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JTH Tax, Inc. v. Hines

United States District Court, E.D. Virginia, Norfolk Division

December 15, 2017

JTH TAX, INC., d/b/a Liberty Tax Service, Plaintiff,
v.
CHARLES HINES, Defendant.

          UNITED STATES MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION

          Robert J. Krask United States Magistrate Judge.

         This matter is before the Court on pro se defendant, Charles Hines' ("Hines") motion for sanctions against Willcox and Savage, P.C., requesting sanctions for Liberty's failure to answer Hines' counterclaims. ECF No. 102. The motion has been referred to the United States Magistrate Judge pursuant to the provisions of 28 U.S.C. § 636(b)(1)(B) and Federal Rule of Civil Procedure 72(b). ECF No. 108. For the reasons that follow, the Court recommends that Hines' motion for sanctions be DENIED.

         I. PROCEDURAL HISTORY

         While the procedural history of this action is extensive, the pertinent filings are outlined below. On December 23, 2015, Liberty filed this action against Hines, ECF No. 1, and Hines answered the complaint on November 10, 2016. ECF No. 41. On December 12, 2016, Hines requested leave to file a "Counter-Complaint." ECF No. 46. On January 18, 2017, the Court granted Hines 21 days to file his counterclaim. ECF No. 51.

         On February 8, 2017, Hines filed a 97-page incomplete counterclaim ("Partial Counter-Complaint"), ECF No. 52, and a 169-page counterclaim ("Full Counter-Complaint"), ECF No. 53, which failed to comply with the Court's signature block and certificate of service requirements. The Court entered an order, on February 13, 2017, advising Hines that the deficiencies needed to be corrected within 30 days. ECF No. 55.

         Liberty filed a motion to dismiss Hines' Partial and Full Counter-Complaints (ECF Nos. 52, 53), on February 17, 2017, for failure to comply with Federal Rules of Civil Procedure 8(a), 8(e), and 12(f). ECF No. 56. Hines filed an opposition to the motion to dismiss on March 10, 2017, ECF No. 58, and Liberty filed a reply on March 16, 2017, ECF No. 59.

         On March 15, 2017, Hines filed a 176-page counterclaim ("amended counterclaim"). ECF No. 60. On March 24, 2017, Liberty filed a motion to strike untimely pleadings and dismiss counterclaim for failure to comply with the Court's Order, asking the Court to strike or dismiss the Partial and Full Counter-Complaints, and amended counterclaim. ECF No. 62. See also ECF No. 63 (Mem. in Support).

         The Court construed representations made in Hines' Full Counter-Complaint and opposition to the motion to dismiss as Hines' motion to amend his Full Counter-Complaint.[1] ECF No. 65. The Court granted the motion to amend, denied Liberty's motion to dismiss, denied Liberty's motion to strike, and ordered Liberty to respond to the Amended Counterclaim. ECF No. 65.

         Liberty filed a motion to dismiss the amended counterclaim on April 14, 2017, for failure to comply with Federal Rules of Civil Procedure 8(a), 8(e), and 10(b). ECF No. 66. See also ECF No. 61 (Mem. in Support). Due to Hines' apparent delay in receiving the motion to dismiss, the Court held a telephone conference on June 2, 2017. See ECF No. 76. The Court explained the posture of the case, explained that Liberty's motion to dismiss was properly filed, and ordered Hines to file a single document responding to the motion by June 16, 2017. Id. Hines timely filed an opposition on June 16, 2017, ECF No. 77, Liberty filed a reply on June 22, 2017, ECF No. 78, and Hines filed a sur-reply on July 13, 2017, ECF No. 79. On July 19, 2017, by report and recommendation, the Court recommended that Liberty's motion to dismiss the amended counterclaim be granted without prejudice to Hines filing a second amended counterclaim. ECF No. 80.

         Hines submitted a second amended counterclaim on August 11, 2017, which was filed subject to defect. ECF No. 82. An order entered August 28, 2017 directed the Clerk to file the second amended counterclaim without defect, and directed Liberty to file a responsive pleading within 21 days. ECF No. 85. Twenty-one days later, on September 18, 2017, Liberty timely filed a motion to dismiss Hines' second amended counterclaim or, in the alternative, stay the counterclaim pending arbitration. ECF No. 88.

         Hines filed a motion for sanctions against Willcox & Savage, P.C., on October 13, 2017, requesting sanctions due to Liberty's failure to file an answer to Hines' counterclaims. ECF No. 102 at 1-2. Liberty filed an opposition to the motion on October 18, 2017, requesting attorneys' fees incurred in responding to the motion. ECF No. 103. On October 26, 2017, eight days after Liberty filed the opposition, Hines filed a "Narrative on Plaintiffs ECF 103." ECF No. 107.

         II. ANALYSIS

         Although Liberty has not filed an answer to Hines' counterclaims, Liberty has complied with the rules by timely filing responsive pleadings. A motion to dismiss is a responsive pleading. Under Rule 12 of the Federal Rules of Civil Procedure, "[a] party must serve an answer to a counterclaim or crossclaim within 21 days after being served with the pleading that states the counterclaim or crossclaim." Fed.R.Civ.P. 12(a)(1)(B). However, if a party serves a motion, the time to answer the counterclaim is postponed, and an answer is not due until fourteen days after such a motion is denied. Fed.R.Civ.P. 12(a)(4)(A).

         In this case, Liberty has timely filed a responsive pleading to each of Hines' counterclaims. As outlined above, Liberty moved to dismiss Hines' two counterclaims filed on February 8, 2017, ECF Nos. 52 and 53, nine days after the counterclaims were filed. ECF No. 56. Liberty moved to strike ...


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