Federal Savings and Loan Insurance Corporation v. John L. Molinaro, and Kurahara & Morrissey, Real Party in Interest-Appellant

Michael Morrissey and Kurahara & Mor-rissey, a law firm, appeal from a district court order imposing Rule 11 sanctions against them. The court imposed the sanctions after it had determined that the counterclaims they had filed against the Federal Savings & Loan Insurance Corporation (FSLIC) were barred by the doctrine of sovereign immunity. The appellant’s client, Kimberleigh Ferm, had been married to John Molinaro, a former officer and director of the failed Ramona Savings & Loan Association. FSLIC’s claims against Ferm, and her sanctioned counterclaims at issue in this appeal, briefly occupied a very small corner of the stage where FSLIC, Molinaro and other defendants litigated the financial liability of the officers and directors for Ramona’s defalcations. See Federal Savings and Loan Insurance Corporation v. Ferm, 909 F.2d 372 (9th Cir.1990); Federal Savings and Loan Insurance Corporation v. Molinaro, 901 F.2d 1490 (9th Cir.1990).

FSLIC originally instituted the underlying action in September of 1986, and did not name Ferm as a party. The amended complaint, filed in June of 1987, contained two claims against Ferm along with 39 other claims against various defendants,…

dissenting:

Respectfully, I dissent.

I

“It is now clear that the central purpose of Rule 11 is to deter baseless filings in the District Court and thus, consistent with the Rule Enabling Act’s grant of authority, streamline the administration and procedure of the federal courts.” Cooter & Gell v. Hartmarx Corp., — U.S. --, 110 S.Ct. 2447, 2454 (1990); see also Pavelic & LeFlore v. Marvel Entertainment Group, — U.S. -, 110 S.Ct. 456, 460 , 107 L.Ed.2d 438 (1989) (Marshall, J., dissenting) (“One of the fundamental purposes of Rule 11 is to strengthen the hand of the trial judge in his [or her] efforts to police abusive litigation practices and to provide him [or her] sufficient flexibility to craft penalties to each case.”). Management of complex litigation often depends on the power of the trial court to sanction attorney behavior in those rare instances where it is necessary to do so. In my view, Rule 11 sanctions played a crucial role in this blockbuster case ably managed by Judge Stot-ler, who used her authority with appropriate discretion.

The Supreme Court has recognized that the district court is in the best position to determine the propriety of Rule 11 sanctions. “A…

concurring:

Because the collateral estoppel basis for the sanctions expressed by the district court does not fully support the sanctions imposed, I concur in Judge Schroeder’s opinion. My concurrence should not, however, be construed as an invitation to counsel to continue to plead the kind of frivolous claims that were interspersed with one or two colorably nonfrivolous claims, as revealed in this record.

923 F.2d 736 FEDERAL SAVINGS AND LOAN INSURANCE CORPORATION, Plaintiff-Appellee, v. John L. MOLINARO, et al., Defendants, and Kurahara & Morrissey, Real Party in Interest-Appellant. No. 88-6216. United States Court of Appeals, Ninth Circuit. Argued and Submitted Dec. 5, 1989. Decided Jan. 17, 1991. Michael T. Morrissey, Joseph R. Kafka, Kurahara & Morrissey, San Jose, Cal., for real party in interest-appellant. Carol Burney, Lawler, Felix & Hall, Los Angeles, Cal., for plaintiff-appellee. Appeal from the United States District Court for the Central District of California. Before GOODWIN, Chief Judge, SCHROEDER and O'SCANNLAIN, Circuit Judges. SCHROEDER, Circuit Judge: 1 Michael Morrissey and Kurahara & Morrissey, a law firm, appeal from a district court order imposing Rule 11 sanctions against them. The court imposed the sanctions after it had determined that the counterclaims they had filed against the Federal Savings & Loan Insurance Corporation (FSLIC) were barred by the doctrine of sovereign immunity. The appellant's client, Kimberleigh Ferm, had been married to John Molinaro, a former officer and director of the failed Ramona Savings & Loan…