1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

7-30-1999

Prosser v. Prosser

Precedential or Non-Precedential:

Docket 98-7607

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Recommended Citation

"Prosser v. Prosser" (1999). 1999 Decisions. Paper 223.

http://digitalcommons.law.villanova.edu/thirdcircuit_1999/223
Filed July 30, 1999 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

Nos. 98-7607 and 98-7610 

JEFFREY J. PROSSER, 

 Appellant, 98-7607 

v. 

MARGARET S. PROSSER 

JEFFREY J. PROSSER 

v. 

MARGARET S. PROSSER 

KEVIN A. RAMES, 

 Appellant, 98-7610 

APPEAL FROM THE DISTRICT COURT 

OF THE VIRGIN ISLANDS 

(D.C. Nos. 96-cv-00029 and 95-cv-00095) 

District Judge: Raymond L. Finch 

SUBMITTED: April 15, 1999 

BEFORE: NYGAARD, McKEE, and RENDELL, 

Circuit Judges. 

(Filed: July 30, 1999) 
 Kevin A. Rames, Esq. 2111 

 Company Street, Suite 3 

 Christiansted, St. Croix 

 USVI, 00820 

 Attorney for Appellant, 98-7607 

 Paul J. Ruskin, Esq. 

 72-08 243rd Street 

 Douglaston, NY 11363 

 Attorney for Appellant, 98-7610 

OPINION OF THE COURT 

NYGAARD, Circuit Judge. 

The issue in this case is whether District Court of the 

Virgin Islands, Appellate Division erred by ordering 

sanctions against a party and his attorney thirty months 

after it entered a final order. The Appellate Division had 

jurisdiction over the appeal from the decision of the Virgin 

Islands Territorial Court under V.I. Code Ann. tit. 4, S 33. 

We have jurisdiction over the appeal of the final order of the 

Appellate Division under 48 U.S.C. S 1613a(c). We conclude 

that the Appellate Division erred and will reverse.

I. Background 

In 1989, Jeffrey Prosser sued for divorce from his wife 

Margaret Prosser in the Territorial Court of the Virgin 

Islands. The Prossers negotiated a settlement agreement, 

which was approved by the court. On March 22, 1990, the 

court entered a Final Decree of Divorce into which the 

written property settlement agreement was merged. 

Jeffrey failed to make a $2,500,000 payment as required 

by the divorce decree. Thereafter, Margaret filed a Praecipe 

requesting that the Territorial Court issue a Writ of 

Execution for the entire amount, plus interest. See V.I. 

Code Ann. tit. 5, S 471 (authorizing the issuance of writs of 

execution by the Territorial Court). The Territorial Court 

issued the writ. Jeffrey filed a motion to vacate the writ of 

execution, which the Territorial Court denied. Jeffrey then 

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appealed to the District Court of the Virgin Islands, 

Appellate Division. 

On April 18, 1996, the Appellate Division denied Jeffrey's 

appeal. Finding that the appeal lacked merit, the court 

noted that it was considering awarding fees and costs to 

Margaret under Federal Rule of Appellate Procedure 38 (as 

to Jeffrey) and 28 U.S.C. S 1927 (as to Jeffrey's counsel, 

Kevin Rames), and asked for additional briefing on the 

issues. Soon thereafter, however, the Prossers settled the 

case, and Jeffrey paid Margaret the $2,500,000, plus all 

interest, costs, and attorney's fees. 

On November 4, 1998, more than two and a half years

after its final order, the Appellate Division issued a 

Memorandum Opinion and Order fining Jeffrey $20,000

and Rames $5000 in the nature of a sanction, relying on 

the court's inherent power to punish litigants and their 

attorneys for abuse of process. Jeffrey and Rames appealed.1 

We review the Appellate Division's sanction award for 

abuse of discretion. See Chambers v. NASCO, Inc., 501 U.S. 

32, 55, 111 S. Ct. 2123, 2138 (1991). "An abuse of 

discretion is a clear error of judgment, and not simply a 

different result which can arguably be obtained when 

applying the law to the facts of the case." In re Tutu Wells 

Contamination Litig., 120 F.3d 368, 387 (3d Cir. 1997) 

(citations omitted). 

II. Discussion 

A. Timing 

As noted above, the Appellate Division invoked its 

inherent power2 to impose the sanctions on Jeffrey and his 

counsel approximately thirty months after rendering its 

_________________________________________________________________ 

1. As part of the settlement agreement, Margaret agreed to take no 

position on sanctions and she did not participate in this appeal. 

2. In its Memorandum Opinion, the Appellate Division stated that it was 

only relying on its inherent power "to the extent that [its] authority 

under Rule 38 and section 1927 need[ed] supplementation." However, as 

noted in Part I.B., neither Rule 38 nor section 1927 supplied the 

necessary authority for the type of sanctions issued in this case. 

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final decision on the merits. Our precedent concerning Rule 

11 sanctions helps guide our review here. In Mary Ann 

Pensiero, Inc. v. Lingle, 847 F.2d 90, 92 (3d Cir. 1988), we 

adopted a supervisory rule requiring parties tofile all 

motions for Rule 11 sanctions before entry of the court's 

final order. See also Mellon Bank Corp. v. First Union Real 

Estate, 951 F.2d 1399, 1413 (3d Cir. 1991); Hilmon Co. v. 

Hyatt Int'l, 899 F.2d 250, 251 n.1 (3d Cir. 1990). 

We extended this rule to apply to courts considering Rule 

11 sanctions in Simmerman v. Corino, 27 F.3d 58 (3d Cir. 

1994). In Simmerman, we reversed the district court's sua 

sponte imposition of Rule 11 sanctions because the order 

was issued three months after the entry of the final order. 

Following the logic of Pensiero, we held that a district court 

should raise and resolve sua sponte Rule 11 sanctions 

issues "prior to or concurrent with its resolution of the 

merits of the case." Id. at 63. We opined that such a rule 

would not greatly increase the burdens faced by the district 

courts because the dictates of due process "should not 

necessitate prolonged consideration in the district court" to 

assess sanctions once a violation has been established. Id. 

(quoting Pensiero, 847 F.2d at 99). We also noted the 

beneficial impact that such a rule would have on judicial 

resources: 

 In the district court, resolution of the issue before the 

 inevitable delay of the appellate process will be more 

 efficient because of current familiarity with the matter. 

 Similarly, concurrent consideration of challenges to the 

 merits and the imposition of sanctions avoids the 

 invariable demand on two separate appellate panels to 

 acquaint themselves with the underlying facts and the 

 parties' respective legal positions. 

Id. (quoting Pensiero, 847 F.2d at 99). 

We continued: 

 [t]here is no reason why prompt action should be 

 required of an opposing party and yet not similarly 

 required of the court. At the time that the court 

 decided the motions for summary judgment and

 dismissal, it had before it the identical information that 

 it relied upon three months later in imposing the 

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 sanctions. Nothing was to be gained by delay. If 

 sanctions had truly been appropriate, the court should 

 have imposed them at that time. Their imposition three 

 months later was an abuse of discretion. 

Id. at 63-64 (footnote omitted). 

We see no reason to limit the logic of Simmerman to sua 

sponte Rule 11 sanctions.3 See Langer v. Presbyterian Med. 

Ctr., 1995 WL 395937, *3 (E.D. Pa. July 3, 1995) (relying 

on Simmerman and Pensiero to vacate court's own tardy 

award of attorney's fees under Federal Rule of Civil 

Procedure 26(g) and section 1927). The interests of judicial 

efficiency, timeliness, and notice are no different when 

imposing sanctions under the court's inherent power. At 

the time of its final order on the merits, the Appellate 

Division possessed the same evidence of the conduct that it 

had when it issued its sanction order two and a half years 

later. The same rationale that supported the invalidation of 

the Rule 11 sanction entered three months after thefinal 

order in Simmerman supports the invalidation of the

inherent power sanction here, which was entered over 

thirty months after the final order. 

Sanctions ideally operate as instructional tools to deter 

parties and attorneys whose conduct has not met the

requisite professional standards from continuing on their 

wayward course of conduct. This exemplary function is ill 

served when sanctions are delayed. During the course of a 

delay, memories can fade and, importantly, attorneys and 

parties may continue to misbehave because they do not 

have the benefit of disciplinary guidance from the court.4 If 

_________________________________________________________________ 

3. Certainly, a court retains its power to sanction under its inherent 

power for abuses which occur or are discovered after the entry of the 

final order. See Chambers, 501 U.S. at 56, 111 S. Ct. at 2138-39 (citing 

Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96, 110 S. Ct. 2447, 

2455-56 (1990), for the proposition that sanctions, even under Rule 11, 

may properly be imposed years after the final judgment on the merits). 

4. Although we need not address the merits of the sanctions here, we feel 

the need to remind the Appellate Division that "[b]ecause of their very 

potency, inherent powers must be exercised with restraint and 

discretion." Chambers, 501 U.S. at 44, 111 S. Ct. at 2132. A court 

cannot be motivated by vindictiveness or retribution when issuing 

sanctions. Indeed, courts must fight the temptation to find all losing 

arguments frivolous, and should only award sanctions in cases in which 

they are clearly justified. 

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sanctions based on the court's inherent power were truly 

appropriate in this case, the Appellate Division should have 

imposed them when it issued its final order. The Appellate 

Division's order will be reversed. 

B. Particularized Notice 

Although the timeliness issue is dispositive, we feel that 

to fulfill our instructional function it is incumbent on us to 

comment upon another troubling aspect of the Appellate 

Division's sanctions order. Fundamental fairness and the 

established law of this circuit require that a court afford the 

parties due process by giving them notice and opportunity 

to be heard before imposing sanctions or awarding 

damages. See Jones v. Pittsburgh Nat'l Corp., 899 F.2d 

1350, 1357 (3d Cir. 1990). "The party against whom 

sanctions are being considered is entitled to notice of the 

legal rule on which the sanctions would be based, the 

reasons for the sanctions, and the form of the potential 

sanctions." In re Tutu Wells, 120 F.3d at 379 (citing 

Simmerman, 27 F.3d at 64). Here, the notice given by the 

Appellate Division was insufficient because the parties were 

not on notice that the sanctions would be based on the 

court's inherent power, nor were they warned of the

possibility that the sanction might be in the form of a fine 

payable to the court. 

Due process requires that the parties have sufficient 

notice of the form of the sanctions being considered by the 

court because the issues that must be addressed may differ 

depending on the form. See id. at 380 (citing Gagliardi v. 

McWilliams, 834 F.2d 81 (3d Cir. 1987) (per curiam)). The 

sanction imposed by the Appellate Division was in the 

nature of a monetary fine payable to the court. Although a 

court may impose a fine under its inherent power, see id. at 

383, neither Jeffrey nor Rames had been given any notice 

that the court was considering this type of sanction. As to 

Jeffrey, the Appellate Division indicated in its original order 

that it was only considering awarding costs and fees to 

Margaret as damages under Federal Rule of Appellate

Procedure 38.5 In Rames's case, the court indicated only 

_________________________________________________________________ 

5. Rule 38 states: 

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that it was considering sanctions under section 1927 6 for 

excess costs. Instead, the court imposed a $20,000fine 

against Jeffrey and a $5000 fine against Rames. 

Moreover, the sanction imposed, a monetary fine payable 

to the court, is not an allowable remedy under either 

section 1927 or Rule 38. Under section 1927, courts may 

order attorneys to personally satisfy "the excess costs, 

expenses, and attorneys' fees."7 Section 1927 does not, 

however, allow courts to impose a fine without articulating 

a basis for the amount. Like Rule 38, section 1927 only 

allows the court to award costs and attorney fees payable 

to the opposing party, not payable to the court. See Laitram 

Corp. v. Cambridge Wire Cloth Co., 919 F.2d 1579, 1584 

(Fed. Cir. 1990). 

Rule 38 is even more clear. It does not provide for

sanctions at all. It allows one who has sufferedfinancial 

detriment from having to defend a legitimate judgment 

_________________________________________________________________ 

 If a court of appeals determines that an appeal is frivolous, it 

may, 

 after a separately filed motion or notice from the court and 

 reasonable opportunity to respond, award just damages and single 

 or double costs to the appellee. 

Fed. R. App. P. 38 (emphasis added). 

6. Section 1927 states: 

 Any attorney or other person admitted to conduct cases in any court 

 of the United States or any Territory thereof who so multiplies the 

 proceedings in any case unreasonably and vexatiously may be 

 required by the court to satisfy personally the excess costs, 

 expenses, and attorneys' fees reasonably incurred because of such 

 conduct. 

28 U.S.C. S 1927. 

7. The Appellate Division couched its sanction in terms of the "harm to 

the judicial system." This is not the type of harm Congress intended to 

address through section 1927. The "excess costs" allowable as a sanction 

under 1927 are limited to those costs enumerated under 28 U.S.C. 

S 1920. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 757-59, 100 

S. Ct. 2455, 2459-62 (1980). Under section 1920, excess costs do not 

include fines for "harm done to the judicial system" as relied upon by the 

Appellate Division. 

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against a frivolous appeal, to recover fees and costs as 

"damages." Moreover, the text of Rule 38 itself limits the 

award of damages to the financially injured party, not the 

court. 

III. Conclusion 

In sum, the Appellate Division, by entering a sanctions 

order approximately two and a half years after itsfinal 

order, by imposing a monetary fine payable to the court, 

which is not an allowable remedy under either section 1927 

or Rule 38, and by failing to inform the parties of its 

intention to use its inherent power, erred. Hence, we will 

reverse its order of November 4, 1998. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

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