Court Opinion

ID: 1004904
Source: CourtListenerOpinion
Date Created: 2013-07-04 18:48:16.254525+00
Date Added: 2024-06-11T15:12:22.298977
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

ATLANTIC FUNDING CORPORATION, as         
assignee of and successor-in-interest
to Resolution Trust Corporation, as
conservator for Trustbank Federal
Savings Bank,
                   Plaintiff-Appellee,           No. 00-1807
                  v.
BARRIE M. PETERSON, individually
and as Trustee,
                Defendant-Appellant.
                                         
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                Leonie M. Brinkema, District Judge.
                          (CA-91-1084-A)

                        Argued: June 4, 2001

                       Decided: July 18, 2001

   Before WILKINSON, Chief Judge, KING, Circuit Judge, and
         Robert R. BEEZER, Senior Circuit Judge of the
       United States Court of Appeals for the Ninth Circuit,
                      sitting by designation.

Affirmed by unpublished per curiam opinion.

                             COUNSEL

ARGUED: Bruce Wayne Henry, HENRY & O’DONNELL, P.C.,
Fairfax, Virginia, for Appellant. James Robert Schroll, BEAN, KIN-
2                ATLANTIC FUNDING CORP. v. PETERSON
NEY & KORMAN, P.C., Arlington, Virginia, for Appellee. ON
BRIEF: James T. Bacon, ALLRED, BACON, HALFHILL, LAN-
DAU & YOUNG, P.C., Fairfax, Virginia, for Appellant.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                              OPINION

PER CURIAM:

   The question before us is whether the district court erred in order-
ing and confirming a second auction of stock certificates. The district
court vacated the first auction because of potentially fraudulent bid-
ding and a violation of the court’s own order. Because the district
court did not abuse its discretion in ordering and confirming the
resale, we affirm.

                                   I.

  Atlantic Funding Corp. holds a judgment in the amount of
$1,217,210.96 plus interest against Barrie M. Peterson and Barrie M.
Peterson, Trustee (collectively "Peterson"). In execution of the judg-
ment, stock certificates surrendered by Peterson were auctioned off by
order of the court on September 14, 1999. The proceeds of the sale
would be used to satisfy, in whole or in part, the judgment against
Peterson.

   The auction was to be conducted by the United States Marshal.
Among other things, the court order required the highest bidder to
tender the purchase price of the stock immediately after the sale or the
next highest bidder would be awarded the stock. The sale would not
be considered final until confirmed by the district court.

  Three bidders participated in the first auction: Mr. Nichols, Barry
Peterson’s son, Scott, and Atlantic. The final bid prices were substan-
                  ATLANTIC FUNDING CORP. v. PETERSON                      3
tially higher than the estimated fair market values for the stock. The
Marshal also unilaterally extended the time for payment. Atlantic
objected to this auction. The district court held an evidentiary hearing
on these objections.

   After the hearing, in a ruling from the bench, the district court
determined that Nichols had bid up the price of the stocks without
ever intending to purchase them. The court decided these actions bor-
dered on the criminal. In addition, it found nothing in the order allow-
ing the Marshal to extend the time for payment. The court found fault
with the procedure of and conduct at the auction, so it ordered a sec-
ond auction.

   The second auction took place on April 19, 2000 pursuant to the
court’s order. At the second auction Atlantic and Peterson partici-
pated, with Atlantic making the high bid for five of the stocks and
Peterson, on behalf of various entities, making the high bid for four
of the stocks. The total amount paid for the stocks at the second auc-
tion was substantially less than at the first auction. Peterson’s objec-
tion to the resale on the grounds that the first auction should not have
been set aside was subsequently denied. The district court then
approved the resale on June 19, 2000.

                                    II.

   Federal courts are vested "with power to impose silence, respect
and decorum, in their presence, and submission to their lawful man-
dates." Anderson v. Dunn, 6 Wheat 204, 227 (1821). In this case, the
district court, utilizing its settled authority, set aside the first auction
and ordered a subsequent one. Such inherent power "must be exer-
cised with restraint and discretion." Chambers v. NASCO, Inc., 501
U.S. 32, 44 (1991). The decision to confirm a sale, however, is
"within the judgment and discretion of the tribunal ordering the sale"
and will not be disturbed absent abuse. American Trading & Produc-
tion Corp. v. Connor, 109 F.2d 871, 872 (4th Cir. 1940); see also
American Tramp Ship. & Dev. Corp. v. Coal Export Corp., 276 F.2d
570 (4th Cir. 1960). Therefore, we review the district court’s ruling
for abuse of discretion.

  A district court may abuse its discretion in several different ways.
For example, a district court abuses its discretion if it fails or refuses
4                 ATLANTIC FUNDING CORP. v. PETERSON
to exercise discretion and instead decides by general rule or arbitrar-
ily. See Will v. Calvert Fire Insurance Co., 437 U.S. 655, 661-62
(1978). Similarly, a district court abuses its discretion if it fails to ade-
quately consider the factors constraining its exercise of discretion. See
Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460
U.S. 1, 19 (1983). Finally, a district court abuses its discretion if its
decision is based on erroneous legal or factual premises. See Cooter
& Gell v. Hartmarx Corp., 496 U.S. 384, 401-02 (1990).

                                    III.

   We do not think the district court violated the ground rules noted
above. The court was faced with evidence of irregularities and mis-
conduct at the first auction. In deciding to order a second auction, the
court carefully weighed the evidence before it and considered the dis-
advantages to a second auction. It did not act in an arbitrary manner.
Rather, it reasonably determined the best way to preserve the integrity
of its order was to require a second auction.

                                     A.

   The first problem with the auction was irregular bidding. Mr. Nich-
ols arrived at the auction and bid up prices for the stock to levels way
above their estimated values. He did so to the benefit of Peterson and
the detriment of Atlantic. Mr. Nichols possessed neither the means
nor the intention to ever buy the stock. The district court found Mr.
Nichols to be "close to the line in terms of criminal conduct."
Although the district court recognized Peterson benefitted from the
higher bids, it found no evidence that he participated in or orches-
trated Mr. Nichols’ conduct. However, there remained an evident
appearance of impropriety surrounding the first auction. The district
court considered this enough to set aside the auction for fraud.

   Courts have the inherent power to prevent corruption of the judicial
process. There was ample evidence of bidding problems at the first
auction that artificially inflated the amount paid for the stocks applied
to satisfaction of Atlantic’s judgment. The court was well within its
discretion to find that the irregularities were so great that they called
the basic integrity of the process into question. Accordingly, a second
auction lay within the court’s discretion.
                 ATLANTIC FUNDING CORP. v. PETERSON                    5
                                   B.

  The district court also sought to ensure the sanctity of its own
orders when it set aside the first auction. By extending the time for
payment, the Marshal violated the court’s order for the first auction.
The Marshal did so despite the objections made by Atlantic before the
auction began. Not only was this in direct violation of the court’s
order, it also may have encouraged the inflated bidding by Nichols.

   Courts act well within their power when they ensure "submission
to their lawful mandates." Anderson, 6 Wheat at 227. Faced with a
direct violation of its own order, the district court determined that the
best remedy was to order a second auction. This action was once
again within the court’s discretion.

                                  IV.

   For the foregoing reasons, the judgment of the district court order-
ing a second auction and confirming the resale of shares therein, is
affirmed.

                                                            AFFIRMED