Starling v. Fuller

United States Court of Appeals,

Fifth Circuit

No. 93-8031

Fred STARLING and Bonnie Starling,

Plaintiffs-Appellants, Cross-Appellees, Appellees,

v.

Charles FULLER, et al.,

Defendants-Appellees,

and

Jim Boutwell and Williamson County, Texas,

Defendants-Appellees, Cross-Appellants,

and

James Ludlum,

Appellant.

Appeal from the United States District Court
for the Western District of Texas.

April 5, 1995

Before GARWOOD and EMILIO M. GARZA, Circuit Judges, and HEAD*,
District Judge.**

HAYDEN W. HEAD, Jr., District Judge:

Fred and Bonnie Starling appeal from a jury verdict finding in

favor of the defendants. Specifically, they challenge the

following of the district court's orders: (1) an order denying

*
District Judge of the Southern District of Texas, sitting by
designation.
**
Pursuant to Local 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this opinion should not be published and is not precedent except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 Local Rule 47.5.4.
leave to file a sixth amended complaint; (2) an order striking the

parties' second joint pretrial order, filed in 1992; (3) an order

denying leave to file a trial amendment of the joint pretrial

order; (4) an order excluding the testimony of Jerry Shorten, one

of plaintiffs' witnesses; (5) an order allowing Paul Womack, an

unlisted defense witness, to testify; and (6) the court's jury

instructions. Sheriff Boutwell and Williamson County cross-appeal,

challenging the district court's award of sanctions against them

and their attorney, James Ludlum. Ludlum also challenges that

award in his own appeal. We affirm the district court's orders

except as to the fee awarded to lift the bankruptcy stay.

I. THE STARLINGS' APPEAL ON THE MERITS

A. Facts and Proceedings Below

Charles Elkins, Fred Starling's landlord, obtained a civil

judgment against Starling in the amount of $1,436.50. Elkins

requested a writ of execution, which was issued on February 3,

1988. In order to execute that writ, Williamson County Constable

Charles Fuller went to a pawnshop owned by Starling. When Fuller

attempted to serve the writ on Starling, Starling became quite

angry. Though there is some dispute as to the exact words used by

Starling, Fuller testified that Starling threatened to shoot him if

he attempted to take anything from the store in execution of the

writ. Starling claims that Fuller became angry when he saw that

Starling was supporting Fuller's opponent in an upcoming election.

Fuller reported the substance of the encounter to Sergeant
Ruby Johnson, the civil warrants officer at the Williamson County

Sheriff's Department. Because Sergeant Johnson believed Starling's

threat violated the criminal laws, she summoned the officer in

charge of criminal matters, Sergeant Dennis Jaroszewski. Sergeant

Jaroszewski took Fuller's statement and ordered Deputy David

Proctor to prepare a criminal complaint against Starling. Fuller

brought the complaint to a Justice of the Peace, who issued a

warrant for Starling's arrest for aggravated assault on a law

enforcement officer and set bond in the amount of $25,000.00.

Upon learning of the warrant for his arrest, Starling

surrendered and was placed in jail for six days. Starling

testified that during the time he was in jail, both Sergeant

Johnson and Constable Fuller visited him in jail, urging him to pay

off the civil judgment. After his bond was reduced to personal

recognizance and his wife paid off the civil judgment, Starling was

released. At the suggestion of Fuller, the charges against

Starling were dropped several months later.

In February 1989, the Starlings filed suit against Fuller,

Proctor, Johnson, Jaroszewski, and Gene Hutchinson, another

employee of the Williamson County Sheriff's Department. In their

complaint, the Starlings alleged violations of 42 U.S.C. § 1983 and

Texas state law, claiming that Starling was falsely arrested and

imprisoned, maliciously prosecuted, and otherwise wrongfully

treated by the defendants. Plaintiffs claimed defendants acted in

retaliation for Starling's support of Fuller's political opponent
and for Starling's earlier complaints about Jaroszewski and

Hutchinson in connection with their handling of a family dispute.

In May 1991, plaintiffs added Sheriff Jim Boutwell and Williamson

County as defendants. After a trial in October 1992, a jury found

in favor of the defendants on all claims.

B. Discussion

1. The Sixth Amended Complaint

On May 1, 1992, the Starlings filed a motion for leave to file

their sixth amended complaint. The Starlings wished to add a claim

alleging the defendants retaliated against them after arresting

Fred Starling in violation of their First Amendment rights. The

court denied their motion to amend on May 19, 1992. The Starlings

challenge that denial, contending it was an abuse of the trial

court's discretion.

Federal Rule of Civil Procedure 15(a) provides that leave to

amend complaints "shall be freely given when justice so requires."

The decision as to whether to grant leave is "entrusted to the

sound discretion of the district court, and that court's ruling is

reversible only for an abuse of discretion." Wimm v. Jack Eckerd

Corp., 3 F.3d 137, 139 (5th Cir.1993) (citations omitted). Though

leave need not be automatically granted, the district court's

discretion is not unbounded. Id. (citations omitted). " "[I]f the

district court lacks a "substantial reason" to deny leave, its

discretion is not broad enough to permit denial.' " Id. (quoting

Jamieson v. Shaw, 772 F.2d 1205, 1208 (5th Cir.1985)). The
district court may consider such factors as undue delay, bad faith

or dilatory motive on the part of the movant, repeated failure to

cure deficiencies by amendments previously allowed, undue prejudice

to the opposing party, and futility of amendment. Id. (citations

omitted).

In Wimm, plaintiffs sought leave to amend their complaint

after defendants filed a motion for summary judgment. The record

showed that the plaintiffs sought leave to add claims based on

facts of which they were aware before they initiated their action.

This Court held that awareness supported a finding of bad faith and

dilatory motive. Wimm, 3 F.3d at 141. Here, the record also

supports such a finding. The defendants' actions forming the basis

for plaintiffs' claims of retaliation occurred in 1987 and 1988,

well before plaintiffs filed their original complaint in this

action.1 Though the Starlings argue they only learned of a pattern

of retaliation in discovery during March and April of 1992, the

actual conduct upon which plaintiffs based the claim occurred much

earlier. Further, the plaintiffs knew of the conduct at the time

it occurred. The pattern discovered in 1992 would only add support

to their claim; it was not the conduct upon which plaintiffs

sought to base their claim. Because plaintiff waited so long to

attempt to add the claim, the district court could have found

1
The Starlings argue defendants should have had notice of a
First Amendment retaliation claim as early as the filing of their
fourth amended complaint in May, 1991. Accordingly, plaintiffs as
much as admit they had a basis for their retaliation claim at least
a year before they sought to add the claim.
plaintiffs' made their motion for leave to amend in bad faith.

Accordingly, the district court's denial of the motion was not an

abuse of discretion.

2. The 1992 Pretrial Order

On May 15, 1991, the parties filed a joint pretrial order.

On May 1, 1992, the parties submitted a second joint pretrial

order. The second order included plaintiffs' purported retaliation

claim. The order did not contain the parties' signatures, as

required by the Local Rules for the Western District of Texas.

Because of that deficiency, the court struck the pretrial order on

May 19, 1992. On appeal, the Starlings claim the district court

erred because they were given no opportunity to cure any problem

with the pretrial order.

The Starlings' argument that they were given no opportunity to

cure the deficiencies of the 1992 pretrial order does not comport

with the facts. The order striking the pretrial order clearly

stated the pretrial order did not comply with the Local Rules.

Neither party attempted to resubmit the order at any time between

May 19, 1992, when it was struck, and October 12, 1992, when trial

began. Clearly, the parties had sufficient opportunity to cure any

deficiencies in the pretrial order by resubmitting it.

Accordingly, plaintiffs' argument lacks merit.

3. The Supplemental, or Trial, Amendment to Pretrial Order

On the second day of trial, the Starlings filed a motion for

leave to file a trial amendment to the 1991 pretrial order.
Apparently, the motion was the Starlings' final attempt to plead a

claim of post-arrest retaliation in violation of their First

Amendment rights such that they could pursue it at trial. The

court denied their motion to supplement. The Starlings challenge

that denial.

The joint pretrial order "shall be modified only to prevent

manifest injustice." Fed.R.Civ.P. 16(e). We review the district

court's decision not to allow the modification of an existing

pretrial order for an abuse of discretion. Masinter v. Tenneco Oil

Co., 929 F.2d 191, 194 (5th Cir.1991), reh. granted, opinion

confirmed and reinstated, 938 F.2d 536 (5th Cir.1991) (citations

omitted). No manifest injustice resulted from the district court's

denial of the motion to amend the pretrial order. The Starlings

knew of the facts underlying their post-arrest retaliation claim

well before they filed their first pretrial order. They did not

include that claim in the first pretrial order, nor did they begin

to attempt to place the claim before the court until over a year

after filing the 1991 pretrial order. Based on those facts, the

Starlings cannot claim manifest injustice occurred when they were

not permitted to amend the pretrial order at trial. See Canal Ins.

Co. v. First General Ins. Co., 889 F.2d 604, 609 (5th Cir.1989),

mandate recalled and reformed, 901 F.2d 45 (5th Cir.1990).

4. The Court's Exclusion of Jerry Shorten's Testimony

The Starlings attempted to call Jerry Shorten as a witness at

trial to support their post-arrest retaliation claim. The court
excluded his testimony, and the Starlings contend that exclusion

was error. We review the district court's exclusion of testimony

for an abuse of discretion. United States v. Pace, 10 F.3d 1106,

1115 (5th Cir.1993), cert. denied, --- U.S. ----, 114 S.Ct. 2180,

128 L.Ed.2d 899 (1994). Plaintiffs sought to introduce Shorten's

testimony as proof of their retaliation claim. That claim was not

before the district court at the time of trial. Though the

plaintiffs argue they asserted the retaliation claim in their

fourth amended complaint, we disagree with that view of the

complaint. That complaint addressed only plaintiffs' claims that

Fred Starling was arrested solely to force him to pay a civil

judgment—it contains no allegations supporting their claim of

post-arrest retaliation. Further, we have held already that the

district court properly struck the 1992 pretrial order.

Consequently, the 1991 pretrial order governed the trial, and that

pretrial order does not include plaintiff's post-arrest retaliation

claim. Finally, plaintiffs, in their brief, admit the description

of Shorten's testimony in the 1991 pretrial order gave no

indication that he would testify as to matters relevant to a

post-arrest retaliation claim. Because we conclude that claim was

not before the district court, the testimony was not relevant to

any issue, and the court did not abuse its discretion in excluding

it.

Plaintiffs argue we should apply the four factors set forth

in Geiserman v. MacDonald, 893 F.2d 787, 791 (5th Cir.1990), to
determine whether the district court's exclusion of Shorten's

testimony is an abuse of discretion. Those factors are used "to

review [a] court's exercise of discretion to exclude evidence that

was not properly designated." Id. In Geiserman, the court struck

plaintiff's untimely expert witness designation and precluded any

expert witness testimony in order to enforce both the court's

scheduling order and local rules. Id. at 790. Here we have held

the district court's exclusion of the evidence to be proper because

the evidence is irrelevant, not because the evidence was not

properly designated. Consequently, the Geiserman factors do not

apply.

5. Allowing Paul Womack to Testify

Defendants named District Attorney Ken Anderson as a witness

in their witness list. Anderson, however, was unavailable to

testify at trial because he was trying a capital murder case. The

defendants therefore called Assistant District Attorney Paul Womack

as a substitute witness. Though the Starlings objected to him

testifying, Womack was allowed to testify over their objection.

The Starlings contend the court erred in allowing Womack's

testimony because (1) he was a surprise witness who testified well

beyond the scope of Anderson's planned testimony as described in

the pretrial order; (2) the court allowed him to testify to legal

opinions; and (3) the court allowed the defendants to introduce a

new theory of defense at trial, largely through the testimony of

Paul Womack.
 a. Surprise Witness

We review the trial court's decision to allow a witness not

listed in the pretrial order to testify for an abuse of discretion.

Geiserman, 893 F.2d at 791 (citations omitted). The trial court's

discretion is to be guided by considering the following four

factors: (1) the importance of the witness's testimony; (2) the

prejudice to the opposing party of allowing the witness to testify;

(3) the possibility of curing such prejudice by granting a

continuance; and (4) the explanation, if any, for the party's

failure to identify the witness. Id.

Womack's testimony clearly was important to the defendants'

case. Plaintiffs claimed Fred Starling was arrested to coerce him

to pay a civil judgment he was contesting. As evidence of that

claim, they sought to show there was no probable cause to arrest

Starling for any crime under Texas law, thus demonstrating

defendants' bad motive in arresting him. At least one of

plaintiffs' witnesses, former assistant district attorney Randy

Dale, testified that, in his opinion, the facts alleged in the

criminal complaint against Starling did not constitute a crime.

R18:762-63. Accordingly, plaintiffs opened the door to the issue

of whether the complaint contained sufficient facts to establish

probable cause that Starling committed a crime. Womack testified

to the requirements for a valid arrest under Texas law, and he

testified that if the facts stated by Constable Fuller were true,

those facts would establish probable cause to believe Starling
committed the crime of retaliation. R19:1078-79. Womack's

testimony covered the same subject as Dale's, and served as a

direct rebuttal of Dale's testimony.

Despite the importance to defendant's case, the Starlings

claim they were prejudiced by the district court allowing Womack to

testify. Plaintiffs claim that before Womack testified, they had

no idea defendants intended to claim there was probable cause to

believe Starling had committed any crime other than aggravated

assault. Accordingly, they were not prepared to rebut the claim

that probable cause existed to believe Starling committed

retaliation. The record belies plaintiffs' contention. As early

as October 13, 1992, which was three days before Womack testified,

the defense elicited an admission on cross-examination that the

facts alleged in the criminal complaint against Fred Starling

amounted to the crime of retaliation. See testimony of Jim

Stinnett, a former employee of the Williamson County Sheriff's

Department at R17:323-27, 338. Further, the defense elicited the

same admission from Randy Dale on October 14, 1992. R18:785-86.

Even if that claim of prejudice is true, such harm clearly

could have been cured by seeking a continuance. Plaintiffs claim

they could not seek a continuance because the district judge had

been consistently emphatic that the trial would be completed on the

day Womack testified. However, the record does not show that

plaintiffs even asked for a continuance when it became clear that

the court was going to allow Womack to testify. Consequently, they
speculate when they now claim it was useless to do so because the

court would have denied it.

Finally, defendants' reason for failing to identify Womack

before trial does not suggest anything other than good faith.

Defendants failed to list Womack simply because they intended to

call the District Attorney, Ken Anderson, and listed Anderson in

the 1991 pretrial order. However, Anderson was prosecuting a

capital murder trial when this case finally came to trial.

Defendants called Womack, who is an assistant district attorney, as

a replacement witness.

Based on consideration of those factors, we cannot hold the

trial court abused its discretion in allowing Womack to testify.

Further, we cannot hold his testimony exceeded its permissible

scope because it simply rebutted evidence presented by plaintiffs

that Williamson County lacked probable cause to arrest Fred

Starling. As defendants point out, plaintiffs' description of

Dale's testimony in the 1991 pretrial order did not indicate

clearly that Dale would address whether the facts alleged in the

criminal complaint would state a crime. R2:208. Plaintiffs were

allowed to raise that issue at trial, and defendants are entitled

to address issues raised by plaintiffs.

b. Legal Opinion Testimony

Plaintiffs claim the district court erred in allowing Womack

to testify on matters of substantive law such as: the general role

of the magistrate in setting bail; whether evidentiary documents
stated probable cause; the legal effect of a technical mistake in

a complaint; whether an arrest warrant was required; and that

probable cause for the offense of criminal retaliation existed. As

an assistant district attorney, Womack knows of the procedures

followed to obtain an arrest warrant and to set bail, and what

happens when there is a technical defect in the application for the

warrant. Accordingly, he is qualified to testify to those matters,

like any other expert. See Marx & Co., Inc. v. Diners' Club, Inc.,

550 F.2d 505, 508-09 (2d Cir.), cert. denied, 434 U.S. 861, 98

S.Ct. 188, 54 L.Ed.2d 134 (1977). As to the remainder of the

testimony, plaintiffs' witnesses had been allowed to testify to the

lack of probable cause. Clearly, the defendants had the right to

meet that testimony with testimony of their own demonstrating

probable cause did exist. "In general, when a party opens up a

subject, there can be no objection if the opposing party introduces

evidence on the same subject." Francis v. Clark Equip. Co., 993

F.2d 545, 550 (6th Cir.1993) (citation omitted). We find no abuse

of discretion.

c. New Defense

Plaintiffs argue the district court erred in allowing

defendants to introduce a new theory of defense through Womack's

testimony. They cite no authority for the proposition that the

court's actions were improper. As we already stated, plaintiffs

raised the issue of the lack of probable cause, and now seek to

preclude defendants from defending on that claim. Further,
notwithstanding their assertions to the contrary, plaintiffs had

notice of this defense at least as early as three days before

Womack testified, through the cross-examination of one of their own

witnesses. Any testimony by Womack was merely cumulative of the

earlier testimony.

6. Failure to Instruct the Jury

Plaintiffs complain that the district court failed to give

several requested instructions, and that failure denied plaintiffs

a fair trial. Specifically, plaintiffs sought the following

instructions: (1) an instruction based on City of Houston v. Hill,

482 U.S. 451, 107 S.Ct. 2502, 96 L.Ed.2d 398 (1987), to the effect

that verbal criticism of law enforcement officers is

constitutionally protected and that a peace officer must exercise

a degree of restraint in the face of verbal criticism or challenge;

(2) instructions on procedural and substantive due process issues

affecting the validity of the arrest of Fred Starling, such as the

requirement that the criminal complaint be made under oath, the

four corners doctrine for reading the complaint, and law as to the

result of the complaint containing conclusory allegations; and (3)

an instruction on post-arrest retaliation based on the First

Amendment.

a. Hill Instruction

Plaintiffs are entitled to have the court instruct the jury

on their theory of the case if the instruction is legally correct,

the theory is supported by the evidence, and the desired
instruction is brought to the court's attention in a timely manner.

Pierce v. Ramsey Winch Co., 753 F.2d 416, 425 n. 10 (5th Cir.1985)

(citing Corey v. Jones, 650 F.2d 803, 806 (5th Cir.1981)).

Plaintiffs, however, are not entitled to have the jury instructed

in the precise language or form they requested. Id. at 425

(citations omitted). In reviewing a claim that the district court

erroneously instructed the jury, we "view the charge as a whole, in

the context of the case, and we ignore technical imperfections."

Id. The court "may refuse proposed instructions ... if the charge

that is given covers the theory in substance; the judge, not the

parties, has control over the language and form of jury

instructions." Id. at 425 n. 10 (citing Corey v. Jones, 650 F.2d

803, 806 (5th Cir.1981)).

Plaintiffs sought an instruction to the effect that verbal

criticism of law enforcement officers is constitutionally protected

and that a peace officer must exercise a degree of restraint in the

face of verbal criticism or challenge. See R11:2020. The court

instructed the jury as follows:

The second constitutional violation which plaintiffs
allege is that Defendants violated Fred Starling's First
Amendment Rights. The First Amendment of the Constitution of
the United States gives every citizen the right to freedom of
speech, which includes the right to complain about the conduct
of a law enforcement officer and the right to support or
criticize any political candidate or public official one
chooses.

Arresting a person in retaliation for his or her speech
activities is a violation of his or her First Amendment rights
if it is shown that the person's speech activities were a
substantial or motivating factor in the defendant's decision
to arrest him or her.
 If you find that plaintiffs have met this burden of
proof, you must then determine whether the defendants have
shown by a preponderance of the evidence that Fred Starling
would have been arrested even if his political opinions or
speech activities had not been considered, i.e., because there
existed probable cause. If the defendants show, by a
preponderance of the evidence, that Fred Starling would have
been arrested in any event, then you should find for the
defendants with regard to plaintiffs' First Amendment claim.

R11:2139. The substance of the court's instruction covers

plaintiffs' theory. Consequently, it was not error for the

district court to refuse to give plaintiff's proposed instruction.

b. Due Process Issues

All of the challenged due process instructions relate to the

issue of whether the warrant authorizing the arrest of Starling was

valid, the determination of which is essential to the plaintiffs'

claim of false arrest. We will not reverse based on a challenged

instruction " "if we find, based upon the record, that the

challenged instruction could not have affected the outcome of the

case.' " Pierce, 753 F.2d at 425 (quoting Bass v. USDA, 737 F.2d

1408, 1414 (5th Cir.1984).

As the defendants point out, the jury's finding that Fred

Starling threatened to shoot Constable Fuller if Fuller carried out

his lawful duties moots plaintiffs' arguments. That behavior

constitutes a felony under Texas law. See Tex.Penal Code § 36.06.

Even if the requested due process instructions were given and the

jury found the arrest warrant was procedurally deficient,

defendants argue, the jury could not have found in favor of

plaintiffs on the false arrest claim because the commission of a
felony in the presence of a peace officer negates the need for an

arrest warrant. Bolden v. State, 634 S.W.2d 710, 713

(Tex.Crim.App.1982); Caro v. State, 771 S.W.2d 610, 616

(Tex.App.—Dallas 1989, no pet.). Accordingly, they argue, the fact

that the arrest warrant was procedurally deficient would not

invalidate the arrest. We agree. The district court's failure to

give the requested due process instructions was not erroneous

because they would not have changed the result of the trial.

c. Post-Arrest Retaliation

We review the district court's refusal of a requested

instruction for an abuse of discretion. Jackson v. Taylor, 912

F.2d 795, 798 (5th Cir.1990) (citing Bryan v. Cargill, Inc., 723

F.2d 1202 (5th Cir.1984)). The refusal is an abuse of discretion

only if there are pleadings and sufficient evidence to support the

instruction. Id. (citing Syrie v. Knoll Int'l, 748 F.2d 304 (5th

Cir.1984)). We have determined already that plaintiffs did not

raise a claim of post-arrest retaliation based on the First

Amendment in any of the pleadings before the court. Because the

post-arrest retaliation claim was not before the court, the court

did not err in refusing the requested instruction.

II. APPEAL OF THE AWARD OF SANCTIONS

A. Facts and Proceedings Below

During 1990, 1991, and the early part of 1992, the parties

were involved in a number of discovery disputes. On April 29,

1992, the Starlings filed a motion for sanctions against Boutwell
and the County, as well as against James Ludlum, their attorney.

On May 19, 1992, the district court assigned the motion to United

States Magistrate Judge Stephen H. Cappelle, and Judge Cappelle

conducted an evidentiary hearing on the motion on June 2, 1992. On

August 25, 1992, the magistrate judge submitted his 104-page report

and recommendation to the district court. The magistrate judge

recommended that sanctions be awarded against Boutwell, Ludlum, and

the County. The district court announced it would postpone

consideration of the magistrate judge's recommendations until after

a trial on the merits.

The jury rendered its verdict in favor of the defendants on

all claims in October 1992. On November 6, 1992, the district

court conducted its hearing on the motion for sanctions. At the

beginning of the hearing, the district court announced its adoption

of the majority of the magistrate judge's findings of fact2 and its

intent to impose sanctions based on those findings. Accordingly,

the district court announced that it would only consider the issue

of the amount of sanctions at the hearing. After the hearing, the

district court assessed sanctions against Boutwell, Ludlum, and the

County in the amount of $44,177.40, ordering that the liability for

2
The district court adopted all of the magistrate judge's
findings with the exception of the findings contained in paragraphs
51, 62, 63, 74, 95, 96, 101, 117, 121, and 122. The excluded
findings included determinations that defendants had retaliated
against plaintiffs and their witnesses, that plaintiffs had been
highly prejudiced by defendants' discovery abuse and that
defendants had delayed to take advantage of Fred Starling's heart
condition. The district court did not indicate why it did not
adopt those findings except to note that Ludlum's dilatory tactics
had not prejudiced Plaintiffs.
the sanction was joint and several among the three. The district

court incorporated the sanctions award into its final judgment,

which the court entered on November 23, 1992. Ludlum, Boutwell and

the County have each appealed the sanctions award.

B. Discussion

In its order awarding sanctions against Boutwell, Ludlum, and

the County, the district court noted that, while the same sanctions

could be awarded under Federal Rule of Civil Procedure 11 or under

its inherent authority, it was imposing the sanctions under Federal

Rule of Civil Procedure 37. We review the imposition of Rule 37

sanctions under an abuse of discretion standard. Coane v. Ferrara

Pan Candy Co., 898 F.2d 1030, 1031 (5th Cir.1990).

1. Inadequate Notice

The cross-appellants Ludlum, Boutwell and the County

(cross-appellants) assert that the imposition of sanctions against

them violated their due process rights. While a district court has

broad discretion in the awarding of sanctions, that discretion is

limited by due process concerns. Frame v. S-H, Inc., 967 F.2d 194,

204 (5th Cir.1992). Due process requires adequate notice and an

opportunity to be heard. American Airlines, Inc. v. Allied Pilots

Ass'n, 968 F.2d 523, 530 (5th Cir.1992). The level of formality of

the notice and proceedings correspond to the level of sanctions

imposed. American Airlines, Inc., 968 F.2d at 530. In American

Airlines, Inc., this Court found that the notice issued by Judge

McBryde was adequate where the notice sufficiently described that
nature of the sanctioned party's conduct that the court wanted to

address. Id. After it gives notice, a district court must also

give the sanctioned party an opportunity to respond to the possible

sanctions. See Spiller v. Ella Smithers Geriatric Center, 919 F.2d

339, 347 (5th Cir.1990) (Rule 11 sanctions).

Cross-appellants view of the magistrate judge's report and

recommendation, as well as the district court's order adopting a

substantial majority of the magistrate judge's findings, argues

that the district court imposed sanctions in a manner which did not

meet the requirements of due process. The motion for sanctions

that the plaintiffs' filed against Ludlum, Boutwell and the County

alleges that they had been dilatory with regard to the production

of documents requested to prepare for the deposition of Boutwell.

With regard to the relief requested in the motion, plaintiffs

sought all costs for the deposition of Boutwell as well as all

attorney's fees that plaintiffs' incurred due to the problems

associated with the production of documents related to Boutwell's

deposition. Plaintiffs' also sought attorney's fees related to the

bringing of the motion for sanctions. The district court's order

assigning the motion to the magistrate judge directed the

magistrate judge to conduct "a full hearing and a recommendation

regarding factual findings on the conduct of the attorneys and

recommendations on what discovery, if any, should be accomplished

prior to the next trial setting."

Pursuant to the district court's order, the magistrate judge
conducted an evidentiary hearing. While the transcript suggests

that the hearing was very lengthy, lasting almost a full day, the

testimony given and the evidence admitted at the hearing were

directed to whether defendants' had failed to produce requested

documents for Boutwell's deposition and whether Ludlum and Boutwell

were guilty of bad faith in failing to produce the requested

documents.

Despite the narrow focus of the motion for sanctions, the

order of reference and the evidence admitted at the hearing, the

magistrate judge's report and recommendation and the district

court's order adopting a substantial majority of the magistrate

judge's findings of fact address issues well beyond the scope of

the motion and hearing. The report and recommendation includes a

twenty page review of the procedural history of this case. Much of

that procedural history is devoted to dilatory tactics that the

magistrate judge found Ludlum to have committed both before and

after Boutwell and the County were joined as parties.

Boutwell and the County note also that there was substantial

consideration given in the report and recommendation to discovery

abuses that happened before they were joined as parties in the

lawsuit in May of 1991. The failure to produce certain Texas Crime

Information Center/National Crime Information Center log data,

Ludlum's failure to respond to the magistrate judge's order to

either produce the log or swear that it did not exist and discovery

delays that prompted plaintiffs to file a motion for contempt on
May 1, 1991, were all included in the magistrate judge's report and

recommendation.

The magistrate judge also included an extensive review of

Ludlum's past conduct that went beyond Ludlum's representation of

Boutwell and the County in this lawsuit. The report and

recommendation included a separate section entitled, "PAST PATTERN

OF CONDUCT OF ATTORNEY JAMES LUDLUM, JR." The section, which is

sixteen pages long, includes a detailed description of Ludlum's

conduct in two other cases in the United States District Court for

the Western District of Texas. The report and recommendation also

includes, as exhibits, docket sheets, district court orders and

attorney correspondence related to those two cases. In this

section, the magistrate judge describes numerous continuances and

instances of delay attributable to Ludlum. While the district

court indicated in its order adopting the report that it was not

familiar with Ludlum's past conduct, it did concur in the

magistrate judge's assessment and warned Ludlum that similar legal

representation by him in the future would result in his inability

to practice in the United States District Court for the Western

District of Texas.

While the notice for the sanctions hearing did not indicate

that the magistrate judge would address issues regarding dilatory

tactics and discovery abuses before Boutwell and the County were

joined in the litigation and regarding Ludlum's overall conduct in

the Western District, it is not evident on the face of the record
that the district court imposed sanctions because of Ludlum's or

this litigation's history. The magistrate judge found and the

district court adopted findings that both Ludlum and Boutwell

engaged in sanctionable delays with respect to Boutwell's

deposition and discovery related to that deposition in this

litigation. Sanctions were calculated on the basis of plaintiffs'

counsel's hours found expended in the deposition dispute in this

litigation multiplied by her hourly rate.3 Any inadequate notice

therefore constitutes harmless error that does not require

reversal.

2. Failure to Consider Evidence

On August 25, 1992, the magistrate judge issued his report

and recommendation. On September 4, 1992, Ludlum, Boutwell and the

County filed a motion to reopen and reconsider, requesting that the

magistrate judge reconsider his report and recommendation and that

he reopen the evidence relating to the report and recommendation.

On the same day, they filed their objections and notice of appeal

from the magistrate judge's report and recommendation in accordance

with 28 U.S.C. § 636(b)(1)(C). In an order entered on September

11, 1992, the district court denied their motion to reopen and

reconsider. In the same order, the district court concluded that

the magistrate judge's "determination [would] stand on the record

3
Even though the district court awarded less than the amount
plaintiffs' sought, it is difficult to see how this dispute could
have reasonably generated almost 250 hours of plaintiffs' attorney
time, which constitutes more than one full month of work. Because
that amount is unchallenged, the Court does not address it other
than to take notice of it.
developed before him prior to the rendering of his opinion when all

parties and their lawyers and the witnesses had full opportunity to

present their evidence on the issues." A review of the record

indicates that this conclusion is not entirely accurate.

In their supplemental offer of evidence filed on June 23,

1992, two months before the magistrate's decision, plaintiffs

included the affidavit of Jim Stinnett, who plaintiffs alleged was

a witness discovered after the sanctions hearing. Stinnett is a

former employee to the Williamson County Sheriff's Department. In

his affidavit, Stinnett describes a list of personnel records that

are maintained by that department. He also indicates that he

received a memorandum from Boutwell requesting that department

employees not have any dealings or associations with Fred Starling

or his business. Stinnett was required to sign the memorandum and

return it to his supervisor. In his report and recommendation at

paragraphs 38, 52 and 55, the magistrate judge referred to

Stinnett's affidavit and concluded that personnel files of the

County existed that had not been produced for discovery to the

plaintiffs. These findings were among those findings of fact

relied on by the district court to determine that sanctions were

appropriate. In their objections to the report and recommendation,

Ludlum, Boutwell and the County sought to show that Stinnett was a

disgruntled former employee who was terminated in 1991. Boutwell

and the County further alleged that Stinnett subsequently filed a

"whistleblower" lawsuit against the Williamson County Sheriff's
Department that was dismissed with prejudice on July 9, 1992. The

district court does not refer to these circumstances in its order

adopting the report and recommendation. Cross-appellants do not

offer an explanation as to why they did not promptly challenge

Stinnett's affidavit.

A more serious issue concerns the affidavit of Beverly

Blevins. On April 29, Plaintiffs filed their motion for sanctions

against the cross-appellants. As part of their motion for

sanctions, plaintiffs included the affidavit of Beverly Blevins.

In her affidavit, Blevins indicates that she worked in the

Williamson County Sheriff's Department but was terminated on April

4, 1992. Also in her affidavit, she describes an office memorandum

similar to the one described by Stinnett. She also indicates that

the memorandum was from Boutwell, who instructed all employees of

the Sheriff's Department not to have any business dealings with

Fred Starling or Rick Perkins. While Blevins does not indicate it

in her affidavit, Perkins was the investigator for plaintiffs'

counsel. Blevins further indicates that she attempted to save her

copy of the memorandum in her personal lockbox, which she

apparently kept at the office, but that the memorandum was

confiscated. When she was terminated, Blevins described how her

supervisor referred to the memorandum when she was terminated.

Finally, Blevins described how phone lines to and from the

Williamson County Sheriff's Department were monitored by Williamson

County personnel. She recalled hearing clicks on the telephone
during a conversation that she had with either Fred Starling or

Rick Perkins.

In his report and recommendation at paragraphs 37 and 66, the

magistrate judge referred to the Blevins affidavit to support his

conclusion that Boutwell had failed to produce an internal

memorandum which instructed employees of the Williamson County

Sheriff's Department to avoid associating with and doing business

with Fred Starling or Rick Perkins. The paragraphs which referred

to the Blevins affidavit were also among the findings of fact that

the district court adopted to impose sanctions.

In both their motion to reconsider and reopen and their

objections to and appeal from the report and recommendation,

cross-appellants attempted to submit affidavits from three

employees of the County to show that Blevins was not an employee of

the Williamson County Sheriff's Department and that the memorandum

at issue did not exist. In order to explain their delay in

submitting the affidavits, Bountwell and the County asserted that

these affidavits constituted newly discovered evidence. In the

context of a motion for new trial, newly discovered evidence

warranting a new trial is such evidence that (1) would probably

have changed the outcome of the trial; (2) could not have been

discovered earlier with due diligence; and (3) is not merely

cumulative or impeaching. Diaz v. Methodist Hospital, 46 F.3d 492

(5th Cir.1995). As all three of the affidavits are from employees

of the County, they cannot argue that they could not have obtained
the affidavits earlier with due diligence. Moreover, these

affidavits could have been filed as late as August 14, 1992, when

plaintiffs filed their last supplemental offer of evidence and when

Boutwell and the County filed their motion for leave to supplement

evidence but before the magistrate judge had issued his report and

recommendation. The motion for leave to file supplemental evidence

did not refer to any affidavits, however, and was made up of

Ludlum's now frequent assertions that he had been too busy to file

supplemental evidence earlier. The affidavits therefore do not

constitute newly discovered evidence as a matter of law.

The first of the three affidavits was from Paul Caldwell, who

was the jail supervisor for the County. According to his

affidavit, Blevins was an inmate in the Williamson County jail on

April 3, 1992 but was released from jail on that same day on a bond

from Ace Bail Bonding. Caldwell indicates in his affidavit that

Ace Bail Bonding is owned by Rick Perkins. Caldwell further

indicated that he had never seen a memorandum from Boutwell

concerning Fred Starling's businesses.

The second affidavit was from Jill Bone, who was Boutwell's

secretary. Bone indicated in her affidavit that her review of

payroll records indicated that Blevins was never an employee of the

Sheriff's Department. She also indicated in her affidavit that she

had neither prepared nor seen a memorandum from Boutwell regarding

Fred Starling's pawn shop.

The third affidavit was from Geniva Simpson, who was the
communications supervisor for the Sheriff's Department. In her

affidavit, Simpson also indicated that Blevins had not worked in

the Sheriff's Department and that she had never seen a memorandum

regarding Fred Starling's pawn shop or his businesses. Simpson

also indicated in her affidavit that she recalled that Blevins had

visited the Sheriff's Department on one occasion and had said then

that she was working for Fred Starling. With no adequate

explanation for lateness given, the district court clearly did not

abuse its discretion in denying the motion to reopen and

reconsider.

Following the district court's hearing on the sanctions issue,

counsel for Boutwell and the County filed a letter on November 17,

1992, directed to the issue of the amount of attorney's fees that

should be imposed as the sanction on Boutwell, the County and

Ludlum. Counsel attached to the letter a second affidavit from

Blevins which had been prepared and signed on September 17, 1992.

In the second affidavit, Blevins indicates that almost all of the

statements on her first affidavit were false. She further

indicates that the only portion of her first affidavit that was

true was that, in late March or early April of 1992, while she was

turning herself in on an outstanding warrant for theft by check,

she saw a memorandum addressed to all County employees but did not

recall who prepared it. She further remembered that the memorandum

referred to Ace Bail Bonds, Gold N Pond and Gold N Pawn. These are

businesses owned by either Rick Perkins or Fred Starling. Blevins
further recalled that the memorandum advised people to be careful

with those businesses. She further indicated that Fred Starling

and Rick Perkins knew that she had never worked for the County

because their company held the bond on her pending charge of theft

by check. Blevins also described how Perkins had prepared the

first affidavit and she had signed it without reading it. Since

that time, she read the affidavit and realized that it was not what

she had told Perkins. Finally, Blevins indicated in the second

affidavit that she told plaintiffs' counsel, Rick Perkins and Fred

Starling that the first affidavit was false. According to Blevins,

they suggested that she not contact counsel for Boutwell and the

County about the matter. In its order adopting the magistrate

judge's report and recommendation and imposing sanctions on

Boutwell, the County and Ludlum, which was issued on November 23,

1992, the district court did not refer to the second affidavit.

In her second affidavit, Blevins also indicates that she was

not contacted by counsel for Boutwell and the County until

September 10, 1992. No reason is given for waiting so long to

contact Blevins. As potentially significant as the second Blevins

affidavit is, the district court was never presented with an

adequate reason for the delay in presenting this affidavit. This

Court concludes that the district court did not abuse its

discretion in refusing to consider the affidavits.

3. Fee Awarded to Lift Bankruptcy Stay

In his appeal of the sanctions award, Ludlum contests the
award of fees to the bankruptcy attorney, John Alvis, and to

plaintiffs' counsel for their efforts to lift the automatic stay

against Defendant David Proctor, who had filed for personal

bankruptcy during the course of the litigation. Even though it was

not in his charge to hear nor the subject of any motion for

sanctions, the magistrate judge found in his report and

recommendation that Proctor has filed his bankruptcy on May 4, 1992

but that Ludlum delayed filing a notice of bankruptcy until June

18, 1992. The magistrate judge concluded that the late notice of

bankruptcy was calculated to interfere with the merits of the case.

Concurring with the magistrate judge's determination, the district

court awarded sanctions of $4,762 for the time spent by the

bankruptcy attorney and $2,700 for the time spent by plaintiff's

counsel that was related to Proctor's bankruptcy.

An examination of the docket sheet for this case indicates

that in the district court's order of May 19, 1992, assigning the

sanctions motion to the magistrate judge, the district court also

vacated the trial setting of May 26, 1992 and did not order another

trial setting. On September 1, 1992, the district court set the

case for jury trial on September 28, 1992. On the date that Ludlum

filed the notice of bankruptcy, there was not a trial setting in

the case. It is therefore difficult to understand how the late

notice was calculated to interfere with the trial of the case.

Moreover, the plaintiffs would have incurred the expenses

associated with lifting of the automatic stay regardless of the
timing of the notice of bankruptcy in order to proceed with their

claims against Proctor. There was never a finding by either the

district court or the bankruptcy court that the Proctor's filing

was made in bad faith. This bankruptcy matter was also beyond the

notice and stated purpose of the hearing. The district court

therefore abused its discretion with regard to the award to

Plaintiffs for the fees and expenses associated with obtaining the

lift of the stay in Defendant David Proctor's bankruptcy case.

III. CONCLUSION

We AFFIRM the district court's judgment with respect to the

trial on the merits. We REVERSE and RENDER the district court's

judgment with respect to the award of fees for the lifting of the

bankruptcy stay. We AFFIRM the district court's judgment with

respect to the remaining imposition of sanctions and REMAND for

issuance of an order for payment of sanctions consistent with this

opinion.