Poulis v. State Farm Fire and Cas. Co.

• Decision Date: 05 November 1984
• Docket Number: No. 83-5600,83-5600
• Parties: Lefteri POULIS and Athena Poulis, his wife, Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY.
• Court: U.S. Court of Appeals — Third Circuit

Page 863

747 F.2d 863

40 Fed.R.Serv.2d 313

Lefteri POULIS and Athena Poulis, his wife, Appellants, v. STATE FARM FIRE AND CASUALTY COMPANY.

No. 83-5600.

United States Court of Appeals, Third Circuit.

Argued April 3, 1984.

Decided Nov. 5, 1984.

George Retos, Jr. (Argued), Retos, Held & Associates, Washington, Pa., for appellants.

Paul K. Geer (Argued), Jones, Gregg, Creehan & Gerace, Pittsburgh, Pa., for appellee.

Before GIBBONS, SLOVITER, Circuit Judges, and BISSELL, District Judge ^*.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

This appeal, as well as another decided today involving the same attorney and district court judge, Scarborough v. Eubanks, 747 F.2d 871, is brought from a final order dismissing the complaint with prejudice due to counsel's failure to meet court-imposed deadlines and other procedural requisites.

I. Background

Lefteri and Athena Poulis filed suit against State Farm Fire and Casualty Company (State Farm) in November 1981, in the Court of Common Pleas of Washington County, Pennsylvania, to recover under an insurance policy after fire damaged their home. State Farm removed the case to the United States District Court for the Western District of Pennsylvania based on diversity of citizenship. In its answer, it denied liability, asserting that plaintiffs had intentionally caused the fire, had concealed and misrepresented information, and had not filed their action in time.

On March 12, 1982, the district court ordered that discovery would close June 14, 1982; that plaintiffs' pre-trial statement would be due July 5; and that defendant's statement would be due July 26. A pre-trial conference was set for August 13. The docket reveals no action by plaintiffs seeking discovery. On April 15, State Farm filed notice of service of interrogatories on plaintiffs. No answers to these interrogatories were or have ever been filed, and plaintiffs did not file their pre-trial statement by July 5 as required. Therefore defendant filed its pre-trial statement first, on July 28, together with a motion to compel answers to interrogatories. A member of the district judge's staff advised plaintiffs' counsel, George Retos, Jr., that the statement was overdue and Retos promised to submit a statement by the next day. He neither did so nor requested any extension. On August 5 the district court, sua sponte, dismissed the case with prejudice for plaintiffs' failure to comply with the orders to file the pre-trial statement.

Retos filed a pre-trial statement on August 9, together with a motion under Rule 60(b) to reconsider and set aside the dismissal, alleging that an illness prevented him from working between July 6 through July 17; that other attorneys could not have taken over because only Retos spoke Greek and could communicate with plaintiff Lefteri Poulis; that Retos' pregnant wife went into false labor on July 29 and 30, and that he had "inadvertently set aside the required work for the instant case on July 29, 1982, due to his concern for his wife" and was "render[ed] unable to prepare the necessary Pre-Trial Statement;" that on his return to work other tasks had backlogged; and that although he had dictated a statement on August 4, it had been mailed on August 6 when it was typed and ready.

The district court denied reconsideration. On appeal, this court vacated the order of dismissal. Poulis v. State Farm Fire & Casualty Co., 714 F.2d 124 (3d Cir.1983) (Poulis I ) (per curiam). We noted there was "no allegation that plaintiffs, as distinguished from their counsel, were in any way responsible for the failure to comply with the court's order." We recognized that in National Hockey League v. Metropolitan Hockey Club, Inc., 427 U.S. 639, 96 S.Ct. 2278, 49 L.Ed.2d 747 (1976), a dismissal was upheld where plaintiffs had acted in "flagrant bad faith" and counsel "had behaved with 'callous disregard' of [his] responsibilities," id. at 643, 96 S.Ct. at 2781, but observed that "[t]he case at hand is not as extreme."

We pointed out that in an earlier opinion, Donnelly v. Johns-Manville Sales Corp., 677 F.2d 339, 342 (3d Cir.1982), we had stated that "dismissal is a drastic sanction and should be reserved for those cases where there is a clear record of delay or contumacious conduct by the plaintiff." However, because Retos' excuses failed to account for many days on which a pre-trial statement could have been filed, we observed that some sanction was "amply justified." Accordingly, we vacated the dismissal and remanded to permit the district court to consider alternatives to dismissal, stating, "Alternatives are particularly appropriate when the plaintiff has not personally contributed to the delinquency."

On remand, the district court ordered the parties to file briefs on appropriate alternative sanctions. Plaintiffs' brief, filed four days late, stated that such sanctions would be costs, attorneys' fees, and monetary penalties imposed on him, but argued that "[s]ince the Third Circuit has specifically assessed the costs of the appeal in this matter against plaintiffs' counsel personally, it has ruled on the sanctions which are to be applied in the instant matter [and] alternative sanctions are now inappropriate." App. at 10-11.

In its brief State Farm took a more reasonable position. It noted that "[i]n this case the defendant has been more prejudiced by plaintiffs' failure to answer interrogatories then [sic] by its counsel's failure to file the Pre-Trial Statement on time." App. at 16. State Farm urged the court to reopen discovery so that it could "have the opportunity to examine plaintiffs' Answers to Interrogatories, conduct further investigation if necessary, and depose the plaintiffs or other witnesses known to plaintiffs if such action is deemed necessary and appropriate." App. at 15. State Farm suggested, "If discovery is reopened, State Farm believes there would be no need to utilize the somewhat harsh remedy of limiting or restricting plaintiffs' witnesses at trial." App. at 16 (emphasis added). In light of this court's order, State Farm requested an award of $750.00 in attorneys' fees which it incurred because of the dismissal and appeal, and sought a prospective limitation on interest due should it ultimately be held liable on plaintiffs' claim.

Significantly, in its brief State Farm further stated, "State Farm strongly believes that the most expeditious manner of disposing of this case can be provided by ruling on the Defendant's Motion to Dismiss which was filed on July 7, 1982," approximately three weeks following the close of discovery and which was denied by the district court because of its policy not to consider motions to dismiss filed more than two weeks after the close of discovery. App. at 16.

Notwithstanding the defendant's submission, the district court reinstated its sua sponte sanction of dismissal, stating that there was no appropriate alternative:

There are no costs which can be charged to plaintiffs' counsel at this point. Further, this was not a situation in which defense counsel was forced to make an unnecessary trip to court because of plaintiffs' counsel's failure to appear. The defendant has only been required to incur fees in an amount that would have been incurred if the case normally proceeded to this point. Thus, this is not an appropriate case for attorney's fees. Finally, the court finds no authority for levying a fine against plaintiffs' counsel as a penalty. Rather than imposing fines and costs of [sic] other sanctions prior to dismissal, plaintiffs' counsel was afforded many opportunities to cure the problems, but he has failed to do so. Sanctions not being appropriate, the court has no alternative but dismissal to motivate plaintiff's counsel to comply with deadlines.

App. at 3-4 (footnotes and citation omitted). The district court intimated its displeasure with the remand in Poulis I but it was unequivocal in its disagreement with the remand in a similar case from another district, Titus v. Mercedes Benz of North America, 695 F.2d 746 (3d Cir.1982). The district court stated: "Judge Garth's dissent in Titus, indicates that deliberate, dilatory action is a basis for dismissal, even under Donnelly, and further indicates that the Circuit Court should only reverse such a decision for abuse of discretion.... [T]his Court finds Judge Garth's dissent persuasive and adopts his dissent, and the cases cited therein, as further support for this decision." App. at 5 (emphasis added).

We treat this extraordinary statement at the outset. Whatever may be the personal views of the district court as to the merits vel non of a decision of this court, the district court is not free to "adopt" the dissent. This court is strict in its adherence to the precedent of its earlier opinions. Our own Internal Operating Procedures are explicit and provide,

It is the tradition of this court that reported panel opinions are binding on subsequent panels. Thus, no subsequent panel overrules a published opinion of a previous panel. Court in banc consideration is required to overrule a published opinion of this court.

Internal Operating Procedures of the Court of Appeals for the Third Circuit, Chapter 8.C. If the judges of this court are bound by earlier panels, a fortiori district court judges are similarly bound. Recognition of the hierarchical nature of the federal judiciary requires no less.

Moreover the reported decisions of this court over the past two years evidence the consistency of this court's rulings emphasizing the extreme nature of a dismissal with prejudice or default judgment. See Hritz v. Woma Corp., 732 F.2d 1178 (3d Cir.1984); In re MacMeekin, 722 F.2d 32 (3d Cir.1983); Madesky v. Campbell, 705 F.2d 703 (3d Cir.1983); Gross v. Stereo Component Systems, Inc., 700 F.2d 120 (3d Cir.1983); Titus v. Mercedez Benz of North America, 695 F.2d 746 (3d Cir.1982); Feliciano v. Reliant Tooling Co., 691 F.2d 653 (3d Cir.1982); Farnese v. Bagnasco, 687 F.2d 761 (3d...