Opinion ID: 2264023
Heading Depth: 1
Heading Rank: 6

Heading: Did the district court abuse its discretion in denying Dollarhide's motion for entry of default?

Text: [¶ 19] After the mistrial brought an end to the first trial, and before the second trial started, Dollarhide filed a motion requesting, among other things, that the district court enter a default against the defendants on the issue of liability because of the last-minute change in Johnson's testimony. The district court took the motion under advisement until after the second trial. In its post-trial Re-Entry of Judgment, Award of Costs, and Order on Motions for Sanctions, the district court found that Johnson had admitted perjury and had changed his testimony, but that neither Bancroft nor Shattuck ever admitted perjury or changed his testimony. In regard to the latter two defendants, the district court stated: However, it is difficult for the Court to comprehend that the owner and general supervisor of a successful construction companywho had both been involved in the construction industry most of their adult liveswere so out of touch with the operations at their construction jobs that they were unaware that wooden platforms were being used to elevate workers. The court then concluded that either Johnson alone, or in concert with the other defendants perpetrated a fraud on the Court since 2005 with the false testimony that wooden platforms were not used as man-baskets on Bancroft construction sites. In the end, the district court resolved its apparent indecision as to the culpability of Bancroft and Shattuck by sanctioning all three defendants for the fraud on the Court. The sanction was the denial to the defendants of their costs and attorneys' fees in the amount of $29,044.31. [¶ 20] That brings us to the nub of Dollarhide's argumenthe contends that monetary sanctions are simply insufficient in the face of perjury, especially where that perjury lies at the heart of a fraud on the court. Dollarhide cites Hazel-Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 64 S.Ct. 997, 88 L.Ed. 1250 (1944) ( overruled on other grounds by Standard Oil Co. v. United States, 429 U.S. 17, 97 S.Ct. 31, 50 L.Ed.2d 21 (1976)), as being the first case to recognize what has come to be known as the fraud on the court doctrine. In Hazel-Atlas, the lower court's denial of a post-trial motion for relief from judgment was reversed by the Supreme Court because tampering with the administration of justice cannot be tolerated. Id. at 246, 64 S.Ct. at 1001. [6] It has been said that fraud on the court occurs where it can be demonstrated, clearly and convincingly, that a party has sentiently set in motion some unconscionable scheme calculated to interfere with the judicial system's ability to impartially adjudicate a matter by improperly influencing the trier or unfairly hampering the presentation of the opposing party's claim or defense. Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.1989). [¶ 21] Many courts have recognized that courts possess the inherent authority to strike claims, or to strike answers, or to enter default, as sanctions for severe litigation abuse. See, e.g., Campos v. Correction Officer Smith, 418 F.Supp.2d 277, 279 (W.D.N.Y.2006) (complaint dismissed where plaintiff knowingly presented a falsified exhibit); Vargas v. Peltz, 901 F.Supp. 1572, 1579 (S.D.Fla.1995) (complaint dismissed where plaintiff fabricated evidence and committed perjury); Sun World, Inc. v. Lizarazu Olivarria, 144 F.R.D. 384, 389 (E.D.Cal. 1992) (default entered against defendants who submitted fraudulent documents and committed perjury); Aoude, 892 F.2d at 1118 (claim dismissed where plaintiff attached a bogus agreement to the complaint); Eppes v. Snowden, 656 F.Supp. 1267, 1279 (E.D.Ky. 1986) (answer and counterclaim stricken because defendant submitted backdated documents). Such severe sanctions should be available not just as punishment, but also as a deterrent to others from such conduct. See Pearson v. First NH Mortg. Corp., 200 F.3d 30, 42 n. 7 (1st Cir.1999); Nat'l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 643, 96 S.Ct. 2778, 2781, 49 L.Ed.2d 747 (1976). [¶ 22] The phrase inherent authority in this context describes those powers that are necessary to the exercise of all others. Roadway Express, Inc. v. Piper, 447 U.S. 752, 764-65, 100 S.Ct. 2455, 2463-64, 65 L.Ed.2d 488 (1980). This Court has said that courts have inherent powers beyond those specified in rules and statutes that are absolutely necessary to the courts' ability to perform the functions for which they were created. Bi-Rite Package, Inc. v. Dist. Court of the Ninth Judicial Dist., 735 P.2d 709, 713 (Wyo. 1987). Further, [c]ourts are vested with very great and far-reaching power to control their business and proceedings and to enforce their orders and process in conducting the business of a court. Courts must have these very great powers to ensure civility, orderly procedure, respect for the court as an institution and for its orders, and in the end an honest development of the facts of a controversy that will end in a just result. Id. at 712. [¶ 23] Needless to say, of course, is the fact that possession of the inherent authority to do something does not equate to the requirement that such be done. Whether a court chooses to impose a sanction as severe as dismissal or default is a matter left to that court's discretion, and our review of that decision, as stated above, is for abuse of that discretion. In the instant case, there are several factors that incline us not to reverse the district court's decision not to default the defendants. First, Johnson recanted his lies prior to trial and was re-deposed, and was cross-examined and impeached, allowing the trial to proceed with the jury having knowledge of, and basing its determination on, the truth. Second, the complicity of Bancroft and Shattuck was surmised by the district court, but evidently not found by the jury, because the jury found in favor of the defendants. And third, the district court did not ignore the alleged misconduct, imposing a sanction of $29,044.31. [¶ 24] Stated as a positive, the proper exercise of discretion means doing something that is reasonable under the circumstances. We do not reverse unless what was done by the district court was unreasonable. Perhaps the most significant procedural fact of this case is the fact that the false testimony was disclaimed by Johnson prior to trial, thereby allowing Dollarhide to present to the jury not only his view of the truth, but the attemptadmitted at least by one of the defendantsto hide the truth. The district court was satisfied that the change in testimony was sufficiently presented to the jury, and concluded that a default was not appropriate. We do not find that to have been an abuse of the district court's discretion.