Miller v. Mid-Continent ( 1999 )

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
MAR 24 1999
FOR THE TENTH CIRCUIT
PATRICK FISHER
Clerk
JORDAN F. MILLER
CORPORATION, a California
corporation and; JORDAN F.
MILLER, an individual,
No. 98-5104
Plaintiffs-Appellants, (D.C. No. 95-CV-469-B)
(N.D. Okla.)
v.
MID-CONTINENT AIRCRAFT
SERVICE, INC., an Oklahoma
corporation; JET CENTER TULSA,
INC., an Oklahoma corporation,
Defendants-Appellees.
ORDER AND JUDGMENT *
Before BALDOCK , BARRETT , and HENRY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
*
This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. The court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
argument. See Fed. R. App. P. 34(f) and 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument.
Plaintiff Jordan F. Miller Corporation (Miller) appeals from a final order of
the district court denying its motion for attorney’s fees and costs after a jury
verdict awarding it a net recovery against defendants Mid-Continent Aircraft
Service, Inc. (Mid-Continent) and Jet Center Tulsa, Inc. (Jet Center). We
exercise jurisdiction under 28 U.S.C. § 1291 and affirm.
BACKGROUND
Miller brought a diversity suit alleging negligence, breach of contract, and
breach of warranty claims arising out of its purchase of a used Cessna 421B
aircraft from Mid-Continent and Jet Center. Defendants filed breach of contract
counterclaims.
A series of pre-trial rulings reduced Miller’s potential recovery. Claims for
damages connected with the left landing gear were dismissed as a sanction for
failing to preserve the allegedly damaged component parts for inspection. See
Jordan F. Miller Corp. v. Mid-Continent Aircraft Serv., Inc. , No. 97-5089, 1998
WL 68879 at **1, **7 (10th Cir. Feb. 20, 1998) (unpublished order and judgment
entered on interlocutory appeal, agreeing with the district court that Miller should
be held responsible for the spoliation of evidence and affirming the order of
dismissal). On a claim concerning alleged defects in the plane’s right engine,
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Miller failed to comply with the requirements for disclosure of expert testimony.
See Fed. R. Civ. P. 26(a)(2)(B). The court entered an order striking the testimony
of the expert on that claim, then granted defendants’ motion for partial summary
judgment based on lack of causation evidence. In a mandamus petition filed in
this court, Miller sought an order directing the district court to withdraw the entry
of partial summary judgment and permit testimony of the expert witness. The
petition was denied on February 13, 1998.
Trial went forward on the remainder of Miller’s contentions that the plane
had not been delivered in airworthy condition. Miller sought damages of
approximately $350,000. The jury returned a verdict in Miller’s favor, awarding
damages of $20,500 against Mid-Continent and $25,000 against Jet Center. The
jury also returned verdicts in favor of defendants on their counterclaim, providing
an offset of $5,909.27 for Mid-Continent and $10,000 for Jet Center. Miller’s net
judgment was $29,590.73. Post-trial, Miller filed a motion for attorney fees in
the amount of $118,662.50 and costs in the amount of $37,769.54. The district
court denied the motion and this appeal followed.
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DENIAL OF ATTORNEY FEES
We review the district court’s denial of attorney fees as a sanction pursuant
to Fed. R. Civ. P. 16(f) for an abuse of discretion, considering the totality of the
circumstances, assessing supporting factual findings under the clear error
standard, see Olcott v. Delaware Flood Co. , 76 F.3d 1538, 1557 (10th Cir. 1996),
and examining the legal analysis de novo, see Utah Women's Clinic, Inc. v.
Leavitt , 136 F.3d 707, 709 (10th Cir. 1998). 1
The question on appeal is not
whether the reviewing court would have chosen the sanction as an original matter
but whether the district court abused its discretion in doing so. See National
Hockey League v. Metropolitan Hockey Club, Inc. , 427 U.S. 639, 642 (1976).
“An abuse of discretion occurs only when the trial court bases its decision on an
erroneous conclusion of law or where there is no rational basis in the evidence for
the ruling.” Callicrate v. Farmland Indus., Inc. , 139 F.3d 1336, 1339 (10th Cir.
1998) (quotation omitted).
1
The district court set out two grounds for denying Miller’s attorney fees:
(1) the imposition of sanctions under Fed. R. Civ. P. 16(f) and (2) the lack of
entitlement to fees under Oklahoma law, see Okla. Stat. tit. 12, §§ 936, 939
(1988). Because we determine that the Rule 16(f) provides a basis for the court’s
ruling, we do not address the parties’ argument concerning the application of
Oklahoma law. We do note, however, that Oklahoma cases suggest that attorney
fees are “mandatory.” American Superior Feeds, Inc. v. Mason Warehouse, Inc. ,
943 P.2d 171, 173 (Okla. Ct. App. 1997).
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Rule 16(f) is implicated when there has been a violation of an existing
pre-trial order. Lillie v. United States , 40 F.3d 1105, 1110 (10th Cir. 1994). 2
“The award of fees and expenses for noncompliance . . . is discretionary, and the
amount and impact of a monetary sanction should depend on the seriousness of
the violation and where the fault lies, i.e. with counsel or client.” Olcott , 76 F.3d
at 1557 (quoting Turnbull v. Wilcken , 893 F.2d 256, 259 (10th Cir. 1990) (per
curiam)). “[I]n the absence of a finding of bad faith, there must be a sufficient
nexus between noncompliance with the rules and the amount of fees and expenses
awarded as a sanction.” Id. Bad faith, in this context, means a voluntary,
intentional refusal to comply with a pretrial order. Cf. M.E.N. Co. v. Control
Fluidics, Inc. , 834 F.2d 869, 872-73 (10th Cir. 1987) (concerning entry of default
judgment for failure to abide by pretrial orders or provide discovery).
2
Rule 16(f) provides, in pertinent part:
Sanctions . If a party or party’s attorney fails to obey a scheduling or
pretrial order . . . , the judge, upon motion or the judge’s own
initiative, may make such orders with regard thereto as are just, and
among others any of the orders provided in Rule 37(b)(2)(B), (C),
(D). In lieu of or in addition to any other sanction, the judge shall
require the party or the attorney representing the party or both to pay
the reasonable expenses incurred because of any noncompliance with
this rule, including attorney’s fees, unless the judge finds that the
noncompliance was substantially justified or that other circumstances
make an award of expenses unjust.
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In ruling on Miller’s request for attorney fees, the district court pointed out
general shortcomings in plaintiff’s litigation of its case. The court also
catalogued repeated instances of voluntary failure to comply with pretrial rulings,
which it attributed to both counsel and the client. Specifically, the court found
that plaintiff’s representative, Jordan Miller, “blatantly” disregarded an in limine
order “not to refer to his terminal cancer only minutes after he was so instructed.”
Appellant’s Supp. at 155-56. Counsel and other witnesses made reference to
other prohibited subjects, such as an offer of settlement, right-engine damages,
and the concept of fraud. See id. at 156. In addition, counsel wasted judicial
resources by “show[ing] up at trial with his exhibits in total disarray,” in spite of
the court’s spending “in excess of five hours in three different pretrial
conferences going through every objection to every exhibit.” Id. The court
concluded that, for these transgressions, counsel and Jordan Miller deserved to be
sanctioned under Rule 16(f) for their failure to abide by pretrial orders. Id. at
156-57.
Although the district court did not explicitly use the term “bad faith,” its
findings attest to willful noncompliance with particular pretrial orders.
Therefore, the court was not required to limit its sanction to those expenses and
attorney’s fees directly attributable to the defendants’ abuse of the legal process.
Cf. Olcott , 76 F.3d at 1557. After scrutinizing the record on appeal, we are
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cannot say that the district court abused its considerable discretion and, therefore,
the denial of attorney fees is sustained.
DENIAL OF COSTS
Similarly, we review the district court’s ruling on Miller’s request for costs
pursuant to Fed. R. Civ. P. 54(d) for abuse of discretion. See, e.g. , AeroTech,
Inc. v. Estes , 110 F.3d 1523, 1526 (10th Cir. 1997). The underlying interpretation
of a statute is a question of law subject to de novo review. See Rushton v. State
Bank of S. Utah (In re Gledhill) , 164 F.3d 1338, 1340 (10th Cir. 1999).
“Rule 54 creates a presumption that the district court will award costs to
the prevailing party.” Cantrell v. International Bhd. of Elec. Workers , 69 F.3d
456, 459 (10th Cir.1995) (en banc). “Because a denial of costs is a severe
penalty, there must be some apparent reason to penalize the party if costs are to
be denied.” AeroTech , 110 F.3d at 1526-27 (further quotation omitted). Here,
the district court supplied a statutory reason for its denial of costs: Miller’s
recovery was less than the applicable jurisdictional amount of $50,000 and, under
28 U.S.C. § 1332(b), a prevailing plaintiff in a diversity suit may be denied an
award of costs or even taxed costs if its recovery does not satisfy the
jurisdictional amount. 3
3
Section 1332(b), as in effect at the time this lawsuit was filed, provided:
(continued...)
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Miller argues that under the circumstances of this case, § 1332(b) does not
provide a valid basis for the district court’s action. Its theory is that § 1332(b)
may be used only against plaintiffs who inflate their claims in order to invoke
federal jurisdiction, not against those whose eventual recovery falls short for
some other reason. Miller points out that the allegations in its complaint
unquestionably supported damages in excess of $50,000, but that the court’s
dismissal orders reduced the jury award.
We disagree with Miller’s legal premise. When interpreting a statute, we
begin with the plain language of the statute itself, and if the terms are
unambiguous, our inquiry normally ends. See United States v. Romero , 122 F.3d
1334, 1337 (10th Cir. 1997), cert. denied , 118 S. Ct. 1310 (1998). The language
of § 1332 is not ambiguous. The statute clearly grants the district court discretion
3
(...continued)
Except when express provision therefor is otherwise made in a
statute of the United States, where the plaintiff who files the case
originally in the Federal courts is finally adjudged to be entitled to
recover less than the sum or value of $50,000, computed without
regard to any setoff or counterclaim to which the defendant may be
adjudged to be entitled, and exclusive of interest and costs, the
district court may deny costs to the plaintiff and, in addition, may
impose costs on the plaintiff.
The statute was amended October 16, 1996, to reflect the new jurisdictional
amount of $75,000. See 28 U.S.C. § 1332(b) (1998).
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to deny costs if the plaintiff “is finally adjudged to be entitled to recover less
than” the jurisdictional amount. It focuses on the plaintiff’s ultimate recovery,
not its potential damages.
We recognize that the legislative history of § 1332(b) demonstrates an
intent to deter plaintiffs from filing cases in federal court when the amount in
controversy is, or is likely to be, less than the jurisdictional amount. See
Breeland v. Hide-a-Way Lake, Inc. , 585 F.2d 716, 722 n.11 (5th Cir. 1978); see
also Dr. Franklin Perkins Sch. v. Freeman , 741 F.2d 1503, 1525 (7th Cir. 1984)
(quoting S. Rep. No. 1830, 85 Cong., 2d Sess. reprinted in 1958 U.S. Code & Ad.
News 3099, 3103). The plain language of the statute, however, does not limit its
application to instances in which plaintiffs deliberately inflate their claims. The
statute leaves the determination on allocation of costs to the discretion of the
judge. It does not preclude an award of costs if the district court determines that
a plaintiff was acting in good faith when it invoked diversity jurisdiction, in spite
of a limited recovery. Nevertheless, it does not require the court to make express
findings on the issue. 4
Under the circumstances of this case, the district court
acted within its discretion in denying Miller’s request for an award of costs.
4
Miller’s citation to dicta in Edgar v. Fred Jones Lincoln-Mercury of Okla.
City, Inc. , 524 F.2d 162, 165 (10th Cir. 1975) is inapposite. In that case, we held
that, because the district court erred in excluding a punitive damages claim, it also
erred in assessing costs against the plaintiff for failure to meet the jurisdictional
minimum.
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AFFIRMED.
ENTERED FOR THE COURT
PER CURIAM
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