Filed: May 23, 2016
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-1153 RDLG, LLC, Plaintiff - Appellee, v. FRED M. LEONARD, JR., a/k/a Chip Leonard, Defendant – Appellant, and RPM GROUP BROKERAGE, LLC; JESSICA LEWIS LEONARD; JASON BENTON; NICK JAMES; DEXTER HUBBARD; GLENN G. GOLDAN; RPM GROUP, LLC, Defendants. Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Dennis L. Howell, Magistrate Judge. (1:10-cv-00204-DLH) Argued: March 24, 2016
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 15-1153 RDLG, LLC, Plaintiff - Appellee, v. FRED M. LEONARD, JR., a/k/a Chip Leonard, Defendant – Appellant, and RPM GROUP BROKERAGE, LLC; JESSICA LEWIS LEONARD; JASON BENTON; NICK JAMES; DEXTER HUBBARD; GLENN G. GOLDAN; RPM GROUP, LLC, Defendants. Appeal from the United States District Court for the Western District of North Carolina, at Asheville. Dennis L. Howell, Magistrate Judge. (1:10-cv-00204-DLH) Argued: March 24, 2016 ..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-1153
RDLG, LLC,
Plaintiff - Appellee,
v.
FRED M. LEONARD, JR., a/k/a Chip Leonard,
Defendant – Appellant,
and
RPM GROUP BROKERAGE, LLC; JESSICA LEWIS LEONARD; JASON
BENTON; NICK JAMES; DEXTER HUBBARD; GLENN G. GOLDAN; RPM
GROUP, LLC,
Defendants.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville. Dennis L. Howell,
Magistrate Judge. (1:10-cv-00204-DLH)
Argued: March 24, 2016 Decided: May 23, 2016
Before DUNCAN and THACKER, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion. Senior Judge Davis
wrote an opinion concurring in the judgment.
ARGUED: John C. Hunter, JOHN C. HUNTER, ATTORNEY AT LAW,
Asheville, North Carolina, for Appellant. Ross Fulton, RAYBURN,
COOPER & DURHAM, P.A., Charlotte, North Carolina, for Appellee.
ON BRIEF: Benjamin E. Shook, RAYBURN, COOPER & DURHAM, P.A.,
Charlotte, North Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
PER CURIAM:
RDLG, LLC (“RDLG”) sued Fred M. Leonard, Jr.
(“Leonard”), raising state law fraud claims. The district court 1
entered default judgment in RDLG’s favor as a sanction for
Leonard’s misconduct during the pretrial conference. A jury
then considered the proper amount of damages resulting from the
default judgment and awarded RDLG $500,580.36.
Leonard now challenges the default judgment, asserting
it violated his right to due process, and the damages verdict,
contending the district court erred when instructing the jury.
We disagree on both counts. The default judgment complied with
due process, as it was imposed after the court provided Leonard
both clear warning that the sanction would result from further
misconduct and an opportunity to oppose imposition of the
sanction. And Leonard’s proposed jury instruction was properly
rejected as irrelevant to the issue submitted to the jury. We,
therefore, affirm the judgment below.
1 The parties consented to the jurisdiction of a United
States magistrate judge. See 28 U.S.C. § 636(c). As “the
magistrate judge was acting for the court, . . . we . . . refer
to [its] decisions as those of the district court.” Lee-Thomas
v. Prince George’s Cty. Pub. Schs., 666 F.3d 244, 247 n.2 (4th
Cir. 2012).
3
I.
A.
RDLG filed this diversity action in the United States
District Court for the Western District of North Carolina in
September of 2010. RDLG sued Leonard, a number of other
individuals, and some related business entities under state law,
alleging a pattern of fraudulent activity. The merits of the
fraud claims are not at issue in this appeal.
The events underlying this appeal began on May 2,
2012, when attorneys Terri Lankford and Seth Neyhart entered
appearances on behalf of Leonard and two business-entity
defendants. Both attorneys were still representing the same
three defendants on September 6, 2012, when the district court
entered an order scheduling a pretrial conference for October 3.
On September 30, just two business days before the
scheduled conference, Lankford and Neyhart filed a motion to
continue the pretrial conference and a separate motion to
withdraw as counsel. They explained that Leonard had not been
communicating with Lankford 2 or paying for her services, so
Lankford had informed Leonard that she would cease
representation as of September 1. She had waited until
2 Neyhart’s sole involvement to that point was that of local
counsel. He had not communicated directly with Leonard prior to
the morning of the pretrial conference.
4
September 30 to move to continue the pretrial conference because
Leonard had represented to her that he intended to file for
bankruptcy (on behalf of himself and the business entities) no
later than September 28, 2012, 3 which would have obviated their
involvement in the impending conference. Lankford added that
she planned to be in Puerto Rico on October 3.
The district court denied the motion to continue and
the motion to withdraw the next day -- October 1. The court
ordered both Lankford and Neyhart to appear and represent
Leonard and the related business entities at the pretrial
conference and explained that either attorney’s absence would
result in a further order holding counsel in contempt.
On October 2, Lankford responded to the court’s order
by filing a declaration. The declaration expanded her
explanation of how she came to request a continuance so close to
the date of the pretrial conference. Lankford asserted that she
did not receive the district court’s October 1 order directing
her to appear at the pretrial conference under pain of contempt
until she had already left for Puerto Rico. But she assured the
court that both Leonard and Neyhart would appear at the pretrial
3 Neither Leonard nor his business organizations, in fact,
filed for bankruptcy prior to the pretrial conference. Leonard
did file for personal bankruptcy, but not until October 10, a
week after the conference. The two business entities never
filed for bankruptcy while this action was pending against them.
5
conference in person, while she would be available to appear via
teleconference.
As promised, Leonard and Neyhart both appeared in
person. However, the pretrial conference did not go well.
Having anticipated that a bankruptcy stay would delay both the
conference and the trial, Leonard and his counsel were not
prepared for either.
Preparation aside, Neyhart worried that a potential
conflict of interest had arisen. He reported to the court that
Leonard was disputing some of Lankford’s representations in her
declaration and in the motion to continue. Neyhart asked the
court for time to clarify the scope and consequences of any
dispute between counsel and client. This request was denied.
During the pretrial conference, RDLG moved for
sanctions, citing Leonard’s lack of preparation. RDLG argued
that entry of a default judgment would be appropriate. See Fed.
R. Civ. P. 16(f)(1)(B), 37(b). Neyhart opposed, arguing a
warning from the court was required prior to imposing default
judgment as a sanction. The court took the motion under
consideration. But prior to concluding the conference, it
expressly stated on the record that it was considering striking
Leonard’s answer and entering default judgment.
Two days later, the district court imposed sanctions
pursuant to Federal Rule of Civil Procedure 16(f) and the
6
court’s inherent power, finding that “the actions of Defendants
and their counsel at the pretrial conference and leading up [to]
the conference made a mockery of the judicial process.” RDLG,
LLC v. RPM Grp., LLC, No. 1:10-cv-204, 2012 WL 4755669, at *7
(W.D.N.C. Oct. 5, 2012). Leonard was fined “$2500.00 pursuant
to Rule 16(f)(l)(C)” and ordered to pay his fine “to the Clerk
of Court within five (5) days of the entry of [the court’s]
Order.”
Id. at *5. The court warned, “failure . . . to comply
with this Order within the time frame set forth in this Order
will result in the Court striking the answer . . . and entering
default judgment.”
Id. Neyhart was also assessed a $2,500
fine, and Lankford was assessed a $5,000 fine.
Separately, the district court raised the prospect of
imposing additional sanctions against Lankford and Neyhart
pursuant to Federal Rule of Civil Procedure 11 and directed
Lankford and Neyhart “to Appear at a hearing at 10:00 a.m. on
Thursday, October 11, 2012, . . . and SHOW CAUSE why they should
not be further sanctioned.” RDLG, LLC, 2012 WL 4755669, at *7.
October 10 -- the deadline for paying the assessed
fines -- came and went without Leonard attempting to pay his
fine. Instead, he filed for personal bankruptcy.
On the other hand, Lankford and Neyhart paid their
fines on time. They also appeared at the Rule 11 hearing on
October 11 as directed. Leonard, who had not been ordered to
7
attend the hearing, chose not to attend. Lankford and Neyhart
both presented evidence at the show cause hearing.
The court decided no additional sanctions should be
imposed on the two attorneys. It then turned to the previously
imposed Rule 16 sanction, which Leonard had failed to pay. That
failure, the district court decided, warranted striking
Leonard’s answer and entering default judgment against him. The
court reasoned, “It’s my belief that even though he’s filed
bankruptcy, the court ordered sanctions are not
excusable . . . . [I]t was [Leonard] who plotted and schemed to
cause a delay and continuance of this matter and to cause the
Court difficulty in trying to administer this case and prepare
it for trial.” J.A. 204-05. 4
The court followed up with a written order on October
24. The court recounted that its October 5 order cautioned that
failure to pay any assessed fine would result in default.
“Despite this warning,” the court observed, Leonard “failed to
comply with the Court’s Order.” J.A. 211. The court then found
Leonard more blameworthy than his attorneys, concluding,
“[Leonard] manipulated counsel” and “undermined counsel’s
ability to prepare for the Pretrial Conference and for the
4
Citations to the “J.A.” refer to the Joint Appendix
filed by the parties in this appeal.
8
trial.” Id. at 211-12. The court determined sanctions less
drastic than default judgment “would be of no avail in this
matter.”
Id. at 212.
B.
The default judgment resolved the issue of liability
but did not set an amount of damages. That determination
required a jury trial, which began on January 12, 2015. 5
At trial, Leonard requested that the jury be
instructed, “Actual damages recoverable by the plaintiff for
fraudulent misrepresentation are limited to the amount of money,
property, services, or credit obtained by defendant from
plaintiff by means of defendant’s fraudulent
misrepresentations.” J.A. 243. The court declined to do so,
and the jury subsequently returned a verdict for $500,580.36 in
damages. The district court entered judgment accordingly. This
timely appeal followed.
II.
Leonard challenges both the default judgment and the
damages jury instruction. We begin with the argument that the
entry of default judgment violated his due process rights.
5The case was stayed due to Leonard’s bankruptcy for much
of the period between the October 2012 pretrial conference and
January 2015 damages trial.
9
A.
Normally, “[w]e review the district court’s grant of
sanctions under [Federal] Rule [of Civil Procedure] 37,
including the imposition of a default judgment, for abuse of
discretion.” 6 Anderson v. Found. for Advancement, Educ. & Emp’t
of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998); see also
Nat’l Hockey League v. Metro. Hockey Club, Inc.,
427 U.S. 639,
642 (1976) (per curiam). “In the case of default, the ‘range of
discretion is more narrow’ than when a court imposes less severe
sanctions.” Hathcock v. Navistar Int’l Transp. Corp.,
53 F.3d
36, 40 (4th Cir. 1995) (quoting Wilson v. Volkswagen of Am.,
Inc.,
561 F.2d 494, 503 (4th Cir. 1977)).
Leonard is not challenging whether the district court
exceeded the bounds of its discretion, though. Rather, Leonard
contends that he is entitled to relief from the sanction because
he “had neither notice nor a meaningful opportunity to respond
6 The district court’s orders sanctioning Leonard refer to
Federal Rule of Civil Procedure 16, not Rule 37. Rule 16
authorizes a district court to sanction a party who is
unprepared to participate in a pretrial conference by “issu[ing]
any just orders, including those authorized by Rule
37(b)(2)(A)(ii)-(vii).” Fed. R. Civ. P. 16(f)(1). Rule
37(b)(2)(A)(iii) authorizes the court to “strik[e] pleadings in
whole or in part,” and Rule 37(b)(2)(A)(vi) authorizes
“rendering a default judgment against the disobedient party.”
So while the district court referred to its authorization to
order default pursuant to Rule 16, the ultimate source of that
authorization is Rule 37. See Rabb v. Amatex Corp., 769 F.2d
996, 999-1000 (4th Cir. 1985).
10
to the allegations leveled against him prior to the court
imposing” the default judgment. Leonard’s Br. 24.
We agree that there are due-process-based limits on a
court’s power to sanction through default judgment. “[T]he
provisions of the Fifth Amendment[, which provide] that no
person shall be deprived of property without due process of
law,” impose “constitutional limitations upon the power of
courts, even in aid of their own valid processes, to dismiss an
action without affording a party the opportunity for a hearing
on the merits of his cause.” Societe Internationale Pour
Participations Industrielles Et Commerciales, S. A. v. Rogers,
357 U.S. 197, 209 (1958). Accordingly, a default judgment
generally may not be entered as a sanction “without first giving
notice of . . . intent to do so and without affording an
opportunity for a hearing.” Ford v. Alfaro,
785 F.2d 835, 840
(9th Cir. 1986).
But Leonard was provided ample notice and hearing in
this case. Prior to imposing the sanction at issue, the
district court issued both oral and written warnings that
continued recalcitrance would result in default judgment. At
the pretrial conference, the court notified the parties that it
was considering “strik[ing] the answer . . . and rul[ing] in
default.” J.A. 118. Moreover, the court’s October 5 order
could not have been more clear, warning, “failure . . . to
11
comply . . . will result in . . . default judgment.” RDLG, LLC
v. RPM Grp., LLC, No. 1:10-cv-204, 2012 WL 4755669, at *5
(W.D.N.C. Oct. 5, 2012) (emphasis supplied). Additionally, the
district court heard oral argument about potential sanctions at
a pretrial conference, which Leonard attended.
Such process was constitutionally adequate. And even
if it were not, Leonard fails to demonstrate that he was
prejudiced by any violation, so he is not entitled to relief on
appeal. We discuss the adequacy of the process employed by the
district court and Leonard’s inability to show prejudice in
turn.
B.
In this circuit, we “requir[e] explicit and clear
notice to” parties “when their failure to meet the . . .
conditions [of a court order] will” preclude their right to
adjudication on the merits. Choice Hotels Int’l, Inc. v.
Goodwin & Boone, 11 F.3d 469, 471 n.2 (4th Cir. 1993); see also
Hathcock, 53 F.3d at 40 (“[T]his court has emphasized the
significance of warning a defendant about the possibility of
default before entering such a harsh sanction.”); Lolatchy v.
Arthur Murray, Inc.,
816 F.2d 951, 954 n.2 (4th Cir. 1987)
(“[The] fact is that in National Hockey League[ v. Metropolitan
Hockey Club, Inc.], as well as in Rabb[ v. Amatex Corporation,
769 F.2d 996 (4th Cir. 1985)], the district court explicitly
12
warned the defaulting party in advance of the consequence of
default, which was dismissal. No such warning was given in this
case; had there been, another case would be presented.”
(citations omitted)). When provided, such notice is undoubtedly
constitutionally adequate. See Link v. Wabash R.R., 370 U.S.
626, 632-33 (1962).
Leonard received the requisite “explicit and clear
notice” in this case. Choice Hotels, 11 F.3d at 471 n.2.
Indeed, he received an unusually clear and explicit warning.
First, he was present at the October 3, 2012 pretrial conference
when the district court announced, “I may strike the answer in
this case and rule in default.” J.A. 118. Second, Leonard does
not dispute that he received notice of the court’s follow-on
October 5, 2012 order, which warns, “The failure of [Leonard] or
counsel to comply with this Order within the time frame set
forth in this Order will result in the Court striking the answer
of [Leonard] and entering default judgment against
[him] . . . .” RDLG, LLC,
2012 WL 4755669, at *5 (emphasis
supplied). Indeed, the warning was repeated twice. See
id. at
*7 (“The Court, however, warns [Leonard] that any future
dilatory conduct will result in the Court striking [his]
Answer[] and entering default judgment against [him].” (emphasis
in original));
id. at *8 (“The failure of [Leonard] or counsel
to comply with this Order within the time frame set forth in
13
this Order will result in the Court striking the answer of
[Leonard] and entering default judgment against [him] . . . .”).
In Rabb v. Amatex Corporation, we upheld a sanction of
dismissal against a due process challenge because “counsel[]
conceded full awareness of and utter disregard for the district
court’s discovery timetable set forth in the pre-trial order.”
769 F.2d 996, 1000 (4th Cir. 1985). The instant case is even
more clear. Here, the order Leonard was fully aware of -- and
utterly disregarded -- specifically threatened default judgment.
Three times. That is far more than enough to accord Leonard
constitutionally adequate notice.
C.
Leonard was also provided an adequate opportunity to
be heard.
“[N]ot . . . every [dismissal] order entered
without . . . a preliminary adversary hearing offends due
process.” Link, 370 U.S. at 632. Following Link, other
circuits have expressly held that a court need not hold an oral
hearing before entering a default judgment sanction. See FDIC
v. Daily,
973 F.2d 1525, 1531 (10th Cir. 1992) (affirming a
default judgment sanction despite the lack of oral hearing
because “[t]he right to respond does not necessarily require an
adversarial, evidentiary hearing”); Spiller v. U.S.V. Labs.,
Inc.,
842 F.2d 535, 538 (1st Cir. 1988) (“Lack of a hearing does
14
not offend due process where the plaintiff had ample warning of
the consequences of his failure to comply with court orders.”).
We need not go that far today, though, because Leonard
was permitted, through counsel, to oppose RDLG’s motion for
default judgment. At the pretrial conference, Neyhart argued in
opposition to the motion and, in fact, convinced the court that
default judgment should not be entered without first warning
Leonard that it could result from further noncompliance.
There is no question that this hearing was adequate.
Like notice, “[t]he adequacy of . . . hearing . . . turns, to a
considerable extent, on the knowledge which the circumstances
show such party may be taken to have of the consequences of his
own conduct.” Link, 370 U.S. at 632. As discussed, as between
the pretrial conference and the October 5 order, it is
abundantly clear that Leonard had knowledge of the consequences
of refusing to pay the court-imposed fine. No further hearing
was necessary.
Leonard concedes as much. At oral argument, his
counsel agreed there would have been no violation if, at the
October 11 hearing, the district court had simply entered
default judgment as a sanction for Leonard’s noncompliance. See
Oral Argument at 3:16–3:34, RDLG, LLC v. Fred M. Leonard, Jr.,
No. 15-1153 (Mar. 24, 2016), available at
http://www.ca4.uscourts.gov/oral-argument/listen-to-oral-
15
arguments (“Had the magistrate judge wanted to find [Leonard] in
default for not paying that $2,500, he could have done so, in my
opinion, without any further hearing into [Leonard’s] conduct,
and he could have done it essentially with a one-sentence
order.”).
D.
Leonard nevertheless contends that his right to due
process was violated because he lacked notice that his failure
to pay his fine would be discussed at the October 11 hearing.
That hearing was set to address potential Rule 11 sanctions for
Leonard’s attorneys, but the district court proceeded further,
raising Leonard’s failure to pay, and then, according to
Leonard, relying on information drawn from the October 11
hearing when ordering default judgment. The court, for example,
ordered the Rule 11 hearing in part because it “ha[d] serious
concern regarding the factual ac[c]uracy of . . . statements in
[Lankford’s] Declaration and pleadings.” RDLG, LLC, 2012 WL
4755669, at *7. After considering the testimony Lankford gave
at the hearing, however, the district court relied on those same
documents as credible evidence supporting entry of default
judgment against Leonard, observing, “From the statements of Ms.
Lankford, in her declaration, it was [Leonard] who plotted and
schemed to cause a delay and continuance of this matter and to
cause the Court difficulty in trying to administer this case and
16
prepare it for trial.” J.A. 205. Leonard maintains that
reliance on findings and credibility assessments made in his
absence violates due process.
But having conceded that, consistent with due process,
the district court “could have [entered default judgment]
essentially with a one-sentence order,” Oral Argument at 3:23–
3:34, and having neglected to identify any evidence suggesting
that the district court’s findings would have been different had
Leonard attended and testified at the October 11 hearing,
Leonard necessarily concedes that any error is harmless. Even
if the court’s appeal to additional findings constituted a due
process violation, the violation did not prejudice Leonard if
the findings were neither material to the determination he seeks
to undo nor incorrect. See Tenn. Secondary Sch. Athletic Ass’n
v. Brentwood Acad., 551 U.S. 291, 303-04 (2007) (holding that
any due process violation arising from an athletic association’s
closed-door discussion with investigators after a disciplinary
hearing was “harmless beyond a reasonable doubt” where the
punished school “identified nothing the investigators shared
with the board that [the school] did not already know” and
“g[ave] no inkling of what” would have changed had the
investigators testified at the open hearing and been subject to
cross-examination).
17
And if Leonard cannot show prejudice, his argument
cannot succeed. Where a sanctioned party “has not made any
showing of any possible prejudice[,] . . . failure to
afford . . . notice and hearing before imposition of the
sanction [i]s harmless error.” Ford, 785 F.2d at 840. Here,
there is no indication that a show cause hearing, Leonard’s
attendance at the October 11 hearing, or any additional notice
and hearing would have had any effect on the district court’s
decision to enter default judgment. Rather, the essential facts
are undisputed: Leonard willfully defied the initial sanctions
order, knowing that default judgment would result. “A party who
flouts such orders does so at his peril.” Update Art, Inc. v.
Modiin Pub., Ltd.,
843 F.2d 67, 73 (2d Cir. 1988). And no
matter what Leonard would say in an additional hearing, it is
beyond dispute that he willfully flouted a court order of which
he was well aware. He is not entitled to relief from the
consequences of that choice.
III.
We turn next to the award of damages. Leonard
contends that the damages verdict must be vacated because the
district court erred when instructing the jury. Again, we
disagree.
18
A.
“We review a district court’s ‘decision to give (or
not give) a jury instruction and the content of an
instruction . . . for abuse of discretion.’” United States ex
rel. Drakeford v. Tuomey, 792 F.3d 364, 382 (4th Cir. 2015)
(alteration in original) (quoting United States v. Russell,
971
F.2d 1098, 1107 (4th Cir. 1992)). Reversal is appropriate “only
when the requested instruction (1) was correct; (2) was not
substantially covered by the court’s charge to the jury; and (3)
dealt with some point in the trial so important, that failure to
give the requested instruction seriously impaired that party’s
ability to make its case.”
Id. (quoting Noel v. Artson,
641
F.3d 580, 586 (4th Cir. 2011)).
B.
Reversal is not appropriate here because Leonard’s
proposed instruction was not relevant to the issue submitted to
the jury. Irrelevant instructions do not, by definition,
“deal[] with some point in the trial so important, that failure
to give [them] seriously impair[s] [a] party’s ability to make
its case.” Tuomey, 792 F.3d at 382 (alterations supplied)
(quoting
Noel, 641 F.3d at 586). Rather, “no valid objection”
lies when a court refuses instructions that are “irrelevant and
immaterial . . . to the ground upon which the case was placed
19
before the jury.” Brown v. Tarkington, 70 U.S. (3 Wall.) 377,
381 (1865).
Leonard asked the district court to instruct the jury
that damages must be “limited to the amount of money, property,
services, or credit obtained by [Leonard] from [RDLG] by means
of [Leonard]’s fraudulent misrepresentations.” J.A. 243. This
instruction was apparently adapted from In re Rountree, 478 F.3d
215 (4th Cir. 2007), an opinion in which we decided whether a
tort judgment was excepted from discharge in Chapter 7
bankruptcy by 11 U.S.C. § 523(a)(2)(A). See
id. at 219-23.
Rountree dealt entirely with federal bankruptcy law. The
limitation set forth in Leonard’s proposed jury instruction
describes his interpretation of a limitation to the reach of the
fraud exception provided in the bankruptcy code.
No issue of federal bankruptcy law, however, was
submitted to Leonard’s jury. Rather, the jury was tasked with
deciding the extent to which he was liable to RDLG pursuant to
the state law causes of action alleged in this diversity suit.
And while “the issue of nondischargeability” addressed in
Rountree is “a matter of federal law governed by the . . .
Bankruptcy Code,” the question whether a valid debt exists “is
determined by rules of state law.” Grogan v. Garner, 498 U.S.
279, 283-84 (1991). The question presented to the jury --
whether and how much Leonard is indebted to RDLG pursuant to
20
North Carolina law -- thus remains a question of state law
despite Leonard’s collateral bankruptcy proceedings. Therefore,
his proposed instruction about the federal dischargeability
question was simply irrelevant.
The question whether Leonard’s judgment debt is
dischargeable is properly directed to the court overseeing his
bankruptcy. Indeed, Leonard did present his Rountree argument
there, and it was rejected. See In re Leonard, No. 15-5452,
2016 WL 1178649, at *7 (6th Cir. Mar. 28, 2016) (unpublished).
That decision was appealed to (and affirmed by) the Sixth
Circuit. See
id. It cannot be challenged again here.
IV.
The district court’s decision to enter default
judgment as a sanction did not violate Leonard’s right to due
process, and Leonard’s proposed jury instruction was properly
refused. Accordingly, the judgment of the district court is
AFFIRMED.
21
DAVIS, Senior Circuit Judge, concurring in the judgment:
This case is a closer call for me than it is for my friends
in the majority. I am somewhat puzzled by the manner in which
the district court sought to vindicate the court’s interest in
maintaining appropriate supervision and control over the
workflow in the busy United States District Court for the
Western District of North Carolina.
In addition to ordering that Leonard and his counsel pay
the plaintiff’s attorney’s fees in preparing for and attending
the pretrial conference, the court further sanctioned Leonard
and his counsel for failing to prepare for the pre-trial
conference by imposing a monetary penalty payable to the court.
Thereafter, with its crosshairs fixed on Leonard’s counsel, the
district court convened a hearing concerning the imposition of
further sanctions on Leonard’s counsel under Federal Rule of
Civil Procedure 11, which Leonard himself was not specifically
ordered to attend. Then, in Leonard’s absence, and in partial
reliance on the statements of his erstwhile counsel (coupled
with Leonard’s failure to timely pay the fine previously
imposed), the court switched its focus and entered an order of
default against Leonard. Ultimately, after a jury considered
solely damages evidence (but not evidence bearing on liability),
it returned a verdict in excess of half a million dollars in
favor of the plaintiff against Leonard. In my view, these
22
procedural machinations skirt the border of due process, even
for a litigant as disreputable as Leonard, who clearly
manipulated his own counsel, his adversary and its counsel, and
the district court, alike.
Manifestly, the district court would have been wise to have
built a more convincing record to explicate the appropriateness
of the ultimate sanction of default by affording Leonard an
opportunity to explain or justify his failure to pay the fine
and why something short of default would have been a more
appropriate sanction. Indeed, the usual course of action in
such circumstances is to hold a show cause hearing. I am
constrained, nonetheless, under the totality of the
circumstances shown by the record, to join in the judgment
affirming the district court.
23
