Court Opinion

ID: 4680553
Source: CourtListenerOpinion
Date Created: 2021-04-23 16:00:35.670637+00
Date Added: 2024-06-11T08:03:55.988040
License: Public Domain

FILED
                                                                 United States Court of Appeals
                         UNITED STATES COURT OF APPEALS                  Tenth Circuit

                               FOR THE TENTH CIRCUIT                    April 23, 2021
                           _________________________________
                                                                    Christopher M. Wolpert
                                                                        Clerk of Court
RUNE KRAFT,

       Plaintiff - Appellant,

v.                                                         No. 20-2062
                                                (D.C. No. 1:19-CV-00646-RB-CG)
JESSE CLARK HATCH; STANLEY N.                               (D. N.M.)
HATCH; DOES 1-10,

       Defendants - Appellees.

–––––––––––––––––––––––––––––––––––

INLAND CONCRETE ENTERPRISES
INC. EMPLOYEE STOCK OWNERSHIP
PLAN,

       Plaintiff - Appellee,

v.                                                        No. 20-2122
                                                  (D.C. No. 1:15-MC-00033-WJ)
RUNE KRAFT,                                                 (D. N.M.)

       Defendant - Appellant,

and

KRAFT AMERICAS, L.P., a limited
partnership,

       Defendant.

------------------------------

CALMAT CO.,

       Garnishee.
                        _________________________________

                            ORDER AND JUDGMENT*
                        _________________________________

Before MORITZ, BALDOCK, and EID, Circuit Judges.
                  _________________________________

      In Case No. 20-2062, Rune Kraft (“Kraft”) appeals from the district court’s

dismissal of his declaratory judgment action against attorneys representing Oldcastle

Precast, Inc. (“Oldcastle”) in garnishment and interpleader proceedings against Kraft.

In Case No. 20-2122, Kraft appeals from the district court’s order in the garnishment

action striking his Rule 11 motion for sanctions after the court had closed the case

and warned him that further filings would be stricken. And in both appeals, Kraft

contests orders imposing filing restrictions against him. Consolidating the appeals

for procedural purposes only and exercising jurisdiction under 28 U.S.C. § 1291, we

modify the filing restrictions and otherwise affirm the district court’s rulings.

                                   BACKGROUND

      In 2011, Inland Concrete Enterprises, Inc. (“Inland”) obtained a default

judgment in the amount of $3 million, along with an order granting over $500,000 in

attorneys’ fees and costs, against Kraft and Kraft Americas, L.P. (“KALP”) in the

      *
        After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

                                            2
U.S. District Court for the Central District of California (“the Inland judgment”).1 In

2015, Inland assigned its interest in the judgment to Oldcastle, which registered the

judgment under 28 U.S.C. § 1963 in the U.S. District Court for the District of New

Mexico and applied to garnish royalty payments that CalMat Co. (“CalMat”) owed to

KALP. The district court granted the application and issued a writ of garnishment,

naming CalMat as the garnishee and KALP as the judgment debtor.

      When Kraft learned of the garnishment, he filed a pro se demand that the writ

be voided, claiming KALP had assigned its interest in the royalties to Kraft Americas

Holdings, Inc. (“KAHI”). Because of the dispute over the royalties, CalMat filed an

interpleader action against Oldcastle, Kraft, KALP, and KAHI. The district court

then stayed the garnishment action pending the outcome of the interpleader action.2

      While the interpleader action was pending, Kraft filed a declaratory judgment

action against Oldcastle’s attorneys and the clerk of court, seeking relief from the

garnishment and claiming: (1) the attorneys committed fraud on the court and failed

to serve him with filings; (2) the clerk improperly accepted their filings and failed to

serve him with court orders; and (3) the Inland judgment was void. The district court

dismissed the case for lack of subject matter jurisdiction. Kraft did not appeal.

      1
        The judgment was ordered as a sanction for Kraft’s litigation misconduct.
See Inland Concrete Enters., Inc. v. Kraft Americas, L.P., No. CV 10-1776-VBF
(OP), 2011 WL 13209258, at *3-4 (C.D. Cal. May 12, 2011).
      2
        When Kraft continued to submit filings in the garnishment action, the court
directed the clerk to reject any further filings until the interpleader case was resolved.

                                            3
       Meanwhile, in the interpleader action, Kraft disclaimed any interest in the

royalties from CalMat but attempted to represent KALP and KAHI pro se. The

district court dismissed Kraft and warned him that the entities needed to retain

counsel. When they failed to do so, the court dismissed them, leaving Oldcastle as

the only defendant. Kraft continued submitting pro se filings, purportedly on behalf

of KALP and KAHI, in which he contested the validity of the underlying Inland

judgment and accused the other parties of misconduct. The court sanctioned him,

proposed filing restrictions, and granted summary judgment for Oldcastle, declaring it the

proper recipient of the royalties. Kraft objected to the filing restrictions and continued

submitting filings on behalf of KALP and KAHI. The district court overruled the

objections, struck the filings, and imposed filing restrictions. Kraft appealed pro se; we

noted that the sanctions were appropriate, but we dismissed the appeal because he lacked

standing to appeal the summary judgment order and failed to properly appeal the

post-judgment rulings. CalMat Co. v. Oldcastle Precast, Inc., 771 F. App’x 866, 869

(10th Cir. 2019).

       Kraft then filed a second declaratory judgment action against Oldcastle’s

attorneys, reiterating his previous claims that the attorneys committed fraud on the

court, that the Inland judgment was invalid, and that he was entitled to relief in the

garnishment action. As with the first declaratory judgment action, the district court

dismissed the case for lack of subject matter jurisdiction. The court also ordered

Kraft to show cause why he should not be subjected to filing restrictions based on his

abusive litigation history. Kraft objected to the proposed restrictions, and the court

                                              4
overruled the objections and entered an order barring him from: (1) submitting

further filings in the action other than objections to the filing restrictions, a notice of

appeal, or a motion for leave to proceed on appeal in forma pauperis, unless a

licensed attorney admitted to practice in the court signed the proposed filing; and

(2) initiating further litigation in the district court, unless a licensed attorney admitted

to practice in the court signed the proposed initial pleading. After filing more

objections, which the court overruled, Kraft appealed (Case No. 20-2062).

       Shortly after filing restrictions were imposed in the second declaratory judgment

action, the district court sua sponte lifted the stay in the garnishment action, concluded

the interpleader action left nothing to be decided, and dismissed the case as moot. But

Kraft continued to submit filings. The court denied the first two motions and warned

him future filings would be stricken. Kraft then filed a notice and a Rule 11 motion

for sanctions. The court struck the filings and proposed restrictions echoing those in

the second declaratory judgment action. Kraft objected, and the court overruled his

objections and imposed the restrictions. Kraft appealed (Case No. 20-2122).3

                                      DISCUSSION

       In Case No. 20-2062, Kraft contends the district court erred in dismissing his

second declaratory judgment action for lack of jurisdiction. In Case No. 20-2122, he

contends the court erred in striking his Rule 11 motion. And in both appeals he

       3
        Kraft also petitioned for a writ of mandamus, seeking vacatur of the orders in
the garnishment action and leave to file a Rule 11 motion. We denied the petition.

                                              5
challenges the filing restrictions entered against him. Because he is proceeding pro

se, we liberally construe his filings but do not craft arguments for him. See Garrett

v. Selby Connor Maddux & Janer, 425 F.3d 836, 840 (10th Cir. 2005).

   I.      Case No. 20-2062

        We review de novo the dismissal of Kraft’s second declaratory judgment

action for lack of subject-matter jurisdiction. See Grynberg v. Kinder Morgan

Energy Partners, L.P., 805 F.3d 901, 905 (10th Cir. 2015). As the plaintiff, Kraft

had the burden of establishing jurisdiction. See Montoya v. Chao, 296 F.3d 952, 955

(10th Cir. 2002). To determine whether he met his burden, we “look to the face of

the complaint, ignoring mere conclusory allegations of jurisdiction.” Spring Creek

Expl. & Prod. Co., LLC v. Hess Bakken Inv., II, LLC, 887 F.3d 1003, 1014 (10th Cir.

2018) (internal quotation marks omitted).

        In his complaint, Kraft raised seven causes of action seeking declaratory or

injunctive relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201-02.

“The Declaratory Judgment Act does not extend the jurisdiction of federal courts;

it only enlarges the range of remedies available.” Prier v. Steed, 456 F.3d 1209,

1212 (10th Cir. 2006) (internal quotation marks omitted). Kraft thus needed to

demonstrate an “independent basis of jurisdictional basis,” id., under either 28 U.S.C.

§ 1331 (federal question) or § 1332 (diversity). And Kraft’s complaint alleged only

federal question jurisdiction under § 1331. See R. (20-2062) vol. 1 at 7.

        Jurisdiction exists under § 1331 if the “complaint establishes either that federal

law creates the cause of action or that the plaintiff’s right to relief necessarily

                                             6
depends on resolution of a substantial question of federal law.” Nicodemus v. Union

Pac. Corp., 440 F.3d 1227, 1232 (10th Cir. 2006) (internal quotation marks omitted).

In declaratory judgment actions, “the position of the parties is often reversed: the

plaintiff asserts a defense to an anticipated action by the declaratory judgment

defendant. . . . Thus, federal question jurisdiction exists in a declaratory judgment

action if the potential suit by the declaratory judgment defendant would arise under

federal law.” Cardtoons, L.C. v. Major League Baseball Players Ass’n, 95 F.3d 959,

964 (10th Cir. 1996). As the district court observed, Kraft sought “declaratory

judgments as a defense to the Garnishment Action filed by Defendants on behalf of

Oldcastle.” R. (20-2062) vol. 1 at 195. But “Defendants’ only involvement in this

matter [was] as counsel for Oldcastle,” and it does not appear they “would have any

potential claims against [Kraft] that would arise under federal law.” Id. The district

court, therefore, concluded Kraft had not established federal question jurisdiction.

      Kraft fails “to explain to us why the district court’s decision was wrong.”

Nixon v. City & Cnty. of Denver, 784 F.3d 1364, 1366 (10th Cir. 2015). He “strongly

disagrees with everything that has taken place at the district court” since Oldcastle

filed the garnishment action, and he insists the underlying Inland judgment was void.

Aplt. Opening Br. (20-2062) at 4. But he does not address the court’s reasoning in

this case regarding federal question jurisdiction. See Nixon, 784 F.3d at 1366

(declining to address issues where the appellant failed “to explain what was wrong

with the reasoning that the district court relied on in reaching its decision”). Instead,

he contends the court had federal question jurisdiction because Oldcastle’s attorneys

                                            7
“are taking part in a fraudulent scheme to use federal courts without merit, and thus

without subject matter jurisdiction, which started in California and they decided to

transfer to New Mexico.” Aplt. Opening Br. (20-2062) at 33-34. This argument is

far too conclusory and unsupported to warrant review. See Garrett, 425 F.3d at 841.

      Kraft also contends on appeal that the court had diversity jurisdiction under

28 U.S.C. § 1332 and, thus, erred in dismissing the action. But he did not allege

diversity jurisdiction in his complaint, and he raised only federal question jurisdiction

in opposition to the motion to dismiss, see R. (20-2062) vol. 1 at 64 (Response); id.

at 149 (Surreply). In any event, he has not established diversity jurisdiction. See

U.S. for Use & Benefit of Gen. Rock & Sand Corp. v. Chuska Dev. Corp., 55 F.3d

1491, 1495 (10th Cir. 1995) (addressing and rejecting claim of diversity jurisdiction

raised for the first time on appeal, where “the complaint refer[red] only to federal

question jurisdiction”).

      Diversity jurisdiction requires “that complete diversity of citizenship exist[]

between the adverse parties and that the amount in controversy exceed[] $75,000.”

Dutcher v. Matheson, 733 F.3d 980, 987 (10th Cir. 2013) (internal quotation marks

omitted). Kraft alleged that he resides outside the United States and that Oldcastle’s

attorneys reside in New Mexico, but he did not seek monetary damages or allege a

specific amount in controversy. Instead, he alleged: (1) Inland obtained a $3 million

benefit—as opposed the $3 million loss that it claimed—as a result of its dealings

with Kraft; and (2) Oldcastle (not Oldcastle’s attorneys) is trying collect on the

Inland judgment by seeking to garnish funds owed to KALP (not Kraft). Construed

                                           8
liberally, Kraft’s complaint did not allege that “an adverse declaration” will have a

“pecuniary effect” of at least $75,000 “on either party to the lawsuit.” City of Moore

v. Atchison, Topeka, & Santa Fe Ry. Co., 699 F.2d 507, 509 (10th Cir. 1983)

(emphasis added). Kraft thus has not shown the court had diversity jurisdiction.4

         Kraft failed to contest the district court’s conclusion regarding federal question

jurisdiction and has not shown that the court had diversity jurisdiction. The court

properly dismissed the action for lack of subject matter jurisdiction.

   II.       Case No. 20-2122

         Next, Kraft contends the district court erred in the garnishment action by

striking his Rule 11 motion, in which he challenged the validity of the proceeding.

We review the court’s ruling for abuse of discretion. See Bunn v. Perdue, 966 F.3d

1094, 1099 (10th Cir. 2020) (“District courts are afforded great discretion regarding

control of the docket and parties.” (internal quotation marks omitted)).

         After the district court dismissed and closed the garnishment action as moot

based on the result of the interpleader action, Kraft filed: (1) a motion for permission

to file pleadings electronically; and (2) a motion for permission to file a Rule 11

motion, arguing the court erred in dismissing the garnishment action and accusing

Oldcastle’s attorneys as well as the court of misconduct. The district court denied the

         4
         Kraft also argues the court had jurisdiction under 28 U.S.C. § 1367(a). But
because the district court had no original jurisdiction, Kraft’s complaint cannot be
saved by this provision. See 28 U.S.C. § 1367(a) (authorizing supplemental
jurisdiction in a civil action in which the district court has original jurisdiction).

                                              9
first motion because the case was closed and there was “no need for [Kraft] to file

subsequent pleadings of any kind—whether or not they are electronically filed.”

Supp. R. (20-2122) at 37. The court construed the second motion as seeking

reconsideration of the dismissal and denied it on the merits. The court then warned

Kraft “that further filings in this case will not receive the same attention given to the

two motions discussed above, and instead, will be STRICKEN.” Id.

      Undeterred, Kraft filed: (1) a notice stating he did not need permission to seek

sanctions; and (2) a Rule 11 motion, ostensibly seeking sanctions but reiterating his

arguments regarding the validity of the garnishment action and the Inland judgment

and demanding that Oldcastle’s attorneys produce documents to refute his assertions.

The district court struck the filings, noting “Kraft’s conduct goes beyond simple

ignorance and appears to be a deliberate disregard of th[e] Court’s rules or Orders.”

R. (20-2122) at 137. The court proposed filing restrictions and gave Kraft an

opportunity to object to the proposed restrictions. Kraft then objected not only to the

proposed restrictions, but also to the order striking his Rule 11 motion and the earlier

order denying his request to file such a motion. The court overruled the objections

regarding Rule 11 sanctions as non-responsive.

      Kraft has not challenged the court’s reasoning for those rulings. See Nixon,

784 F.3d at 1366. Instead, he repeats the arguments in his Rule 11 filings, including

his challenge to the validity of the Inland judgment—a judgment from a court outside

                                           10
our jurisdiction that has long been final.5 Kraft also repeats his argument that the

district court lacked subject matter jurisdiction in the garnishment action. But he has

not argued that Oldcastle failed to comply with 28 U.S.C. § 1963 when it registered

the Inland judgment. See Bronson v. Swensen, 500 F.3d 1099, 1104 (10th Cir. 2007)

(noting arguments not raised in an appellant’s brief are forfeited). And to the extent

he challenges the writ of garnishment—either its initial issuance or the court’s

dismissal order, which stated the writ would issue as originally ordered—he lacks

standing because the writ only named KALP as the judgment debtor. See Thomas v.

Metro. Life Ins. Co., 631 F.3d 1153, 1159 (10th Cir. 2011) (“[T]o have standing on

appeal, one must be aggrieved by the order from which appeal is taken.” (internal

quotation marks omitted)). Cf. CalMat, 771 F. App’x at 869 (holding Kraft lacked

standing to contest the interpleader judgment on behalf of KALP and KAHI).

      Accordingly, Kraft has failed to show that the court abused its discretion in

striking his Rule 11 motion and overruling his subsequent objections.

   III.   Filing Restrictions in Both Cases

      Finally, Kraft contends the district court erred in imposing filing restrictions in

Case Nos. 20-2062 and 20-2122. We review these orders for abuse of discretion.

See Tripati v. Beaman, 878 F.2d 351, 354 (10th Cir. 1989).

      5
         In addition to the present cases, Kraft sought, unsuccessfully, to collaterally
attack the Inland judgment in an action against Oldcastle and Inland. See Kraft v.
Oldcastle Precast, Inc., 700 F. App’x 704, 704 (9th Cir. 2017).

                                           11
       Federal courts may “regulate the activities of abusive litigants by imposing

carefully tailored restrictions under the appropriate circumstances.” Landrith v.

Schmidt, 732 F.3d 1171, 1174 (10th Cir. 2013) (internal quotation marks omitted).

Filings restrictions “are appropriate where [1] the litigant’s lengthy and abusive

history is set forth; [2] the court provides guidelines as to what the litigant may do to

obtain its permission to file an action; and [3] the litigant receives notice and an

opportunity to oppose the court’s order before it is implemented.” Andrews v.

Heaton, 483 F.3d 1070, 1077 (10th Cir. 2007); see also Landrith, 732 F.3d at 1174.

       Kraft does not contend the district court failed to either set out his litigation

history or provide notice and an opportunity to object. Nor does he contend the court

erred in imposing restrictions. Instead, he argues the restrictions are overly broad

and do not provide a mechanism for him to proceed pro se in these or future cases.

       The district court enjoined Kraft from submitting further pro se filings in the

garnishment and declaratory judgment actions unless the filings were signed by a

licensed attorney admitted in the district court. The court also “enjoined [him] from

initiating further litigation in [the district court],” directing the clerk “to return

without filing any initial pleading . . . unless a licensed attorney who is admitted to

practice before [the district court] signs the pleading.” R. (20-2062) vol. 1 at 206;

R. (20-2122) at 157. To the extent the filing restrictions apply to any future litigation

                                             12
that Kraft may attempt to initiate in the District of New Mexico, irrespective of the

parties or subject matter, the restrictions are overbroad and require modification.6

      Unlike “indiscriminate filers,” restrictions for litigants “who have limited their

repetitive filings to a particular subject” should be “limited to the subject matter of

the previous lawsuits.” Ford v. Pryor, 552 F.3d 1174, 1181 (10th Cir. 2008). The

record indicates Kraft’s litigation abuses in the District of New Mexico have been

limited to cases related to the Inland judgment and involving Inland, CalMat, and

Oldcastle, as well as their counsel. Because “[t]his history does not (at least as yet)

suggest that [Kraft] is likely to abuse the legal process in connection with other

persons and subject matters,” the restrictions are overbroad to the extent they

encompass “all future pro se proceedings pertaining to any subject matter and any

defendant.” Andrews, 483 F.3d 1070, 1077 (10th Cir. 2007); see also Sieverding v.

Colo. Bar Ass’n, 469 F.3d 1340, 1345 (10th Cir. 2006) (holding the restrictions “on

any subject matter and as to any defendant [was] overbroad” where the plaintiff

“ha[d] not filed litigation against random persons or entities” but only “against the

persons, entities, counsel, and insurance companies of the parties” in a particular

matter). Accordingly, we conclude the future-litigation restrictions must be more

narrowly tailored to apply only to any action related to the Inland judgment and

      6
        Oldcastle’s attorneys contend the order in the second declaratory judgment
action “plainly limits the restrictions to this case.” Aplee. Br. (20-2062) at 15. The
order, however, not only enjoins Kraft “from making further filings in this case,” but
also “from initiating further litigation in [the district court].” R. (20-2062) vol. 1 at
206.
                                           13
involving Inland, CalMat, Oldcastle, or any person or entity working for or on behalf

of those entities, including their attorneys. See Andrews, 483 F.3d at 1077;

Sieverding, 469 F.3d at 1346.

       With this modification, we uphold the filing restrictions. Although Kraft

insists there should be a mechanism for him to proceed pro se in the present actions

and future litigation, the district court rejected this argument in the garnishment

action and concluded that requiring a licensed attorney to sign proposed filings was

“necessary and tailored to curb Kraft’s litigation abuses.” R. (20-2122) vol. 1 at 156.

Kraft has not shown this ruling was an abuse of discretion. He cites no case

requiring a mechanism to proceed pro se, and we know of no such authority. See

Andrews, 483 F.3d at 1078 & n.9 (declaring “this court will not accept any further

pro se appeals or original proceedings filed by [the plaintiff] related to the subject

matter of these cases” without providing a mechanism for advance review of such

pro se filings); see also Van Sickle v. Holloway, 791 F.2d 1431, 1437 (10th Cir.

1986) (prohibiting the litigant from filing in the district court any further complaints

containing the same or similar allegations, without allowing for an advance-review

mechanism). Accordingly, we affirm the filing restrictions as modified.

                                    CONCLUSION

       The district court’s judgments are affirmed. The orders imposing filing

restrictions on Kraft are affirmed, except for the provisions of the orders enjoining

Kraft from initiating further pro se litigation in the District of New Mexico; those

provisions are modified to limit the restriction on further litigation to litigation

                                            14
involving or related to the judgment entered against Kraft and KALP in Inland

Concrete Enterprises, Inc. v. Kraft Americas, L.P., No. CV-10-1776-VBF (OP)

(C.D. Cal.), and involving Inland, CalMat, Oldcastle, or any person or entity working

for or on behalf of those entities, including their attorneys. Kraft’s motion to order

the district court to clarify its filing restrictions in Case No. 20-2062 is denied.7

                                             Entered for the Court

                                             Allison H. Eid
                                             Circuit Judge

       7
         To the extent Kraft seeks clarification whether the filing restrictions apply to
future litigation unrelated to this case, his motion is denied as moot based on our
modification to the restrictions. To the extent he seeks clarification on the district
court’s citation to “Doc. 32 at 1-7,” R. (20-2062) vol. 1 at 372, that refers to pages
1-7 of Docket Entry 32, in which the court detailed the history of Kraft’s litigation.
                                            15