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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

WESTERN MARYLAND WIRELESS CONNECTION Plaintiff v. PRIMO ZINI et al. Defendants

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Civil No. L-08-741

MEMORANDUM Now pending are two motions: (i) defendants Primo Zini, Tom Catani, United States Cellular Company, and USCC Distribution Company, LLC's, (collectively the "defendants") motion for summary judgment (Docket No. 20), and (ii) defendants' motion for Rule 11 sanctions against plaintiff Western Maryland Wireless, Inc. ("Western Maryland") and its counsel (Docket No. 28). No hearing is required because the issues are narrow, purely legal in nature, and indisputably clear. For the reasons stated in the accompanying Order, the Court GRANTS defendants' motion for summary judgment and GRANTS defendants' motion for Rule 11 sanctions against Western Maryland and its counsel, Mr. Jason Buckel. I. Background Plaintiff Western Maryland is a former authorized agent for U.S. Cellular, a provider of wireless communication services. As an authorized agent, Western Maryland operated retail stores that sold U.S. Cellular wireless telephones, service plans, and accessories. Western Maryland was owned and operated by Allison Knisley and Mark Reeder. In May 2004, Western Maryland, though Knisley and Reeder, entered into an Agent Contract and Equipment Agreement with U.S. Cellular. Problems developed quickly, and on February 23, 2005, U.S.

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Cellular terminated the Agreement for cause due to numerous breaches by Western Maryland. Pursuant to the Agreement, the dispute was submitted for binding arbitration. U.S. Cellular, as claimant, pressed two claims; Western Maryland, the respondent, pressed eleven counterclaims. The arbitrator received and considered pre- and post-hearing briefs, each with voluminous exhibits. The arbitrator held a three day trial during which numerous witnesses testified and documents were received into evidence. In an eight page opinion, the arbitrator addressed each claim and counterclaim individually. He found Western Maryland to be in breach of contract and awarded U.S. Cellular $195,411.01 in damages. He denied all eleven of Western Maryland's claims on the merits. In the instant complaint, Western Maryland seeks to revive the exact claims denied in binding arbitration. Western Maryland filed the instant complaint pro se in state court, and it was removed by defendants. Defendants then answered. The complaint plead seven counts against the defendants: fraud, negligent misrepresentation, breach of contract, breach of fiduciary duty/constructive trust, unfair and deceptive acts, failure to act in good faith, and accounting.1 Western Maryland raised these identical counts as counterclaims at arbitration. Because under the Local Rules a corporation cannot proceed pro se, the Court ordered it to obtain counsel. Mr. Jason Buckel entered his notice of appearance on May 1, 2008. On May 5th a scheduling order issued, but was suspended by consent of both parties to allow the Court to rule on the defendants' instant motion for summary judgment, which was filed on May 16th. Mr. Buckel then sought and received leave to file his opposition two weeks after the normal
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During the six week period during which Mr. Buckel represented Western Maryland, it did not seek leave to amend the pro se complaint. In a footnote to its opposition, plaintiff now, informally and belatedly, seeks leave to amend. This request is denied. Western Maryland had ample time to request leave to amend prior to filing its opposition, including 32 days after the defendants filed the instant motion. Furthermore, amendment would be futile because Western Maryland could not bring any claim arising from its failed business relationship with the defendants that would not be barred by res judicata, as discussed infra. Simons v. United States, 75 Fed. Cl. 506, 509 (Fed. Cl. 2007) (citing Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)).

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deadline. On June 18th, having now been in the case for six weeks, Mr. Buckel filed the plaintiff's opposition. The defendants replied shortly thereafter. On July 23, 2008, defendants served a motion for sanctions under Rule 11, claiming that Mr. Buckel's opposition to the motion to dismiss was frivolous and misstated material facts. Pursuant to Rule 11, Mr. Buckel was afforded the required three weeks to discuss the proposed motion with defendants before they filed it with the Court on August 15, 2008. Docket No. 28. Mr. Buckel did not contact the defendants. Nor has Mr. Buckel written this Court in response to the Rule 11 motion. On February 10, 2009, the Court wrote Mr. Buckel a letter that "directed [him] to show cause, in the form of a letter to this Court, by February 18, 2009 as to why Rule 11 sanctions against you and your client are inappropriate." Docket No. 29. Mr. Buckel did not respond. II. Standard of Review The Court may grant summary judgment when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986); see also Felty v. Graves-Humphreys Co., 818 F.2d 1126, 1128 (4th Cir. 1987) (recognizing that trial judges have "an affirmative obligation" to prevent factually unsupported claims and defenses from proceeding to trial). Nevertheless, in determining whether there is a genuine issue of material fact, the Court views the facts, and all reasonable inferences to be drawn from them, in the light most favorable to the non-moving party. Pulliam Inv. Co. v. Cameo Properties, 810 F.2d 1282, 1286 (4th Cir. 1987). The decision to impose sanctions or award attorney's fees under Fed. R. Civ. P. 11 lies

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within the sound discretion of the district court. Deadwyler v. Volkswagen of America, Inc., 884 F.2d 779, 784 (4th Cir. 1989). The "proper inquiry in ruling on Rule 11 motions is whether a reasonable attorney in like circumstances would believe his actions to be factually and legally justified. If the actions of an attorney or a party fail to meet this standard, an award of sanctions is mandatory under the rule." Artco Corp. v. Lynnhaven Dry Storage Marina, Inc., 898 F.2d 953, 956 (4th Cir. 1990) (internal citations and quotations omitted). III. Analysis Western Maryland has failed to create a dispute of material fact. Defendants press three theories as to why plaintiff's claims are barred: res judicata, collateral estoppel, and arbitration and award. As discussed below, each of defendants' theories are meritorious and summary judgment must be granted in their favor. A. Res Judicata In the Fourth Circuit, once an action reaches a "final judgment on the merits," the doctrine of res judicata "bars further claims by parties . . . based on the same cause of action." Young-Henderson v. Spartanburg Area Mental Health Ctr., 945 F.2d 770, 773 (4th Cir. 1991). Specifically, res judicata "bars a party from relitigating a claim that was decided or could have been decided in an original suit. The doctrine was designed to protect litigants from the burden of relitigating an identical issue with the same party or his privy and to promote judicial economy by preventing needless litigation." Laurel Sand & Gravel, Inc. v. Wilson, 519 F.3d 156, 161-62 (4th Cir. 2008) (internal citations, quotations, and brackets omitted). In a diversity action, as here, federal courts apply the res judicata rules of the state in which the prior judgment was obtained. Kremer v. Chem. Const. Corp., 456 U.S. 461, 482 (1982). Illinois law applied throughout arbitration, and its application was undisputed by

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Western Maryland. The facts support the application of Illinois law.2 Conversely, nothing supports the application of Maryland law for the first time in the history of this dispute.3 The choice of law issue is largely irrelevant because Illinois and Maryland law are substantively identical on this point. See Kutzik v. Young,730 F.2d 149, 151 (4th Cir. 1984). Plaintiff does not suggest it would benefit from the application of Maryland law, nor does it suggest any material differences between the states' laws. Res judicata applies if: "(1) there was a final judgment on the merits rendered by a court of competent jurisdiction, (2) there is an identity of cause of action, and (3) there is an identity of parties or their privies." River Park, Inc. v. City of Highland Park, 703 N.E.2d 883, 889 (Ill. 1998). Because plaintiff's claims satisfy this test, any claims that were brought at arbitration, or could have been brought at arbitration, are forever barred by the doctrine of res judicata. 1. Final Judgment "[A]rbitration awards have the same res judicata and collateral estoppel effect as court judgments." Peregrine Fin. Group, Inc. v. Martinez, 712 N.E.2d 861, 867 (Ill. App. Ct. 1999).4 Illinois courts stress the universality of this rule in cases where the parties by "mutual agreement submit a dispute to arbitration, the award by the arbitrators is final and binding." Rosee v. Bd. of Trade, 356 N.E.2d 1012, 1036 (Ill. App. Ct. 1976). Here, the Exclusive Agent Contract requires that all disputes "shall be settled by arbitration" and that "[t]he arbitration decision shall be final and binding on both parties." O'Brien Decl., Ex. 4

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