G.J.B. & Associates, Inc. v. Singleton

• Decision Date: 05 September 1990
• Docket Number: No. 88-2249,88-2249
• Citation: 913 F.2d 824
• Parties: G.J.B. & ASSOCIATES, INC., a Florida Corporation; Glenn J. Beadle; Ruth Beadle, on their own behalf, and as to the causes of action asserted on behalf of Brown Educational Corporation, for its use and benefit on a derivative basis; Albert O. Roy; Mark V. Berland; Robert J. Quinn; Winston Churchill; W.B. Pearson; Ann L. Giordano; Harlan L. Berland; Darrell J. Lundgren; and C.C. Pollen Company, Plaintiffs, v. John D. SINGLETON; Kenneth H. Reiserer; Beckett Partnership; Johnny Brown; Brown Educational Corporation; Richard Brooke; John Does 1 Through 20; Betty Brown, also known as "Boots"; Ann Margolis, Special Administrator of the Estate of Harry Margolis; and John D. Singleton, doing business as Singleton & Reiserer, Defendants. Earl D. MILLS; W. Wayne Mills; and Robert F. Bourk, Appellees, v. John A. CLARO, Movant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 824

913 F.2d 824

17 Fed.R.Serv.3d 1083

G.J.B. & ASSOCIATES, INC., a Florida Corporation; Glenn J.

Beadle; Ruth Beadle, on their own behalf, and as to the

causes of action asserted on behalf of Brown Educational

Corporation, for its use and benefit on a derivative basis;

Albert O. Roy; Mark V. Berland; Robert J. Quinn; Winston

Churchill; W.B. Pearson; Ann L. Giordano; Harlan L.

Berland; Darrell J. Lundgren; and C.C. Pollen Company, Plaintiffs, v. John D. SINGLETON; Kenneth H. Reiserer; Beckett

Partnership; Johnny Brown; Brown Educational Corporation;

Richard Brooke; John Does 1 Through 20; Betty Brown, also

known as "Boots"; Ann Margolis, Special Administrator of

the Estate of Harry Margolis; and John D. Singleton, doing

business as Singleton & Reiserer, Defendants.

Earl D. MILLS; W. Wayne Mills; and Robert F. Bourk, Appellees, v. John A. CLARO, Movant-Appellant.

No. 88-2249.

United States Court of Appeals, Tenth Circuit.

Sept. 5, 1990.

John A. Claro, pro se, David Morse and Jay D. Adkisson on the brief, Claro & Johnston, Oklahoma City, Okl., for movant-appellant.

No appearance for appellees.

Before LOGAN, SETH and BALDOCK, Circuit Judges. ^*

BALDOCK, Circuit Judge.

Movant-appellant John Claro, an attorney, challenges the district court's sua sponte imposition of sanctions upon him for violating Fed.R.Civ.P. 11 & 16(f) during trial of a legal malpractice action. Reviewing the district court's determination under an abuse of discretion standard, Cooter & Gell v. Hartmarx Corp., --- U.S. ----, 110 S.Ct. 2447, 2461, 110 L.Ed.2d 359 (1990) (Rule 11 standard); Ikerd v. Lacy, 852 F.2d 1256, 1258 (10th Cir.1988) (Rule 16(f) standard), we sustain the Rule 16(f) sanction as lawfully imposed, but vacate the Rule 11 sanction for want of procedural due process. ¹

I.

On direct examination, Claro was questioning his client, plaintiff Glenn Beadle, about a critical meeting with the defendant tax attorneys. Claro asked Beadle if he had taken any notes during the meeting and whether the notes would refresh Beadle's recollection of the meeting. Rec. vol. VIII at 73. When Beadle answered "yes," to both inquiries, defendants' respective counsel objected because they had not received a copy of the notes and were unaware of their existence, despite four years of litigation and a notice of deposition duces tecum requesting Beadle to provide "[a]ny and all documents and/or evidence" in support of his allegations. Id. at 73-74. Claro's response to the court was three-fold: (1) the defendants did not request the notes, (2) the notes were not exhibits to be submitted into evidence, and (3) the notes were "absolute just hen-scratching." Id. at 76-77. The district court found that Claro should have produced the notes to defense counsel pursuant to their discovery request once Beadle located the notes and Claro knew the notes would be used at trial. Id. at 79-80. ²

The district court permitted Claro to continue his examination of Beadle without the notes for the remainder of the day. At day's end, however, the court found that Claro had failed to comply with (1) the court's pretrial scheduling orders and (2) his continuing duty to produce requested discovery documents. Id. at 97. The court directed Claro to give defense counsel an opportunity to depose Beadle based on the notes. The court, which earlier had sanctioned Claro in related litigation for similar misconduct, Roy v. American Professional Mktg., Inc., 117 F.R.D. 687, 690-91 (W.D.Okla.1987), further ordered him to pay all fees and costs associated with Beadle's deposition in lieu of striking Beadle's testimony. Id. at 98-99. ³ The following day, the district court entered a written order reprimanding Claro for his conduct. Rec. vol. I at doc. 439. A copy of the order was disseminated to all federal judicial officers in the Western District of Oklahoma.

Thereafter, Claro filed a motion under Fed.R.Civ.P. 60(b)(1) & (6) to vacate the district court's order, asserting that the court (1) denied him notice and hearing, and (2) lacked any pretrial or discovery orders to support a reprimand. Rec. vol. I at doc. 455. At the motion hearing, the district court read to Claro the language of its April 20, 1988 pretrial standing order requiring "plaintiffs to identify the specific exhibits to be introduced or discussed in connection with the direct examination of each witness." Rec. vol. XII at 6-7 (emphasis in original). The court reminded Claro that this language was incorporated into its standing order as a direct result of complaints the court received concerning Claro's trial tactics in the Roy case. Id. at 6, 17-19. The district court rejected as "patently frivolous" Claro's argument that the notes were not "exhibits" within the meaning of the court's standing order. Id. at 36. At the conclusion of the hearing, the court entered detailed findings into the record and sanctioned Claro $185 for his failure to reveal the notes to opposing counsel prior to Beadle's direct examination. Id. at 35-40. The court then imposed an additional $185 sanction upon Claro for filing a "frivolous" motion to vacate. Id. at 39. The $370 sanction represented four hours of opposing counsel's billable time. Lastly, the district court admonished Claro that it would report any future misconduct to disciplinary authorities. Id. at 40. That same day, the court entered a minute order imposing the cost of Beadle's deposition upon Claro as well. Rec. vol. I at doc. 484.

II.

Initially, we express concern over our jurisdiction to consider Claro's appeal although the issue has not been raised. See Fed.R.Civ.P. 12(h)(3) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shall dismiss the action.") (emphasis added). Claro filed his notice of appeal within thirty days after the district court's order ruling on his motion to vacate and setting the amount of his fine, see Fed.R.App.P. 4(a)(1), but before the district court's denial of his client Beadle's motion for judgment notwithstanding the verdict under Fed.R.Civ.P. 59(e). See Fed.R.App.P. 4(a)(4) (notice of appeal filed before disposition of Rule 59(e) motion ineffective). Thus, we have jurisdiction over Claro's appeal only if an order imposing sanctions against an attorney currently of record represents a "final decision" under 28 U.S.C. Sec. 1291 or comes within an exception to the Sec. 1291 finality requirement. Otherwise, Claro's notice of appeal was prematurely filed.

A.

Under 28 U.S.C. Sec. 1291, circuit courts "have jurisdiction of appeals from all final decisions of the district courts...." The Supreme Court has described a final decision as generally "one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 633, 89 L.Ed. 911 (1945). To date, only the Ninth Circuit has held that an order imposing sanctions upon counsel currently of record is final and appealable under Sec. 1291 when imposed. E.g., Mesirow v. Pepperidge Farm, Inc., 703 F.2d 339, 345 (9th Cir.), cert. denied, 464 U.S. 820, 104 S.Ct. 83, 78 L.Ed.2d 93 (1983). In contrast, a number of circuits have held that a sanction order against present counsel is not a final decision within the meaning of Sec. 1291 because an adjudication on the merits of the underlying controversy has yet to occur. E.g., DeSisto College, Inc. v. Line, 888 F.2d 755, 761-62 (11th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 2219, 109 L.Ed.2d 544 (1990); In re Licht & Semonoff, 796 F.2d 564, 569-70 (1st Cir.1986); Frazier v. Cast, 771 F.2d 259, 261 (7th Cir.1985).

Without undue analysis, we join the majority of circuit courts that have addressed the issue and hold that a sanction order against an attorney currently of record is not a final decision for purposes of a Sec. 1291 appeal where the underlying controversy remains unresolved. See Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 373-75, 101 S.Ct. 669, 672-74, 66 L.Ed.2d 571 (1981) (general requirement of Sec. 1291 is that all appeals await final judgment on the merits). At the time of the district court's sanction order, Claro was actively representing a party to the litigation. Consequently, Claro had a continuing interest in and connection to the litigation. We cannot consider the sanction order, which resulted from Claro's failure to disclose notes relating to the substance of his client's malpractice claims against defendants, as wholly separate from the merits of the case.

B.

Despite their general agreement on the interlocutory nature of a sanction order against counsel of record, the circuit courts are sharply divided on the question of whether such an order is immediately appealable as an exception to the "final decision" rule under the collateral order doctrine first announced in Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949). ⁴ "To come within the 'small class' of decisions excepted from the final-judgment rule by Cohen, the order must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978) (emphasis added). The Second, Seventh and Eleventh Circuits have held that an order imposing sanctions upon an attorney is immediately appealable under the Cohen doctrine. Cheng v. GAF Corp., 713 F.2d 886, 889-90 (2d Cir.1983) (Sec. 1927 sanctions); Frazier, 771 F.2d at 262 (Rule 11 sanctions); DeSisto College, 888 F.2d at 762-63 (Rule 11 sanctions). In denying an immediate appeal of attorney sanctions, however, the First, Third and Fifth Circuits have relied on the third requisite of the Cohen doctrine to hold that postponing the appeal would not cause the sanctioned party irreparable harm. In...