Martin v. Automobili Lamborghini Exclusive, Inc.
| Citation | 307 F.3d 1332 |
| Decision Date | 30 September 2002 |
| Docket Number | No. 00-12489.,No. 01-13659.,No. 01-15443.,00-12489.,01-13659.,01-15443. |
| Parties | John MARTIN, Plaintiff-Appellant, Brian Neiman, Saul Smolar, Interested-Parties-Appellants, v. AUTOMOBILI LAMBORGHINI EXCLUSIVE, INC., Automobili Lamborghini, SpA, Automobili Lamborghini, U.S.A., Inc., Exclusive, Inc., Defendants-Appellees. John Martin, Plaintiff-Appellant, Brian Neiman, Saul Smolar, Interested-Parties-Appellants, v. Automobili Lamborghini Exclusive, Inc., Automobili Lamborghini, SpA, Automobili Lamborghini, U.S.A., Inc., Exclusive, Inc., Defendants-Appellees. John Martin, Plaintiff-Appellant, Brian Neiman, Interested-Party-Appellant, v. Automobili Lamborghini Exclusive, Inc., Automobili Lamborghini, SpA, Automobili Lamborghini, U.S.A., Inc., Exclusive, Inc., Defendants-Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
Kevin C. Gleason, Kevin C. Gleason, P.A., Fort Lauderdale, FL, for Martin, Neiman and Smolar.
Lorin Louis Mrachek, Randy Richard Dow, Page, Mrachek, Fitzgerald & Rose, P.A., Meenu T. Sasser, Gunster, Yoakley, Valdes-Fauli & Stewart, West Palm Beach, FL, John Martin Mullin, Fort Lauderdale, FL, Thomas F. Clauss, Jr., Pillsbury Winthrop LLP, New York City, John Charles Dotterrer, Pillsbury Winthrop LLP, Palm Beach, FL, for Defendants-Appellees.
Appeals from the United States District Court for the Southern District of Florida.
Before EDMONDSON, Chief Judge, and BARKETT and KRAVITCH, Circuit Judges.
This appeal is about fraud on the courts and about sanctions.
Appellants, Brian Neiman ("Neiman"), Saul Smolar ("Smolar") and John Martin ("Martin"), (together "Appellants"), in Case No. 00-12489, appeal the district court's order sanctioning them for perpetration of fraud on the court. In Case No. 01-13659, Appellants appeal the district court's order awarding more than one and a half million dollars in attorneys' fees and costs to Appellees. In Case No. 01-15443, Neiman appeals the district court's order denying his motions to enforce an alleged agreement with Automobili Lamborghini USA, Inc. and Automobili Lamborghini, SpA for the liquidation of Neiman's property. We affirm in part and vacate in part and remand.
This case began in June 1998, when Martin, as Plaintiff, filed a complaint against Automobili Lamborghini Exclusive, Inc., Automobili Lamborghini U.S.A., Inc., Automobili Lamborghini, SpA, and Prestige Imports, Inc. (together "Appellees"). Martin alleged claims under the Magnuson-Moss Act, 15 U.S.C. § 2310(d), along with several Florida statutory and common law claims. The claims involved a defective Lamborghini Diablo (the "Diablo") Plaintiff purportedly purchased.
While pursuing his case in federal court, Martin filed a claim with a Florida arbitration board pursuant to the Florida Lemon Law. Fla. Stat. § 681.10, et seq. The federal district court enjoined the arbitration board's proceedings. Plaintiff appealed the injunction. We ultimately dismissed that appeal as moot.
The case proceeded on in the district court while the appeal of the injunction was pending here. Discovery in the case was referred to Magistrate Judge Seltzer. During the course of discovery, Magistrate Seltzer sanctioned Appellants five separate times. Evidence emerged during discovery that Martin was not the owner of the Diablo and that the lawsuit was filed in bad faith.
Appellees filed a Motion to Dismiss for Fraud upon the Court. At the end of April 1999, the district court referred all pending motions to Magistrate Judge Johnson. After conducting many hearings, Magistrate Johnson issued her 50-page report and recommendation concluding that the action constituted a fraud upon the court. Magistrate Johnson recommended dismissal of the case along with other severe sanctions on Appellants. The district court adopted the report and recommendations and imposed sanctions on Appellants. Appellants appeal from this order.
The district court directed Appellees to submit fee applications and referred the matter to Magistrate Johnson. After receiving Appellees' applications for attorneys' fees, Magistrate Johnson, although indicating that she was not inclined to consider Appellants' ability to pay in setting the sanctions, allowed Appellants to submit evidence on their financial situation. After conducting hearings, including a session on Appellants' financial situation, Magistrate Johnson issued a report and recommendation. She concluded that Appellees should be awarded the amount of fees and costs sought in the fee applications, less certain deductions which the Appellees had made voluntarily at the fee hearings.
Magistrate Johnson determined that, under the court's inherent powers, the Appellants' ability to pay the sanctions need not be considered. Magistrate Johnson, however, stated that, even if ability to pay were considered, Appellants had failed to demonstrate they lacked the ability to pay the sanctions. Magistrate Johnson concluded that, with their combined assets, Appellants had the ability to pay the full amount of sanctions. The district court adopted Magistrate Johnson's recommendation and held Appellants jointly and severally liable for more than one and a half million dollars in attorneys' fees and costs. Appellants appeal from this order.
After the district court entered its order quantifying the monetary sanctions, Neiman filed an emergency motion to enforce an alleged agreement with Automobili Lamborghini USA, Inc. and Automobili Lamborghini, SpA to liquidate his personal property. The district court denied the motion. The district court concluded that Neiman had failed to evidence a total agreement between the parties. Neiman then filed a "renewed motion" to enforce this alleged agreement, which the district court denied for the same reasons as the first. Neiman appeals. We discuss each of the appeals in turn.
• Imposition of Sanctions (Case No. 00-12489)
Courts have the inherent authority to control the proceedings before them, which includes the authority to impose "reasonable and appropriate" sanctions. See Malautea v. Suzuki Motor Co., Ltd., 987 F.2d 1536, 1545 (11th Cir.1993). A court also has the power to conduct an independent investigation to determine whether it has been the victim of fraud. See Chambers v. NASCO, Inc., 501 U.S. 32, 44, 111 S.Ct. 2123, 2132, 115 L.Ed.2d 27 (1991); see also In re E.I. DuPont De Nemours & Company-Benlate Litigation, 99 F.3d 363, 367 (11th Cir.1996) ().
We review the district court's imposition of sanctions for abuse of discretion. See Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.1998). To exercise its inherent power a court must find that the party acted in bad faith. See In re Mroz, 65 F.3d 1567, 1575 (11th Cir.1995).
We are aware that the sanctions ordered in this case are severe.1 The sanctions, however, reflect Appellants' continual and flagrant abuse of the judicial process in this case.2 The district court was clearly justified in imposing severe sanctions against Appellants.
The magistrate judge's report of 50 pages and the district court's order of 22 pages adequately present and address all remaining questions of law and fact. We see no reason to expend further judicial resources repeating what other judges have already written.3
• Amount of Monetary Sanctions (Case No. 01-13659)
We next consider whether the district court abused its discretion by imposing a monetary sanction of more than one and a half million dollars jointly and severally on Appellants. Each Appellant contends that the district court erred by failing to consider his ability to pay as a limiting factor.4
We review for abuse of discretion the district court's imposition of sanctions in a certain amount. See Barnes, 158 F.3d at 1214. "A district court abuses its discretion if it applies an incorrect legal standard, follows improper procedures in making the determination, or makes findings of fact that are clearly erroneous." Chicago Tribune Co. v. Bridgestone/Firestone Inc., 263 F.3d 1304, 1309 (11th Cir.2001).
This Court has not explicitly determined whether a party's ability to pay must be considered under the court's inherent power to impose a sanction. The Supreme Court has warned that "[b]ecause of their very potency, inherent powers must be exercised with restraint and discretion." Chambers, 501 U.S. at 44, 111 S.Ct. at 2132. The Supreme Court noted that "[a] primary aspect of that discretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process." Id. at 44-45, 111 S.Ct. at 2132-33.
We conclude that, when exercising its discretion to sanction under its inherent power, a court must take into consideration the financial circumstances of the party being sanctioned. Cf. Baker v. Alderman, 158 F.3d 516, 528-29 (11th Cir.1998) (); see also Byrne, 261 F.3d at 1098-99 n. 53 (). The inherent power to impose sanctions allows courts to vindicate their judicial authority, but such power must be used to fashion "an appropriate sanction." Chambers, 501 U.S. at 44-45, 111 S.Ct. at 2132-33.
Sanction orders must not involve amounts that are so large that they seem to fly in the face of common sense, given the financial circumstances of the party being sanctioned. What cannot be done must not be ordered to be done. Miccosukee Tribe v. South Florida Water Management District, 280 F.3d 1364, 1370 (11th Cir.2002)(discussing injunctions). And, sanctions must never be hollow gestures; their bite must be real. For the bite to be real, it has to be a sum that the person might actually pay. A...
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