Case Title: HORN v. WELCH

Citation: 

Docket Number: 02-13

State: wyoming

Court: Wyoming Supreme Court

Date: 2002-09-23T00:00:00Z

Document:
HORN v. WELCH2002 WY 13854 P.3d 754Case Number: 02-13Decided: 09/23/2002
APRIL TERM, A.D. 2002

 

                                                                                                            

 

IN 
THE MATTER OF THE ORDER OF

CONTEMPT 
AND AWARD OF

ATTORNEYS' 
FEES AS SANCTION:

 

ROBERT 
W. HORN,

 

Appellant(Respondent),

 

v.

                                                                                    

PATTY 
WELCH and DAVID HAUSER,

 

Appellees(Petitioners).

 

Appeal 
from the District Court of Teton County

The 
Honorable Dennis L. Sanderson, Judge

 

Representing 
Appellant:

            
Robert W. Horn, pro se, Jackson Hole, Wyoming  

 

Representing 
Appellees:

Paul 
Harrison Stacey of Law Offices of Paul Harrison Stacey, Jackson Hole, 
Wyoming  

 

Before 
HILL, C.J., and GOLDEN, LEHMAN,* KITE, and VOIGT, JJ.

 

*Chief 
Justice at time of expedited conference

 

            
KITE, Justice.

 

[¶1]      Attorney Robert 
Horn appeals from an order holding him, along with his clients, in contempt of 
court and imposing sanctions for failing to comply with a court order and 
pursuing frivolous litigation tactics.  
We hold the trial court failed to follow the requirements of W.R.Cr.P. 42 
for contempt proceedings or the requirements for violations of W.R.C.P. 11.  Accordingly, we reverse the contempt 
order and imposition of sanctions against Mr. Horn.1

 

 

ISSUES

 

[¶2]      Mr. Horn states 
the issues as follows:

 

I

 

            
Can a citizen be held in contempt of an order which is not directed to 
that citizen and does not mandate that the citizen perform or refrain from 
performing any specified conduct?

 

II

 

            
Is it appropriate for the court to impose a sanction for criminal 
contempt which compels payment for the benefit of a party rather than mandating 
payment to the court?

 

Ms. 
Welch and Mr. Hauser present the following issues:

 

A.

 

            
Whether the appellate court should dismiss Appellant's appeal because the 
judgment from which the appeal has been taken has been released[.2]

 

B.

 

            
Whether the decision of the trial court should be affirmed based on other 
matters of record thereby rendering Appellant's contentions 
moot[.]

 

C.

 

            
Whether the trial court was within the bounds of discretion in finding 
Appellant, Attorney Horn, in contempt based upon making false statements to the 
court[.]

 

D.

 

            
Appellee[s] request[] that this court certify that there is no reasonable 
cause for this appeal, and that this court award sanctions against 
Appellant[.]

 

We 
view the issue as whether the trial court's order is sustainable either as an 
appropriate sanction for criminal contempt of court under W.R.Cr.P. 42 or as an 
appropriate sanction under W.R.C.P. 11.

 

  

FACTS

 

[¶3] 
     In 1996, 
Continental Investments of Wyoming, L.L.C. (Continental) purchased the Steak Pub 
Bar and Restaurant in Teton County and entered into an agreement with Ms. Welch 
and Mr. Hauser pursuant to which they agreed to act as managers of the business 
for Continental.  Over the course of 
the next several months, disagreements arose between Continental and Ms. Welch 
and Mr. Hauser, culminating in Continental filing a complaint for breach of 
contract.  Ms. Welch and Mr. Hauser 
filed a counterclaim against Continental and a third-party complaint against 
James G. Anderson, Jr., shareholder and manager of Continental, and Juline 
Christofferson, counsel for Continental.  
Ms. Welch and Mr. Hauser alleged they were forcibly removed from the 
restaurant's premises and, upon their removal, Continental, Mr. Anderson, and 
Ms. Christofferson took possession of personal property belonging to them, 
including business equipment, furniture, and fixtures.  After Ms. Christofferson was named as a 
party, Mr. Anderson and Continental retained Mr. Horn to represent them in the 
proceedings.

 

[¶4]      The trial court 
ordered Continental and Mr. Anderson to post a surety bond in the amount of the 
personal property in their possession which Ms. Welch and Mr. Hauser alleged 
belonged to them.  On December 18, 
2000, the trial court dismissed all the claims.  Ms. Welch and Mr. Hauser objected, 
claiming the issue of Continental's continued possession of property belonging 
to them remained unresolved.  
Continental and Mr. Anderson, through Mr. Horn, responded, claiming all 
the property had been returned.

 

[¶5]      Ms. Welch and Mr. 
Hauser filed a reply, alleging Mr. Horn's response contained deliberate 
misrepresentations concerning the return of the property.  They alleged the representation that the 
property had been returned was false and Continental was deliberately 
perpetrating a fraud upon the court in the face of a court record clearly 
demonstrating the property had not been returned and the bond had not been 
paid.  They sought an order granting 
judgment for them in the amount of the bond.

 

[¶6]      The trial court 
entered an order on February 1, 2001, dismissing all claims, allowing Mr. 
Anderson and Continental to keep any property in their possession belonging to 
Ms. Welch and Mr. Hauser, and ordering payment of the bond amount to Ms. Welch 
and Mr. Hauser.  Mr. Horn, on behalf 
of his clients, filed a motion in which he again represented to the court that 
all property was returned to Ms. Welch and Mr. Hauser and no basis existed for 
requiring Continental and Mr. Anderson to pay any amount.  He asked the court to enter an order 
nunc pro tunc reflecting the property had been fully returned.  Ms. Welch and Mr. Hauser claimed Mr. 
Horn's motion was again deliberately misleading, contained false statements, and 
constituted a fraud on the court.  
The court denied the motion for an order nunc pro tunc on March 21, 
2001.

            

[¶7]      On April 27, 
2001, Ms. Welch and Mr. Hauser requested an order compelling Continental, Mr. 
Anderson, and Mr. Horn to show cause why they should not be held in contempt for 
failing to comply with the orders requiring payment of the bond to them and 
asked for attorney's fees.  A 
hearing was held September 21, 2001, at which time the trial court ruled the 
amount of the bond was to be turned over to Ms. Welch and Mr. Hauser.  The court reserved ruling as to the 
issues of contempt and attorney's fees.  
On November 5, 2001, the trial court issued a decision letter in which it 
stated in relevant part:

 

            
The second issue is whether attorney fees should be allowed for attorney 
services required by the post judgment Petition for Rule to Show Cause and 
Petition for Post Judgment Garnishment.  
The Court found at the hearing in Jackson, Wyoming on September 21, 2001, 
that there was no basis whatsoever to support Mr. Horn's assertion that the 
property that was subject to the surety bond of $25,305.83, had been returned to 
Hauser and Welch, and that the exact amount due, if any, needed to be 
determined.

 

            
This matter had been resolved previously by Judge Troughton in his Order 
of January 31, 2001, and in his subsequent Order of March 15, 2001, denying the 
Plaintiff's motion for order nunc pro tunc, based on the assertion that the 
property had been returned.

 

            
Mr. Horn's and his clients' subsequent efforts to relitigate the one 
issue and Mr. Horn's subsequent representation to this Judge that the property 
had been returned was at best frivolous, did not have any proper purpose.  It was done to harass, delay or to 
increase the cost of litigation.  
See W.R.C.P. 11(b).

 

            
The Court finds that James Anderson, Continental Investments of Wyoming, 
L.L.C[.] and their attorney, Robert W. Horn, are in contempt of Court for 
wilfully failing to abide by the order of the Court dated January 31, 2001, 
and for pursuing post judgment delaying tactics which were without 
merit.  If Mr. Horn believed 
Judge Troughton's decision was in error he should have appealed the decision 
rather than use the tactics and methods that were 
employed.

 

            
The Court further finds an award of attorney fees incurred 
in opposing the frivolous efforts of Continental and Anderson is appropriate 
sanction and that the amounts set forth in the affidavits are 
reasonable.  It makes the 
innocent party whole and deters future conduct of this 
kind.

 

(Emphasis 
added.)  Consistent with its 
decision letter, the court entered an order on December 3, 2001, finding Mr. 
Anderson, Continental, and Mr. Horn in contempt of court and ordering them to 
pay attorney's fees in the amount of $5,612.88.  Mr. Horn timely appealed from the 
contempt order.  

 

 

STANDARD 
OF REVIEW

 

[¶8]      When reviewing an 
appeal from a contempt citation, we will not overturn the trial court's action 
except for an abuse of discretion since the inherent power to summarily punish 
for contempt is securely vested within a trial judge's discretion.  Horn v. District Court, Ninth 
Judicial District, 647 P.2d 1368, 1375 (Wyo. 1982).  The ultimate question in determining 
whether an abuse of discretion has occurred is whether the district court could 
have reasonably concluded as it did.  
GGV v. JLR, 2002 WY 19, ¶14, 39 P.3d 1066, ¶14 (Wyo. 2002); 
Vaughn v. State, 962 P.2d 149, 151 (Wyo. 1998). 

 

[¶9]      We review a trial 
court's determination on whether to impose W.R.C.P. 11 sanctions for an error of 
law.  Caldwell v. Cummings, 
2001 WY 106, ¶12, 33 P.3d 1138, ¶12 (Wyo. 2001).  Such determinations are not subject to 
the abuse of discretion standard because a court does not enjoy discretion with 
respect to an error of law.  
Id.  

 

 

DISCUSSION

 

A.        
Contempt of Court

 

[¶10]   Mr. Horn contends the contempt 
order cannot be upheld because the trial court was without authority to hold him 
in contempt since he was not a party to the action, had no obligation to pay any 
amount of money to Ms. Welch or Mr. Hauser, and was not subject to any court 
mandate requiring payment.  In 
making this argument, Mr. Horn focuses on the portion of the contempt order that 
states, "Respondents willfully failed to pay the monies ordered by the court to 
be paid by them as sureties."  We 
find it unnecessary to decide whether the trial court had authority to hold Mr. 
Horn in contempt for failing to pay the judgment because it is clear from the 
record other grounds existed, separate and apart from failure to pay the 
judgment, to support the contempt order.

 

[¶11]   In its decision letter, the trial 
court described Mr. Horn's actions and representations as frivolous; without any 
proper purpose; and done to harass, delay, or increase the cost of 
litigation.  The trial court found 
Mr. Horn in contempt of court not only for willfully failing to pay the judgment 
but also for "pursuing post judgment delaying tactics which were without 
merit."  Findings of this nature are 
sufficient to support an order of contempt whether or not the trial court also 
based its order on any failure by Mr. Horn to see that the judgment was 
paid.  W.R.Cr.P. 
42.

 

[¶12]   Mr. Horn next argues that the 
contempt order cannot be upheld as a criminal contempt because the trial court 
did not follow the procedural mandates of W.R.Cr.P. 42 and it ordered payment of 
attorney's fees to the opposing party rather than imposing a penalty to be paid 
to the court.  We agree with Mr. 
Horn's argument insofar as it characterizes the contempt order here as criminal 
rather than civil in nature.  A 
contempt is considered civil when the punishment is wholly remedial, serves only 
the purposes of the complainant, and is not intended as a deterrent to offenses 
against the public.  Horn, 
647 P.2d  at 1373.  A civil contempt 
is generally intended to compel a party to comply with a lawful court order 
while a criminal contempt is punitive in nature and is enforced so the authority 
of the law and the court will be vindicated.  Id.  Stated simply, the primary purpose of 
criminal contempt is to punish while the primary purpose of civil contempt is to 
coerce.  Anderson v. 
Anderson, 667 P.2d 660, 662 (Wyo. 1983); Horn, 647 P.2d  at 1373.  Appellate courts are obligated to decide 
whether a contempt is civil or criminal based on the reasons for a particular 
penalty.  Id.  

 

[¶13]   In its decision letter, the trial 
court found Mr. Horn and his clients in contempt for willfully failing to abide 
by its earlier order and for pursuing frivolous delaying tactics.  The trial court imposed payment of 
attorney's fees as a sanction for the express purpose of making the innocent 
party whole and deterring future like conduct.  Thus, the contempt order was both civil 
and criminal in nature.  Where both 
criminal relief and civil relief are imposed in a contempt order, the criminal 
feature is dominant and fixes the order's character for purposes of review.  United Mine Workers of America, Local 
1972 v. Decker Coal Company, 774 P.2d 1274, 1281 (Wyo. 
1989).

  

[¶14]   Having determined the contempt 
citation is criminal in nature, we turn to the question of whether the trial 
court followed proper procedures in holding Mr. Horn in contempt.  W.R.Cr.P. 42 provides the procedures 
that must be followed for direct and indirect contempt.  Direct contempt contemplates acts 
committed in the court's immediate view and presence, including those which tend 
to interrupt judicial proceedings or the court's business.  W.R.Cr.P. 42(a)(1).  Acts not committed in the court's 
immediate presence and of which the court has no personal knowledge, including 
an attorney's willful neglect or violation of duty, a party's deceit or abuse of 
process, disobedience of a court order, and other unlawful interferences with 
court processes or proceedings, constitute indirect contempt.  W.R.Cr.P. 42(a)(2).  We need not determine whether the 
contempt in this case is direct or indirect because we find the trial court 
failed to follow the procedures set forth for either.

  

[¶15]   W.R.Cr.P. 42(b), governing direct 
contempt, requires a trial court to inform the accused of the accusation against 
him, give him an opportunity to show why he should not be held in contempt, and 
allow him to present evidence of mitigating circumstances.  Upon an adjudication of guilt, the 
sentence for direct contempt is to be pronounced in open court and reduced to 
writing.  W.R.Cr.P. 42(c), governing 
indirect contempt, requires the trial court to issue an order directed to the 
accused stating the essential facts which support the contempt charge and 
requiring him to appear and show cause why he should not be held in 
contempt.  W.R.Cr.P. 42(c) also 
requires an arraignment for the purpose of entering a plea; a hearing to 
determine guilt or innocence; a judgment of guilty or not guilty; and, in the 
event of a judgment of guilty, a judgment reciting the facts constituting the 
contempt.

  

[¶16]   Neither the procedures for direct 
contempt nor those for indirect contempt were followed in this case.  The trial court did not inform Mr. Horn 
of the accusation against him; did not inform him of his right to present 
evidence of mitigating circumstances; and, upon an adjudication of guilt, did 
not pronounce the sentence in open court as required by W.R.Cr.P. 42(b) for 
direct contempt proceedings.  The 
trial court also did not issue an order directed to Mr. Horn stating the 
essential facts supporting the contempt charge, hold an arraignment, hold a 
hearing to determine guilt or innocence, or enter a judgment of guilty reciting 
the facts constituting the contempt as required by W.R.Cr.P. 42(c).  

 

[¶17]   The only notice Mr. Horn received 
as to the accusation against him was the April 27, 2001, petition filed by Ms. 
Welch and Mr. Hauser requesting an order requiring him to show cause why he 
should not be held in contempt.  The 
trial court never informed Mr. Horn in writing or otherwise of the accusation 
against him, nor did it advise him in any fashion of the essential facts 
supporting the accusation.  The only 
hearings relating to the contempt issue were a hearing on Mr. Horn's motion to 
compel the attendance of witnesses to testify at the contempt hearing; a 
scheduling hearing in which the trial court indicated it would not allow 
testimony at the contempt hearing; and the September 21, 2001, hearing in which 
the court reserved ruling on the contempt issue.  During the September 21, 2001, hearing, 
no evidence or sworn testimony was presented; the court heard only the arguments 
of counsel; and Mr. Horn was not advised at any time of his right to present 
evidence or, in the case of indirect contempt proceedings under W.R.Cr.P. 
42(c)(4), compel the attendance of witnesses.  The only "facts" recited in support of 
the order of contempt were, Mr. Horn and his clients willfully failed to pay the 
monies ordered by the court and pursued postjudgment tactics without legal or 
factual merit.  Regardless of 
whether Mr. Horn's conduct is characterized as direct contempt or indirect 
contempt, the trial court failed to follow required procedures.  

  

[¶18]   When imposing criminal contempt, a 
court must comply with the due process requirements of W.R.Cr.P. 42.  Honan v. Honan, 809 P.2d 783, 786 
(Wyo. 1991).  In considering direct 
contempt, we have said courts must be meticulously careful to observe procedural 
safeguards.  Townes v. State, 
502 P.2d 991, 993 (Wyo. 1972).  We 
also have said indirect contempt proceedings can only be prosecuted upon notice 
stating the time and place of the hearing and allowing a reasonable time for 
preparation of a defense.  Tracy, 
Green & Company v. Warner, 704 P.2d 1306, 1308 (Wyo. 1985).  Absent such notice, the court never 
obtains jurisdiction to proceed.  
Id.  Whether the 
contempt here is direct or indirect, the trial court did not follow the proper 
procedures.  Accordingly, the 
contempt order cannot stand.

 

[¶19]   Having concluded the order of 
contempt cannot be sustained under W.R.Cr.P. 42, we find it unnecessary to 
address Mr. Horn's assertion that the trial court improperly ordered payment of 
sanctions to the opposing party rather than to the court.  

 

B.        
W.R.C.P.  11 

 

[¶20]   Ms. Welch and Mr. Hauser argue that 
Mr. Horn's contentions are moot because, regardless of the validity of the 
contempt order, Mr. Horn was properly sanctioned for making frivolous 
representations for improper purposes in violation of W.R.C.P. 11.  As previously set forth in this opinion, 
the trial court in its decision letter concluded there was no basis for Mr. 
Horn's assertions that the property was returned to Ms. Welch and Mr. 
Hauser.  The trial court further 
concluded Mr. Horn's assertions to that effect were frivolous; without proper 
purpose; and done to harass, delay, or increase the cost of litigation. 

 

[¶21]   The decision letter cites W.R.C.P. 
11.  The contempt order, however, 
does not.  The rule authorizes the 
court to impose sanctions, after notice and an opportunity to respond, against 
the offending attorney or party upon a determination the rule has been 
violated.  The rule provides two 
procedures for initiating proceedings for sanctions for filing frivolous 
claims:

 

(c)  Sanctions.  If, after notice and a reasonable 
opportunity to respond, the court determines that subdivision (b) has been 
violated, the court may, subject to the conditions stated below, impose an 
appropriate sanction upon the attorneys, law firms, or parties that have 
violated subdivision (b) or are responsible for the 
violation.

 

                                    
(1) How Initiated.

 

(A) 
By Motion.  A motion for sanctions 
under this rule shall be made separately from other motions or requests and 
shall describe the specific conduct alleged to violate subdivision (b).  It shall be served as provided in Rule 
5, but shall not be filed with or presented to the court unless, within 21 days 
after service of the motion (or such other period as the court may prescribe), 
the challenged paper, claim, defense, contention, allegation, or denial is not 
withdrawn or appropriately corrected. . . .

 

(B) 
On Court's Initiative.  On its own 
initiative, the court may enter an order describing the specific conduct that 
appears to violate subdivision (b) and directing an attorney, law firm, or party 
to show cause why it has not violated subdivision (b) with respect 
thereto.

 

W.R.C.P. 
11(c)(1).

 

[¶22]   Neither of these procedures was 
utilized in the present case.  The 
petition filed by Ms. Welch and Mr. Hauser was styled "Petition for Rule to Show 
Cause" and makes no reference to W.R.C.P. 11.  Thus, the petition does not comply with 
W.R.C.P. 11(c)(1)(A), which requires a separate W.R.C.P. 11 motion describing 
the specific conduct alleged to violate the rule.  There further is no indication in the 
record that Ms. Welch and Mr. Hauser complied with the service requirements of 
W.R.C.P. 11(c)(1)(A) before filing their petition to enable Mr. Horn and his 
clients to withdraw the challenged assertions.  The record likewise contains no 
indication of compliance with W.R.C.P. 11(c)(1)(B)the trial court did not enter 
an order describing the specific conduct at issue and directing Mr. Horn to show 
cause why he had not violated W.R.C.P. 11.  
Under these circumstances, the strict procedural requirements of W.R.C.P. 
11 were not met.  Caldwell, 
2001 WY 106, ¶12.  Therefore, the 
sanctions imposed against Mr. Horn are not sustainable under W.R.C.P. 
11.

 

[¶23]   In their final issue, Ms. Welch and 
Mr. Hauser ask this court to certify there is no reasonable cause for this 
appeal and award sanctions against Mr. Horn.  Our determination that the sanctions 
imposed by the trial court cannot be upheld precludes any conclusion that no 
reasonable cause existed for the appeal.  
The request is denied.  

 

 

CONCLUSION

 

[¶24]   The trial court's order requiring 
Mr. Horn to pay attorney's fees is not sustainable as an appropriate sanction 
for either criminal contempt of court under W.R.Cr.P. 42 or the filing of 
frivolous claims under W.R.C.P. 11.

  

[¶25]   Reversed.

 

FOOTNOTES

1Mr. Horn's clients paid the sanction and have not filed an appeal.  Therefore, our holding applies to only 
the contempt order and sanctions against Mr. Horn.

 

2We previously addressed this issue on Ms. Welch and Mr. Hauser's motion 
to dismiss the appeal.  We denied 
the motion and will not reconsider the issue at this stage of the 
appeal.