American Recovery v. Looper Reed Mark ( 1998 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
AMERICAN RECOVERY CORPORATION,
Plaintiff-Appellee,
v.
LOOPER, REED, MARK AND MCGRAW,
INCORPORATED; DONALD R. LOOPER,
Defendants-Appellants,
No. 97-2622
and
RICHARD V. SECORD; COMPUTERIZED
THERMAL IMAGING, INCORPORATED;
DAVID B. JOHNSTON; FLUOR DANIEL,
INCORPORATED,
Defendants.
Appeal from the United States District Court
for the Eastern District of Virginia, at Alexandria.
T.S. Ellis, III, District Judge.
(CA-95-1323)
Submitted: September 15, 1998
Decided: October 5, 1998
Before MURNAGHAN, WILLIAMS, and MOTZ, Circuit Judges.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
Robert C. Gill, Lynn M. Jordan, SLAVIT & GILL, P.C., Washington,
D.C., for Appellants. Arthur W. Tifford, Lawrence R. Metsch, Miami,
Florida; Edward T. Waters, FELDESMAN, TUCKER, LEIFER,
FIDELL & BANK, L.L.P., Washington, D.C., for Appellee.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
Looper, Reed, Mark & McGraw, Inc. (LRMM), and Donald R.
Looper appeal from the district court's denial of their motion for
sanctions against American Recovery Corporation (ARC). We affirm.
The background facts of this case are fully set forth in our earlier
opinion in American Recovery Corporation v. Computerized Thermal
Imaging, Inc., 96 F.3d 88 (4th Cir. 1996). After the arbitrator's award
in favor of Computerized Thermal Imaging (CTI), ARC elected to
continue with its suit against Defendants LRMM and Looper. The
district court granted Defendants' motion for summary judgment, but
denied Defendants' motion for sanctions. Defendants appeal the dis-
trict court's denial of their motion for sanctions.
The district court did not abuse its discretion by denying Defen-
dants' motion for sanctions under Fed. R. Civ. P. 37. See Stillman v.
Edmund Scientific Co., 522 F.2d 798, 801 (4th Cir. 1975). Many of
the requests for admissions which LRMM complains of call for legal
conclusions, which ARC reasonably replied that it could neither admit
or deny. One of the requests which LRMM contends ARC unreason-
ably denied was actually not denied by ARC; rather, ARC clarified
and explained its position as to that point. Thus, even assuming that
ARC later "prevailed" on these matters, "the true test under Rule
37(c) is not whether a party prevailed . . . but whether he acted rea-
sonably in believing that he might prevail." Fed. R. Civ. P. 37(c) cmt.
Likewise, the district court did not abuse its discretion in denying
Defendants' motion to impose sanctions under Fed. R. Civ. P. 11(b),
2
28 U.S.C. § 1927 (1994), or the court's inherent authority. See
Brubaker v. Richmond, 943 F.2d 1363, 1374 (4th Cir. 1991). ARC's
argument that the arbitrator's award should not be given preclusive
effect was not unreasonable. Whether LRMM breached its fiduciary
duty to ARC by representing an individual ARC director and officer
in contract negotiations with CTI is reasonably viewed as a separate
issue from whether the individual director himself usurped a corpo-
rate opportunity of ARC or whether CTI breached the consulting
agreement. Accordingly, it was not unreasonable for ARC to go for-
ward with the litigation against LRMM.
We affirm the district court's order. We dispense with oral argu-
ment because the facts and legal contentions are adequately set forth
in the materials before the court and argument would not aid the deci-
sional process.
AFFIRMED
3