her expenses were all paid for by her lawyer, Plaintiff, Marcot has failed to even attempt to visit Budget Inn, much less the Bradenton-Sarasota area, since the alleged visit sometime before June 14, 2003, when she moved from Florida to Indiana.

Also on May 12, Budget Inn filed a motion for fees/sanctions pursuant to Fla. R. Prof'l Conduct R. 4-1.8, Fed. R. Civ. P. 11, and 28 U.S.C. § 1297. As grounds for the motion, Budget Inn wrote that “the Schwartz firm failed to conduct a reasonable pre-suit investigation whatsoever, let alone a reasonable one.” As part of its motion for fees/sanctions, Budget Inn asked the district court for discovery into the Schwartz firm's relationship with Macort, including “copies of all authorizations for suit signed by Macort.”

The next day, on May 13, 2004, one of Macort's attorneys at the Schwartz firm wrote Budget Inn that, “I was advised by Ms. Macort that as of this coming weekend (approximately May 17, 2004), she is moving back to the Bradenton area, so will no longer require the use of a hotel. As such, given this change in circumstances, we believe it is appropriate to dismiss this action ․”

On May 18, 2004, another of Macort's lawyers sent Budget Inn a joint motion to dismiss the lawsuit without prejudice. Budget Inn did not want to consent to the dissmissal of the lawsuit while its motions to dismiss and for fees and sanctions were pending, and therefore did not respond.

Two days later, having not heard back from Budget Inn, the Schwartz firm motioned for the district court to dismiss the lawsuit with prejudice. A proposed order was attached. Because the motion was sent by United States mail, Budget Inn did not receive Macort's motion to dismiss the lawsuit until May 24, 2004. By then, however, the district court had signed the proposed order, which dismissed Macort's lawsuit with prejudice and had each party bear its own costs.

As soon as Budget Inn learned that the district court had granted Macort's motion to dismiss the lawsuit with prejudice, it filed a motion to vacate and set aside the final judgment under Fed. R. Civ. P. 59(e) and 60(b). Budget Inn also renewed its May 12, 2004 motion for sanctions and fees.

On September 16, 2004, the district court denied both of Budget Inn's motions. Budget Inn appeals.

II.

Fed. R. Civ. P. 59(e) authorizes a motion to alter or amend a final judgment after it has been entered by the district court. “The rule also has been interpreted as permitting a motion to vacate a judgment rather than merely amend it.” 11 Charles Alan Wright et al., Federal Practice and Procedure § 2810.1, at 119 (2d ed. 1995). Among other grounds, a district court should grant a defendant's Rule 59(e) motion to vacate the judgment if the defendant “demonstrate[s] that the motion is necessary to correct manifest errors of law or fact upon which the judgment is based.” Id. at 125. We review a district court's decision to grant or deny a Rule 59(e) for abuse of discretion. Thomas v. Farmville Mfg. Co., 705 F.2d 1307, 1307 (11th Cir. 1983).

The district court made a manifest error of law upon which the judgment is based in granting Macort's motion to dismiss her lawsuit with prejudice without allowing Budget Inn to respond. Under Fed. R. Civ. P. 41(a), a plaintiff may, “without order of the court,” voluntary dismiss her lawsuit if the defendant has not yet answered her complaint, or all the parties consent to the dismissal. Fed. R. Civ. P. 41(a)(1). But after the defendant answers the complaint, the plaintiff can only dismiss her lawsuit by order of the court. Fed. R. Civ. P. 41(a)(2).

When a plaintiff asks the district court to dismiss her lawsuit under Rule 41(a)(2), the court has the discretion to choose between dismissing the suit with prejudice or without it. See Pontenberg v. Boston Scientific Corp., 252 F.3d 1253, 1255 (11th Cir. 2001). If the district court dismisses the suit without prejudice, ‘ “voluntary dismissal should be granted unless the defendant will suffer clear legal prejudice, other than the mere prospect of a subsequent lawsuit, as a result.’ ” Id. (emphasis removed) (quoting McCants v. Ford Motor Co., 781 F.2d 855, 856-57 (11th Cir. 1986)).

However, if the district court is inclined to dismiss the suit with prejudice, because of the finality of such a decision, it must afford the non-moving party an opportunity to oppose the Rule 41(a)(2) motion. See Andes v. Versant Corp., 788 F.2d 1033, 1037 (4th Cir. 1986); see also Marlow v. Winston & Strawn, 19 F.3d 300, 305-06 (7th Cir. 1994). Granting a plaintiff's request for a voluntary dismissal with prejudice under Rule 41(a)(2) without allowing the defendant an opportunity to respond “upsets notions of fundamental fairness,” and is error. See Andes, 788 F.2d at 1037.

That is what happened here. On May 18, 2003, Macort's attorneys asked Budget Inn to consent to dismissing the lawsuit one day after Budget Inn had filed its motions to dismiss and for sanctions and fees. Budget Inn did not consent. On Thursday, May 20, 2003, Macort asked the district court to dismiss her lawsuit with prejudice. The district court granted Macort's motion and dismissed her lawsuit with prejudice on Monday, May 24, 2003. Budget Inn had no opportunity to respond. In fact, Budget Inn's attorney did not see Macort's motion to dismiss until after the district court entered its order dismissing the suit with prejudice. Rendering a decision before Budget Inn had a chance to see Macort's motion was error on the part of the district court.

For these reasons, denying Budget Inn's Rule 59(e) motion to vacate was an abuse of discretion.¹ On remand, the district court must extend Budget Inn a reasonable opportunity to respond to Macort's motion to dismiss her lawsuit with prejudice. Then the court “must ‘weigh the relevant equities and do justice between the parties in each case, imposing such costs and attaching such conditions to the dismissal as are deemed appropriate.’ ” Potenberg, 252 F.3d at 1256 (quoting McCants, 781 F.2d at 857). Any bad faith on the plaintiff's part weighs heavily in favor of the defendant, and often precludes dismissal or requires that the costs be taxed to the defendant. Id. at 1256-57, 1258-59.

While we have not adopted a specific formula to “weight the relevant equities,” see id. at 1259, there are factors the court should consider in its decision on Macort's Rule 41(a)(2) motion, including: the stage of the proceedings (the further along the litigation, the more prejudice to the defendant), 9 Wright et al., supra, § 2364, at 291-92; the purpose of the voluntary dismissal (“if the purpose is to avoid an adverse determination on the merits of the action” then “voluntary dismissal should generally be denied”), 8 Charles L. Brieant, Moore's Federal Practice, § 41.40[7][b][v], at 41-150 (3d ed. 2004) (citing Druid Hills Civic Ass'n v. Fed. Highway Admin., 833 F.2d 1545, 1549 (11th Cir. 1987)); and its effect on discovery deadlines, id. § 41.40[7][d], at 41-154 (“The district court should not permit the plaintiff voluntarily to dismiss the action to thwart discovery deadlines.”). Here, we note that Macort asked to voluntarily dismiss her lawsuit nine months after she initiated it; at the end of discovery; one day after Budget Inn moved to dismiss the suit for lack of standing and for sanctions and fees; and one day after Budget Inn asked for discovery in support of its motion for sanctions and fees. The district court should have granted the Rule 59(e) motion to vacate its order.

III.

The district court also denied Budget Inn's renewed motion for sanctions and fees pursuant to Fla. R. Prof'l Conduct R. 4-1.8, Fed. R. Civ. P. 11, and 28 U.S.C. § 1927. The court held that it did not have to address the motion because it already dismissed the lawsuit with prejudice. Because we have just decided that the district court abused its discretion by denying Budget Inn's motion to vacate the final judgment, the district court's stated reason for not deciding the motion for fees and sanctions cannot be valid.

Moreover, even if Macort's ADA claim had been properly dismissed under Rule 41(a)(2), the district court still retained jurisdiction to decide collateral issues, W. Group Nurseries, Inc. v. Ergas, 167 F.3d 1354, 1358-59 (11th Cir. 1999), including matters involving Rule 11 sanctions. Brieant, supra, § 41.33[6][h][i], at 41-87 (citing Cooter & Gell v. Hartmax Corp., 496 U.S. 384, 396, 110 S. Ct. 2447, 2456 (1990) (“Like the imposition of costs, attorney's fees, and contempt sanctions, the imposition of a Rule 11 sanction is not a judgment on the merits of an action. Rather, it requires the determination of a collateral issue: whether the attorney has abused the judicial process, and, if so, what sanction would be appropriate. Such a determination may be made after the principal suit has been terminated.”)). The same is true of motions under 28 U.S.C. § 1927 for sanctions and fees. Id. § 41.33[6][h][ii], at 41-89 (citing Bolivar v. Pocklington, 975 F.2d 28, 31 (1st Cir. 1992)). Even after entry of a final judgment on the underlying claim, a district court still must decide any pending motion for sanctions and fees.

As an alternative basis for its holding, the district court said that it “would have” denied Budget Inn's Rule 11 motion because it “failed to comply with the 21-day safe harbor provision.” Rule 11 states that a motion for sanctions “shall not be filed with or presented to the court unless, within twenty-one days after service of the motion ․ the challenged paper, claim, defense, contention, allegation, or denial is not withdrawn or appropriately corrected.” Fed. R. Civ. P. 11(c)(1)(A). “Since the procedural requirements of the Rule 11 safe harbor provision are designed to protect the person against whom sanctions are sought and forestall unnecessary motion practice, a failure to comply with them will result in the rejection of the motion for sanctions ․” 5A Wright et al., supra, § 1337.2, at 723.

Budget Inn admittedly did not give Macort twenty-one days to withdraw her complaint. Therefore, the district court was correct to reject the Rule 11 part of Budget Inn's motion for sanctions and fees.

However, the court should have decided the part of Budget Inn's motion for sanctions and fees that was based on Fla. R. Prof'l Conduct R. 4-1.8 and 28 U.S.C. § 1927. On remand, the district court must do so.

IV.

For the foregoing reasons, we REVERSE the district court's decision on Budget Inn's motion for sanctions and fees, except as to Rule 11, which we AFFIRM. We also REVERSE the district court's decision on Budget Inn's motion to vacate/set aside the final judgment. We REMAND for further proceedings consistent with this opinion.

AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.

FOOTNOTES

1.   Because our decision to reverse the district court on Budget Inn's Rule 59(e) motion is dispositive, we need not decide whether the district court abused its discretion when it denied Budget Inn's alternative Rule 60(b) motion for relief from the final judgment

PER CURIAM: