Source: https://law.justia.com/cases/federal/appellate-courts/F2/899/1350/272354/
Timestamp: 2020-08-14 12:54:12
Document Index: 3794971

Matched Legal Cases: ['§ 1291', '§ 1927', '§ 1332', '§ 1961', '§ 1927', '§ 1927', '§ 1927', '§ 144', '§ 144', '§ 455', '§ 144', '§ 455', '§ 19273', '§ 1927', '§ 1927', '§ 1927', '§ 1927', '§ 1927']

Catherine M. Jones v. Pittsburgh National Corporation T/d/b/a Pittsburgh Nationalbank, a Federally-chartered Banking Corporation; Americanmotors Corporation, a Delaware Business Corporation; Amicamutual Insurance Company, a Rhode Island Businesscorporation; American Auto Sales, Incorporated, T/d/b/awilkinsburg Jeep, a Pennsylvania Business Corporation;whitehall Adjusters, a Pennsylvania Business Corporation;mckean Motors, Inc., a Pennsylvania Business Corporation;golick Corporation, a Pennsylvania Business Corporation;streets Run Auto Service, a Pennsylvania Business Corporation v. David A. Jones, Third Party Deft., Appellant, 899 F.2d 1350 (3d Cir. 1990) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Third Circuit › 1990 › Catherine M. Jones v. Pittsburgh National Corporation T/d/b/a Pittsburgh Nationalbank, a Federally-c...
Catherine M. Jones v. Pittsburgh National Corporation T/d/b/a Pittsburgh Nationalbank, a Federally-chartered Banking Corporation; Americanmotors Corporation, a Delaware Business Corporation; Amicamutual Insurance Company, a Rhode Island Businesscorporation; American Auto Sales, Incorporated, T/d/b/awilkinsburg Jeep, a Pennsylvania Business Corporation;whitehall Adjusters, a Pennsylvania Business Corporation;mckean Motors, Inc., a Pennsylvania Business Corporation;golick Corporation, a Pennsylvania Business Corporation;streets Run Auto Service, a Pennsylvania Business Corporation v. David A. Jones, Third Party Deft., Appellant, 899 F.2d 1350 (3d Cir. 1990)
U.S. Court of Appeals for the Third Circuit - 899 F.2d 1350 (3d Cir. 1990) Argued Feb. 6, 1990. Decided April 3, 1990
* This court views a motion characterized as a motion for reconsideration as the "functional equivalent" of a Rule 59(e) motion to alter or amend a judgment. Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir. 1986); see Fed. R. Civ. P. 59(e). A timely appeal from the denial of a 59(e) motion "brings up the underlying judgment for review." Quality Prefabrication, Inc. v. Daniel J. Keating Co., 675 F.2d 77, 78 (3d Cir. 1982). We therefore reach the merits of the appeal from the order refusing to recuse and awarding attorneys' fees and costs against appellant under 28 U.S.C. § 1291 (1982).
On defendants' motion, the court determined that appellant had conducted the litigation in bad faith, and imposed sanctions against him in the form of attorneys' fees and costs under Fed. R. Civ. P. 11 and 28 U.S.C. § 1927 (1982). It also determined that the dismissal of the complaint was a sufficient sanction against plaintiff for her own violations of Rule 11. Appellant's subsequent motion for recusal of the judge and for reconsideration was denied and this appeal followed.
A recital of the often unorthodox details of this litigation is important to an understanding of this appeal. Plaintiff's complaint, filed on her behalf by appellant, asserted seven causes of action, including one RICO count. The complaint based jurisdiction on diversity of citizenship, see 28 U.S.C. § 1332 (1982), asserting that plaintiff was a citizen of New Hampshire and indicating that at least some of the defendants were citizens of Pennsylvania. It also invoked the jurisdiction provided by RICO. See 18 U.S.C. §§ 1961-1968 (1988).
The court subsequently entered an order citing Field v. Volkswagenwerk AG, 626 F.2d 293, 299 (3d Cir. 1980) (third-party complaint requires no independent jurisdictional basis) and reciting that plaintiff's agreement to a dismissal because of incomplete diversity due to the addition of appellant as a third-party defendant was "patently without merit." It directed defendants to mail copies of their dismissal and sanctions motion to plaintiff and to notify her that her legal interests were in jeopardy as a result of appellant's conduct. It also instructed plaintiff to inform the court whether she had any objection to granting defendants' motion to dismiss. Plaintiff stated by letter that she did object to dismissal.
Thereupon, the district court determined that the two asserted grounds for its jurisdiction, diversity of citizenship and RICO's jurisdictional provisions, were in fact lacking and ordered the case dismissed for lack of subject matter jurisdiction. The court relied on plaintiff's answer to the interrogatory in which she stated that she had lived in Pennsylvania since before filing the action. In addition, the court referred to plaintiff's concession, at a point in the litigation which is unclear from the record, that " [e]arly in the case history, plaintiff decided not to pursue a RICO cause of action." The dismissal has, of course, not been appealed. The court also ordered defendants to submit records of the "reasonable fees incurred in the action for purposes of imposing appropriate sanctions" against appellant.
Thereafter, defendants filed requests for counsel fees and expenses which contained the amount of fees and expenses sought. After receiving submissions from all defendants, the district court on November 8, 1988, ordered third-party defendant (appellant) to respond to defendants' motions and petitions for counsel fees. This order recited that counsel fees were sought pursuant to Rule 11. It made no mention of 28 U.S.C. § 1927.
At the same time, the court's order sanctioned appellant. It cited his failure to prosecute any claim, failure to comply with orders and rules of the court, failure to conduct discovery and failure to conduct the inquiry required by Rule 11. The court imposed sanctions, in an amount to be determined, based upon Rule 11 and 28 U.S.C. § 1927. Its memorandum opinion contained the first mention in the record of 28 U.S.C. § 1927.
On August 22, 1989, the court denied appellant's motion for recusal and reconsideration. Recusal was denied for the following reasons: the motion was untimely; there was no claim that a reasonable person under the circumstances would doubt the judge's impartiality; the accompanying affidavit of Catherine Jones was insufficient; and appellant did not file the certificate of counsel required by 28 U.S.C. § 144 (1982). The court also rejected the challenge to the amount of defendants' fees and expenses, noting that the large sum granted was due to appellant's failure to inform the court of plaintiff's decision to abandon the RICO claim and his refusal to abide by court orders and to participate in discovery. The court also noted that the deposition transcripts showed that plaintiff had no facts to support her various claims and never conducted discovery to develop them.
We review a district court's action on recusal, pursuant to either 28 U.S.C. § 144 (1982) or 28 U.S.C. § 455 (1982), under an abuse of discretion standard. Johnson v. Trueblood, 629 F.2d 287, 290 (3d Cir. 1980), cert. denied, 450 U.S. 999, 101 S. Ct. 1704, 68 L. Ed. 2d 200 (1981). Since appellant has not indicated which of the two recusal statutes he was relying on, we will address both statutes.
The recusal motion was filed after the entry of the orders dismissing the complaint and imposing sanctions. Under these circumstances, the affidavit (motion) was not timely filed within the meaning of 28 U.S.C. § 144.2 Any other conclusion would permit a party to play fast and loose with the judicial process by "betting" on the outcome. See United States v. Rosenberg, 806 F.2d 1169, 1173, n. 3 (3d Cir. 1986), cert. denied, 481 U.S. 1070, 107 S. Ct. 2465, 95 L. Ed. 2d 873 (1987); Smith v. Danyo, 585 F.2d 83, 86 (3d Cir. 1978). We are not confronted with an allegation that there was "good cause" for the delay.
Section 144 also requires that the affidavit be "sufficient" to show that the judge involved has a personal bias or prejudice against the party seeking recusal, or in favor of the adverse party, that dictates that the judge proceed no further. Conclusory allegations need not be accepted as true. United States v. Vespe, 868 F.2d 1328, 1340 (3d Cir. 1989). A court should grant recusal if the allegations give fair support to a charge of a bent of mind that might prevent or impede impartiality of judgment. United States v. Townsend, 478 F.2d 1072, 1073-74 (3d Cir. 1973).
We turn next to a consideration of the merits of the motion to recuse on the basis of 28 U.S.C. § 455(a) which reads in pertinent part:
Under this section a judge must consider whether a reasonable person knowing all the circumstances would harbor doubts concerning the judge's impartiality. United States v. Dalfonso, 707 F.2d 757, 760 (3d Cir. 1983). There is nothing in this record to support remotely a conclusion that a reasonable person would doubt the district judge's impartiality. Disagreement with a judge's determinations certainly cannot be equated with the showing required to so reflect on his impartiality as to dictate recusal.
We now address appellant's attacks on the sanctions imposed by the district court. We review for abuse of discretion. Schering Corp. v. Vitarine Pharmaceuticals, Inc., 889 F.2d 490, 496 (3d Cir. 1989); Snow Machines, Inc. v. Hedco, Inc., 838 F.2d 718, 725 (3d Cir. 1988). We note that we are not dealing with sanctions imposed by the court on its own initiative.
As a preliminary matter, we address appellant's contention that the term "vexatious" in 28 U.S.C. § 19273 is unconstitutionally vague and therefore the section violates the due process clause of the fourteenth amendment. We have interpreted that section as requiring a showing of bad faith, see Gaiardo v. Ethyl Corp., 835 F.2d 479, 484 (3d Cir. 1987), which has a well understood meaning in the law. Thus, it cannot be described as impermissibly vague and therefore appellant's contention is without merit.
Because of its due process implications, we turn next to the issue of the sufficiency of the notice appellant received before he was sanctioned. Prior to sanctioning an attorney, a court must provide the party to be sanctioned with notice of and some opportunity to respond to the charges. See Eash v. Riggins Trucking Inc., 757 F.2d 557, 570-71 (3d Cir. 1985) (considering court's inherent power to impose sanctions, stating need for "prior notice and some occasion to respond"); Knorr Brake Corp. v. Harbil, Inc., 738 F.2d 223, 227-28 (7th Cir. 1984) (Sec. 1927 case stating the "court should provide counsel with some opportunity to be heard"). Tom Growney Equip., Inc. v. Shelly Irrigation Dev., Inc., 834 F.2d 833, 836 (9th Cir. 1987) (Rule 11 case requiring opportunity "to explain the allegedly improper filings," that is, "notice and the opportunity to be heard").
An examination of the Memorandum Opinion of the district court granting defendants' motions for counsel fees reveals that the sanctions were imposed under both Rule 11 and 28 U.S.C. § 1927. However, we cannot find where appellant was put on any explicit notice that Sec. 1927 would be relied upon in sanctioning him until he received the court's order of February 2, 1989, actually imposing sanctions. Defendants' motions for sanctions referred only to Rule 11 and appellant's responses primarily addressed that basis for sanctions.
We point out that the mere existence of Rule 11 or 28 U.S.C. § 1927 does not constitute sufficient notice in our view. Rather, we think particularized notice is required to comport with due process. See Donaldson v. Clark, 819 F.2d 1551, 1560 (11th Cir. 1987) (en banc) (dealing with Rule 11). In this manner a party is on notice as to the particular factors that he must address if he is to avoid sanctions. Therefore, the district court's reliance in part on Sec. 1927, at the point when it actually imposed sanctions, raises a serious question as to the legal sufficiency of the notice as a basis for any Sec. 1927 sanctions.
Although there was reference in various submissions prior to the court's decision to actions that could be sanctionable under Sec. 1927, we cannot say with reasonable assurance on this record that appellant was on notice that Sec. 1927 was being relied on by defendants as a basis for the imposition of sanctions prior to the court's determination. Cf. Gagliardi v. McWilliams, 834 F.2d 81 (3d Cir. 1987) (remanding Rule 11 sanction to give sanctioned party notice and chance to show why sanction should not issue). To that extent, at least, the sanction order cannot stand. However, appellant clearly was on notice that sanctions in the form of attorneys' fees and costs were being sought under Fed. R. Civ. P. 11.
has conducted this litigation in willful bad faith since the filing of the complaint. He has failed to prosecute any claim asserted on behalf of plaintiff, failed to comply with the orders and rules of this court, failed to engage in discovery and conduct the inquiry required by Rule 11 of the Federal Rules of Civil Procedure. Under such circumstances, we believe that Rule 11 and 28 U.S.C. § 1927 provide the authority relevant to the conduct of Attorney Jones.
The record is replete with examples where David Jones neglected his duties as an officer of the court and the representation of his client. Sanctions will therefore be imposed pursuant to 28 U.S.C. § 1927.
The Rule applies only to pleadings, motions or other papers signed by an attorney or a party. See Gaiardo, 835 F.2d at 484. The objective standard incorporated in the Rule does not require a finding of bad faith. If a violation is found, sanctions are mandatory. Lieb v. Topstone Indus. Inc., 788 F.2d 151, 157 (3d Cir. 1986). On the other hand, Sec. 1927 only covers the excess costs generated by an attorney that resulted from a multiplication of the proceedings, "unreasonably and vexatiously." It requires a finding of counsel's bad faith. Gaiardo, 835 F.2d at 484. Even in the face of such a finding, a district court retains discretion as to the imposition of attorneys' fees as a sanction. Ford v. Temple Hospital, 790 F.2d 342, 347 (3d Cir. 1986).
Appellant contends that, notice aside, he was denied a proper hearing in connection with the disposition of the fee applications. Our precedent, Eash v. Riggins Trucking Inc., 757 F.2d 557, 570-71 (3d Cir. 1985) (in banc), commands that a party sought to be sanctioned be given "some occasion to respond." See also Roadway Express, Inc. v. Piper, 447 U.S. 752, 760-61, 100 S. Ct. 2455, 2461, 65 L. Ed. 2d 488 (1980).
Here we must decide what "the occasion to respond" should encompass. Given the permutations inherent in fee applications and response thereto, any rigid rule would, to say the least, be undesirable. The circumstances must dictate what is required. In some cases an oral response may be sufficient, while in others an opportunity to file a written response must be accorded. However, it does not follow, in either case, that further proceedings are automatically unnecessary. See Donaldson v. Clark, 819 F.2d 1551, 1560-61 (11th Cir. 1987) (en banc). Rather, we think a district court in the exercise of its sound discretion must identify and determine the legal basis for each sanction charge sought to be imposed, and whether its resolution requires further proceedings, including the need for an evidentiary hearing. See Sanko S.S. Co., v. Galin, 835 F.2d 51, 53-54 (2nd Cir. 1987); Oliveri v. Thompson, 803 F.2d 1265, 1280 (2nd Cir. 1986), cert. denied, 480 U.S. 918, 107 S. Ct. 1373, 94 L. Ed. 2d 689 (1987); G. Joseph, Sanctions: The Federal Law of Litigation Abuse Sec. 17(D) (2) (1989).
On remand, if the district court reimposes sanctions, it will be governed by the principles announced by this court in Doering v. Union County Bd. of Chosen Freeholders, 857 F.2d 191, 194 (3d Cir. 1988) and in Gaiardo v. Ethyl Corp., 835 F.2d 479, 483 (3d Cir. 1987). Among these principles is that at least where, as here, appellant has raised the issue, a court is not free to dispose of a fee application without affording the party to be sanctioned an opportunity to make an appropriate showing as to his ability to pay.
First, sanctions under Rule 11 must be treated and determined separately from those that may be imposed under Sec. 1927. The resulting findings must appear with reasonable specificity in terms of the perceived misconduct and the sanctioning authority. See In re Yagman, 796 F.2d 1165, 1184 (9th Cir. 1986).
Second, Rule 11 sanctions must be based on appellant's objective knowledge or belief at the time of the filing of a challenged paper. Eavenson, Auchmuty & Greenwald v. Holtzman, 775 F.2d 535, 540 (3d Cir. 1985). This factor is particularly important here because the issue with respect to plaintiff's citizenship at the date the complaint was filed must relate to appellant's objective knowledge at that time. It is not whether, in fact, plaintiff was then a citizen of Pennsylvania for diversity purposes.
The answer recited that it was filed "pro se." It was not under oath as required by Fed. R. Civ. P. 33(a). At some unidentified point in these proceedings, appellant ceased in fact to represent plaintiff but did not file a motion to withdraw as counsel
Appellant also seems to be attacking both Rule 11 and 28 U.S.C. § 1927 on the grounds that these sections, by authorizing sanctions against him personally rather than against his law firm, violate due process principles. While we ordinarily would not address this contention in view of our order vacating sanctions, we do not think it inappropriate to do so here. The short answer is that the statute and rule impose liability on counsel directly and we are at a loss to understand how such a grant of authority violates due process