894 F.2d 696 (5th Cir. 1990), 89-4137, NASCO, Inc. v. Calcasieu Television and Radio, Inc.

Docket Nº:89-4137.
Citation:894 F.2d 696
Party Name:NASCO, INC., Plaintiff-Appellee, v. CALCASIEU TELEVISION AND RADIO, INC., and G. Russell Chambers, Defendants-Appellants, and Richard A. Curry, Edwin A. McCabe, and A.J. Gray, III, Appellants.
Case Date:February 06, 1990
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 696

894 F.2d 696 (5th Cir. 1990)

NASCO, INC., Plaintiff-Appellee,

v.

CALCASIEU TELEVISION AND RADIO, INC., and G. Russell

Chambers, Defendants-Appellants,

and

Richard A. Curry, Edwin A. McCabe, and A.J. Gray, III, Appellants.

No. 89-4137.

United States Court of Appeals, Fifth Circuit

February 6, 1990

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[Copyrighted Material Omitted]

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Robert G. Pugh, Pugh & Pugh, Shreveport, La. and Michael H. Rubin, Rubin, Curry, Colvin & Joseph, Baton Rouge, La., for Richard A. Curry.

Mack E. Barham and Robert E. Arceneaux, Barham & Associates, New Orleans, La., and Russell F. Tritico, Lake Charles, La., for Calcasieu Television and Radio, et al.

Michael G. Crow and Michael McGrath Duran, Adams & Reese, New Orleans, La., for Edwin A. McCabe.

John G. Torian, II and Bert Wilson, Onebane, Donohoe, Bernard, Torian, Diaz, McNamara & Abell, Lafayette, La., for A.J. Gray, III.

John B. Scofield and David L. Hoskins, Scofield, Bargstedt, Gerard, Mount & Veron, Lake Charles, La. and Jon D. Ross and Aubrey B. Harwell, Jr., Neal & Harwell, Nashville, Tenn., for plaintiff-appellee.

Appeals from the United States District Court for the Western District of Louisiana.

Before WISDOM, JOHNSON, and HIGGINBOTHAM, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Calcasieu Television and Radio, Inc. and its sole shareholder and director, Russell Chambers, appeal the district court's award of attorneys' fees to NASCO based on Chambers's bad faith in conducting his defense to NASCO's breach of contract suit. 124 F.R.D. 120 (1985). We find that the district court has inherent power to prevent frustration of its judicial duty by a party. We also conclude that, although jurisdiction in this suit rested on diversity of citizenship, the district court may, without reference to Louisiana law, award attorneys' fees to the party forced by the obstructive tactics to incur them. A.J. Gray and Edwin McCabe appeal the district court's order disbarring them for various periods for their conduct of the defense. Richard Curry appeals the Court's order suspending him from practice. We hold that the district court afforded them due process and that its findings are supported by clear and convincing evidence, and affirm the disbarment and suspension orders. In setting the length of McCabe's disbarment the district court considered that he is a resident of Massachusetts and would seldom have occasion to appear in the Western District of Louisiana. After the order was issued, however, the Massachusetts Bar ordered McCabe to show cause why it should not impose identical discipline. We do not know whether this turn of events may work an unintended result. In the interest of fairness, we remand to enable the district court to consider the length of McCabe's disbarment in light of this development.

I

On August 9, 1983, CTR and NASCO agreed to the sale to NASCO of CTR's television station. The agreement required CTR to file required forms with the FCC by a specified date, but it did not do so.

On Friday, October 14, 1983, NASCO notified Chambers that it would file suit in the district court seeking specific performance and would request a temporary restraining order preventing Chambers and CTR from encumbering property subject to the contract. Over the weekend, Chambers and his attorney, Gray, created a trust with Chambers's sister, Mabel Baker, as trustee. CTR then conveyed to the trust all of its immovable property subject to the contract of sale. On Monday morning, Chambers and Gray filed warranty deeds in the proper parish offices showing the transfer to the trust. NASCO filed its suit later that morning. At noon, the district judge conducted a telephone conference with NASCO's attorney and Gray regarding a temporary restraint of property transfers. Gray did not disclose in the conference that CTR was already transferring property to the trust.

On Monday afternoon, Chambers flew to Birmingham, where Baker signed the documents necessary to her appointment as trustee. She then signed a $1.4 million note on behalf of the trust for the purchase of the property.

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On Tuesday, Gray informed the court of the transfers and that he had withheld the information during the telephone conference. NASCO amended its complaint to name Baker as a defendant and on October 24, the district court issued a preliminary injunction enjoining Chambers and CTR from encumbering the property, and an order restraining Baker from alienating or otherwise encumbering the property. On the next day, Baker nevertheless entered into a leaseback agreement with CTR.

In November 1983, NASCO sought access to CTR's general ledger and 1982 income tax return, but Chambers, through Gray, refused. The October 24 preliminary injunction ordered CTR and Chambers to grant NASCO access to any documents or records related to the assets purchased under the contract. The district court held these records were clearly within the scope of the injunction and fined Chambers and CTR after NASCO instituted a civil contempt proceeding. NASCO, Inc. v. Calcasieu Television & Radio, 583 F.Supp. 115 (W.D.La.1984). Chambers brought two unsuccessful appeals of this order, under Sec. 1292(b) and Sec. 1291. See NASCO, Inc. v. Calcasieu Television & Radio, slip op. No. 84-9037 (5th Cir. May 29, 1984); NASCO, Inc. v. Calcasieu Television & Radio, Inc., 752 F.2d 157 (5th Cir.1985).

The attorneys then filed four motions for summary judgment. Gray filed two on behalf of Chambers, Curry filed one on behalf of Baker, and Gray filed one on behalf of Chambers and Baker. In each motion, they argued that since the deeds of the station's property to the trust had been recorded before the NASCO-CTR contract, the public records doctrine barred specific enforcement of the contract. Before the hearing on the motions for summary judgment, NASCO filed an affidavit attacking Baker's credibility which Curry moved to strike; the court denied the motion. The district court then concluded that the transfer to the trust was a sham and denied summary judgment.

In August 1984, Gray moved for a protective order and for clarification of the scope of the October 24 preliminary injunction. After a hearing, the court denied that motion as well. Gray then filed on behalf of Chambers several compulsory counterclaims which proved to be baseless; indeed some had no relevance to the proceeding. For example, these claims included arguments that NASCO's conduct of its FCC ascertainment survey was improper, that NASCO would be unable to pay the purchase price, that NASCO had misrepresented its plans for the station, and that NASCO was not committed to the community interest. Chambers and Gray did not drop these claims until the eve of trial, when they admitted the contract was valid.

About the same time, Gray noticed the depositions of officials of Manufacturers Hanover, the financing bank for NASCO's purchase. McCabe, Chambers's Boston counsel, asserted that he took these depositions to determine NASCO's ability to pay the purchase price. Gray also took the depositions of five members of NASCO's board of directors, to determine whether the NASCO officer who had signed the purchase contract had been authorized to do so.

Throughout, Gray sought continuances, extensions of pleading deadlines, and deferments of scheduled discovery. After the district court finally set trial for February 27, 1985, Gray filed a motion to recuse the trial judge for bias and prejudice, which the trial court denied. Chambers and CTR sought a writ of mandamus from this court ordering recusal. Curry filed an "answer" to the petition on behalf of Baker, who was technically a respondent, in which he also urged that the writ be granted. This court denied the petition, calling it meritless. In re Calcasieu Television & Radio, Inc. and G. Russell Chambers, slip op. No. 85-4128 (5th Cir. February 25, 1985). The motion and the petition again delayed the trial. Chambers then listed 100 trial witnesses in the pretrial order. The case went to trial April 17-18, 1985 and only two of the 100 appeared to testify.

At trial, Chambers, CTR, and Baker argued only the public records doctrine defense. The district court rendered judgment on November 8, 1985, restoring the

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status quo and ordering specific performance. NASCO, Inc. v. Calcasieu Television & Radio, Inc., 623 F.Supp. 1372 (W.D.La.1985). Chambers, Baker, and CTR appealed.

Soon after judgment, Chambers, without notice to NASCO, petitioned the FCC to construct a new transmission tower for the station and to relocate the station's transmission facilities. This change to a new site was not covered by the purchase contract, and would have materially altered the status quo in violation of the district court's judgment. The district court's informal intervention and NASCO's threat to seek further contempt sanctions persuaded Chambers to drop his petition.

On November 27, 1985, Chambers and Baker, through Gray and Curry, moved for a stay of the execution of the judgment pending appeal. The trial court denied the motion, and this court denied writs of mandamus sought by Chambers and by Curry on behalf of the trust. Chambers then petitioned Justice White to stay the judgment. Justice White denied the petition. In re Calcasieu Television & Radio, Inc. and G. Russell Chambers v. NASCO, Inc., No. A-611 (White, J., in chambers, February 18, 1986) (unpublished opinion). Chambers and CTR fired Gray in March 1986 and Russell Tritico replaced him as their counsel of record. Tritico was later joined by McCabe.

In late spring 1986, while the appeal to this court from the judgment on the merits was still pending, a dispute arose between Chambers and NASCO over the station's equipment to...

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