Phoceene Sous-Marine, S. A. v. U.S. Phosmarine, Inc.

• Citation: 682 F.2d 802
• Decision Date: 27 July 1982
• Docket Number: SOUS-MARIN,No. 80-5712,S,80-5712
• Parties: PHOCEENEA., Plaintiff-Appellee, v. U. S. PHOSMARINE, INC., and Samuel G. Lecocq, Defendants-Appellants.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 802

682 F.2d 802

PHOCEENE SOUS-MARINE, S. A., Plaintiff-Appellee, v. U. S. PHOSMARINE, INC., and Samuel G. Lecocq, Defendants-Appellants.

No. 80-5712.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted April 8, 1982.

Decided July 27, 1982.

Charles H. Thomas, Cislo, O'Reilly & Thomas, Long Beach, Cal., for defendants-appellants.

Jim P. Mahacek, Kunath & Talley, Laguna Hills, Cal., argued for plaintiff-appellee; Walter A. Talley, Kunath & Talley, Laguna Hills, Cal., on brief.

Appeal from the United States District Court for the Central District of California.

Before CHAMBERS, ELY and NORRIS, Circuit Judges.

ELY, Circuit Judge:

This appeal requires a determination whether a district court may enter a default judgment against a defendant as a sanction for the defendant's deceiving the court on a matter wholly unrelated to the merits of the defendant's case. We conclude that the entry of default under such circumstances is inconsistent with the requirements of due process and therefore reverse the judgment of the District Court and remand the case for further proceedings.

I. FACTS

On October 20, 1978, appellee Phoceene Sous-Marine ("Phoceene") brought this action against appellants U. S. Phosmarine, Inc. and Samuel G. Lecocq ¹ for patent and trademark infringement, wrongful disclosure and appropriation of trade secrets, unfair competition, and failure to pay an account stated. Trial was originally scheduled for February of 1979 but, because of the complexity of the case, was continued until August of that year. Approximately one week prior to the August trial date, appellants' attorney requested an additional continuance until October of 1979. The basis asserted for this continuance was that a conflict existed between the attorney's vacation schedule and the scheduled trial date. The District Court granted the continuance and trial was rescheduled for October 10, 1979. At a pretrial hearing on October 9 1979, appellants' attorney once again requested a continuance, asserting that Samuel Lecocq had suffered a physical and nervous breakdown while in France and would be unable to attend trial for approximately 45 days. ² Because Lecocq's presence would significantly aid the presentation of appellants' case, the District Court granted the continuance, but ordered Lecocq to submit to examination by an independent physician.

The circumstances surrounding Lecocq's alleged illness require extended discussion. On October 1, 1979, nine days prior to the scheduled trial date, Lecocq left the United States for France, allegedly to visit his ailing mother. Shortly after his arrival in France, Lecocq allegedly became ill, complaining of chest pains and an arrhythmic heartbeat. Lecocq mentioned these ailments to his sister, Madeleine Martin, the Director of Nursing at Bon Repos Hospital, Bourg-en-Bresse, France. Ms. Martin then attempted, on October 2 or 3, to arrange for an examination of Lecocq by Dr. J. Paul Renand, a French physician affiliated with the Bon Repos Hospital. ³ Because of his busy schedule, Dr. Renand was unable to schedule an appointment for Lecocq prior to October 5.

On October 3, Lecocq telephoned his attorney ⁴ and allegedly stated: "I'm beat-any way to postpone the trial?" ⁵ Lecocq's attorney replied that a continuance could be obtained on the basis of Lecocq's illness only if a statement confirming that illness were obtained from a physician. On October 3, prior to any consultation with a physician, Lecocq's sister, with Lecocq's knowledge and consent, ⁶ sent a telegram to the court under Dr. Renand's name stating:

"Due to extremely grave condition of Mr. Samuel Lecocq's mother and great stress in business affairs the patient is suffering mental and physical exhaustion. Mandatory that Mr. Lecocq refrain from activity which would result in physical or mental stress for at least 45 days."

(punctuation added). ⁷ This telegram, although sent under Dr. Renand's name, was sent without Dr. Renand's knowledge or consent and was relied upon by the District Court in granting Lecocq's motion for a continuance. In fact, Lecocq was not examined by Dr. Renand until October 5, two days after the telegram was dispatched.

During subsequent proceedings, Lecocq consistently endeavored to prevent disclosure of the circumstances surrounding the dispatch of the telegram. Lecocq originally contended that the telegram was sent by Dr. Renand's English-speaking assistant pursuant to the doctor's instructions. When it was discovered that Dr. Renand had no such assistant, Lecocq contended that, although the telegram was sent by his sister, the telegram was in accordance with a certificate issued by Dr. Renand following the doctor's examination of Lecocq. When it was discovered that the telegram was sent prior to Lecocq's examination by Dr. Renand, Lecocq admitted that the telegram was sent by his sister but contended that, under French medical practice, his sister, as a nurse, was authorized to send the telegram under Dr. Renand's name prior to Lecocq's examination by the doctor. ⁸ According to the affidavit by Dr. Renand, Lecocq's efforts to suppress the true information regarding the circumstances surrounding the telegram even extended to attempts to convince Dr. Renand to testify falsely that the telegram was sent after Lecocq had been examined.

The District Court found that in falsely sending the above-referenced telegram, ⁹ Lecocq had willfully deceived the court. ¹⁰ The court thereafter struck appellants' pleadings, entered default judgment, and issued a preliminary injunction against appellants. ¹¹

II. DISCUSSION

A. Jurisdiction

After entering default judgment against appellants, the District Court granted Phoceene's request for preliminary injunctive relief. 28 U.S.C. § 1292(a) confers upon this Court jurisdiction to review orders of the District Court granting or denying injunctive relief. This review "extends to all matters inextricably bound up with the ... (injunction) and the court ... may consider the merits of the case ...." Wright, Federal Courts 513 (3d ed. 1976); accord, Aerojet-General Corp. v. American Arbitration Ass'n, 478 F.2d 248, 252-53 (9th Cir. 1973). Here, issuance of injunctive relief was premised solely upon the entry of default against appellants. Accordingly, the entry of default is "inextricably bound up with" the injunction and we therefore have jurisdiction to evaluate the propriety of the entry of default under 28 U.S.C. § 1292(a).

B. The Propriety of the Default Judgment

Appellants challenge the entry of default in the present case on two grounds. ¹² First, appellants contend that the evidence was insufficient to establish that Lecocq perpetrated a fraud on the court. Second, appellants contend that, even if the evidence was sufficient to establish a fraud on the court, the district judge lacked the power to enter default as a sanction for that fraud. We address the former contention first.

Lecocq's conduct clearly does not constitute a "fraud on the court" as that term has previously been defined in this Circuit. A "fraud on the court" is "an unconscionable plan or scheme which is designed to improperly influence the court in its decision." England v. Doyle, 281 F.2d 304, 309 (9th Cir. 1960). Lecocq's deception was clearly not an attempt to influence the court's ultimate decision on the merits. Rather, it was apparently designed solely to delay trial of the matter. Accordingly, we conclude that Lecocq's conduct does not constitute a "fraud on the court." Our inquiry does not end there, however. Lecocq is alleged to have willfully deceived the court and engaged in conduct utterly inconsistent with the orderly administration of justice. Such conduct, if proved, would clearly merit the imposition of severe sanctions. We must therefore determine whether the evidence below was sufficient to establish that Lecocq willfully misled the court and, if the evidence was sufficient, whether the entry of default was a permissible means of sanctioning that conduct consistent with the requirements of due process.

Appellants' contention that the evidence was insufficient to establish that Lecocq willfully deceived the court is wholly without merit. It is undisputed that the October 3 telegram purporting to come from Dr. Renand was sent prior to Lecocq's examination by the doctor. When questioned about the telegram and the circumstances surrounding its dispatch, Lecocq told numerous contradictory stories. Moreover, at no time did Lecocq come forward and explain the circumstances surrounding the telegram. Under these circumstances, we conclude that the evidence was sufficient to clearly and convincingly establish that Lecocq willfully deceived the court in an effort to delay trial. ¹³

We now turn to Lecocq's contention that the District Court lacks power to enter default as a sanction for Lecocq's deceptive conduct. We somewhat reluctantly conclude that Lecocq's position has merit and that the entry of default as a sanction for a deception of the court on a matter wholly unrelated to the merits of the controversy is inconsistent with the requirements of due process. Accordingly, we reverse the judgment of default and remand the cause for further proceedings.

It is firmly established that the courts have inherent power to dismiss an action or enter a default judgment to ensure the orderly...