Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-06032/USCOURTS-ca10-91-06032-0/pdf.json

Parties Involved:
Bill W. Rains
Appellant
Dale A. Ruplinger
Appellee

Document Text:

PUBLISH 

FILED ,~ Unired States ~prt ~£ Appca.w Tenth C1rcu1<.. 

OCT 0 7 1991 

ROBERT L. HOECKER 

Clerk 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

In re: BILL W. RAINS, also known as 

Billy Wayne Rains, 

Debtor 

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DALE A. RUPLINGER, 

Plaintiff-Appellee, 

v. 

BILL W. RAINS, also known as Billy 

Wayne Rains, 

Defendant-Appellant. 

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No.91-6032 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE WESTERN DISTRICT OF OKLAHOMA 

(D.C. No. CIV-89-777-A) 

Kenneth G. Mayfield, Oklahoma City, Oklahoma, for defendantappellant. 

James S. Matthews, Jr. (Jay Self with him on the brief), Oklahoma 

City, Oklahoma, for plaintiff-appellee. 

Before ANDERSON, TACHA, and BRORBY, Circuit Judges. 

Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 1 
PER CURIAM 

At issue in this case is whether the district court abused 

its discretion in entering a default judgment against a defendant 

who had delayed executing a settlement agreement. Because the 

district court did not make findings regarding the defendant's 

willfulness, bad faith or other fault and has not explained why 

some lesser sanction was not appropriate in this case, we remand 

for further action by the district court. 

Plaintiff Ruplinger was a former Mr. Universe who, in June 

1985, brought a tort action against Dr. Rains, an Oklahoma 

chiropractor, for wrongful appropriation of Mr. Ruplinger's image 

and endorsement. The case, scheduled for jury trial in August 

1987, was preempted when Dr. Rains filed a petition in bankruptcy 

and was administratively closed pending the conclusion of the 

bankruptcy proceeding. 

Mr. Ruplinger then filed an adversary complaint in the 

bankruptcy court to determine the dischargeability of his claim 

against Dr. Rains. Mr. Ruplinger's subsequent motion to withdraw 

reference of the case from the bankruptcy court was granted, and 

in May 1989 the case was transferred to the district court. 

Approximately five months later, in October 1989, the parties 

appeared at a settlement conference where an oral settlement 

agreement was reached. Under the terms of that agreement, 

Dr. Rains would confess a nondischargeable judgment in favor of 

Mr. Ruplinger in the amount of $50,000.00 and would assign to 

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Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 2 
Mr. Ruplinger a 17.5% interest in an unfiled malpractice claim 

against Dr. Rains' former attorney. 

What followed next, according to Mr. Ruplinge'r, was a series 

of delays, missed appointments, broken promises and generally 

intransigent behavior on the part of Dr. Rains which prevented the 

settlement agreement from being reduced to written form and 

executed. Finally, in June 1990, Mr. Ruplinger filed a motion 

requesting an order to enforce the settlement agreement or for 

entry of default against Dr. Rains. Dr. Rains did not respond to 

this motion but did appear with counsel at a hearing to show cause 

as to why the agreement should not be enforced. 

During the show cause hearing it became apparent that 

Dr. Rains was pursuing his malpractice claim pro se rather than 

with the assistance of counsel as had been the prior understanding 

between the parties. Because of this change in strategy, the 

district court deemed Dr. Rains' attempted assignment of the 

malpractice claim to Mr. Ruplinger to be illusory, Ruplinger v. 

Rains, No. CIV-89-777-A, Order at 2 (W.O. Okla. Oct. 19, 1990) 

(Default Order), and Mr. Ruplinger's counsel withdrew his motion 

to enforce the settlement agreement. 1 Finding that Dr. Rains had 

offered no excuse for his failure to comply with the terms of the 

settlement agreement and citing H.F. Livermore Corp. v. 

Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 

1970), the court determined that a default judgment was warranted 

1 

the 

Mr. Ruplinger's motion had requested either 

settlement agreement or entry of default. 

3 

enforcement of 

Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 3 
"lest Mr. Ruplinger's right in this suit remain tenuous." Default 

Order at 2. Dr. Rains' request for a new trial was denied. 

After entering the default judgment against Dr. Rains, the 

district court held a hearing on damages at which it determined 

that Dr. Rains was liable to Mr. Ruplinger in a total amount of 

$950,000.00. Because the court further found that Dr. Rains' 

conduct was "a wilful and intentional infliction of injury to the 

plaintiff's property," it ruled that the judgment was 

nondischargeable in bankruptcy under 11 u.s.c. § 523(a)(6). Rains 

v. Ruplinger, No. CIV-89-777-A, Order at 5 (W.D. Okla., Dec. 12, 

1990). It is from this order that Dr. Rains appeals. 2 

Dr. Rains argues that the court "lacked the authority" to 

enter default judgment on the full amount of liability for failure 

to comply with the terms of the settlement agreement. A court's 

determination to enter default judgment is reviewed for abuse of 

discretion. National Hockey League v. Metropolitan Hockey Club, 

Inc., 427 U.S. 639, 642 (1976); Ikerd v. Lacy, 852 F.2d 1256, 1258 

(lOth Cir. 1988). Abuse of discretion will be found only if the 

reviewing court has "a definite and firm conviction that the court 

below committed a clear error of judgment in the conclusion it 

reached upon a weighing of the relevant factors." United States 

v. Sumitomo Marine & Fire Ins. Co., 617 F.2d 1365, 1369 (9th Cir. 

1980). The district court's dismissal will be viewed in the 

totality of the circumstances, Toma v. City of Weatherford, 846 

2 After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); lOth Cir. R. 34.1.9. The case is therefore ordered 

submitted without oral argument. 

4 

Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 4 
F.2d 58, 61 (lOth Cir. 1988), and "considerable deference is given 

the trial judge's determination regarding the default judgment 

since he is the person most familiar with the circumstances of the 

case and, thus, is in the best position to evaluate the good faith 

and credibility of the parties at the hearings." Nikwei v. Ross 

Sch. of Aviation, Inc., 822 F.2d 939, 941 (lOth Cir. 1987). 

Default judgments are a harsh sanction. M.E.N. Co. v. 

Control Fluidics, Inc., 834 F.2d 869, 872 (lOth Cir. 1987). 

[S]trong policies favor resolution of disputes on their 

merits: "[T]he default judgment must normally be viewed 

as available only when the adversary process has been 

halted because of an essentially unresponsive party. In 

that instance, the diligent party must be protected lest 

he be faced with interminable delay and continued 

uncertainty as to his rights. The default judgment 

remedy serves as such a protection." 

H.F. Livermore, 432 F.2d at 691, quoted in Cessna Fin. Corp. v. 

Bielenberg Masonry Contracting, Inc., 715 F.2d 1442, 1444 (lOth 

Cir. 1983) . 

We do not favor default judgments because the court's 

power is used to enter and enforce judgments regardless 

of the merits of the case, purely as a penalty for 

delays in filing or other procedural error. However, a 

workable system of justice requires that litigants not 

be free to appear at their pleasure. We therefore must 

hold parties and their attorneys to a reasonably high 

standard of diligence in observing the courts' rules of 

procedure. The threat of judgment by default serves as 

an incentive to meet this standard. 

Cessna Fin. Corp., 715 F.2d at. 1444-45 (citations omitted): see 

also Gomes v. Williams, 420 F.2d 1364, 1366 (lOth Cir. 1970). 

Although a default judgment is an appropriate sanction in 

some instances, without more elaboration from the district court 

we cannot say that it acted here within its discretion. We note 

the case of M.E.N. Co., 834 F.2d 869, in which the district court 

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Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 5 
refused to set aside the defendants' default after the defendants 

failed to provide discovery or appear for noticed and court 

ordered depositions, failed to file a pretrial memorandum and 

refused to pay sanctions to the plaintiffs. On appeal, this court 

held that because default is such a harsh sanction, due process 

requires that failure to comply with court orders or failure to 

effect discovery must be the result of "'willfulness, bad faith, 

or [some] fault of petitioner.'" Id. at 872 (quoting National 

3 Hockey League, 427 u.s. at 640); see also Toma, 846 F.2d at 60. 

Because the district court in M.E.N. Co. had made no findings 

regarding either the defendants' personal fault or whether their 

conduct amounted to willful noncompliance, the case was remanded. 

M.E.N. Co., 834 F.2d at 873-74. The closest the district court in 

this case came to making a finding of willfulness on the part of 

Dr. Rains was its observation that he "offered no excuse for his 

failure to comply with the settlement agreement." Default Order 

at 2. This finding is not the equivalent of a finding of willful 

noncompliance and thus does not meet the due process standard 

required to justify a default. 4 

3 It should be noted that Dr. Rains did not disobey a court 

order, miss a pleading deadline or obstruct the discovery process. 

If willfulness is required for these overt breaches of the 

established rules of litigation, the standard of culpability for 

failing to fully cooperate in the settlement process should be at 

least as high. 

4 Mr. Ruplinger's motion for enforcement of the agreement or 

for default averred that Dr. Rains did not intend to affect 

settlement and willfully ignored his duties under the agreement. 

Appellant's Appendix at 28. Mr. Ruplinger argues that because 

Dr. Rains failed to respond to this motion, the allegations 

contained therein are confessed. While this is so in a technical 

sense, such a constructive admission by the defendant is not the 

same as a finding by the court of the requisite willfulness. 

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Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 6 
Because default judgment deprives a litigant of his or her 

day in court, it is appropriate "'only where a lesser sanction 

would not serve the interest of justice.'" Meade v. Grubbs, 841 

F.2d 1512, 1520 (lOth Cir. 1988) (quoting Cohen v. Carnival Cruise 

Lines, Inc., 782 F.2d 923, 925 (11th Cir. 1986)). In order to 

assure that the appropriate level of punishment has been 

administered, the appellate court needs a statement or recitation 

from the district court "as to why the particular circumstances 

demonstrated a need for the sanctions imposed. The 'why' the 

particular sanction was imposed is, of course, related to the 

selection of the person against whom it is to be imposed and the 

choice of appropriate sanctions. Any choice includes monetary 

sanctions." Russell v. Weicker Moving & Storage Co. (In re 

Russell), 746 F.2d 1419, 1420 (lOth Cir. 1984); see also Meade, 

841 F.2d at 1520 n.7 (citing cases requiring consideration of less 

drastic alternatives). There is no indication in the record that 

the district court considered any sanction short of default for 

the defendant's delay in executing the settlement agreement. 

Because we are unable to conclude on this record that no 

abuse of ~discretion has occurred, we reverse the judgment and 

remand this case to the district court for entry of findings 

regarding Dr. Rains' willfulness, bad faith or other fault in 

failing to execute the settlement agreement and for findings 

regarding the possible appropriateness of lesser sanctions. In 

arriving at a determination regarding a possible lesser sanction, 

the district court may consider whether Dr. Rains can demonstrate 

a meritorious defense to the underlying claim, see Greenwood 

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Appellate Case: 91-6032 Document: 01019290939 Date Filed: 10/07/1991 Page: 7 
Explorations, Ltd. v. Merit Gas & Oil Corp., 837 F.2d 423, 427 

(lOth Cir. 1987); Cessna Fin. Corp., 715 F.2d at 1445; Gomes, 420 

F.2d at 1336, such that the default judgment should be set aside, 

some other sanction imposed, and the case returned to the court's 

trial docket. Our disposition of this case makes it unnecessary 

for us to address Dr. Rains' other issues on appeal. 

The judgment of the district court for the Western District 

of Oklahoma is REVERSED and REMANDED for proceedings consistent 

with this opinion. 

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