Segal v. L.C. Hohne Contractors, Inc.

• Decision Date: 22 January 2004
• Docket Number: No. CIV.A. 2:02-1260.,CIV.A. 2:02-1260.
• Citation: 303 F.Supp.2d 790
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Scott Sumner SEGAL, and Robin Davis, Plaintiffs, v. L.C. HOHNE CONTRACTORS, INC., Ta/Hohne Pools, a Maryland corporation, Defendant.

303 F.Supp.2d 790

Scott Sumner SEGAL, and Robin Davis, Plaintiffs, v. L.C. HOHNE CONTRACTORS, INC., Ta/Hohne Pools, a Maryland corporation, Defendant.

No. CIV.A. 2:02-1260.

United States District Court, S.D. West Virginia, Charleston Division.

January 22, 2004.

David Allen Barnette, Mark D. Clark, and Christina T. Brumley, Jackson Kelly, Charleston, WV, For Plaintiffs Scott Sumner Segal and Robin Davis.

John C. Yoder, Harpers Ferry, WV, Matthew G. Hjortsberg, and Robert Bowie, Jr., Bowie & Jensen, Towson, MD, For Defendant L.C. Hohne Contractors, Inc. t/a Hohne Pools.

MEMORANDUM OPINION AND ORDER

GOODWIN, District Judge.

Pending before the court is the plaintiffs' motion for entry of default judgment and sanctions [Docket 106]. The matter was referred to Magistrate Judge Mary E. Stanley. Magistrate Judge Stanley treated the plaintiffs' motion as dispositive under Federal Rule of Civil Procedure 72(b) and issued proposed findings and a recommendation that the court deny the plaintiffs' motion [Docket 123]. The plaintiffs timely filed objections to the findings and recommendation by the Magistrate Judge [Docket 126]. For the reasons that follow, the court AFFIRMS Magistrate Judge Stanley's findings.

I BACKGROUND

The plaintiffs, Scott Sumner Segal and Robin Davis, hired the defendant, L.C. Hohne Contractors, Inc. (Hohne), to construct a "vanishing edge" pool on the plaintiffs' property. This breach of contract case arises from the defendant's allegedly deficient construction of the pool. The court has jurisdiction over this action pursuant to 28 U.S.C. § 1332 because the parties are of diverse citizenship and the amount in controversy exceeds $75,000. The motion for entry of default judgment and sanctions presently before the court is the latest in a series of discovery disputes between the parties. In their motion, the plaintiffs claim that the defendant gave false answers to interrogatories, testified falsely in response to deposition questions, attempted to conceal a witness, and attempted to create an unwarranted presumption of its expertise in constructing vanishing edge pools. See generally Plaintiffs Scott Sumner Segal and Robin J. Davis' Motion for Entry of Default Judgment and Sanctions [Docket 106].

The plaintiffs' motion was referred to Magistrate Judge Stanley, who determined that each of the plaintiffs' allegations was without merit. Proposed Findings and Recommendation (PF & R) [Docket 123] at 11. Further, the Magistrate Judge found that the plaintiffs' motion was neither substantially justified nor procedurally proper.¹ Id. at 11-13. Accordingly, Magistrate Judge Stanley recommended that I deny the plaintiffs' motion. Id. at 13.

The plaintiffs lodge objections to the following three findings of the Magistrate Judge: (1) that the plaintiffs have failed to show that Gary Hohne, the president of the defendant company Hohne, gave false deposition testimony; (2) that the plaintiffs have failed to show that the defendant attempted to conceal the whereabouts of its former employee, Cliff Daugherity; and (3) that the motion for default judgment was neither procedurally proper nor substantially justified. Plaintiffs Scott Sumner Segal and Robin J. Davis' Objections to the Proposed Findings and Recommendation of Magistrate Judge Filed September 11, 2003 (Plaintiffs' Objections) [Docket 126] at 2. The plaintiffs ask that I reject these findings and grant their motion for default judgment as a sanction for the alleged discovery abuses. See id. Each of the plaintiffs' objections is discussed below.

II STANDARD OF REVIEW

As an initial matter, the defendant raises the question of which standard of review should be applied to the decision of the Magistrate Judge. A magistrate judge has the power to consider both non-dispositive and dispositive pre-trial motions, subject to two different standards of review by a district court judge. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72. Therefore, the standard of review I must apply depends upon whether the plaintiffs' motion for entry of default judgment and sanctions is dispositive or non-dispositive.

The different treatment of dispositive and non-dispositive motions is best understood by a review of the authority upon which this distinction is based. The Magistrates Act, codified at 28 U.S.C. § 636, permits a district court judge to refer certain matters to a magistrate judge for determination. Section 636(b)(1)(A) gives magistrate judges the authority to "hear and determine any pretrial matter pending before the court," with the exception of motions for injunctive relief, for judgment on the pleadings, for summary judgment, to dismiss or quash an indictment or information made by the defendant, to suppress evidence in a criminal case, to dismiss or to permit maintenance of a class action, to dismiss for failure to state a claim upon which relief can be granted, and to involuntarily dismiss an action. 28 U.S.C. § 636(b)(1)(A). Subsection (A) further states that a district court judge "may reconsider any pretrial matter [decided by a magistrate judge under this subsection] where it has been shown that the magistrate judge's order is clearly erroneous or contrary to law."² Id.

Section 636(b)(1)(B) provides that in regard to the eight motions expressly excepted under § 636(b)(1)(A), a magistrate judge may conduct hearings and submit to the district court judge proposed findings of fact and a recommendation for disposition.³ Id. at § 636(b)(1)(B). Upon a party's objection, § 636(b)(1)(B) requires that the district court conduct a de novo review of those portions of the proposed findings and recommendation to which objection is made. Id. Thus, § 636(b)(1) of the Magistrates Act distinguishes between dispositive and non-dispositive motions by requiring a higher standard of review for those listed pre-trial motions that are considered to be dispositive. See id.

This distinction is one of constitutional significance. The United States Constitution requires that Article III judges exercise final decision-making authority, and therefore, a district court judge must make the final determination on dispositive matters. See Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1463 (10th Cir.1988) (citing United States v. Raddatz, 447 U.S. 667, 683, 100 S.Ct. 2406, 65 L.Ed.2d 424 (1980)). After the Magistrates Act was amended to include § 636(b)(1), courts recognized the constitutional concern underlying its provisions and, as a result, did not confine the application of § 636(b)(1)(B) to the eight listed motions. See 12 Charles Allen Wright, Arthur R. Miller & Richard L. Marcus, Federal Practice and Procedure § 3068.2 (2d.1997). Rather, courts considered whether the nature of a motion was dispositive, regardless of whether the motion actually appeared on the list. See, e.g., Long v. Lockheed Missiles and Space Co., 783 F.Supp. 249, 250 (D.S.C.1992); Neal v. Miller, 542 F.Supp. 79, 81 (S.D.Ill.1982). If a motion was determined to be dispositive in nature, a magistrate judge could not exercise decision-making power, but could only issue findings and a recommendation as provided by § 636(b)(1)(B). See id. The district court would accordingly conduct a de novo review of those findings upon a party's objection. See id.

Federal Rule of Civil Procedure 72 was passed to implement 28 U.S.C. § 636(b)(1). See Wright & Miller, supra, § 3068. The drafters of the rule were aware that courts applying § 636(a)(1)(B) generally considered the nature of pending motions to determine whether they were dispositive rather than merely adhering to the given list. See id. at § 3068.2. As a result, Rule 72 sets forth no list of "dispositive" motions but instead is based upon the dispositive/non-dispositive distinction long followed by the courts. See Fed.R.Civ.P. 72. Rule 72(a) provides that a magistrate judge may enter an order on a non-dispositive matter and if a party objects to the order, a district court judge must review it for clear error. Id. Rule 72(b) provides that for dispositive motions, a magistrate judge may only submit proposed findings and a recommendation to the district court judge and, upon a party's objection, the district court judge must conduct a de novo review of those portions of the findings and recommendation to which objection is made. Id. By requiring courts to consider the nature of a motion instead of providing a list of dispositive motions, Rule 72 "permits the courts to reach commonsense decisions rather than becoming mired in a game of labels." Wright & Miller, supra, § 3068.2.

The plaintiffs have labeled their motion a Motion for Entry of Default Judgment and Sanctions. Magistrate Judge Stanley treated the motion as a dispositive motion, and therefore, submitted findings and a recommendation to the court. See Fed. R.Civ.P. 72(b). The defendant asserts that the court should review this motion based on discovery violations for clear error rather than conducting a de novo review. Defendant L.C. Hohne Contractors, Inc.'s Opposition to Scott Sumner Segal and Robin J. Davis' Objections to Magistrate Judge Mary E. Stanley's Proposed Findings and Recommendation (Defendant's Opposition to Objections) [Docket 129] at 2.

In effect, the plaintiffs are asking the court to sanction the defendant in some way for its alleged discovery abuses. Federal Rule of Civil Procedure 37(b)(2) gives this court power to impose any sanction that is just, with default judgment being the most severe sanction. Although the plaintiff may ask the court to impose the most severe of sanctions, it is for the court to decide which sanction, if any, is appropriate.⁴ Therefore, a motion for "default judgment" based on alleged discovery violations is nothing more than an optimistically labeled motion for sanctions. Clearly, a case is not disposed of if a sanction other than default judgment is granted or if the motion for sanctions is denied. However, in the rare situation where default...