Prosser v. Prosser ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
7-30-1999
Prosser v. Prosser
Precedential or Non-Precedential:
Docket 98-7607
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Recommended Citation
"Prosser v. Prosser" (1999). 1999 Decisions. Paper 223.
http://digitalcommons.law.villanova.edu/thirdcircuit_1999/223
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Filed July 30, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
Nos. 98-7607 and 98-7610
JEFFREY J. PROSSER,
Appellant, 98-7607
v.
MARGARET S. PROSSER
JEFFREY J. PROSSER
v.
MARGARET S. PROSSER
KEVIN A. RAMES,
Appellant, 98-7610
APPEAL FROM THE DISTRICT COURT
OF THE VIRGIN ISLANDS
(D.C. Nos. 96-cv-00029 and 95-cv-00095)
District Judge: Raymond L. Finch
SUBMITTED: April 15, 1999
BEFORE: NYGAARD, McKEE, and RENDELL,
Circuit Judges.
(Filed: July 30, 1999)
Kevin A. Rames, Esq. 2111
Company Street, Suite 3
Christiansted, St. Croix
USVI, 00820
Attorney for Appellant, 98-7607
Paul J. Ruskin, Esq.
72-08 243rd Street
Douglaston, NY 11363
Attorney for Appellant, 98-7610
OPINION OF THE COURT
NYGAARD, Circuit Judge.
The issue in this case is whether District Court of the
Virgin Islands, Appellate Division erred by ordering
sanctions against a party and his attorney thirty months
after it entered a final order. The Appellate Division had
jurisdiction over the appeal from the decision of the Virgin
Islands Territorial Court under V.I. Code Ann. tit. 4, S 33.
We have jurisdiction over the appeal of the final order of the
Appellate Division under 48 U.S.C. S 1613a(c). We conclude
that the Appellate Division erred and will reverse.
I. Background
In 1989, Jeffrey Prosser sued for divorce from his wife
Margaret Prosser in the Territorial Court of the Virgin
Islands. The Prossers negotiated a settlement agreement,
which was approved by the court. On March 22, 1990, the
court entered a Final Decree of Divorce into which the
written property settlement agreement was merged.
Jeffrey failed to make a $2,500,000 payment as required
by the divorce decree. Thereafter, Margaret filed a Praecipe
requesting that the Territorial Court issue a Writ of
Execution for the entire amount, plus interest. See V.I.
Code Ann. tit. 5, S 471 (authorizing the issuance of writs of
execution by the Territorial Court). The Territorial Court
issued the writ. Jeffrey filed a motion to vacate the writ of
execution, which the Territorial Court denied. Jeffrey then
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appealed to the District Court of the Virgin Islands,
Appellate Division.
On April 18, 1996, the Appellate Division denied Jeffrey's
appeal. Finding that the appeal lacked merit, the court
noted that it was considering awarding fees and costs to
Margaret under Federal Rule of Appellate Procedure 38 (as
to Jeffrey) and 28 U.S.C. S 1927 (as to Jeffrey's counsel,
Kevin Rames), and asked for additional briefing on the
issues. Soon thereafter, however, the Prossers settled the
case, and Jeffrey paid Margaret the $2,500,000, plus all
interest, costs, and attorney's fees.
On November 4, 1998, more than two and a half years
after its final order, the Appellate Division issued a
Memorandum Opinion and Order fining Jeffrey $20,000
and Rames $5000 in the nature of a sanction, relying on
the court's inherent power to punish litigants and their
attorneys for abuse of process. Jeffrey and Rames appealed.1
We review the Appellate Division's sanction award for
abuse of discretion. See Chambers v. NASCO, Inc., 501 U.S.
32, 55, 111 S. Ct. 2123, 2138 (1991). "An abuse of
discretion is a clear error of judgment, and not simply a
different result which can arguably be obtained when
applying the law to the facts of the case." In re Tutu Wells
Contamination Litig., 120 F.3d 368, 387 (3d Cir. 1997)
(citations omitted).
II. Discussion
A. Timing
As noted above, the Appellate Division invoked its
inherent power2 to impose the sanctions on Jeffrey and his
counsel approximately thirty months after rendering its
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1. As part of the settlement agreement, Margaret agreed to take no
position on sanctions and she did not participate in this appeal.
2. In its Memorandum Opinion, the Appellate Division stated that it was
only relying on its inherent power "to the extent that [its] authority
under Rule 38 and section 1927 need[ed] supplementation." However, as
noted in Part I.B., neither Rule 38 nor section 1927 supplied the
necessary authority for the type of sanctions issued in this case.
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final decision on the merits. Our precedent concerning Rule
11 sanctions helps guide our review here. In Mary Ann
Pensiero, Inc. v. Lingle, 847 F.2d 90, 92 (3d Cir. 1988), we
adopted a supervisory rule requiring parties tofile all
motions for Rule 11 sanctions before entry of the court's
final order. See also Mellon Bank Corp. v. First Union Real
Estate, 951 F.2d 1399, 1413 (3d Cir. 1991); Hilmon Co. v.
Hyatt Int'l, 899 F.2d 250, 251 n.1 (3d Cir. 1990).
We extended this rule to apply to courts considering Rule
11 sanctions in Simmerman v. Corino, 27 F.3d 58 (3d Cir.
1994). In Simmerman, we reversed the district court's sua
sponte imposition of Rule 11 sanctions because the order
was issued three months after the entry of the final order.
Following the logic of Pensiero, we held that a district court
should raise and resolve sua sponte Rule 11 sanctions
issues "prior to or concurrent with its resolution of the
merits of the case." Id. at 63. We opined that such a rule
would not greatly increase the burdens faced by the district
courts because the dictates of due process "should not
necessitate prolonged consideration in the district court" to
assess sanctions once a violation has been established. Id.
(quoting Pensiero, 847 F.2d at 99). We also noted the
beneficial impact that such a rule would have on judicial
resources:
In the district court, resolution of the issue before the
inevitable delay of the appellate process will be more
efficient because of current familiarity with the matter.
Similarly, concurrent consideration of challenges to the
merits and the imposition of sanctions avoids the
invariable demand on two separate appellate panels to
acquaint themselves with the underlying facts and the
parties' respective legal positions.
Id. (quoting Pensiero, 847 F.2d at 99).
We continued:
[t]here is no reason why prompt action should be
required of an opposing party and yet not similarly
required of the court. At the time that the court
decided the motions for summary judgment and
dismissal, it had before it the identical information that
it relied upon three months later in imposing the
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sanctions. Nothing was to be gained by delay. If
sanctions had truly been appropriate, the court should
have imposed them at that time. Their imposition three
months later was an abuse of discretion.
Id. at 63-64 (footnote omitted).
We see no reason to limit the logic of Simmerman to sua
sponte Rule 11 sanctions.3 See Langer v. Presbyterian Med.
Ctr., 1995 WL 395937, *3 (E.D. Pa. July 3, 1995) (relying
on Simmerman and Pensiero to vacate court's own tardy
award of attorney's fees under Federal Rule of Civil
Procedure 26(g) and section 1927). The interests of judicial
efficiency, timeliness, and notice are no different when
imposing sanctions under the court's inherent power. At
the time of its final order on the merits, the Appellate
Division possessed the same evidence of the conduct that it
had when it issued its sanction order two and a half years
later. The same rationale that supported the invalidation of
the Rule 11 sanction entered three months after thefinal
order in Simmerman supports the invalidation of the
inherent power sanction here, which was entered over
thirty months after the final order.
Sanctions ideally operate as instructional tools to deter
parties and attorneys whose conduct has not met the
requisite professional standards from continuing on their
wayward course of conduct. This exemplary function is ill
served when sanctions are delayed. During the course of a
delay, memories can fade and, importantly, attorneys and
parties may continue to misbehave because they do not
have the benefit of disciplinary guidance from the court.4 If
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3. Certainly, a court retains its power to sanction under its inherent
power for abuses which occur or are discovered after the entry of the
final order. See Chambers, 501 U.S. at 56, 111 S. Ct. at 2138-39 (citing
Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 395-96, 110 S. Ct. 2447,
2455-56 (1990), for the proposition that sanctions, even under Rule 11,
may properly be imposed years after the final judgment on the merits).
4. Although we need not address the merits of the sanctions here, we feel
the need to remind the Appellate Division that "[b]ecause of their very
potency, inherent powers must be exercised with restraint and
discretion." Chambers, 501 U.S. at 44, 111 S. Ct. at 2132. A court
cannot be motivated by vindictiveness or retribution when issuing
sanctions. Indeed, courts must fight the temptation to find all losing
arguments frivolous, and should only award sanctions in cases in which
they are clearly justified.
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sanctions based on the court's inherent power were truly
appropriate in this case, the Appellate Division should have
imposed them when it issued its final order. The Appellate
Division's order will be reversed.
B. Particularized Notice
Although the timeliness issue is dispositive, we feel that
to fulfill our instructional function it is incumbent on us to
comment upon another troubling aspect of the Appellate
Division's sanctions order. Fundamental fairness and the
established law of this circuit require that a court afford the
parties due process by giving them notice and opportunity
to be heard before imposing sanctions or awarding
damages. See Jones v. Pittsburgh Nat'l Corp., 899 F.2d
1350, 1357 (3d Cir. 1990). "The party against whom
sanctions are being considered is entitled to notice of the
legal rule on which the sanctions would be based, the
reasons for the sanctions, and the form of the potential
sanctions." In re Tutu Wells, 120 F.3d at 379 (citing
Simmerman, 27 F.3d at 64). Here, the notice given by the
Appellate Division was insufficient because the parties were
not on notice that the sanctions would be based on the
court's inherent power, nor were they warned of the
possibility that the sanction might be in the form of a fine
payable to the court.
Due process requires that the parties have sufficient
notice of the form of the sanctions being considered by the
court because the issues that must be addressed may differ
depending on the form. See id. at 380 (citing Gagliardi v.
McWilliams, 834 F.2d 81 (3d Cir. 1987) (per curiam)). The
sanction imposed by the Appellate Division was in the
nature of a monetary fine payable to the court. Although a
court may impose a fine under its inherent power, see id. at
383, neither Jeffrey nor Rames had been given any notice
that the court was considering this type of sanction. As to
Jeffrey, the Appellate Division indicated in its original order
that it was only considering awarding costs and fees to
Margaret as damages under Federal Rule of Appellate
Procedure 38.5 In Rames's case, the court indicated only
_________________________________________________________________
5. Rule 38 states:
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that it was considering sanctions under section 1927 6 for
excess costs. Instead, the court imposed a $20,000fine
against Jeffrey and a $5000 fine against Rames.
Moreover, the sanction imposed, a monetary fine payable
to the court, is not an allowable remedy under either
section 1927 or Rule 38. Under section 1927, courts may
order attorneys to personally satisfy "the excess costs,
expenses, and attorneys' fees."7 Section 1927 does not,
however, allow courts to impose a fine without articulating
a basis for the amount. Like Rule 38, section 1927 only
allows the court to award costs and attorney fees payable
to the opposing party, not payable to the court. See Laitram
Corp. v. Cambridge Wire Cloth Co., 919 F.2d 1579, 1584
(Fed. Cir. 1990).
Rule 38 is even more clear. It does not provide for
sanctions at all. It allows one who has sufferedfinancial
detriment from having to defend a legitimate judgment
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If a court of appeals determines that an appeal is frivolous, it
may,
after a separately filed motion or notice from the court and
reasonable opportunity to respond, award just damages and single
or double costs to the appellee.
Fed. R. App. P. 38 (emphasis added).
6. Section 1927 states:
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs,
expenses, and attorneys' fees reasonably incurred because of such
conduct.
28 U.S.C. S 1927.
7. The Appellate Division couched its sanction in terms of the "harm to
the judicial system." This is not the type of harm Congress intended to
address through section 1927. The "excess costs" allowable as a sanction
under 1927 are limited to those costs enumerated under 28 U.S.C.
S 1920. See Roadway Express, Inc. v. Piper, 447 U.S. 752, 757-59, 100
S. Ct. 2455, 2459-62 (1980). Under section 1920, excess costs do not
include fines for "harm done to the judicial system" as relied upon by the
Appellate Division.
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against a frivolous appeal, to recover fees and costs as
"damages." Moreover, the text of Rule 38 itself limits the
award of damages to the financially injured party, not the
court.
III. Conclusion
In sum, the Appellate Division, by entering a sanctions
order approximately two and a half years after itsfinal
order, by imposing a monetary fine payable to the court,
which is not an allowable remedy under either section 1927
or Rule 38, and by failing to inform the parties of its
intention to use its inherent power, erred. Hence, we will
reverse its order of November 4, 1998.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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