Opinion ID: 406138
Heading Depth: 2
Heading Rank: 2

Heading: The Propriety of the Default Judgment

Text: 10 Appellants challenge the entry of default in the present case on two grounds. 12 First, appellants contend that the evidence was insufficient to establish that Lecocq perpetrated a fraud on the court. Second, appellants contend that, even if the evidence was sufficient to establish a fraud on the court, the district judge lacked the power to enter default as a sanction for that fraud. We address the former contention first. 11 Lecocq's conduct clearly does not constitute a fraud on the court as that term has previously been defined in this Circuit. A fraud on the court is an unconscionable plan or scheme which is designed to improperly influence the court in its decision. England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960). Lecocq's deception was clearly not an attempt to influence the court's ultimate decision on the merits. Rather, it was apparently designed solely to delay trial of the matter. Accordingly, we conclude that Lecocq's conduct does not constitute a fraud on the court. Our inquiry does not end there, however. Lecocq is alleged to have willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice. Such conduct, if proved, would clearly merit the imposition of severe sanctions. We must therefore determine whether the evidence below was sufficient to establish that Lecocq willfully misled the court and, if the evidence was sufficient, whether the entry of default was a permissible means of sanctioning that conduct consistent with the requirements of due process. 12 Appellants' contention that the evidence was insufficient to establish that Lecocq willfully deceived the court is wholly without merit. It is undisputed that the October 3 telegram purporting to come from Dr. Renand was sent prior to Lecocq's examination by the doctor. When questioned about the telegram and the circumstances surrounding its dispatch, Lecocq told numerous contradictory stories. Moreover, at no time did Lecocq come forward and explain the circumstances surrounding the telegram. Under these circumstances, we conclude that the evidence was sufficient to clearly and convincingly establish that Lecocq willfully deceived the court in an effort to delay trial. 13 13 We now turn to Lecocq's contention that the District Court lacks power to enter default as a sanction for Lecocq's deceptive conduct. We somewhat reluctantly conclude that Lecocq's position has merit and that the entry of default as a sanction for a deception of the court on a matter wholly unrelated to the merits of the controversy is inconsistent with the requirements of due process. Accordingly, we reverse the judgment of default and remand the cause for further proceedings. 14 It is firmly established that the courts have inherent power to dismiss an action or enter a default judgment to ensure the orderly administration of justice and the integrity of their orders. Landis v. North American Co., 299 U.S. 248, 57 S.Ct. 163, 81 L.Ed. 153 (1936); Fendler v. Westgate-California Corp., 527 F.2d 1168, 1170 (9th Cir. 1975); O'Brien v. Sinatra, 315 F.2d 637, 641 (9th Cir. 1963). This power is limited, however, by the requirements of due process. Hovey v. Elliot, 167 U.S. 409, 17 S.Ct. 841, 42 L.Ed. 215 (1897); Securities & Exchange Comm'n v. Seaboard Corp., 666 F.2d 414, 416-17 (9th Cir. 1982). In Hovey, the Supreme Court held that a court could not, consistent with the requirements of due process, strike a defendant's answer and enter default as punishment for contempt. Hovey v. Elliot, 167 U.S. at 413-14, 17 S.Ct. at 843. The decision was based principally on the notion that a party should not be deprived of his opportunity to defend based on factors unrelated to the merits of his case. 15 The Supreme Court subsequently limited Hovey in Hammond Packing Co. v. Arkansas, 212 U.S. 322, 349-54, 29 S.Ct. 370, 379-381, 53 L.Ed. 530 (1909). There the Court held that the entry of default was a permissible sanction for the defendant's failure to comply with a court order to produce documents. The Court's decision was premised on the idea that one may reasonably infer from the suppression of relevant evidence that the defendant's case is lacking in merit. Id. at 351, 29 S.Ct. at 380. (T)he generating source of the power (to enter default) was the right to create a presumption flowing from the failure to produce. Id. 16 In the present case, Lecocq's deception related not to the merits of the controversy but rather to a peripheral matter: whether Lecocq was in fact too ill to attend trial on October 10. Because the deception was wholly unrelated to the matters in controversy, no legitimate inference regarding the merits of Lecocq's position may be drawn. Accordingly, the entry of default in the present case was impermissible. See Securities & Exchange Comm'n v. Seaboard Corp., 666 F.2d at 417. 14 III. CONCLUSION 17 We are not unsympathetic to the plight of the district judge in the present case. When faced with a recalcitrant, deceitful party, the district judge exercised admirable restraint. We hold, however, that default may not be entered as a sanction for a party's deception where that deception relates only to a peripheral matter not at issue in the suit. Accordingly, the judgment of the District Court is reversed and the case remanded for further proceedings not inconsistent with this OPINION. 18 REVERSED.