Jones v. Pittsburgh Nat. Corp.
| Decision Date | 03 April 1990 |
| Docket Number | No. 89-3626,89-3626 |
| Citation | 899 F.2d 1350 |
| Parties | RICO Bus.Disp.Guide 7454 Catherine M. JONES v. PITTSBURGH NATIONAL CORPORATION t/d/b/a Pittsburgh National Bank, a federally-chartered banking corporation; American Motors Corporation, a Delaware Business Corporation; Amica Mutual Insurance Company, a Rhode Island Business Corporation; American Auto Sales, Incorporated, t/d/b/a Wilkinsburg Jeep, a Pennsylvania Business Corporation; Whitehall Adjusters, a Pennsylvania Business Corporation; McKean Motors, Inc., a Pennsylvania Business Corporation; Golick Corporation, a Pennsylvania Business Corporation; Streets Run Auto Service, a Pennsylvania Business Corporation v. David A. JONES, Third party deft., Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
Diana F. Wilkins and Barry M. Simpson, Ecker, Rome and Simpson, P.C., Pittsburgh, Pa., for McKean Motors, Inc.
Kenneth W. Lee (argued), Plowman & Spiegel, Pittsburgh, Pa., for American Sales, Inc.
Kenneth S. Mroz, Dickie, McCamey & Chilcote, P.C., Pittsburgh, Pa., for American Motors Corp., Amica Mut. Ins. Co., and Whitehall Adjusters, appellees.
Before SLOVITER, GREENBERG and SEITZ, Circuit Judges.
David Jones (appellant), an attorney, appeals from the order of the district court dated August 22, 1989, denying his motion for recusal of the district judge and for reconsideration of the allowance of attorneys' fees and expenses against him.
This court views a motion characterized as a motion for reconsideration as the "functional equivalent" of a Rule 59(e) motion to alter or amend a judgment. Federal Kemper Ins. Co. v. Rauscher, 807 F.2d 345, 348 (3d Cir.1986); see Fed.R.Civ.P. 59(e). A timely appeal from the denial of a 59(e) motion "brings up the underlying judgment for review." Quality Prefabrication, Inc. v. Daniel J. Keating Co., 675 F.2d 77, 78 (3d Cir.1982). We therefore reach the merits of the appeal from the order refusing to recuse and awarding attorneys' fees and costs against appellant under 28 U.S.C. Sec. 1291 (1982).
Appellant was counsel for his wife Catherine Jones (plaintiff), who had instituted the underlying diversity and RICO action on July 24, 1987, against the numerous defendants, at least some of whom were citizens of Pennsylvania, based upon the purchase and use of an automobile. Because appellant was driving the car when two accidents occurred, defendants joined appellant as a third-party defendant seeking indemnification or contribution on the ground that his negligence caused the car damage. After discovery, the court determined that the two grounds for jurisdiction asserted by plaintiff were lacking and dismissed the action and, as we read the order, the third-party complaint as well.
On defendants' motion, the court determined that appellant had conducted the litigation in bad faith, and imposed sanctions against him in the form of attorneys' fees and costs under Fed.R.Civ.P. 11 and 28 U.S.C. Sec. 1927 (1982). It also determined that the dismissal of the complaint was a sufficient sanction against plaintiff for her own violations of Rule 11. Appellant's subsequent motion for recusal of the judge and for reconsideration was denied and this appeal followed.
A recital of the often unorthodox details of this litigation is important to an understanding of this appeal. Plaintiff's complaint, filed on her behalf by appellant, asserted seven causes of action, including one RICO count. The complaint based jurisdiction on diversity of citizenship, see 28 U.S.C. Sec. 1332 (1982), asserting that plaintiff was a citizen of New Hampshire and indicating that at least some of the defendants were citizens of Pennsylvania. It also invoked the jurisdiction provided by RICO. See 18 U.S.C. Secs. 1961-1968 (1988).
As we have noted, defendants filed a motion to dismiss the complaint along with a third-party complaint against appellant. Appellant, as third-party defendant, filed an answer to the third-party complaint in which he objected to the jurisdiction of the court on the ground that the addition of appellant, a Pennsylvania citizen, as a party to the action created incomplete diversity of citizenship. In a supporting brief, appellant asserted, strangely enough, that the entire action should be dismissed because of this jurisdictional deficiency. This position, of course, raised a possible conflict of interest between appellant and plaintiff which we are not called on to address.
Defendants then filed a motion for sanctions on April 28, 1988. The motion also requested dismissal for procedural noncompliance and summary judgment. The sole authority cited for the imposition of sanctions was Federal Rule of Civil Procedure 11, although the motion referred to conduct which is not sanctionable under this Rule. Thus, it alleged that plaintiff had failed to file a pre-trial statement, to submit a RICO case statement, to answer interrogatories, to produce documents requested and to conduct any discovery and that plaintiff had had no factual basis for the RICO count.
The district court ordered plaintiff to respond to the motion for sanctions and dismissal, without citing any source for its authority to impose the requested sanctions. Plaintiff's response agreed that the case should be dismissed, but stated that the reason should be because the joining of appellant as a third-party defendant destroyed diversity jurisdiction.
The court subsequently entered an order citing Field v. Volkswagenwerk AG, 626 F.2d 293, 299 (3d Cir.1980) () and reciting that plaintiff's agreement to a dismissal because of incomplete diversity due to the addition of appellant as a third-party defendant was "patently without merit." It directed defendants to mail copies of their dismissal and sanctions motion to plaintiff and to notify her that her legal interests were in jeopardy as a result of appellant's conduct. It also instructed plaintiff to inform the court whether she had any objection to granting defendants' motion to dismiss. Plaintiff stated by letter that she did object to dismissal.
In a response to plaintiff's letter, defendants reiterated their request for fees and dismissal. Although this document did not identify any authority in support of their requests, it recited that it sought dismissal and fees based upon plaintiff's "conduct of [the] litigation in general," including the failure to answer interrogatories, failure to file a RICO case statement or pre-trial statement and failure to produce requested documents.
Sometime after the motion for sanctions was served, plaintiff answered certain of defendants' interrogatories. In an answer 1 to one question, she stated that her present address was in Saltsburg, Pennsylvania, and that she "has owned said premises since April 29, 1977, lived there, seriatim, since then."
Thereupon, the district court determined that the two asserted grounds for its jurisdiction, diversity of citizenship and RICO's jurisdictional provisions, were in fact lacking and ordered the case dismissed for lack of subject matter jurisdiction. The court relied on plaintiff's answer to the interrogatory in which she stated that she had lived in Pennsylvania since before filing the action. In addition, the court referred to plaintiff's concession, at a point in the litigation which is unclear from the record, that "[e]arly in the case history, plaintiff decided not to pursue a RICO cause of action." The dismissal has, of course, not been appealed. The court also ordered defendants to submit records of the "reasonable fees incurred in the action for purposes of imposing appropriate sanctions" against appellant.
Thereafter, defendants filed requests for counsel fees and expenses which contained the amount of fees and expenses sought. After receiving submissions from all defendants, the district court on November 8, 1988, ordered third-party defendant (appellant) to respond to defendants' motions and petitions for counsel fees. This order recited that counsel fees were sought pursuant to Rule 11. It made no mention of 28 U.S.C. Sec. 1927.
Appellant's answer denied liability as either a third-party defendant or as counsel for plaintiff. He reasserted that plaintiff was a citizen of New Hampshire, having been in Pennsylvania for only a few days between June 1985 and September 1987. The answer alleged that the amount of fees and expenses sought was "absurd" and in any event "a sum far in excess of [appellant's] ability to pay." It further stated that liability should be limited to those fees necessary to prepare defendants' answers and to draft the relevant portions of "their non duplicitous interrogatories." In response to the charge of having violated Rule 11, appellant asserted that he "believed throughout a large portion of the instant litigation ... that the Complaint was warranted by existing law; that, alternatively, it was warranted by good faith arguments for extension, modification or reversal of existing laws; and that it was not interposed for delay or needless increase in cost of litigation."
On February 2, 1989, the court issued a memorandum opinion and order sanctioning plaintiff under Rule 11 for her conduct during the litigation. The court, however, determined that dismissal of her action was an adequate sanction and plaintiff has not appealed that decision. The subsequent discussion will deal only with appellant's contentions.
At the same time, the court's order sanctioned appellant. It cited his failure to prosecute any claim, failure to comply with...
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