Armendariz v. Chowaiki

Case Type:
Case Status:
Affirmed in part and Reversed in part
16-50905 (5th Circuit, Mar 30,2017) Not Published
"With no opinion on how this [Rule 11 sanctions] issue should come out on remand, we reverse and remand this issue to the district court for a 'brief statement of reasons' justifying its denial of Appellees’ motion for sanctions." Court reversed and remanded the "text order" denial of appellees' Rule 11 sanctions, and affirmed the district court's dismissal of appellants' 885-count RICO complaint, finding that the record amply supported the lower court's rationale for such dismissal.
Procedural context:
Cross appeals from two orders of the U.S. District Court for the Western District of Texas. In the first order, the district court dismissed appellants' 885-count RICO complaint. In the second order, the district court denied Appellees' motion for Rule 11 sanctions against the appellants via docket entry "text order."
Appellants (the Armendarizes) were former employees of a group of Fuddruckers, owned by the Chowaiki brothers. The Chowaiki brothers borrowed about $100,000 from Amendariz in 2010, at a time when the restaurants were failing. The Chowaikis were unable to repay Armendariz on the loan and, instead filed for bankruptcy protection in 2011. In that bankruptcy case, the debtors filed an adversary proceeding against the Armendarizes for what amounted to theft and embezzlement by the Armendarizes. That lawsuit was dismissed in 2014 for lack of subject matter jurisdiction. Shortly thereafter, the Armendarizes brought this 885-count RICO lawsuit against virtually every individual and company involved in the bankruptcy adversary proceeding, including the debtors' attorneys and expert witnesses. After the defendants in that lawsuit filed a second motion to dismiss, the district court granted the motion for failure to state any plausible claims and denied the Armendarizes' request to file an amended complaint. The district court then denied the defendants' motion for sanctions against the Armendarizes. This cross appeal followed.
Stewart, Jolly, Jones (per curiam)

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