Edmond, In re

• Decision Date: 28 May 1991
• Docket Number: No. 89-2957,89-2957
• Citation: 934 F.2d 1304
• Parties: In re John EDMOND, d/b/a Landover Contact Lens Center, Debtor. John EDMOND, Plaintiff-Appellant, v. CONSUMER PROTECTION DIVISION, OFFICE OF the ATTORNEY GENERAL OF THE STATE OF MARYLAND, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1304

934 F.2d 1304

20 Fed.R.Serv.3d 542

In re John EDMOND, d/b/a Landover Contact Lens Center, Debtor John EDMOND, Plaintiff-Appellant, v. CONSUMER PROTECTION DIVISION, OFFICE OF the ATTORNEY GENERAL OF THE STATE OF MARYLAND, Defendant-Appellee.

No. 89-2957.

United States Court of Appeals Fourth Circuit.

Argued Feb. 4, 1991.

Decided May 28, 1991.

Pamela Lynn Lyles, argued, Washington, D.C., for plaintiff-appellant.

Margaret Hartka, Law Student, argued (Roger C. Wolf, Sp. Asst. Atty. Gen., on brief), Consumer Protection Div., Office of the Atty. Gen., Baltimore, Md., for defendant-appellee.

Before WIDENER and MURNAGHAN, Circuit Judges, and McMILLAN, Senior United States District Judge for the Western District of North Carolina, sitting by designation.

MURNAGHAN, Circuit Judge:

The Consumer Protection Division, Office of the Attorney General for the State of Maryland ("the Division"), brought an action against John Edmond in bankruptcy court to forestall discharge. The Division sought to protect the possibility of eventual recovery on an administrative judgment rendered against Edmond for violations of Maryland's Consumer Protection Act (the "Act"), Md.Com.Law Code Ann. Secs. 13-101-501. Edmond has resisted, seeking summary judgment, sanctions pursuant to Federal Rule of Civil Procedure 11, and dismissal for failure to comply with Federal Rule of Civil Procedure 23, applicable to class actions. His efforts have not succeeded before the bankruptcy court or on appeal to the district court.

I.

The Division initially had brought an administrative action under the Act to obtain an injunction and an order of restitution against John Edmond individually, and d/b/a Landover Contact Lens Center and d/b/a Landover Labs, on April 7, 1986. The Division asserted, "among other things, that lenses ordered and paid for were not received; that promised refunds were never made; and that unconditional satisfaction was not provided." After a two-day hearing, on February 26, 1987, the hearing officer determined that Edmond had violated Sec. 13-301(1) of the Act. Apparently, during the administrative proceedings, Edmond filed for bankruptcy.

The Division then filed in the bankruptcy court an action opposing dischargeability on March 16, 1987, under 11 U.S.C. Sec. 523(a)(2)(A), "on behalf of itself and all consumers listed in debtor's schedules...." On February 29, 1988, Edmond moved for summary judgment, offering his own affidavit in support of his motion. The Division objected because, it argued, Edmond had asserted his Fifth Amendment privilege throughout discovery frustrating the mounting of a solid defense to the summary judgment motion. According to Edmond, at a hearing on June 7, 1988, "the Court offered appellant the choice of submitting to a deposition or having the motion for summary judgment denied." Edmond refused to submit to the deposition. Denial of summary judgment followed.

Prior to and during the trial, Edmond had sought to dismiss on the grounds that the Division had failed to obtain class certification and to follow the procedural requirements of Rule 23. The bankruptcy judge found that class certification would have been unnecessary: "This was not a class action but rather an action brought by the Attorney General as parens patriae."

As for Rule 11 sanctions, Edmond's basis for the claim of sanctions was an assertion that the Division had failed to abide by the court's scheduling order, had made materially false statements to the court, had filed a complaint which had no factual or legal basis while relying on discovery to prove its claim, and had refused to move for class certification. The bankruptcy judge concluded that "[b]ecause the plaintiff has prevailed, however, the court will decline to allow sanctions requested by debtor." The judge also rejected Edmond's claim that a witness had fabricated testimony and that the action was driven, in part, by the "vindictiveness" of the Attorney General.

So far as discharge was concerned, the judge determined that the debts, including "all consumer claims arising after October 11, 1985" and other specific additional claims arising prior to that date, were nondischargeable. ¹

The district court affirmed the bankruptcy judge's decision:

Upon review of the briefs, the Court has determined that oral argument is not needed. The appeal is essentially frivolous, the facts and legal arguments are adequately presented in the briefs and record, and the decisional process would not be significantly aided by oral argument.

The district judge stated that the denial of Rule 11 sanctions was well within the bankruptcy judge's discretion, "especially since neither side ... adhered strictly to the pretrial procedures." ² The judge also upheld the bankruptcy judge's denial of summary judgment, concluding that it "would have been unfair to allow the appellant to sandbag the appellee...." The Rule 23 contention was regarded as "frivolous." In addition, the district court concluded with the statement that "it is plain that the appellant was not clearly entitled to judgment in his favor...." ³

II.

A. Summary Judgment

On summary judgment, in the bankruptcy court or on appeal, the same standard is employed. The facts must be construed in the light most favorable to the nonmoving party, with the burden on the moving party "to demonstrate the absence of any genuine issue of material fact." Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985). Federal Rule of Civil Procedure 56 permits a party to move for summary judgment "without affidavits," Fed.R.Civ.P. 56(b), and authorizes the judgment to be rendered after examination of "the pleadings, depositions, answers to interrogatories, and admissions on file." Fed.R.Civ.P. 56(c). Either party, however, also may supply affidavits, which, in turn, the court "may permit ... to be supplemented or opposed by depositions, answers to interrogatories, or further affidavits." Fed.R.Civ.P. 56(e). When the moving party supports the motion with affidavits, "an adverse party may not rest upon the mere allegations or denials ... but, by affidavits or as otherwise provided ..., must set forth specific facts showing there is a genuine issue of material fact." Id.

Edmond has emphasized that the Division never produced any affidavits or other documents in opposition to the summary judgment motion but only made allegations termed conclusory. In addition, Edmond has argued that the bankruptcy court incorrectly conditioned summary judgment on his refusal to be deposed and did not sufficiently consider the Division's statement that it was "still awaiting discovery two weeks prior to trial."

The Division has responded that Edmond never even met his initial burden of establishing the absence of a genuine issue. The Division, in opposition to the motion, has pointed to genuine issues present in the pleadings and depositions: the administrative hearing's findings, depositions of consumers, and bank records that suggested financial improprieties. According to the Division, Edmond had based his summary judgment motion on "substantial hearsay statements which were not part of the record and were supported only by his unverified affidavit." The Division had requested, consequently, that the bankruptcy judge strike the affidavit and hearsay statements or else compel Edmond to respond to a deposition. The Division's position has been that, by submitting an affidavit, Edmond waived his Fifth Amendment privilege against self-incrimination. Characterizing the judge's discussion with Edmond as "the choice of either submitting to a deposition or having his affidavit and hearsay statements struck," the Division has claimed that, when Edmond refused to be deposed, the judge, in essence, struck the material leaving nothing to support the summary judgment motion.

Edmond's efforts to secure a grant of summary judgment were destined to fail. At the hearing on the motion, the bankruptcy court judge first attempted merely to give the Division time to depose Edmond. The judge noted that Edmond could not "have peanut butter on both sides of his bread...." He stated that by submitting the affidavit, Edmond waived his privilege; therefore, the judge would "enter an order compelling the discovery." The judge declared that after the deposition he would consider again the summary judgment motion. Edmond's counsel implied that the dates suggested for the deposition by the Division were unsatisfactory, apparently because counsel felt that the Division had been given adequate time for discovery. The judge then told Edmond's counsel, "the alternative is to deny your motion for summary judgment and hold the June 20 trial." Counsel responded, "Sir, we would like to proceed with the June 20th trial date." The judge concluded by denying the motion for summary judgment and the motion to compel discovery from Edmond.

Although the best characterization of the colloquy between the judge and counsel may be somewhat unclear, the propriety in denying summary judgment is not debatable. Affidavits submitted on summary judgment do not deserve to receive unthinking acceptance by the court. In Rohrbough v. Wyeth Laboratories, Inc., 916 F.2d 970 (4th Cir.1990), the Fourth Circuit held that "the district court was justified in disregarding the affidavit" submitted by a party opposing summary judgment. Id. at 975. The court emphasized that the affidavit contradicted prior deposition testimony by the affiant. See id. at 976. Unlike Rohrbough, the present case does not even raise the problem of conflicting versions of testimony. By selectively asserting his Fifth Amendment privilege, Edmond attempted to insure that his unquestioned, unverified affidavit would be the only version. But the Fifth Amendment privilege cannot be invoked as a shield to oppose depositions while discarding it for the limited purpose of making statements to support a summary judgment motion.

The...