Pease v. Pakhoed Corp.

• Decision Date: 11 January 1993
• Docket Number: Nos. 91-2798,91-6046,s. 91-2798
• Citation: 980 F.2d 995
• Parties: 124 Lab.Cas. P 57,224, 24 Fed.R.Serv.3d 1155 Jerry A. PEASE, Plaintiff-Appellant, v. PAKHOED CORP., et al., Defendants-Appellees. Jerry A. PEASE, Plaintiff-Appellee, v. PAKHOED CORP., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 995

980 F.2d 995

124 Lab.Cas. P 57,224, 24 Fed.R.Serv.3d 1155

Jerry A. PEASE, Plaintiff-Appellant, v. PAKHOED CORP., et al., Defendants-Appellees.

Jerry A. PEASE, Plaintiff-Appellee, v. PAKHOED CORP., et al., Defendants-Appellants.

Nos. 91-2798, 91-6046.

United States Court of Appeals Fifth Circuit.

Jan. 11, 1993.

Rehearing Denied in No. 91-2798

Feb. 10, 1993.

Thomas W. McQuage, Gipson & McQuage, Galveston, Tex., for Jerry A. Pease in No. 91-2798.

K.L. Carnley, John M. Helms, Dow, Cogburn & Friedman, Houston, Tex., for Pakhoed Corp., et al.

Thomas W. McQuage, Gipson & McQuage, Stephen G. Williams, Garner, Walker & Froeschner, Galveston, Tex., for Jerry A. Pease in No. 91-6046.

Appeals from the United States District Court for the Southern District of Texas.

Before KING, WILLIAMS and SMITH, Circuit Judges.

JERRE S. WILLIAMS, CIRCUIT JUDGE:

Pease claims that his employers (collectively "Pakhoed"), fired him because he refused to engage in fraudulent activities. The district court dismissed with prejudice Pease's action because Pease failed to comply with the court's order for a more definite statement. In No. 91-2798, Pease appeals from the district court's order denying Pease's Rule 60(b) Motion for Relief From Judgment. In No. 91-6046, Pakhoed appeals from the district court's order denying Pakhoed's Motion for Sanctions. Because these two cases arise out of the same lawsuit and involve related facts and circumstances, the parties agreed to consolidate for purposes of appeal. We agree with the district court that Pease's claim of wrongful discharge is defective because his pleadings continually fail to reference the specific criminal laws that he alleges Pakhoed directed him to violate. His Rule 60(b) motion fails to cure this defect. We also conclude that the district court's denial of sanctions was within its considerable discretion. We affirm.

I. FACTS AND PRIOR PROCEEDINGS

The parties quarrel over the specifics of "who did and knew what when," but the underlying facts that inform our decision are relatively straightforward. Pease was hired by Pakhoed in 1975 and, through a series of promotions, ultimately secured a managerial position. According to Pease, he was demoted in September 1988 because he refused to participate in a fraudulent scheme proposed by his superiors.

In early 1989, Pease consulted with Mr. David Garner, an attorney in Galveston, Texas. Garner addressed correspondence to Pakhoed and later transferred the case to Mr. Stephen Williams, a solo practitioner who had an office sharing and sublease association with Garner's law firm. Negotiations between Williams and Pakhoed's in-house counsel failed to resolve Pease's complaints, and Pease was terminated on May 12, 1989. Pease eventually filed suit in Texas state court in October 1989, alleging wrongful discharge and age discrimination. Pakhoed removed the case to federal district court. ¹

In November 1989, shortly after removal, Pakhoed filed a Motion for a More Definite Statement. Specifically, Pakhoed requested the court to require Pease to plead his allegations with greater precision:

Plaintiff does not specifically identify the alleged conduct which he refused to take part in which allegedly resulted in his termination. While the complaint alleges that Plaintiff was terminated because of his failure to cover up, conceal or falsify material facts[,] the pleading is too vague to allow Defendants [to] file a responsive pleading.... In order for Defendants to file a responsive pleading it is necessary that Plaintiff more definitely state his grounds for estopping application of [the "employment at will"] doctrine.... Defendants are clearly entitled to know the alleged criminal act which Plaintiff was asked to perform. (footnote omitted)

Williams failed to respond to the motion, and in April 1990 the district court, reciting Williams's failure to respond, entered an order requiring Pease to submit an amended complaint containing a more definite statement within thirty days. Again, Williams did not respond. Pakhoed immediately filed a Motion to Dismiss. In December 1990, following a hearing that Williams failed to attend, the district court dismissed Pease's complaint with prejudice for failure to (1) comply with the court's earlier order requiring a more definite statement, (2) respond to the Motion to Dismiss, and (3) appear at the hearing. Three months later, Pease, who was unaware of the dismissal, grew dissatisfied with Williams's representation (or lack thereof) ² and engaged different counsel, who informed Pease in April 1991 that his suit had been dismissed the previous December.

In May 1991, Pease's new attorneys, Messrs. Jack Ewing and Thomas McQuage, filed a Rule 60(b) Motion for Relief from Judgment ³ along with supporting affidavits, a proposed amended complaint that was asserted to be in compliance with the More Definite Statement Order, and a supporting memorandum of law. The district court denied the motion. Two months later, Pakhoed moved for sanctions, claiming Pease's unsuccessful Rule 60(b) motion violated Fed.R.Civ.P. 11 and 28 U.S.C. § 1927. ⁴ The district court denied this motion also. Both Pease and Pakhoed timely appeal the denial of their respective motions.

II. DISCUSSION

A. The District Court's Denial of Pease's Rule 60(b) Motion

As we recently stated in Bertrand v. Sullivan, the decision to grant or deny a Rule 60(b) motion is committed to the sound discretion of the district court and is accorded deferential review. 976 F.2d 977, 979 (5th Cir.1992). Courts are disinclined to disturb judgments under the aegis of Rule 60(b). "To overturn the district court's denial of this 60(b) motion, it is not enough that a grant of the motion might have been permissible or warranted; rather, the decision to deny the motion must have been sufficiently unwarranted as to amount to an abuse of discretion." Fackelman v. Bell, 564 F.2d 734, 736 (5th Cir.1977) (emphasis added). We discern no abuse on the record before us.

The crux of Pease's Rule 60(b) motion is that his former attorney, Williams, essentially abandoned him once the case was transferred to federal court. Despite close monitoring by Pease and abundant assurances from Williams that the case was proceeding in the typical fashion, Pease contends that Williams actually ignored the case. This neglect, he avers, resulted in its ultimate dismissal and justifies relief under the Rule. We need not reach, however, the sharply contested issue of Williams's deleterious conduct, although it occupies the vast portion of the parties' briefs before this Court. A crucial threshold matter renders Pease's plea for Rule 60(b) relief fatally defective: neither Pease's original complaint nor his Rule 60(b) documents assert a meritorious cause of action because they fail to reference specific criminal laws that Pease was told to violate. The district court's Order remains unheeded.

It is well established that Rule 60(b) requires the movant to demonstrate that he possesses a meritorious cause of action. See, e.g., Lepkowski v. United States Dep't of Treasury, 804 F.2d 1310, 1314 (D.C.Cir.1986) ("motions for relief under Rule 60(b) are not to be granted unless the movant can demonstrate a meritorious claim or defense"); United States v. Parcel of Land, Etc. (Woburn City Athletic Club, Inc.), 928 F.2d 1, 5 (1st Cir.1991) ("In exercising its discretion under Rule 60(b), the district court must look, inter alia, to whether the party seeking relief has a potentially meritorious claim or defense."). The record before us demonstrates that Pease has failed to satisfy this seminal requirement.

Pease's original complaint makes several bare and conclusory allegations regarding:

Plaintiff's failure to and refusal to enter into or continue a conspiracy or to otherwise participate in a scheme to cover up or conceal material facts, or his refusal to falsify, conceal or cover up material facts, or his failure or refusal to make false, fictitious or fraudulent statements or representations, or his failure and refusal to make or use a false writing or document containing a false, fictitious or fraudulent statement or entry to another by the use of the United States Postal Service or by telephone, telegraph or other governmentally regulated means of communication.

Understandably, Pakhoed argued that Pease's complaint was too vague to allow Pakhoed to file an adequate, responsive pleading. The trial court agreed and ordered Pease to serve an amended and more precise complaint. Particularly, the court ordered Pease to "identify specifically the alleged conduct which Plaintiff refused to take part in ... [and] any criminal law, if any, which Plaintiff refused to violate." ⁵ As previously stated, Williams never responded to the court's Order. But of greater import here, Pease's new counsel likewise failed to satisfy the court's demands via their Rule 60(b) motion, as the following colloquy from oral argument illustrates: ⁶

COURT: In order to get 60(b) relief in this kind of a situation, one of the things you're going to need to show is that you potentially have a meritorious cause of action. What kind of a showing have you made on that? There's no point in worrying about this case unless your client is [asserting a meritorious claim].

COUNSEL: I understand. And the Defendants made a point about that in their Appellees' brief on our appeal. The answer is this: the showing in the context of the dismissal was failure to replead by an amended complaint that showed his wrongful discharge claim. Mr. Ewing, along with his affidavit in our 60(b) motion, presented his amended complaint that he told the district court, "Here's what I'll file if you give me the chance, with particularized allegations of what Mr. Pease is talking about." (Counsel proceeded to cite various provisions of the Texas Penal Code that were never mentioned in the proffered complaint)

COURT: Now did you tell the district...