Friday, December 27, 2013

Rector v. Approved Federal Savings Bank case brief

Rector v. Approved Federal Savings Bank case brief summary
265 F.3d 248 (4th Cir. 2001)

Plaintiff attorney, personally and as a trustee, sued defendant bank alleging conspiracy, Racketeer Influenced and Corrupt Organizations Act, and fraud claims. The case was dismissed and the bank moved for sanctions. The motion was granted and the attorney appealed. The court of appeals vacated and remanded. On remand the United States District Court for the Eastern District of Virginia again imposed sanctions. The attorney appealed.

The current motion for sanctions stemmed from the underlying suit which arose from an agreement in which the attorney, both personally and as trustee of a charitable remainder trust, agreed to sell to the bank his majority interest in a different bank. The attorney alleged that the bank failed to pay at least $ 20 billion dollars of the agreed purchase price. After the complaint was dismissed the bank moved for sanctions pursuant to Fed. R. Civ. P. 11. On the first appeal the attorney did not assert the 21-day safe harbor provision of Fed. R. Civ. P. 11. On his second appeal, for the first time, the attorney asserted the 21-day safe harbor defense.


  • The court of appeals affirmed and held the 21-day safe harbor provision was not jurisdictional and the attorney waived the defense when he failed to raise the argument to the district court in the first instance and he failed to raise it on the first appeal.

The judgment was affirmed.

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