No. 22-1975 ___________________________

Gwen G. Caranchini,

Plaintiff

v.

Nationstar Mortgage, LLC

Defendant

Martin Leigh, P.C.

Defendant - Appellee

v.

Gregory Leyh; Gregory Leyh, P.C.

Interested parties - Appellants ____________

Appeal from United States District Court for the Western District of Missouri ____________

Submitted: November 16, 2023 Filed: April 3, 2024 ____________ Before LOKEN, ERICKSON, and GRASZ, Circuit Judges. ____________ GRASZ, Circuit Judge.

Attorney Gregory Leyh and his law firm were sanctioned by the district court pursuant to Missouri Supreme Court Rule 55.03 and Federal Rule of Civil Procedure 11 for filing frivolous claims.1 On appeal, Leyh argues the sanction cannot stand because the party requesting the sanctions, Martin Leigh, P.C., failed to comply with Rule 11(c)(2)’s safe harbor provision when it initiated the sanctions process. We hold that the imposition of sanctions was improper under Rule 11. Therefore, we reverse and remand for further proceedings consistent with this opinion.

I. Background

A few years after Gwen Caranchini borrowed $300,000 to finance the purchase of a home, she stopped making payments on the loan. To stop foreclosure on her home, Caranchini then filed a number of lawsuits against various note holders, loan servicers, and trustees for the deed of trust. This case, filed on August 15, 2017, involves her fourth such attempt. Caranchini—represented by Leyh— sued the loan servicer, Nationstar Mortgage, LLC, and Martin Leigh, the successor trustee, in Missouri state court. Nationstar removed the case to federal court. Caranchini moved for remand, but on August 16, 2018, the district court denied the motion because it found Caranchini fraudulently joined Martin Leigh to defeat the court’s diversity jurisdiction and prevent removal. The same order dismissed Caranchini’s claims against Martin Leigh.

1 “Rule 55.03 . . . is Missouri’s equivalent to Rule 11.” Hatch v. TIG Ins. Co., 301 F.3d 915, 918 (8th Cir. 2002). See also Dillard Dep’t. Stores, Inc. v. Muegler, 775 S.W.2d 179, 186 (Mo. Ct. App. 1989) (“Rule 55.03 is substantially the same as Federal Rule 11, and it is appropriate to look to that provision for construction.”); State ex rel. Accurate Constr. Co. v. Quillen, 809 S.W.2d 437, 440 (Mo. Ct. App. 1991) (“Federal decisions construing Rule 11 are persuasive in applying Rule 55.03.”). -2- On October 5, 2018, almost two months after being dismissed from the case, Martin Leigh served Leyh with a motion for sanctions and a letter warning that the motion would be filed with the district court after thirty days “unless [the issue was] resolved to the firm’s satisfaction.” Martin Leigh then filed the motion for sanctions on November 16, 2018. Just two weeks later, Leyh filed a motion to dismiss the sanctions motion for lack of subject matter jurisdiction. In his written reply to the motion, Leyh noted that he had not been given the opportunity to respond to the safe harbor letter. The district court denied the motion, and eventually held a hearing regarding sanctions on October 13, 2020. In supplemental briefing, Leyh claimed Martin Leigh failed to mitigate its damages by not sending the safe harbor letter earlier. Leyh quoted the Advisory Committee’s Note for Rule 11, which states, “a party cannot delay filing its Rule 11 m