Court Opinion

ID: 2650170
Source: CourtListenerOpinion
Date Created: 2014-01-21 06:14:23.426774+00
Date Added: 2024-06-11T12:56:04.105601
License: Public Domain

Case: 13-40448      Document: 00512475611         Page: 1    Date Filed: 12/18/2013

           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT
                                                                         United States Court of Appeals
                                                                                  Fifth Circuit

                                                                                FILED
                                      No. 13-40448                      December 18, 2013
                                                                           Lyle W. Cayce
IMPERIAL ED PROMOTIONS, L.L.C.                                                  Clerk

                                                 Plaintiff-Appellant
v.

EMMANUEL PACQUIAO

                                                 Defendant-Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                              USDC No. 7:10-CV-453

Before JONES, WIENER, and GRAVES, Circuit Judges.
PER CURIAM:*
       This is an appeal from the dismissal with prejudice of a suit by Imperial
ED Promotions, LLC against prominent boxer Emmanuel “Manny” Pacquiao.
For the reasons that follow, we affirm the dismissal.
                                   BACKGROUND
       In July 2010, Pacquiao entered into a contract to appear at an event in
McAllen, Texas. The contract was signed by Pacquiao and Edmundo Lozano
as “Imperial ED Promotions PRODUCER, Edmundo H. Lozano.” Pacquiao

       * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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                                 No. 13-40448
was to be paid a total of $200,000 in two installments: one when the agreement
was signed, and the second no later than September 3, 2010. Pacquiao failed
to attend the event and Imperial ED Promotions, LLC (“Imperial ED”) sued
Pacquiao to recover the $100,000 paid on signing and an additional $119,020
it allegedly spent on advertising and marketing the Pacquiao appearance.
      Pacquiao answered the complaint and filed a counterclaim against
Lozano for failing to make the second payment of $100,000. Lozano was never
served, and thus never became a party to the case. The parties made Rule 26
disclosures and engaged in written discovery. At a July 18, 2012, pretrial
conference the district court questioned Imperial ED’s standing to bring the
suit because the agreement states that it is entered into by “Mr. Edmundo H.
Lozano, d/b/a Imperial ED Promotions (PRODUCER”).” In response to the
inquiry, counsel for Imperial ED asked to “present what we have prepared but
not filed in regard” to the issue of standing.      The district court granted
Pacquiao leave to file a motion to dismiss for lack of standing.
      Pacquiao filed a motion to dismiss for lack of standing, and Imperial ED
filed a response to which it attached an “Assignment and Assumption
Agreement” between Lozano and Imperial ED.           The assignment – which
Imperial ED had not previously disclosed – purports to transfer all of Lozano’s
rights and interests in the agreement to Imperial ED. Pacquiao questioned
the authenticity of the assignment and the district court granted leave to
perform a forensic examination of the document and to depose the four
signatories, Edmundo H. Lozano, Salvador Avilez, Pablo Casas, and Domicindo
Casas.
      After considering the evidence relating to the assignment, the district
court concluded that the assignment was not executed until after the district
court raised the issue of standing at the pretrial hearing. Accordingly, it
granted Pacquiao’s motion to strike and motion for sanctions consisting of
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                                      No. 13-40448
dismissal with prejudice.         In the alternative, the district court granted
Pacquiao’s motion to dismiss for lack of standing. 1
                             STANDARD OF REVIEW
        The district court’s imposition of sanctions is reviewed for an abuse of
discretion. Brown v. Oil States Skagit Smatco, 664 F.3d 71, 77 (5th Cir. 2011).
The district court’s factual findings underlying the imposition of sanctions are
reviewed for clear error. Id. Because dismissal with prejudice is “the severest
sanction possible,” Brinkmann v. Dallas Cnty. Deputy Sheriff Abner, 813 F.2d
744, 749 (5th Cir. 1987), we ordinarily affirm a dismissal with prejudice only
if: “(1) there is ‘a clear record of delay or contumacious conduct by the plaintiff,’
and (2) ‘lesser sanctions would not serve the best interests of justice.’” Brown,
664 F.3d at 77 (citing Sturgeon v. Airborne Freight Corp., 778 F.2d 1154, 1159
(5th Cir. 1985)). “The district court’s consideration of lesser sanctions should
appear in the record for review of the court’s exercise of its discretion.”
Sturgeon, 778 F.2d at 1159 (citation omitted). “[D]ismissal with prejudice is a
more appropriate sanction when the objectionable conduct is that of the client,
and not the attorney.” Brown, 664 F.3d at 77 (citation omitted).
                                     DISCUSSION
        Imperial ED raises two primary objections. First, it argues that the
district court clearly erred when it found the assignment agreement
fraudulent. Second, it argues that the district court abused its discretion by
not considering or granting lesser sanctions. We address each argument in
turn.

        1 Because we will affirm the district court’s imposition of the sanction of dismissal
with prejudice, we need not reach the alternative order granting Pacquiao’s motion to dismiss
for lack of standing.
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                                No. 13-40448
I.    Fraudulent Agreement.
      The district court judge read his detailed findings from the bench. The
court noted that a power of attorney agreement purporting to transfer Lozano’s
claims to Salvador Aviles was filed with the complaint but, unlike the
assignment agreement in question, it was notarized and prepared by counsel.
The court observed that no mention of the assignment was made until after
the court raised the standing issue and the agreement was not produced
despite several production requests for materials related to the relationship
between Imperial ED and its financial backers. The district court reasoned
that if such a document existed during discovery, it should have been produced.
      The district court also questioned the manner in which Aviles allegedly
created the document. Aviles is not a native English speaker and he requested
the use of a translator in court hearings. Despite his lack of familiarity with
the language, Aviles claimed that he drafted the assignment agreement by
googling “Assumption and Assignment Agreement” and using the model
agreements that his search returned.       Aviles seemed to imply that the
document was created over several days, while his attorney claimed that it was
created in a hurry. Additionally, Aviles stated that he gave away both the
computer upon which the agreement was drafted and the printer from which
it was printed to unnamed and unknown construction workers who were
completing work at his home, frustrating any attempts to gather physical
evidence related to the creation of the document.
      The district court noted other inconsistencies with the document. It
explained that the assignment agreement indicates equal ownership shares in
Imperial ED between assignor and the shareholders, which is at odds with
profit sharing agreements from January 2011 which showed varying interests.
The court also noted that the signatories’ testimony conflicted as to when the
document was actually signed, particularly that the Casas claimed to have
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signed in the presence of Lozano, while Lozano claimed to have no knowledge
of when or where the Casas signed the agreement.
       Finally, the district court considered the expert testimony. Pacquiao
submitted an ink dating expert’s report which concluded with ninety percent
certainty that the agreement was not signed on or near the date in 2010 on
which it was purported to have been signed. The district court found the expert
statement proffered by Pacquiao convincing even after consideration of live
testimony from Imperial ED’s expert. The district court found that “there was
no Assumption and Assignment Agreement that was properly done at the time
this lawsuit was filed and that the Assumption and Assignment Agreement
was only prepared as a result of the desire of the Plaintiffs to satisfy the Court’s
answer as to do we have the proper party here.”
       In light of the district court’s detailed factual findings, we find no merit
in Imperial ED’s assertion that there was “no evidence” to support a finding
that the assignment was fraudulent. Furthermore, under clear error analysis
this court does not “reweigh the evidence,” “re-evaluate credibility of
witnesses,” or discount “the district court’s reasonable factual inferences from
the evidence.” Glass v. Petro-Tex Chem. Corp., 757 F.2d 1554, 1559 (5th Cir.
1985). The district court did not err when it found the assignment agreement
was fraudulent.
II.    Lesser Sanctions.
       Because the district court determined that the assignment agreement
was fraudulent, there was a clear record of offensive conduct. Still, this court
normally only affirms the sanction of dismissal with prejudice where the
district court has also found that “lesser sanctions would not serve the best
interests of justice.” Brown, 664 F.3d at 77 (citing Sturgeon, 778 F.2d at 1159).
       Brown upheld the sanction of dismissal with prejudice where the district
court found that the plaintiff committed perjury. F.3d 71 at 77-78. Brown
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stated that “dismissal of the complaint in its entirety was the only effective
sanction,” and that a “severe sanction was necessary under deterrence and
institutional integrity rationales.” Id. at 79. Brown further held that a district
court could “implicitly reject[]” lesser sanctions as insufficient when it
determined that dismissal was the only effective option. Id.
      Here, the district court concluded that the plaintiff had perpetrated a
fraud – conduct similar to the perjury in Brown – and stated that it had “no
alternative” but to dismiss the case, thereby implicitly rejecting lesser
sanctions.   Additionally, Fifth Circuit cases have recognized that advance
warnings of possible default mitigate the requirement that the district court
consider lesser sanctions. See, e.g., Ramsay v. Bailey, 531 F.2d 706, 709 n.2
(5th Cir. 1976) (because “plaintiff was fully and repeatedly apprised of the
possible imposition of the . . . sanction [of dismissal]” the district court need
not consider “possible alternative sanctions”);      Diaz v. S. Drilling Corp.,
427 F.2d 1118, 1127 (5th Cir. 1970) (“Thus the default judgment was a
foreseeable and appropriate response to [plaintiff’s actions], and we hold that
the trial court did not abuse its discretion in ordering it.”). The district court
warned Imperial ED on multiple occasions that if the assignment agreement
were not withdrawn, and if the court found the document to be fabricated, the
case would be dismissed. The district court did not abuse its discretion when,
after multiple warnings, it determined that lesser sanctions were inadequate
to redress Imperial ED’s conduct.
      We AFFIRM the sanction of dismissal with prejudice.

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