Court Opinion

ID: 4675117
Source: CourtListenerOpinion
Date Created: 2021-04-07 00:00:21.37646+00
Date Added: 2024-06-11T08:03:24.295777
License: Public Domain

Case: 20-20130      Document: 00515810422         Page: 1     Date Filed: 04/06/2021

              United States Court of Appeals
                   for the Fifth Circuit                             United States Court of Appeals
                                                                              Fifth Circuit

                                                                            FILED
                                                                         April 6, 2021
                                   No. 20-20130                        Lyle W. Cayce
                                                                            Clerk

   Don Peterson; Mackey Peterson; Lonny Peterson,

                                                            Plaintiffs—Appellants,

                                       versus

   Russ Jones; Underwood, Jones, Scherrer, P.L.L.C.;
   Harris County, Texas,

                                                          Defendants—Appellees.

                   Appeal from the United States District Court
                       for the Southern District of Texas
                             USDC No. 4:16-CV-733

   Before Higginbotham, Costa, and Oldham, Circuit Judges.
   Per Curiam:*
          Usually a final judgment is just that—final. But the Federal Rules of
   Civil Procedure provide a limited escape valve for parties to allege, even years
   after a judgment, that the decision was based on certain errors of jurisdiction
   or due process: Rule 60(b)(4). If such an error occurs, the judgment is void.

          *
            Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 20-20130        Document: 00515810422          Page: 2   Date Filed: 04/06/2021

                                      No. 20-20130

   FED R. CIV. P. 60(b)(4); United Student Aid Funds, Inc. v. Espinosa, 559 U.S.
   260, 271 (2010).
          This appeal concerns the denial of a Rule 60(b)(4) motion. The
   motion argues that a sanctions order the district court issued more than four
   years ago is void for lack of subject matter jurisdiction. Because the court did
   have jurisdiction to sanction appellants, we affirm.
                                            I.
          The litigation that sparked the district court’s award of sanctions and
   the Rule 60(b)(4) motion began in 2016. That year, the Petersons and their
   coplaintiffs filed a 192-page complaint alleging a RICO conspiracy, fraud, and
   breach of fiduciary duty. The claims stemmed from probate disputes in
   which the plaintiffs contended that more than thirty people—judges and
   court personnel included—“conspired to cheat them out of property” by
   “tak[ing] over” Harris County Probate Court One.              In response, the
   defendants moved to dismiss and notified the plaintiffs of their intent to seek
   sanctions for filing frivolous litigation.
          The district court held that the plaintiffs failed to establish subject
   matter jurisdiction and failed to plead their RICO claims with particularity,
   calling their arguments “pure zanyism.” See Bell v. Hood, 327 U.S. 678, 681–
   83 (1946) (explaining that while the mere assertion of a federal claim typically
   will support subject matter jurisdiction, even if the claim later fails, there is
   an exception for claims that are “wholly insubstantial and frivolous”); see also
   Arbaugh v. Y&H Corp., 546 U.S. 500, 513 n.10 (2006) (reiterating this
   exception). For example, the court explained that the defendants’ use of mail
   and wire services for “routine communications” did not indicate that they
   were engaged in a RICO conspiracy, nor did the defendants’ acts of “simply
   filing papers with the Harris County Clerk or entering into an agreement to
   resolve disputes.” The court dismissed the RICO claims with prejudice and

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Case: 20-20130      Document: 00515810422           Page: 3     Date Filed: 04/06/2021

                                     No. 20-20130

   indicated that the defendants’ motions for sanctions should be resolved in
   the state probate proceedings, dismissing those motions without prejudice
          Not to be deterred, the plaintiffs then filed a motion for a new trial
   “without meaningful or substantive facts or arguments.” At that point, the
   court decided to impose sanctions. The sanctions order emphasized that the
   plaintiffs had “more than 40 opportunities” to drop their claims and received
   ten safe harbor letters from the defendants, yet they pressed on. The court
   also noted that the motion for a new trial was constructed with such
   “minimal effort” that it could have only been brought in “bad faith,” “for
   the improper purpose of escalating costs.”
          Citing both Rule 11 and 28 U.S.C. § 1927, the court used its inherent
   authority to impose sanctions in the amount of the defendants’ costs for
   responding to the “groundless” motion.           The order also provided for
   “conditional appellate fee awards” to be imposed against the plaintiffs “in
   the event of an appeal by any party.” The conditional fees totaled $140,000,
   including $15,000 to each set of attorneys for “handling an appeal to the Fifth
   Circuit” and $7,500 for “successfully defending” against a petition for
   certiorari to the Supreme Court.
          The plaintiffs appealed anyway, seeking relief from the dismissal of
   their claims and the grant of sanctions for litigation costs. We affirmed on
   both grounds, holding that the plaintiffs’ pleadings evinced “little to no
   factual specificity as to injury or causation” and that the district court did not
   abuse its discretion by imposing sanctions. Sheshtawy v. Gray, 697 F. App’x
   380, 382–83 (5th Cir. 2017) (per curiam). The opinion noted, however, that
   although the district court “imposed conditional sanctions for appeal,” the
   plaintiffs “d[id] not appear to challenge this award.” Id. at 383 n.7. The
   plaintiffs then sought Supreme Court review, finding another unreceptive
   audience.

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Case: 20-20130        Document: 00515810422          Page: 4     Date Filed: 04/06/2021

                                      No. 20-20130

          Over three years after the district court sanctioned them, the
   Petersons filed the Rule 60(b)(4) motion, arguing that the order is void
   because the court committed “fundamental error” by awarding conditional
   appellate fees. 1 The motion asserted that the prospective fee award lacked
   subject matter jurisdiction and “abridge[d] core First Amendment
   freedoms,” denying the plaintiffs (who have been litigating their claims for
   years) access to the courts. The district court denied the motion, refusing to
   reopen the case, and the Petersons appealed to this court once more.
                                           II.
          The single issue is whether the district court erred in denying the
   Petersons’ Rule 60(b)(4) motion challenging the conditional appellate
   sanctions. Because there is no room for discretion in determining whether a
   judgment is void, we review de novo. Carter v. Fenner, 136 F.3d 1000, 1005
   (5th Cir. 1998).
                                           A.
          Rule 60(b) “provides an ‘exception to finality,’. . . that ‘allows a party
   to seek relief from a final judgment, and request reopening of his case, under
   a limited set of circumstances.’” Espinosa, 559 U.S. at 269–70 (quoting
   Gonzalez v. Crosby, 545 U.S. 524, 528–29 (2005)). A motion brought under
   Rule 60(b)(4) authorizes the court to “relieve a party or its legal
   representative from a final judgment, order, or proceeding . . . [if] the
   judgment is void.” Fed. R. Civ. P. 60(b)(4); Espinosa, 559 U.S. at 270.
   To warrant relief, the judgment must be “so affected by a fundamental
   infirmity that the infirmity may be raised even after the judgment becomes
   final.” Espinosa, 559 U.S. at 270. Rule 60(b)(4) “applies only in the rare

          1
            Only Don, Lonny, and Mackey Peterson filed the Rule 60(b)(4) motion and are
   pursuing this appeal. The other plaintiffs are not involved in this latest round.

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                                     No. 20-20130

   instance” when the moving party can show either that the court lacked
   subject matter or personal jurisdiction or that the court committed “a
   violation of due process that deprive[d] a party of notice or the opportunity
   to be heard.” Id. at 271; Carter, 136 F.3d at 1006; see Callon Petroleum Co. v.
   Frontier Ins. Co., 351 F.3d 204, 208 (5th Cir. 2003).
                                          B.
          The Petersons’ motion challenges the district court’s sanctions order
   as “void for lack of subject matter jurisdiction.” Yet it is difficult to decipher
   why the Petersons believe that the district court lacked jurisdiction to
   sanction them. Although they characterize the conditional sanctions as a
   prior restraint that violates the First Amendment, they do not cite any
   caselaw suggesting that the court lacked jurisdiction to sanction them.
   Perhaps they assume there was no jurisdiction to sanction because the district
   court dismissed their complaint for lack of subject matter jurisdiction.
          But the district court had jurisdiction to sanction the Petersons
   despite the general absence of subject matter jurisdiction. Even after a court
   dismisses a case, it retains authority to sanction. See Willy v. Coastal Corp.,
   503 U.S. 131, 137 (1992) (upholding a Rule 11 award following dismissal for
   lack of subject matter jurisdiction); cf. Automation Support, Inc. v. Humble
   Design, L.L.C., 982 F.3d 392, 394–95 (5th Cir. 2020) (citing cases describing
   a district court’s broad power to award attorneys’ fees even when an action
   is no longer pending). In fact, “regardless of a court’s ability to hear the
   merits of a suit, it possesses the power to sanction a noncompliant party that
   stands before it.” DTND Sierra Invs., L.L.C. v. HSBC Bank USA, N.A., 627
   F. App’x 285, 287 (5th Cir. 2015) (citations omitted). If the law were
   otherwise, a court would be powerless to punish misconduct, however
   extreme, in a case filed in federal court despite a lack of subject matter
   jurisdiction.

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                                     No. 20-20130

          As a final note, there is some confusion in the briefing about whether
   the Petersons’ motion also challenges the sanctions order as void for violating
   due process. It is not clear that the plaintiffs are pressing this issue, but even
   if they are, the Petersons admit that they “have never complained and do not
   now complain in this appeal of a lack of notice or substantive opportunity to
   be heard.” These are the only components of due process that can support
   a Rule 60(b)(4) motion. Espinosa, 559 U.S. at 271.
          No jurisdictional or due process error occurred here.
                                               ***
          We AFFIRM the district court’s denial of the Rule 60(b)(4) motion.

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