Devaney v. Continental American Ins. Co., 91-7427

CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
Citation989 F.2d 1154
Docket NumberNo. 91-7427,91-7427
PartiesGary DEVANEY, d/b/a DeVaney Logging Company, Plaintiff-Appellee, v. CONTINENTAL AMERICAN INSURANCE COMPANY; Daniel M. Speer, d/b/a Speer Holt Insurance, Defendants, Tom E. Ellis, Appellant. Eleventh Circuit
Decision Date05 May 1993

Tom E. Ellis, Kracke, Thompson & Ellis, Birmingham, AL, for appellant.

Mary A. Westbrook, Ralph M. Young, Gonce, Young & Westbrook, Florence, AL, Samuel H. Franklin, Lightfoot, Franklin, White & Lucas, Birmingham, AL, for defendants.

Frank H. Hawthorne, Jr., G. William Gill, McPhillips, Debardelaben & Hawthorne, Montgomery, AL, for plaintiff-appellee.

Appeal from the United States District Court for the Northern District of Alabama.

Before EDMONDSON and CARNES, Circuit Judges, and HILL, Senior Circuit Judge.

HILL, Senior Circuit Judge:

Petitioner Tom Ellis served as defense counsel for Continental American Insurance Company ("Continental") in a suit brought by Gary Devaney for nonpayment of a claim for damaged logging equipment. A third party defendant, Daniel Speer, d/b/a Speer-Holt Insurance Agency, ("Speer") participated in discovery but was dismissed on summary judgment prior to trial. The relationship between Continental and Devaney was highly acrimonious during the nineteen month pre-trial period, and each of the three parties in the suit filed motions for sanctions. The magistrate judge deferred ruling on these motions pending the completion of trial.

Subsequent to a jury trial which resulted in a judgment in Devaney's favor, the district court referred the motions for sanctions to the magistrate judge, who conducted a hearing and eventually recommended sanctions against Ellis under Fed.R.Civ.P. 37 and against Devaney's attorneys under Fed.R.Civ.P. 11 and 37. After considering the attorneys' objections to the magistrate's report, the district judge adopted the magistrate's recommendation in full and ordered, inter alia, that Ellis pay costs of $1,954.38 to Gary DeVaney. 1

On appeal, Ellis raises three issues. He argues: 1) that the manner in which the court imposed sanctions denied him due process of law under the Fifth Amendment to the Constitution; 2) that the magistrate judge applied an erroneous legal standard under Fed.R.Civ.P. 37; and 3) that the court erred in adopting the magistrate's finding that no "substantial justification" excused Ellis' behavior during the relevant discovery period. For the reasons that follow, we AFFIRM the order of the district court.

I. Procedural History

Gary Devaney filed the initial complaint in this case in the Circuit Court of Franklin County, Alabama, in June, 1989, and the defendants removed it to federal court shortly thereafter. The complaint contained bad faith and breach of contract claims against Continental and Speer for failure to pay under a casualty policy for the fire loss of a Hydro-Ax 611 Filler Buster used in Devaney's logging business.

Upon Continental's 2 motion, the district court authorized an extension of time, to August 23, 1989, for Continental to reply to discovery requests which Devaney had served with the complaint. On August 7, Devaney filed a notice of deposition under Fed.R.Civ.P. 30(b)(6) and a request for production of documents under 30(b)(5). Continental objected to that portion of the notice which appeared to demand that it produce the president of Continental, John V. Loudermilk, as its 30(b)(6) corporate representative. 3 3] Devaney amended the notice of deposition three times during August and, in its final form, the notice included the original 30(b)(5) document requests and scheduled the deposition of John V. Loudermilk for September 6, 1989, in Indianapolis, Indiana.

On August 31, Continental filed an objection to the notice as amended, claiming 1) that some of the documents sought were either undiscoverable under state law or protected by the attorney/client privilege, and 2) that the 30(b)(5) request was unduly burdensome. On September 1, Ellis telephoned Devaney's counsel, Frank Hawthorne, to discuss whether the parties should proceed with the deposition scheduled for September 6. The parties dispute the substance of the conversation. Ellis contends that Hawthorne insisted on proceeding with the deposition notwithstanding Continental's newly filed objections, and Hawthorne contends that Ellis assured him Continental would provide substantially all of the requested documents at the deposition.

On September 5, after a holiday weekend, the magistrate judge and Mary Anne Westbrook, counsel for defendant Speer, received copies of Continental's August 31 objections. Westbrook telephoned Ellis and Hawthorne in Indianapolis, where each assured her individually that the scheduled deposition would proceed. At Loudermilk's deposition on September 6, Ellis attempted to characterize some of Loudermilk's responses as the responses of a 30(b)(6) representative but refused to concede that Loudermilk would serve as the corporate representative at trial and refused to identify a corporate representative. Ellis also refused to provide the documents described in Devaney's 30(b)(5) request. Westbrook objected to the conduct of both attorneys and informed them that she would seek sanctions against Continental for the cost of any future trip to Indiana made necessary by Ellis' failure to provide documents and a corporate representative. She filed a motion to that effect on October 24 (Motion I). R1-43. Devaney filed a similar motion for sanctions on October 26 (Motion II). R1-44.

On October 18, Devaney filed a motion to compel answers to the interrogatories and document requests he had submitted to Continental in September. On October 26, Magistrate Judge Greene held a hearing on this motion and on the earlier motions for sanctions and orally instructed the parties to file supplemental briefs addressing Continental's objections to production of the requested material. On November 2, Judge Greene entered an order which reiterated his caution at the hearing that Continental should prepare the relevant files for immediate production in case he disallowed its objection. On December 7, Judge Greene granted substantially all of Devaney's October 18 motion. At Devaney's request, the court deferred consideration of his motion for sanctions until Continental complied with the other requirements of the order and the court likewise deferred consideration of Speer's motion for sanctions.

On January 12, 1990, Devaney filed a second motion for sanctions and renewed the October 18 motion for sanctions, noting that Continental had failed to comply with the December 7 order within the twenty day period allotted (Motion III). R1-55. On January 16, Speer filed a similar motion for sanctions and renewed his October 24 motion (Motion IV). R1-56. Judge Greene scheduled a hearing for January 26 and, on January 23, Continental filed the responses required by the December 7 order. At the January 26 hearing, Ellis asserted that Continental had had difficulty obtaining the requested documents. Ellis had not, however, requested a modification of the December 7 order or applied for an extension of time to reply. Judge Greene determined that Continental had by then complied with substantially all of the December 7 order and again deferred the question of sanctions.

On May 16, 1990, Devaney filed a motion to compel more complete answers to his fifth set of interrogatories. After a hearing, the magistrate judge entered an order on May 25 directing Continental to answer five of the disputed interrogatories. He determined that four interrogatories had become moot because of a concession made by Continental at the hearing, and he denied Devaney's motion as to four additional interrogatories. On August 7, Ellis filed a motion to compel answers to interrogatories which Judge Greene granted on August 14 in an order that included a warning to counsel that the district court would likely hold a post-trial hearing to explore the propriety of Rule 37 and Rule 11 sanctions against them. R2-112.

On September 21, Ellis filed a motion to compel production of the transcript of a telephone conversation between a plaintiff's witness, Dwight May, and plaintiff's counsel Hawthorne. During that conversation, May implied that Ellis had encouraged him to misstate a fact in his affidavit. Depo. of Dwight May 73-87. On September 27, Devaney filed a motion to compel answers to his seventh consolidated discovery request and moved for sanctions based on Continental's failure to comply with the court's order of May 25. (Motion V). R2-144. In an order entered on November 27, Judge Greene granted Continental's motion to produce May's statement, granted Devaney's motion to compel, and again deferred the issue of sanctions. District Judge Acker subsequently vacated this order and reserved ruling on the motions pending the scheduled deposition of Dwight May. At a pre-trial conference on December 28, Judge Acker informed Ellis that the transcript of May's conversation with Hawthorne would be admitted at trial and that he would disqualify Ellis from testifying as a witness in opposition to the substance of that conversation unless Ellis withdrew as trial counsel. Ellis withdrew in January, 1991, but did not testify at trial. The court took no further action regarding the May-Hawthorne telephone conversation.

In the meantime, the district court had granted a summary judgment motion dismissing defendant Speer. On October 12, 1990, Speer filed a motion for Rule 11 sanctions against DeVaney on the basis that the claims against Speer were frivolous. (Motion VI). R3-154.

Following a jury trial of Devaney's remaining claims, and concurrent with the entry of judgment, the district court ordered that Speer's October 12 motion for sanctions and "the sua sponte questions of sanctions to be imposed on Tom C. [sic] Ellis" would be considered upon submission of affidavits and briefs. R3-196. On the following day, District...

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