MICHAEL GULISANO, Interested Party-Appellant, CATHY COHEN, Plaintiff, versus BURLINGTON, INC., Defendant-Appellee.
No. 20-12660
United States Court of Appeals For the Eleventh Circuit
May 12, 2022
[PUBLISH]
Appeal from the United States District Court for the Southern District of Florida
D.C. Docket No. 9:18-cv-81420-BB
Before JORDAN, JILL PRYOR, and MARCUS, Circuit Judges.
When attorney Michael Gulisano represented a client in a negligence action in the Southern District of Florida, he obtained a default judgment against a non-existent entity, “Burlington, Inc.” He added an unrelated entity, Burlington Coat Factory Direct Corporation, as a judgment debtor on the resulting writ of execution. He used the writ of execution to levy funds from another entity, Burlington Stores, Inc. After Burlington Stores, Inc. and Burlington Coat Factory Warehouse Corporation protested and sought to quash the writ, Gulisano
I. FACTS1
While Cathy Cohen was shopping at a Burlington Coat Factory store in Royal Palm Beach, Florida, she looked at a set of tables on display. When Cohen attempted to inspect the tables, they fell on her knee. Cohen jumped back to avoid the falling tables, injuring her neck and back.
Cohen hired Gulisano as her attorney. He filed a civil action on her behalf in federal court in the Southern District of Florida. The complaint Gulisano drafted alleged that defendant “Burlington, Inc.”2 had been negligent and was liable for damages to Cohen. Gulisano served a summons and a copy of the complaint on CT Corporation System, ostensibly the registered agent of “Burlington, Inc.” After “Burlington, Inc.” failed to file an answer or otherwise respond to the lawsuit, the district court clerk entered a default. Following a hearing on damages, the district court entered a default judgment, awarding Cohen $677,774.75. The district court‘s final judgment named “Burlington, Inc.” as the sole defendant.
To collect on the default judgment, Gulisano requested that the court issue a writ of execution naming “Burlington, Inc. a/k/a Burlington Coat Factory Direct Corporation” as the judgment debtor. The court issued the writ.
Seeking to execute the writ, Gulisano used employer identification numbers (“EIN“)3 to perform an asset search to find bank accounts from which he could levy funds. But, instead of using the EIN number of the judgment debtor, “Burlington, Inc.“—which did not exist—he used the EIN numbers of two other entities: Burlington Stores, Inc. (“BSI“) and Burlington Coat Factory Direct Corporation (“BCFDC“). BSI is the parent company of the entities that operate Burlington Coat Factory stores, including BCFDC and Burlington Coat Factory Warehouse Corporation (“BCFWC“), which operates the Florida stores. After locating bank accounts in New Jersey that belonged to BSI, Gulisano registered the judgment in the District of New Jersey. The New Jersey district court then issued a writ of execution against “Burlington, Inc.” The United States Marshals Service delivered the writ to BSI‘s bank. The bank withdrew the amount of the judgment award, plus costs, from BSI‘s account.
Once they discovered the withdrawal, BSI and BCFWC filed a motion in the New Jersey district court to vacate the levy, quash the writ of execution, and vacate the default judgment. They pointed out that the writ of execution was based on a default judgment entered against “Burlington, Inc.,” but the judgment was levied
Gulisano opposed the motion. He asserted that “Burlington, Inc.” was a registered fictitious name or a misnomer that was similar enough to the correct name that it gave BSI and BCFWC—which he collectively referred to as “Burlington“—notice of the action.
The day after he filed his response in the New Jersey district court, Gulisano filed in the Florida district court a “Motion to Amend Final Default Judgment to Remove Any Ambiguity of the Correct Defendant‘s Identity.” In this motion, Gulisano asked the district court to amend the default judgment so that all references to the defendant “Burlington, Inc.” would become “Burlington, Inc. a/k/a Burlington Stores, Inc. a/k/a Burlington Coat Factory Warehouse Corporation.” Doc. 33 at 6 (internal quotation marks omitted).4 Gulisano requested this change in order to “remove any alleged ambiguity that ‘Burlington, Inc.’ is not the same entity as” BSI and BCFWC. Id. (emphasis in original). He contended that “Burlington, Inc.” properly referred to BSI and BCFWC because the company went by multiple names, all of which included the word “Burlington.” He argued that BSI and BCFWC were the same entity, operating under the fictitious name “Burlington, Inc.” He also argued that he had served “Burlington” via its registered agent, and that service on “Burlington, Inc.” was effective service on BSI.
BSI and BCFWC opposed the motion to amend. They acknowledged that there were multiple entities that together owned and operated the retail stores known as Burlington Coat Factory, but stated that “Burlington, Inc.” was not one of those entities. Nor was it a fictitious name for BSI or another Burlington Coat Factory entity. Therefore, they argued, the judgment against “Burlington, Inc.,” a completely unrelated entity, was improperly levied on BSI. Noting that the New Jersey district court had granted their motion to quash the writ of execution, BSI and BCFWC asked the Florida district court to deny the motion to amend the judgment.
In the Florida district court, BSI and BCFWC also moved for sanctions under
The district court denied the motion to amend. It observed that, although Gulisano now argued that he had sued BSI and BCFWC under their purported fictitious name, the complaint had not alleged that the defendant used a fictitious name. And, despite many opportunities, Gulisano never sought to amend the complaint to add that allegation, nor did he attempt to voluntarily dismiss the action without prejudice and initiate a new action against the intended entities. The district court found no support for his claims that “Burlington, Inc.” was the same entity as or the fictitious name of BSI or BCFWC: “Appallingly, the Court has not identified a single piece of evidence . . . that substantiates the use of ‘Burlington, Inc.’ as the proper entity to be named in this action, either as a fictitious name or as a company authorized to conduct business in Florida.” Doc. 50 at 9. The court observed that Gulisano‘s motion to amend failed to explain why the default judgment named “Burlington, Inc.” but the writ of execution named BCFDC. It concluded,
In the same order, the court granted the motion for sanctions. It found that Gulisano had “add[ed] an independent and distinct legal entity to a motion for writ of execution that was neither referenced at any point in the litigation nor explicitly listed in the Court‘s Final Judgment” and had “attempt[ed] to conflate various distinct corporate entities in order to recover an award of damages obtained through a default judgment against a non-existent corporate entity.” Id. at 13-14. The court found this conduct to be “both frivolous and dishonest.” Id. at 13. It stated that a brief investigation would have revealed the proper entities to sue, but Gulisano‘s presuit investigation was “woefully deficient,” and his post-judgment investigation was done in bad faith. Id. at 14. Because of his “serious fraudulent conduct,” the court granted the motion for Rule 11 sanctions against Gulisano. Id. at 18. It ordered him to pay attorney‘s fees and costs and referred him to the Florida Bar for appropriate disciplinary action.
Gulisano filed under
Gulisano filed this appeal of the order granting sanctions and the order denying reconsideration.
II. STANDARD OF REVIEW
We review a district court‘s imposition of Rule 11 sanctions for abuse of discretion. Kaplan v. DaimlerChrysler, A.G., 331 F.3d 1251, 1255 (11th Cir. 2003). We must affirm unless we find that the court applied the wrong legal standard or based its ruling on a clearly erroneous assessment of the evidence. Jones v. Int‘l Riding Helmets, Ltd., 49 F.3d 692, 694 (11th Cir. 1995).
We review for abuse of discretion a district court‘s denial of a motion for reconsideration under
III. ANALYSIS
There are two issues before us on appeal: (1) whether the district court abused its discretion in granting BSI and BCFWC‘s motion for sanctions, and (2) whether the district court abused its discretion when it denied Gulisano‘s motion for reconsideration of the sanctions order. We see no abuse of discretion in the first issue and deem the second issue abandoned.
A. The District Court Acted Within Its Discretion in Imposing Sanctions on Gulisano.
warranted
If the attorney failed to make a reasonable inquiry, then “the court must impose sanctions despite the attorney‘s good faith belief that the claims were sound.” Worldwide Primates, Inc. v. McGreal, 87 F.3d 1252, 1254 (11th Cir. 1996). The reasonableness of the inquiry depends on the circumstances of the case. See id.
In addition, an attorney‘s obligations with respect to the contents of pleadings or motions are not measured solely as of the time when the pleading or motion is initially filed with the court, but also at the time when the attorney, having learned the claims lack merit, reaffirms them to the court. Turner v. Sungard Bus. Sys., Inc., 91 F.3d 1418, 1422 (11th Cir. 1996) (citing
The district court did not abuse its discretion when it determined that Gulisano‘s claim that the default judgment against “Burlington, Inc.” allowed him to collect damages from BSI and BCFWC was objectively frivolous. That claim was undergirded by two arguments. First, Gulisano argued that “Burlington, Inc.” was the fictitious name of BSI and BCFWC. That argument was frivolous because there were no facts to support it. Second, he argued that a judgment entered against a corporation‘s fictitious name could bind multiple distinct corporate entities. That argument was frivolous because it ignored basic principles of corporations law.
First, there was no factual support for Gulisano‘s claim that “Burlington, Inc.” was the fictitious name of BSI and BCFWC. It is true that Gulisano attached hundreds of pages to the motion to amend to illustrate that BSI used the name “Burlington,” including pictures from the website, pictures of the interiors of Burlington stores, the federal trademark registration of the Burlington logo, and BSI‘s SEC 10-K Form. But he presented no evidence that BSI or any other Burlington entity used the name “Burlington, Inc.” Nor did he show that “Burlington, Inc.” was a corporate entity in Florida or anywhere else. Eventually Gulisano admitted to the district court that “Burlington, Inc.” did not exist.
Nor was “Burlington, Inc.” a fictitious name. In Florida, a corporation engaging in business under a fictitious name must first register the name with the State.
Second, there was no legal support for Gulisano‘s argument that his judgment against “Burlington, Inc.” entitled him to collect monies from BSI or BCFWC. In Florida, a corporation must be sued under its corporate name. RHPC, Inc. v. Gardner, 533 So. 2d 312, 314 (Fla. Dist. Ct. App. 1988). A corporation operating under a fictitious name has no independent legal existence. Osmo Tec SACV Co. v. Crane Env‘t, Inc., 884 So. 2d 324, 327 (Fla. Dist. Ct. App. 2004). “In pleadings, the corporate name must be strictly used.” RHPC, Inc., 533 So. 2d at 314. The district court explained that, when suing an entity under its fictitious name, the plaintiff should state the entity‘s true name, the designation “d/b/a” or “doing business as,” and the fictitious name. Thus, even if “Burlington, Inc.” had been the registered fictitious name of BSI or BCFWC, Gulisano should have included those proper corporate names in the complaint. He failed to do so. Instead, he named only “Burlington, Inc.” without including a d/b/a designation.
The district court denied the motion to amend and rejected Gulisano‘s argument that “Burlington, Inc.” was a fictitious name. On appeal, Gulisano argues that “Burlington, Inc.” was a typographical error—he had accidentally omitted “Stores” from the party‘s name on the complaint and repeated the error throughout the suit. It hardly matters whether Gulisano intentionally chose to use a fictitious name or inadvertently repeated a mistake. He tried to use a judgment against a non-existent party to collect from an unrelated
We turn now to the question whether Gulisano should have known that his arguments were legally and factually frivolous. Our answer is yes. Gulisano should have known that the motion to amend was frivolous because “even the most minimal investigation would have alerted” him that there was no such entity as “Burlington, Inc.” McGreal, 87 F.3d at 1255. The district court found that a search of registered corporations in Florida would have revealed proper Burlington Coat Factory entities that he could have sued. And we know that Gulisano could have performed such an investigation because, after obtaining the default judgment against “Burlington, Inc.,” he used the EIN numbers of BSI and BCFDC to locate their assets. He failed to mention whether he performed an asset search on “Burlington, Inc.” or what, if anything, he found. That he had to identify other entities from which to collect the judgment should have informed him that the named judgment debtor did not exist.
Even if Gulisano had failed to discover that “Burlington, Inc.” was non-existent and unrelated to the other Burlington entities, he learned these facts from BSI and BCFWC‘s motion to quash the writ and opposition to the motion to amend. Though BSI and BCFWC had “alerted [him] to the potential impropriety of his collection efforts,” Gulisano persisted in claiming that he could collect the award from BSI, BCFWC, or BCFDC, despite failing to name any of them as parties to the default judgment. Doc. 50 at 15. The district court properly concluded, “[I]t is abundantly clear that Mr. Gulisano should have known, and seemingly did know, that the claims he asserted during these proceedings were objectively and patently frivolous.” Id. at 15. Gulisano violated his duty of candor by “insisting upon a position after it [was] no longer tenable.” Peer v. Lewis, 606 F.3d 1306, 1311 (11th Cir. 2010) (internal quotation marks omitted). And, because “[a] finding of bad faith is warranted where . . . a frivolous argument is knowingly or recklessly raised,” the district court correctly determined that Gulisano acted in bad faith. Johnson, 9 F.4th at 1314 (alteration adopted) (internal quotation marks omitted). We thus conclude that the district court acted well within its discretion in imposing sanctions on Gulisano.
Gulisano‘s arguments against the sanctions order are unpersuasive. He asserts that the court improperly punished his conduct throughout the litigation rather than looking solely at the challenged motion. But to determine whether the motion to amend judgment warranted sanctions, the court had to examine whether Gulisano conducted a reasonable inquiry before filing the motion. It thus was required to look beyond the four corners of the motion to the attorney‘s conduct. See McGreal, 87 F.3d at 1254-55 (affirming sanctions on an attorney who accepted his client‘s assertions without questioning the client about damages, obtaining or examining any data, or contacting a third party who could shed light on the claim‘s validity). The district court properly considered Gulisano‘s reasonable-inquiry
Gulisano also argues that the sanctions motion flouted Rule 11‘s safe harbor provision. The safe harbor provision requires the moving party to serve the motion for sanctions on the nonmoving party and give it 21 days to withdraw the offending pleading before filing the motion with the district court.
B. The District Court Acted Within Its Discretion in Denying Gulisano‘s Motion for Reconsideration.
Gulisano asked the court to reconsider its decision to impose sanctions. After conducting an evidentiary hearing, the district court denied his motion. Gulisano challenges the denial on appeal, but he has abandoned this challenge. See Sapuppo v. Allstate Floridian Ins. Co., 739 F.3d 678, 680 (11th Cir. 2014). He failed to support the claim with arguments and citations to authority. See id. at 681. Instead, he merely appended, repeatedly, the same sentence to the end of his arguments against sanctions: “In the alternative, the court abused its discretion by denying the Appellant‘s Motion for Reconsideration, which raised this issue as grounds for doing so.” Appellant‘s Brief at 39, 43, 47, 52, 54. These appended sentences are mere “passing references” that cannot raise an issue for appellate review. Sapuppo, 739 F.3d at 681. We consider the issue abandoned.
Were we to reach the merits, however, we would affirm the district court‘s denial of the
IV. CONCLUSION
For the foregoing reasons, we affirm the district court‘s order imposing sanctions and its denial of the motion for reconsideration.
AFFIRMED.