Waldschmidt v. Columbia Gulf Transmission Co. (In re Fulghum Construction Corp.)
Waldschmidt v. Columbia Gulf Transmission Co. (In re Fulghum Construction Corp.)
Opinion of the Court
MEMORANDUM
This matter is before the Court on the motion of the plaintiff/trustee to impose sanctions on the defendant for failure to comply with discovery orders. This is the second motion for sanctions against this defendant under Rule 37 of the Federal Rules of Civil Procedure.
The procedural history of this case prior to September 30, 1981 is accurately discussed in this Court’s order of September 30, 1981. In this second motion for sanctions, the trustee contends that the defendant has failed to comply with two
1. That portion of the order which required that “the defendant should4 furnish the trustee within 15 days of the date of this order with a list identifying all persons with significant information concerning this matter and the nature of that information.”
2. That portion of the order which stated “that the trustee should recover attorneys’ fees from the defendant’s attorney in the amount of $750.”
In support of this second motion, the trustee exhibits a letter to defendant’s counsel dated March 2, 1982 in which the trustee demanded compliance with the September 30, 1981 order. In addition, the trustee submits an affidavit stating that, as of April 26, 1982, the trustee had not received the list of names or the attorneys’ fees called for in the order.
At the hearing on June 3, 1982, the trustee, Robert H. Waldschmidt,
Mr. Waldschmidt testified that he filed no formal discovery requests between the order of September 30, 1981 and the decision denying the first motion for summary judgment on December 17,1981. However, following the denial of the first motion for summary judgment, Mr. Waldschmidt sought discovery by filing the second request for admissions and the third set of interrogatories on January 14, 1982. Mr. Waldschmidt testified that he sent the March 2, 1982 letter to Harlan Dodson, III, demanding compliance with the September 30, 1981 order and asking Mr. Dodson for documentation concerning the further appeal of the September 30th order to the United States Court of Appeals for the Sixth Circuit. Mr. Dodson testified that he never received Mr. Waldschmidt’s letter. Mr. Waldschmidt recalled that some days after the letter of March 2,1982 he received the requested documentation. At no time has Mr. Waldschmidt received the $750 attorney’s fee. Except for the period between September 30,1981, and the denial of the first motion for summary judgment on December 17,1981, Mr. Waldschmidt stated he has never acquiesced in noncompliance
This second motion for sanctions was filed on April 27, 1982. On May 27, 1982 a pre-trial conference was held in chambers. By pre-trial order dated May 28, 1982, trial was rescheduled to begin June 16, 1982 and yet another schedule for discovery was established. On May 28, 1982, the defendant finally provided the trustee with a list of the names, etc., of persons having knowledge of this matter, as required by the order of September 30, 1981.
The trustee is correct that this is an appropriate case for the imposition of sanctions pursuant to Rule 37 of the Federal Rules of Civil Procedure. This Court’s order of September 30,1981 was an order “to provide or to permit discovery” within the provisions of Rule 37(b)(2) of the Federal Rules. Rule 37(b)(2) states explicitly that Rule 37 may be used to impose sanctions for the failure to comply with a prior Rule 37(a) order. The courts have broadly recognized the use of Rule 37 to impose sanctions for disobedience of valid discovery orders. See, e.g., Ohio v. Arthur Anderson & Co., 570 F.2d 1370 (10th Cir.), cert. denied, 439 U.S. 833, 99 S.Ct. 114, 58 L.Ed.2d 129 (1978); Von Brimer v. Whirlpool Corp., 536 F.2d 838 (9th Cir. 1976); Local 251, International Brotherhood of Teamsters v. Town Line Sand & Gravel, Inc., 511 F.2d 1198 (1st Cir. 1975). Mr. Dodson contends that the portion of the September 30th order which required him to pay $750 to the trustee is an order which can only be enforced by application for contempt. This argument is without merit. Rule 37(b)(2)(D) specifically contemplates the use of contempt powers in matters arising under Rule 37(b). The $750 awarded by this Court against Harlan Dodson, III, personally, was an order authorized by Rule 37(a)(4) of the Federal Rules of Civil Procedure. Such order was an order under Rule 37(a), violation of which may be sanctioned pursuant to Rule 37(b)(2).
At least two portions of the order of September 30, 1981 are “self-executing” in the sense that no further action or request by the trustee was necessary to require some action or compliance by the defendant.
The second “self-executing” portion of the order of September 30, 1981 required the defendant to “furnish the trustee within 15 days of the date of this order with a list identifying all persons with significant information concerning this matter and the nature of that information.” Mr. Wald-schmidt contends that this provision of the September 30, 1981 order was not complied with until a month after the second motion for sanctions. Mr. Dodson argues alternatively that his October 1981 letters to Mr. Waldschmidt constitute substantial compliance with the September 30th order, or that the actions of the trustee excused defendant’s compliance.
A review of Mr. Dodson’s October, 1981 correspondence with the trustee demands rejection of the contention that these letters constitute compliance with the order of September 30,1981. Exhibit 1, Mr. Dodson’s letter of October 12,1981, contains nothing more than a promise to “have my people provide you whatever other information you need.” Nowhere does the letter identify who “my people” are. Nowhere does the letter comply with the Court order to list persons with information about this case and to describe the information such persons may have. Likewise, Exhibit 2, Mr. Dodson’s letter of October 27,1981, contains an offer to have “someone from our general counsel’s office” come discuss the case with Mr. Waldschmidt. Exhibit 2 does not comply with the listing requirement.
Defendant explains its failure to supply the list by arguing that the trustee never asked for the list and in fact excused noncompliance by seeking no further discovery after the entry of the September 30th order. At the threshhold, the Court rejects defendant’s contention that a further request for discovery was a necessary precondition to the defendant’s obligation to supply the list within 15 days. By the clear terms of the order, there were no preconditions to supplying the list within 15 days. Similarly, the Court finds no merit to defendant’s argument that the parties could by their actions alter or amend the explicit requirement that defendant supply the list within 15 days. No court at any level can allow attorneys to disregard or modify lawful orders at their convenience. Had the defendant perceived or desired a modification of the September 30th order, counsel for the defendant had at his disposal the procedural devices to bring the order before the Court. Only a stay or a superseding court order could alter, amend or suspend the explicit terms of the September 30th order.
This Court rejects defendant’s view that the trustee “waived” its right to the list by proceeding with a motion for summary judgment before seeking furthér discovery. It is inconceivable to the Court that a counsel as experienced as defendant’s counsel would interpret the filing of a motion for summary judgment as excusing
The Court finds that sanctions should again be assessed against the defendant under Rule 37. The effect of defendant’s noncompliance with the September 30th order has been to require further discovery actions by the trustee and to again cause the rescheduling of trial at substantial expense and inconvenience to the administration of this case and to the Court. Notwithstanding the efforts of the plaintiff, several conferences with the Court, the ordering of discovery and the imposition of sanctions and fines, the defendant and defendant’s counsel have successfully avoided discovery and avoided trial for over 20 months. The trustee asserts that the appropriate sanction is the entry of a default judgment against the defendant.
The defendant has been in contempt since the 15th day following September 30, 1981. However, the Court will compensate the trustee and will assess a penalty against defendant from the filing of this second motion for sanctions — when it would be apparent to even the most obtuse litigant that he should obey the Court’s order. Therefore, for each day since the filing of this second motion for sanctions, and continuing through the day on which defendant supplied the list of all persons with significant information concerning this matter, the Court orders the defendant to pay $100 per day to the trustee.
The Court determines that, pursuant to the provisions of the last subparagraph of Rule 37(b)(2)(E) of the Federal Rules of Civil Procedure, this is an appropriate case in which to require the defendant to pay reasonable expenses, including attorneys’ fees caused by the defendant’s actions. The trustee shall submit to the Court and to the defendant an affidavit and itemization of all fees and expenses incurred in connection with this second motion for sanctions, including the costs and expenses of additional discovery caused by the defendant’s failure to comply with the September 30th order. The Court further finds from the documents and testimony at the hearing that Harlan Dodson, III was both a party failing to obey a court order and “the attorney advising” the defendant on the matters here at issue and thus assesses the reasonable expenses and attorneys’ fees described in this paragraph against the defendant and Mr. Harlan Dodson, III, personally.
Judgment shall enter accordingly.
. Applicable herein pursuant to Rule 737 of the Federal Rules of Bankruptcy Procedure.
. The defendant appealed the order of September 30, 1981 to the United States District Court for the Middle District of Tennessee. By order dated February 10, 1982, the District Court affirmed the order of September 30, 1981. Defendant noticed its appeal to the United States Court of Appeals for the Sixth Circuit on February 26, 1982. No stay has been sought or granted of the order of September 30, 1981.
. The trustee’s motion suggests a third ground for sanctions — failure to comply with that portion of the September 30th order which required defendant to make certain persons available for examination upon 20 days’ notice from the trustee. At the hearing of this matter on June 3, 1982, the trustee stated that the “20 days’ written notice from the trustee” required by the September 30 order was contained in the trustee’s letter of March 2, 1982 to Harlan Dodson, III, counsel for the defendant. Acknowledging a dispute concerning receipt by Mr. Dodson of this letter of March 2, 1982, the
. This Court rejects defendant’s suggestion that the use of the word “should” instead of the word “shall” renders the September 30th order unenforceable under Rule 37. From the context and other language of the September 30th order, it cannot be doubted that these provisions were mandatory, compulsory and with the force of court orders.
. By order dated February 12, 1980, Mr. Waldschmidt was authorized to represent himself pursuant to 11 U.S.C. § 327(d).
. The trial of this matter has been set and reset innumerable times since the original trial date of September 25, 1980.
. Defendant suggested for the first time at argument on June 3, 1982 that this Court should not act on the trustee’s second motion for sanctions because there was no finding in the opinion of September 30, 1981 that Harlan Dodson, III “advised” the defendant on the matters at issue in that order. Mr. Dodson admitted to the Court that this argument was not advanced as an issue on appeal. Given that the Septem-her 30th order is now on further appeal to the United States Court of Appeals for the Sixth Circuit, this Court declines to reconsider its order on the basis offered by Mr. Dodson.
. Both Mr. Waldschmidt and Mr. Dodson acknowledged the “self-executing” features of the September 30th order at the hearing on June 3, 1982.
. The enactment of 28 U.S.C. § 1481 expanded the contempt powers available to bankruptcy courts under the old Act. The specific $250 limitation contained in old Rule 920 of the Federal Rules of Bankruptcy Procedure is not carried into the Code and is inconsistent with 28 U.S.C. § 1481. The legislative history of § 1481 fully supports this view. H.R.Rep.No. 595, 95th Cong., 1st Sess. 13, 448, reprinted in 1978 U.S.Code Cong. & Ad.News 5787, 5974, 6404. See In re Lowe, 18 Bankr. 20, 24 (Bankr. N.D.Ga. 1981) (the $250 limitation in Bankruptcy Rule 920(a)(3) is inconsistent with the Bankruptcy Reform Act of 1978 and therefore is inapplicable in contempt cases thereunder). See also 1 L. King, Collier on Bankruptcy ¶ 3.01 (15th ed. 1982).
. It is noted that the contempt powers available to the Bankruptcy Court include the power to imprison.
. Such a judgment, if granted, would be entered in the principal sum of $262,039.65.
Reference
- Full Case Name
- In re FULGHUM CONSTRUCTION CORPORATION, Debtor. Robert H. WALDSCHMIDT, Trustee v. COLUMBIA GULF TRANSMISSION COMPANY
- Cited By
- 1 case
- Status
- Published