Rousseau v. 3 Eagles Aviation, Inc.

United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT May 12, 2005
_____________________
Charles R. Fulbruge III
No. 04-30927 Clerk
Summary Calendar
_____________________
WAYNE M. ROUSSEAU; ET AL.,
Plaintiffs,
v.
3 EAGLES AVIATION, INC.; ET AL.,
Defendants,
3 EAGLES AVIATION, INC.,
Defendant - Appellee,
v.
CLAYTON KRESGE; STANDARD COLLISION, INC.,
Garnishees - Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:02-CV-208
_________________________________________________________________
Before JONES, BARKSDALE and PRADO, Circuit Judges.
PRADO, Circuit Judge:*
Appellants Standard Collision and Clayton Kresge, Standard
Collision’s president and sole officer, appeal the district
court’s order awarding attorney’s fees to appellee 3 Eagles
*
Pursuant to 5TH CIRCUIT RULE 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIRCUIT
RULE 47.5.4.
1
Aviation, Inc. (“3 Eagles”). For the following reasons, this
court affirms the district court’s award.
Factual Background
In October 2002, the district court entered judgment against
Wayne Rousseau and in favor of 3 Eagles in the amount of
$1,341,462.14. 3 Eagles sought to satisfy the judgment, in part,
with money Rousseau had invested in Standard Collision. In June
2003, Kresge——as Standard Collision’s registered agent for
service of process——was served with a citation, a petition of
garnishment, and garnishment interrogatories. Kresge responded
to the interrogatories and confirmed that Rousseau had invested
$285,028.87 in Standard Collision.
In August 2003, 3 Eagles asked the district court to order
Standard Collision to turn over the money that Rousseau had
invested in Standard Collision. The district court granted the
request and issued an Order to Turn Over and Deposit Seized Funds
(the “Turn Over Order”). The Turn Over Order directed Standard
Collision to liquidate Rousseau’s investment and to turn over the
sum of $285,028.87 to the court’s registry.
Kresge was served with the Turn Over Order on September 23,
2003 but did not challenge it.1 When Standard Collision failed to
comply with the order, 3 Eagles asked the district court to hold
1
Kresge claims that he notified his attorney when he
received notice of the Turn Over Order, but that his attorney
told him not to worry about it.
2
Kresge in contempt. Neither Kresge nor Standard Collision
responded.
In January 2004, the district court held Kresge in contempt.
As a sanction, the district court ordered Kresge to pay 3 Eagles’
attorney’s fees associated with the contempt action. When
Standard Collision still failed to comply, 3 Eagles asked the
court to enforce the contempt order and to impose additional
sanctions.
In April 2004——seven months after being served with the Turn
Over Order——Standard Collision and Kresge filed a pleading
opposing 3 Eagles’ motion to enforce and asked the court to
reconsider the Turn Over Order under Rule 60(b).2 They argued
that the Turn Over Order was erroneous because 3 Eagles did not
follow the appropriate garnishment procedures and because the
order gave 3 Eagles more rights against Standard Collision than
Rousseau had. In response, the district court ordered 3 Eagles
to file a supplemental brief addressing whether a garnishment
proceeding can be used to force a corporate garnishee to
liquidate a judgment debtor’s equity interest in the corporation
and turn over the proceeds to the creditor. The court also
ordered 3 Eagles to submit a statement of its attorney’s fees
associated with preparing the brief.
Ultimately, the district court determined that the Turn Over
2
FED. R. CIV. P. 60(b).
3
Order and contempt order were invalid because 3 Eagles failed to
show that Standard Collision possessed Rousseau’s property. The
court vacated the Turn Over Order and lifted the sanctions order.
The court, however, also ordered Kresge and Standard Collision to
pay 3 Eagles $9,207.50 in attorney’s fees as compensation for the
cost of filing the supplemental brief. The court’s order
indicates that the court acted pursuant to the inherent authority
of a district court to enforce its orders. Kresge and Standard
Collision appeal the award of attorney’s fees.
Standard of Review
The district court has broad discretion to impose sanctions
in a civil contempt proceeding.3 As a result, this court reviews
the imposition of sanctions for an abuse of discretion.4
Analysis
Kresge and Standard Collision first argue that the district
court abused its discretion in awarding attorney’s fees because 3
Eagles knew or should have known that no legal basis existed for
3
See Am. Airlines, Inc. v. Allied Pilots Ass'n, 228 F.3d
574, 585 (5th Cir. 2000); see also United States v. United Mine
Workers of Am., 330 U.S. 258, 303 (1947) (explaining that because
the interest of an orderly government demands respect of and
compliance with court orders, reviewing courts rely heavily on
the district court for enforcement).
4
Am. Airlines, 228 F.3d at 578; Crowe v. Smith, 151 F.3d
217, 226 (5th Cir. 1998); Martin v. Trinity Indus., Inc., 959
F.2d 45, 46 (5th Cir. 1992).
4
the Turn Over Order. Even if a court issues an erroneous order,
a party must obey the order until it is reversed through an
orderly proceeding.5 The remedy for an erroneous order is appeal,
not noncompliance.6 When a party disobeys a court order, the
court uses a civil contempt proceeding to either compel
compliance or compensate a litigant for damages resulting from
the noncompliance.7 “Compensatory civil contempt reimburses the
injured party for the . . . losses flowing from noncompliance and
expenses reasonably and necessarily incurred in the attempt to
enforce compliance.”8 An award of attorney’s fees is an
appropriate sanction where a party incurs additional expenses as
a result of the other party’s noncompliance.9
In this case, the district court’s award was appropriate
because 3 Eagles incurred the cost of filing the supplemental
brief as a result of Kresge’s failure to comply with the Turn
5
See United Mine Workers of Am., 330 U.S. at 293-94 (holding
that so long as jurisdiction exists, a party must obey a court’s
order even if the court’s action is erroneous).
6
See Maness v. Meyers, 419 U.S. 449, 458 (1975) (stating
that a party must comply with a district court’s order and the
remedy for a party opposing the order is appeal, not
noncompliance).
7
See Norman Bridge Drug Co. v. Banner, 529 F.2d 822, 827
(5th Cir. 1976) (discussing contempt proceedings).
8
Norman Bridge Drug Co., 529 F.2d at 827.
9
See Cook v. Ochsner Found. Hosp., 559 F.2d 270, 272 (5th
Cir. 1977 (stating that attorney’s fees are appropriate to
sanction noncompliance with an order).
5
Over Order.10 Had Kresge complied with, or at least challenged,
the Turn Over Order, 3 Eagles would not have pursued the contempt
action or the enforcement action. The district court, in turn,
would not have ordered 3 Eagles to file the supplemental brief.
Although 3 Eagles may have filed an additional pleading if Kresge
or Standard Collision had responded to the Turn Over Order, the
district court specifically ordered the supplemental brief as
part of the enforcement action. Because 3 Eagles incurred
additional expenses as a result of Standard Collision’s
noncompliance, the district court did not abuse its discretion
even though the court ultimately determined that no legal basis
existed for the Turn Over Order.
Kresge and Standard Collision next complain that 3 Eagles is
not entitled to attorney’s fees because it is not the prevailing
party. The district court, however, did not award attorney’s
fees based on who prevailed. The district court awarded
attorney’s fees to compensate 3 Eagles for the additional expense
it incurred when Kresge failed to comply with the court’s orders.
The district court’s inherent power to sanction does not depend
on who prevails; instead, the district court may sanction a party
“to enforce compliance with an order of the court or to
compensate for losses or damages sustained by reason of
10
See Cook, 559 F.2d at 272.
6
noncompliance.”11 Kresge failed to challenge the Turn Over Order
and the contempt order before finally opposing the enforcement
action. Had Kresge responded earlier, the district court would
not have ordered 3 Eagles to file the supplemental brief. The
district court did not abuse its discretion by awarding fees
because the award compensates 3 Eagles for the expenses
reasonably and necessarily incurred in its attempt to enforce
compliance.12
Finally, Kresge and Standard Collision maintain that they
should not be forced to pay attorney’s fees because 3 Eagles
failed to comply with the district court’s order for the
supplemental brief. They argue that 3 Eagles did not address
whether a garnishment proceeding may be used to require a
corporate garnishee to liquidate a judgment debtor’s equity
interest in the corporation, but instead advanced a new
explanation about why it should prevail. Although 3 Eagles
advanced a new argument in the supplemental brief, the award was
still appropriate because it represented losses that flowed from
noncompliance with a court order and expenses that were
11
Cook, 559 F.2d at 272.
12
See Norman Bridge Drug Co., 529 F.2d at 827 (stating that
the court can compensate a party for the losses flowing from
noncompliance and for expenses incurred in an enforcement
action); see also Dow Chem. Co. v. Chem. Cleaning, Inc., 434 F.2d
1212, 1215 (5th Cir. 1970) (explaining that the district court
can exercise its inherent discretion to correct willful
violations of its orders).
7
reasonably and necessarily incurred in an attempt to enforce
compliance.13 The district court did not award attorney’s fees
based on the contents of the supplemental brief, but rather on
Kresge’s inaction, which ultimately caused 3 Eagles to incur the
costs of the supplemental brief. The district court required 3
Eagles to file an additional brief as part of an enforcement
proceeding——a dispute that could have been resolved much earlier
had Kresge responded to the court’s orders. Under these
circumstances, the district court did not abuse its discretion in
awarding attorney’s fees associated with the additional briefing.
Conclusion
Having determined that the district court did not abuse its
discretion in awarding attorney’s fees to 3 Eagles, the court
AFFIRMS the award.
AFFIRMED.
13
See Norman Bridge Drug Co., 529 F.2d at 827.
8