Court Opinion

ID: 3205912
Source: CourtListenerOpinion
Date Created: 2016-05-23 19:01:01.228229+00
Date Added: 2024-06-11T14:28:58.172264
License: Public Domain

UNPUBLISHED

                   UNITED STATES COURT OF APPEALS
                       FOR THE FOURTH CIRCUIT

                               No. 15-1153

RDLG, LLC,

                 Plaintiff - Appellee,

           v.

FRED M. LEONARD, JR., a/k/a Chip Leonard,

                 Defendant – Appellant,

           and

RPM GROUP BROKERAGE, LLC; JESSICA LEWIS LEONARD; JASON
BENTON; NICK JAMES; DEXTER HUBBARD; GLENN G. GOLDAN; RPM
GROUP, LLC,

                 Defendants.

Appeal from the United States District Court for the Western
District of North Carolina, at Asheville.   Dennis L. Howell,
Magistrate Judge. (1:10-cv-00204-DLH)

Argued:   March 24, 2016                     Decided:   May 23, 2016

Before DUNCAN and THACKER, Circuit Judges, and DAVIS, Senior
Circuit Judge.

Affirmed by unpublished per curiam opinion.     Senior Judge Davis
wrote an opinion concurring in the judgment.
ARGUED: John C. Hunter, JOHN C. HUNTER, ATTORNEY AT LAW,
Asheville, North Carolina, for Appellant. Ross Fulton, RAYBURN,
COOPER & DURHAM, P.A., Charlotte, North Carolina, for Appellee.
ON BRIEF:   Benjamin E. Shook, RAYBURN, COOPER & DURHAM, P.A.,
Charlotte, North Carolina, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

                                2
PER CURIAM:

            RDLG,   LLC     (“RDLG”)        sued     Fred    M.       Leonard,   Jr.

(“Leonard”), raising state law fraud claims.                The district court 1

entered   default   judgment    in   RDLG’s        favor    as    a   sanction   for

Leonard’s misconduct during the pretrial conference.                        A jury

then considered the proper amount of damages resulting from the

default judgment and awarded RDLG $500,580.36.

            Leonard now challenges the default judgment, asserting

it violated his right to due process, and the damages verdict,

contending the district court erred when instructing the jury.

We disagree on both counts.          The default judgment complied with

due process, as it was imposed after the court provided Leonard

both clear warning that the sanction would result from further

misconduct    and   an    opportunity       to     oppose   imposition      of   the

sanction.     And Leonard’s proposed jury instruction was properly

rejected as irrelevant to the issue submitted to the jury.                       We,

therefore, affirm the judgment below.

     1 The parties consented to the jurisdiction of a United
States magistrate judge.    See 28 U.S.C. § 636(c).     As “the
magistrate judge was acting for the court, . . . we . . . refer
to [its] decisions as those of the district court.” Lee-Thomas
v. Prince George’s Cty. Pub. Schs., 666 F.3d 244, 247 n.2 (4th
Cir. 2012).

                                        3
                                            I.

                                            A.

            RDLG filed this diversity action in the United States

District Court for the Western District of North Carolina in

September   of      2010.         RDLG    sued    Leonard,       a     number     of    other

individuals, and some related business entities under state law,

alleging a pattern of fraudulent activity.                            The merits of the

fraud claims are not at issue in this appeal.

            The     events       underlying      this     appeal       began    on     May   2,

2012, when attorneys Terri Lankford and Seth Neyhart entered

appearances       on    behalf      of    Leonard       and      two        business-entity

defendants.         Both attorneys were still representing the same

three defendants on September 6, 2012, when the district court

entered an order scheduling a pretrial conference for October 3.

            On September 30, just two business days before the

scheduled conference, Lankford and Neyhart filed a motion to

continue    the     pretrial       conference       and    a     separate        motion      to

withdraw as counsel.             They explained that Leonard had not been

communicating       with    Lankford 2     or    paying        for    her     services,      so

Lankford      had       informed         Leonard        that         she     would      cease

representation         as   of    September        1.      She        had    waited     until

     2 Neyhart’s sole involvement to that point was that of local
counsel. He had not communicated directly with Leonard prior to
the morning of the pretrial conference.

                                            4
September 30 to move to continue the pretrial conference because

Leonard had represented to her that he intended to file for

bankruptcy (on behalf of himself and the business entities) no

later than September 28, 2012, 3 which would have obviated their

involvement in the impending conference.                Lankford added that

she planned to be in Puerto Rico on October 3.

           The district court denied the motion to continue and

the motion to withdraw the next day -- October 1.                      The court

ordered   both       Lankford   and   Neyhart    to   appear    and    represent

Leonard   and       the   related   business    entities   at    the    pretrial

conference and explained that either attorney’s absence would

result in a further order holding counsel in contempt.

           On October 2, Lankford responded to the court’s order

by   filing     a     declaration.      The     declaration     expanded     her

explanation of how she came to request a continuance so close to

the date of the pretrial conference.            Lankford asserted that she

did not receive the district court’s October 1 order directing

her to appear at the pretrial conference under pain of contempt

until she had already left for Puerto Rico.             But she assured the

court that both Leonard and Neyhart would appear at the pretrial

     3 Neither Leonard nor his business organizations, in fact,
filed for bankruptcy prior to the pretrial conference. Leonard
did file for personal bankruptcy, but not until October 10, a
week after the conference.     The two business entities never
filed for bankruptcy while this action was pending against them.

                                        5
conference in person, while she would be available to appear via

teleconference.

             As    promised,       Leonard        and    Neyhart       both     appeared       in

person.      However,        the    pretrial       conference          did    not    go     well.

Having anticipated that a bankruptcy stay would delay both the

conference       and   the    trial,    Leonard          and    his    counsel       were     not

prepared for either.

            Preparation        aside,    Neyhart          worried       that    a    potential

conflict of interest had arisen.                   He reported to the court that

Leonard was disputing some of Lankford’s representations in her

declaration and in the motion to continue.                             Neyhart asked the

court for time to clarify the scope and consequences of any

dispute between counsel and client.                     This request was denied.

             During     the        pretrial        conference,          RDLG        moved     for

sanctions, citing Leonard’s lack of preparation.                                 RDLG argued

that entry of a default judgment would be appropriate.                                See Fed.

R.   Civ.   P.    16(f)(1)(B),        37(b).            Neyhart       opposed,      arguing     a

warning from the court was required prior to imposing default

judgment    as     a   sanction.        The        court       took    the     motion       under

consideration.          But    prior    to        concluding      the        conference,      it

expressly stated on the record that it was considering striking

Leonard’s answer and entering default judgment.

             Two days later, the district court imposed sanctions

pursuant    to    Federal      Rule    of     Civil       Procedure          16(f)    and     the

                                              6
court’s inherent power, finding that “the actions of Defendants

and their counsel at the pretrial conference and leading up [to]

the conference made a mockery of the judicial process.”                RDLG,

LLC v. RPM Grp., LLC, No. 1:10-cv-204, 2012 WL 4755669, at *7

(W.D.N.C. Oct. 5, 2012).         Leonard was fined “$2500.00 pursuant

to Rule 16(f)(l)(C)” and ordered to pay his fine “to the Clerk

of Court within five (5) days of the entry of [the court’s]

Order.”    Id. at *5.     The court warned, “failure . . . to comply

with this Order within the time frame set forth in this Order

will result in the Court striking the answer . . . and entering

default judgment.”        Id.     Neyhart was also assessed a $2,500

fine, and Lankford was assessed a $5,000 fine.

           Separately, the district court raised the prospect of

imposing   additional     sanctions       against   Lankford   and   Neyhart

pursuant   to   Federal   Rule   of   Civil   Procedure   11   and   directed

Lankford and Neyhart “to Appear at a hearing at 10:00 a.m. on

Thursday, October 11, 2012, . . . and SHOW CAUSE why they should

not be further sanctioned.”        RDLG, LLC, 2012 WL 4755669, at *7.

           October 10 -- the deadline for paying the assessed

fines -- came and went without Leonard attempting to pay his

fine.   Instead, he filed for personal bankruptcy.

           On the other hand, Lankford and Neyhart paid their

fines on time.      They also appeared at the Rule 11 hearing on

October 11 as directed.          Leonard, who had not been ordered to

                                      7
attend the hearing, chose not to attend.                         Lankford and Neyhart

both presented evidence at the show cause hearing.

               The court decided no additional sanctions should be

imposed on the two attorneys.                   It then turned to the previously

imposed Rule 16 sanction, which Leonard had failed to pay.                                 That

failure,       the       district       court         decided,       warranted       striking

Leonard’s answer and entering default judgment against him.                                 The

court    reasoned,        “It’s    my    belief       that    even    though    he’s   filed

bankruptcy,          the        court          ordered         sanctions         are        not

excusable . . . .           [I]t was [Leonard] who plotted and schemed to

cause a delay and continuance of this matter and to cause the

Court difficulty in trying to administer this case and prepare

it for trial.”           J.A. 204-05. 4

               The court followed up with a written order on October

24.     The court recounted that its October 5 order cautioned that

failure       to   pay    any     assessed      fine     would       result    in    default.

“Despite this warning,” the court observed, Leonard “failed to

comply with the Court’s Order.”                      J.A. 211.    The court then found

Leonard       more       blameworthy          than     his    attorneys,       concluding,

“[Leonard]         manipulated          counsel”        and    “undermined          counsel’s

ability       to   prepare      for     the    Pretrial       Conference      and    for    the

          4
          Citations to the “J.A.” refer to the Joint Appendix
filed by the parties in this appeal.

                                                8
trial.”     Id. at 211-12.             The court determined sanctions less

drastic than default judgment “would be of no avail in this

matter.”    Id. at 212.

                                          B.

            The default judgment resolved the issue of liability

but   did   not    set   an    amount    of     damages.        That     determination

required a jury trial, which began on January 12, 2015. 5

            At     trial,      Leonard     requested        that        the    jury     be

instructed,       “Actual     damages    recoverable       by    the    plaintiff      for

fraudulent misrepresentation are limited to the amount of money,

property,     services,        or     credit    obtained        by     defendant      from

plaintiff          by         means       of        defendant’s               fraudulent

misrepresentations.”           J.A. 243.        The court declined to do so,

and the jury subsequently returned a verdict for $500,580.36 in

damages.    The district court entered judgment accordingly.                          This

timely appeal followed.

                                          II.

            Leonard challenges both the default judgment and the

damages jury instruction.              We begin with the argument that the

entry of default judgment violated his due process rights.

      5The case was stayed due to Leonard’s bankruptcy for much
of the period between the October 2012 pretrial conference and
January 2015 damages trial.

                                           9
                                   A.

            Normally, “[w]e review the district court’s grant of

sanctions     under   [Federal]   Rule   [of   Civil   Procedure]   37,

including the imposition of a default judgment, for abuse of

discretion.” 6    Anderson v. Found. for Advancement, Educ. & Emp’t

of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998); see also

Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639,

642 (1976) (per curiam).     “In the case of default, the ‘range of

discretion is more narrow’ than when a court imposes less severe

sanctions.”      Hathcock v. Navistar Int’l Transp. Corp., 53 F.3d

36, 40 (4th Cir. 1995) (quoting Wilson v. Volkswagen of Am.,

Inc., 561 F.2d 494, 503 (4th Cir. 1977)).

            Leonard is not challenging whether the district court

exceeded the bounds of its discretion, though.         Rather, Leonard

contends that he is entitled to relief from the sanction because

he “had neither notice nor a meaningful opportunity to respond

     6 The district court’s orders sanctioning Leonard refer to
Federal Rule of Civil Procedure 16, not Rule 37.          Rule 16
authorizes a district court to sanction a party who is
unprepared to participate in a pretrial conference by “issu[ing]
any   just   orders,    including    those   authorized  by   Rule
37(b)(2)(A)(ii)-(vii).”     Fed. R. Civ. P. 16(f)(1).         Rule
37(b)(2)(A)(iii) authorizes the court to “strik[e] pleadings in
whole   or  in   part,”   and   Rule   37(b)(2)(A)(vi)  authorizes
“rendering a default judgment against the disobedient party.”
So while the district court referred to its authorization to
order default pursuant to Rule 16, the ultimate source of that
authorization is Rule 37.     See Rabb v. Amatex Corp., 769 F.2d
996, 999-1000 (4th Cir. 1985).

                                   10
to    the    allegations           leveled      against       him    prior       to     the   court

imposing” the default judgment.                      Leonard’s Br. 24.

               We agree that there are due-process-based limits on a

court’s      power     to      sanction      through        default          judgment.        “[T]he

provisions      of     the      Fifth     Amendment[,            which       provide]     that    no

person      shall    be     deprived       of    property        without        due    process    of

law,”       impose    “constitutional            limitations          upon       the     power    of

courts, even in aid of their own valid processes, to dismiss an

action without affording a party the opportunity for a hearing

on    the    merits       of    his   cause.”              Societe    Internationale             Pour

Participations Industrielles Et Commerciales, S. A. v. Rogers,

357    U.S.    197,       209   (1958).          Accordingly,            a    default     judgment

generally may not be entered as a sanction “without first giving

notice       of . . .       intent      to      do    so    and     without          affording    an

opportunity for a hearing.”                     Ford v. Alfaro, 785 F.2d 835, 840

(9th Cir. 1986).

               But Leonard was provided ample notice and hearing in

this    case.         Prior      to   imposing          the      sanction       at     issue,    the

district       court      issued      both       oral      and    written        warnings        that

continued recalcitrance would result in default judgment.                                         At

the pretrial conference, the court notified the parties that it

was    considering         “strik[ing]          the   answer . . .             and    rul[ing]     in

default.”        J.A. 118.            Moreover, the court’s October 5 order

could    not    have        been    more     clear,         warning,         “failure . . .       to

                                                 11
comply . . . will result in . . . default judgment.”                                   RDLG, LLC

v.   RPM   Grp.,       LLC,       No.    1:10-cv-204,         2012      WL    4755669,       at   *5

(W.D.N.C. Oct. 5, 2012) (emphasis supplied).                                 Additionally, the

district court heard oral argument about potential sanctions at

a pretrial conference, which Leonard attended.

             Such process was constitutionally adequate.                                And even

if   it    were    not,       Leonard        fails     to    demonstrate         that    he       was

prejudiced by any violation, so he is not entitled to relief on

appeal.     We discuss the adequacy of the process employed by the

district     court      and       Leonard’s         inability      to    show    prejudice         in

turn.

                                                B.

             In    this       circuit,        we     “requir[e]         explicit       and   clear

notice     to”     parties         “when      their     failure         to     meet    the . . .

conditions       [of    a     court      order]      will”    preclude         their    right     to

adjudication       on       the    merits.           Choice     Hotels        Int’l,    Inc.      v.

Goodwin & Boone, 11 F.3d 469, 471 n.2 (4th Cir. 1993); see also

Hathcock,     53       F.3d    at       40   (“[T]his        court      has    emphasized         the

significance of warning a defendant about the possibility of

default before entering such a harsh sanction.”); Lolatchy v.

Arthur     Murray,      Inc.,       816      F.2d    951,    954     n.2      (4th    Cir.   1987)

(“[The] fact is that in National Hockey League[ v. Metropolitan

Hockey Club, Inc.], as well as in Rabb[ v. Amatex Corporation,

769 F.2d 996 (4th Cir. 1985)], the district court explicitly

                                                12
warned the defaulting party in advance of the consequence of

default, which was dismissal.               No such warning was given in this

case;     had    there     been,     another       case      would     be    presented.”

(citations omitted)).            When provided, such notice is undoubtedly

constitutionally adequate.              See Link v. Wabash R.R., 370 U.S.

626, 632-33 (1962).

             Leonard      received      the   requisite       “explicit          and    clear

notice”    in    this    case.      Choice       Hotels,     11   F.3d      at    471    n.2.

Indeed, he received an unusually clear and explicit warning.

First, he was present at the October 3, 2012 pretrial conference

when the district court announced, “I may strike the answer in

this case and rule in default.”                  J.A. 118.     Second, Leonard does

not dispute that he received notice of the court’s follow-on

October 5, 2012 order, which warns, “The failure of [Leonard] or

counsel to comply with this Order within the time frame set

forth in this Order will result in the Court striking the answer

of      [Leonard]        and      entering         default        judgment          against

[him] . . . .”           RDLG,   LLC,    2012     WL    4755669,     at     *5    (emphasis

supplied).       Indeed, the warning was repeated twice.                         See id. at

*7   (“The      Court,     however,     warns       [Leonard]        that    any       future

dilatory     conduct      will     result     in       the   Court     striking         [his]

Answer[] and entering default judgment against [him].” (emphasis

in original)); id. at *8 (“The failure of [Leonard] or counsel

to comply with this Order within the time frame set forth in

                                            13
this   Order    will     result     in   the     Court    striking      the   answer    of

[Leonard] and entering default judgment against [him] . . . .”).

            In Rabb v. Amatex Corporation, we upheld a sanction of

dismissal      against    a   due    process      challenge       because     “counsel[]

conceded full awareness of and utter disregard for the district

court’s discovery timetable set forth in the pre-trial order.”

769 F.2d 996, 1000 (4th Cir. 1985).                      The instant case is even

more clear.       Here, the order Leonard was fully aware of -- and

utterly disregarded -- specifically threatened default judgment.

Three times.       That is far more than enough to accord Leonard

constitutionally adequate notice.

                                            C.

            Leonard was also provided an adequate opportunity to

be heard.

            “[N]ot . . .            every        [dismissal]         order       entered

without . . .      a     preliminary        adversary       hearing       offends      due

process.”        Link,    370     U.S.    at     632.      Following      Link,     other

circuits have expressly held that a court need not hold an oral

hearing before entering a default judgment sanction.                            See FDIC

v. Daily, 973 F.2d 1525, 1531 (10th Cir. 1992) (affirming a

default   judgment       sanction        despite    the    lack    of    oral    hearing

because “[t]he right to respond does not necessarily require an

adversarial,      evidentiary       hearing”);          Spiller    v.   U.S.V.    Labs.,

Inc., 842 F.2d 535, 538 (1st Cir. 1988) (“Lack of a hearing does

                                            14
not offend due process where the plaintiff had ample warning of

the consequences of his failure to comply with court orders.”).

            We need not go that far today, though, because Leonard

was   permitted,     through    counsel,     to   oppose     RDLG’s    motion      for

default judgment.      At the pretrial conference, Neyhart argued in

opposition to the motion and, in fact, convinced the court that

default judgment should not be entered without first warning

Leonard that it could result from further noncompliance.

            There is no question that this hearing was adequate.

Like notice, “[t]he adequacy of . . . hearing . . . turns, to a

considerable extent, on the knowledge which the circumstances

show such party may be taken to have of the consequences of his

own conduct.”       Link, 370 U.S. at 632.          As discussed, as between

the   pretrial      conference    and    the      October     5    order,     it   is

abundantly clear that Leonard had knowledge of the consequences

of refusing to pay the court-imposed fine.                   No further hearing

was necessary.

            Leonard    concedes    as    much.       At     oral    argument,      his

counsel agreed there would have been no violation if, at the

October    11   hearing,   the    district        court    had     simply     entered

default judgment as a sanction for Leonard’s noncompliance.                        See

Oral Argument at 3:16–3:34, RDLG, LLC v. Fred M. Leonard, Jr.,

No.       15-1153       (Mar.       24,           2016),          available        at

http://www.ca4.uscourts.gov/oral-argument/listen-to-oral-

                                        15
arguments (“Had the magistrate judge wanted to find [Leonard] in

default for not paying that $2,500, he could have done so, in my

opinion, without any further hearing into [Leonard’s] conduct,

and   he   could   have      done   it   essentially      with     a    one-sentence

order.”).

                                          D.

            Leonard nevertheless contends that his right to due

process was violated because he lacked notice that his failure

to pay his fine would be discussed at the October 11 hearing.

That hearing was set to address potential Rule 11 sanctions for

Leonard’s attorneys, but the district court proceeded further,

raising     Leonard’s     failure    to    pay,    and     then,       according   to

Leonard,    relying     on    information       drawn    from    the     October   11

hearing when ordering default judgment.                 The court, for example,

ordered the Rule 11 hearing in part because it “ha[d] serious

concern regarding the factual ac[c]uracy of . . . statements in

[Lankford’s] Declaration and pleadings.”                    RDLG, LLC, 2012 WL

4755669, at *7.         After considering the testimony Lankford gave

at the hearing, however, the district court relied on those same

documents    as    credible     evidence       supporting    entry       of   default

judgment against Leonard, observing, “From the statements of Ms.

Lankford, in her declaration, it was [Leonard] who plotted and

schemed to cause a delay and continuance of this matter and to

cause the Court difficulty in trying to administer this case and

                                          16
prepare      it    for   trial.”        J.A.       205.        Leonard   maintains       that

reliance on findings and credibility assessments made in his

absence violates due process.

              But having conceded that, consistent with due process,

the    district      court      “could     have      [entered         default    judgment]

essentially with a one-sentence order,” Oral Argument at 3:23–

3:34, and having neglected to identify any evidence suggesting

that the district court’s findings would have been different had

Leonard      attended     and    testified          at    the    October    11    hearing,

Leonard necessarily concedes that any error is harmless.                                 Even

if the court’s appeal to additional findings constituted a due

process violation, the violation did not prejudice Leonard if

the findings were neither material to the determination he seeks

to undo nor incorrect.               See Tenn. Secondary Sch. Athletic Ass’n

v. Brentwood Acad., 551 U.S. 291, 303-04 (2007) (holding that

any due process violation arising from an athletic association’s

closed-door discussion with investigators after a disciplinary

hearing      was    “harmless      beyond      a    reasonable        doubt”     where   the

punished      school     “identified      nothing          the   investigators      shared

with   the    board      that   [the     school]         did   not    already    know”   and

“g[ave]      no    inkling      of     what”       would       have   changed     had    the

investigators testified at the open hearing and been subject to

cross-examination).

                                            17
             And   if      Leonard    cannot       show    prejudice,      his    argument

cannot succeed.            Where a sanctioned party “has not made any

showing      of      any     possible         prejudice[,] . . .           failure        to

afford . . .       notice      and     hearing       before       imposition      of     the

sanction [i]s harmless error.”                    Ford, 785 F.2d at 840.               Here,

there   is   no    indication        that    a    show    cause    hearing,      Leonard’s

attendance at the October 11 hearing, or any additional notice

and hearing would have had any effect on the district court’s

decision to enter default judgment.                  Rather, the essential facts

are undisputed: Leonard willfully defied the initial sanctions

order, knowing that default judgment would result.                         “A party who

flouts such orders does so at his peril.”                         Update Art, Inc. v.

Modiin Pub., Ltd., 843 F.2d 67, 73 (2d Cir. 1988).                                 And no

matter what Leonard would say in an additional hearing, it is

beyond dispute that he willfully flouted a court order of which

he   was   well    aware.      He     is    not    entitled       to   relief    from    the

consequences of that choice.

                                            III.

             We    turn     next     to     the    award    of    damages.         Leonard

contends that the damages verdict must be vacated because the

district     court    erred    when        instructing      the    jury.        Again,    we

disagree.

                                             18
                                         A.

             “We review a district court’s ‘decision to give (or

not    give)      a     jury    instruction         and     the     content       of   an

instruction . . . for abuse of discretion.’”                        United States ex

rel. Drakeford v. Tuomey, 792 F.3d 364, 382 (4th Cir. 2015)

(alteration in original) (quoting United States v. Russell, 971

F.2d 1098, 1107 (4th Cir. 1992)).                  Reversal is appropriate “only

when   the     requested    instruction       (1)    was    correct;      (2)    was   not

substantially covered by the court’s charge to the jury; and (3)

dealt with some point in the trial so important, that failure to

give the requested instruction seriously impaired that party’s

ability to make its case.”              Id. (quoting Noel v. Artson, 641

F.3d 580, 586 (4th Cir. 2011)).

                                         B.

             Reversal      is   not   appropriate         here    because       Leonard’s

proposed instruction was not relevant to the issue submitted to

the    jury.      Irrelevant      instructions         do    not,    by    definition,

“deal[] with some point in the trial so important, that failure

to give [them] seriously impair[s] [a] party’s ability to make

its    case.”         Tuomey,   792   F.3d    at    382     (alterations        supplied)

(quoting Noel, 641 F.3d at 586).                   Rather, “no valid objection”

lies when a court refuses instructions that are “irrelevant and

immaterial . . . to the ground upon which the case was placed

                                         19
before the jury.”            Brown v. Tarkington, 70 U.S. (3 Wall.) 377,

381 (1865).

           Leonard asked the district court to instruct the jury

that damages must be “limited to the amount of money, property,

services, or credit obtained by [Leonard] from [RDLG] by means

of [Leonard]’s fraudulent misrepresentations.”                           J.A. 243.          This

instruction was apparently adapted from In re Rountree, 478 F.3d

215 (4th Cir. 2007), an opinion in which we decided whether a

tort    judgment       was     excepted         from     discharge        in        Chapter      7

bankruptcy     by     11    U.S.C.       § 523(a)(2)(A).          See    id.        at   219-23.

Rountree   dealt       entirely          with    federal      bankruptcy        law.            The

limitation      set    forth       in     Leonard’s      proposed       jury    instruction

describes his interpretation of a limitation to the reach of the

fraud exception provided in the bankruptcy code.

           No       issue     of     federal         bankruptcy    law,      however,           was

submitted to Leonard’s jury.                    Rather, the jury was tasked with

deciding the extent to which he was liable to RDLG pursuant to

the state law causes of action alleged in this diversity suit.

And    while    “the       issue        of    nondischargeability”           addressed           in

Rountree   is    “a    matter        of      federal    law   governed         by    the . . .

Bankruptcy Code,” the question whether a valid debt exists “is

determined by rules of state law.”                      Grogan v. Garner, 498 U.S.

279,   283-84    (1991).           The       question    presented      to     the       jury    --

whether and how much Leonard is indebted to RDLG pursuant to

                                                20
North   Carolina    law    --   thus   remains      a    question    of   state    law

despite Leonard’s collateral bankruptcy proceedings.                      Therefore,

his    proposed    instruction     about     the    federal        dischargeability

question was simply irrelevant.

            The    question     whether      Leonard’s        judgment      debt   is

dischargeable is properly directed to the court overseeing his

bankruptcy.       Indeed, Leonard did present his Rountree argument

there, and it was rejected.             See In re Leonard, No. 15-5452,

2016 WL 1178649, at *7 (6th Cir. Mar. 28, 2016) (unpublished).

That    decision   was    appealed     to    (and       affirmed    by)   the   Sixth

Circuit.    See id.      It cannot be challenged again here.

                                       IV.

            The    district      court’s      decision       to     enter    default

judgment as a sanction did not violate Leonard’s right to due

process, and Leonard’s proposed jury instruction was properly

refused.    Accordingly, the judgment of the district court is

                                                                            AFFIRMED.

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DAVIS, Senior Circuit Judge, concurring in the judgment:

        This case is a closer call for me than it is for my friends

in the majority.           I am somewhat puzzled by the manner in which

the district court sought to vindicate the court’s interest in

maintaining         appropriate       supervision       and     control       over    the

workflow      in    the    busy     United   States    District       Court    for    the

Western District of North Carolina.

       In addition to ordering that Leonard and his counsel pay

the plaintiff’s attorney’s fees in preparing for and attending

the pretrial conference, the court further sanctioned Leonard

and    his    counsel      for    failing      to   prepare     for    the    pre-trial

conference by imposing a monetary penalty payable to the court.

Thereafter, with its crosshairs fixed on Leonard’s counsel, the

district court convened a hearing concerning the imposition of

further sanctions on Leonard’s counsel under Federal Rule of

Civil Procedure 11, which Leonard himself was not specifically

ordered to attend.           Then, in Leonard’s absence, and in partial

reliance on the statements of his erstwhile counsel (coupled

with     Leonard’s        failure    to   timely      pay     the    fine    previously

imposed), the court switched its focus and entered an order of

default against Leonard.               Ultimately, after a jury considered

solely damages evidence (but not evidence bearing on liability),

it returned a verdict in excess of half a million dollars in

favor    of   the    plaintiff       against      Leonard.      In    my    view,    these

                                             22
procedural machinations skirt the border of due process, even

for    a     litigant     as    disreputable             as        Leonard,     who     clearly

manipulated his own counsel, his adversary and its counsel, and

the district court, alike.

       Manifestly, the district court would have been wise to have

built a more convincing record to explicate the appropriateness

of    the    ultimate   sanction         of    default        by    affording     Leonard       an

opportunity to explain or justify his failure to pay the fine

and    why    something    short         of   default      would       have     been    a   more

appropriate sanction.               Indeed, the usual course of action in

such    circumstances      is       to   hold       a   show       cause   hearing.         I    am

constrained,        nonetheless,              under       the         totality         of       the

circumstances      shown       by    the      record,     to       join    in   the    judgment

affirming the district court.

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