Lawson v. Brown's Home Day Care Center, 03-112.

• Court: United States State Supreme Court of Vermont
• Citation: 861 A.2d 1048
• Docket Number: No. 03-112.,03-112.
• Parties: Katherine LAWSON and Bradley Lawson v. BROWN'S HOME DAY CARE CENTER, INC. and Lucille Nelson and Robert Nelson, Jr. (Duncan F. Kilmartin, Appellant).
• Decision Date: 08 July 2004

861 A.2d 1048

Katherine LAWSON and Bradley Lawson
v.
BROWN'S HOME DAY CARE CENTER, INC. and Lucille Nelson and Robert Nelson, Jr. (Duncan F. Kilmartin, Appellant)

No. 03-112.

Supreme Court of Vermont.

July 8, 2004.

Motion for Reargument Denied August 20, 2004.

861 A.2d 1049

Present: AMESTOY, C.J., DOOLEY, JOHNSON and SKOGLUND, JJ., and FREDERIC W. ALLEN, C.J. (Ret.), Specially Assigned

ENTRY ORDER

¶ 1. Duncan Kilmartin appeals from the trial court's order, on remand, upholding its imposition of $2000 in sanctions. The court found that Kilmartin acted in bad faith in filing unsealed materials from a confidential mediation session with the court. Kilmartin argues that the court's order should be reversed because: (1) he was deprived of his due process right to advance notice that his conduct was proscribed; (2) due process required proof of his misconduct beyond a reasonable doubt; (3) the trial court erred in finding that he acted in bad faith; and (4) the court lacked jurisdiction to sanction him after August 10, 1998 when the underlying case was dismissed.

¶ 2. As discussed below, we find these arguments without merit. The trial court was ordered on remand to determine Kilmartin's motivation in disclosing confidential materials. See Lawson v. Brown's Day Care Ctr., Inc., 172 Vt. 574, 574, 776 A.2d 390, 391 (2001) (mem.) ("We reverse and remand for a determination on the issue of Kilmartin's motivation in making the disclosure."). We explained that if the court found that Kilmartin had revealed the mediation materials in bad faith, "then a sanction would be an appropriate exercise of the court's inherent powers." Id. at 578, 776 A.2d at 395. The court's finding that Kilmartin acted in bad faith is supported by the record, and the court did not abuse its discretion in imposing sanctions. See Chambers v. NASCO, Inc., 501 U.S. 32, 55, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (court's exercise of its inherent powers reviewed for abuse of discretion). We therefore affirm.

¶ 3. The facts underlying this appeal are largely set forth in our entry order reversing and remanding this case to the trial court. See Lawson, 172 Vt. at 574-76, 776 A.2d at 390-93. Briefly restated, Kilmartin was counsel for defendants in an underlying civil action. Significant animosity developed between Kilmartin and plaintiffs' counsel, Gareth Caldbeck, which manifested itself in numerous filings with the

861 A.2d 1050

trial court. Despite being ordered to refrain from personally attacking one another, their behavior continued. See id. at 574, 776 A.2d at 391. On June 18, 1998, Kilmartin filed an "emergency" motion to disqualify Caldbeck, accusing him of obstruction of justice, subornation of perjury, and presentation of false evidence. See id. The motion was denied

¶ 4. On June 22, 1998, the parties began court-ordered mediation, agreeing that all proceedings would remain confidential. Shortly thereafter, Kilmartin filed unsealed documents with the court accusing Caldbeck of unethical and illegal conduct. These filings included a copy of a proposed settlement agreement, and they disclosed discussions that had occurred during mediation. Caldbeck similarly filed material from the mediation session with the court. The court ordered the temporary seal of certain pages of these documents to protect the confidentiality of the parties' mediation and settlement discussions.

¶ 5. On August 10, 1998, the underlying case was dismissed with prejudice based on the parties' stipulation. On August 21, the court issued a show cause order, asking Kilmartin and Caldbeck to demonstrate why sanctions should not be imposed for their violation of the confidentiality of the mediation session. After a hearing, the court imposed sanctions against both attorneys pursuant to its inherent powers.

¶ 6. Kilmartin appealed, arguing that he had been denied procedural due process, and that his professional responsibilities required him to make the disclosure that was the subject of sanctions.¹ See id. at 574, 776 A.2d at 390. We reversed and remanded, holding that the trial court lacked the authority to sanction Kilmartin through its inherent powers absent a finding of bad faith or other exceptional circumstances. Id. at 576, 776 A.2d at 393. We thus remanded for a determination of Kilmartin's motivation in making the disclosure. As we explained, Kilmartin was entitled to "some explanation why the reasons [he offered] for the disclosure were not only wrong, but so wrong that they were advanced in bad faith." Id. We recognized that the court's imposition of sanctions raised due process concerns, but we concluded that these concerns would be addressed by a finding of bad faith. Id. at 577-78, 776 A.2d at 394 (explaining that "attorneys in this state are on notice that negotiating in bad faith during settlement negotiations can result in sanctions.").

¶ 7. On remand, and after a hearing, the trial court issued a lengthy order upholding its imposition of sanctions after finding that Kilmartin acted in bad faith. In reaching its conclusion, the court considered Kilmartin's justification for his behavior, i.e., "to disclose unethical conduct and/or potentially criminal conduct and to disqualify the opposing lawyer," in light of all the facts and circumstances. The court found Kilmartin's explanation inconsistent with his conduct, and, based on numerous findings, it concluded that Kilmartin had acted in bad faith in filing confidential materials with the court.

¶ 8. To place Kilmartin's behavior in context, the court first recounted in detail the "unnecessary, unprofessional, and distracting" behavior exhibited by counsel in the underlying proceedings. The court turned next to the specific acts that formed the basis of its sanction order: Kilmartin's repeated filing of documents protected by the confidentiality of the mediation process. As the court explained, on July 2, 1998, Kilmartin filed a complicated motion seeking permission to appeal the court's denial of his emergency motion to disqualify

861 A.2d 1051

Caldbeck, or alternatively, to suspend and disqualify Caldbeck. In his motion, Kilmartin accused Caldbeck of misconduct in preparation of the settlement agreement, and he repeated his earlier charge that Caldbeck had prepared false affidavits. Kilmartin described specific discussions that took place during the June 22 mediation session, and attached a draft settlement agreement as an exhibit. Kilmartin did not request that any portion of the motion be sealed, and it became a matter of public record upon filing, even though the settlement process was ongoing. Kilmartin filed two additional motions that included discussions of events that had occurred during mediation, as well as an affidavit from a mediation participant

¶ 9. The court compared this behavior with the justification proffered by Kilmartin, and found that, although his claimed purposes appeared facially valid, they did not justify his actions. The court explained...