Ehrenhaus v. Reynolds

965 F.2d 916, 1992 WL 113986
CourtCourt of Appeals for the Tenth Circuit
DecidedMay 29, 1992
DocketNo. 90-1216
StatusPublished
Cited by588 cases

This text of 965 F.2d 916 (Ehrenhaus v. Reynolds) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ehrenhaus v. Reynolds, 965 F.2d 916, 1992 WL 113986 (10th Cir. 1992).

Opinion

EBEL, Circuit Judge.

In this appeal, we consider the scope of a district court’s discretion to dismiss a complaint with prejudice pursuant to Rule 37(b)(2)(C) of the Federal Rules of Civil Procedure as a sanction for the intentional violation of a discovery order. The court had ordered the appellant to appear for a scheduled deposition and had warned him that the court would dismiss his complaint if he did not comply. The appellant failed to attend the deposition and subsequently declared bankruptcy. The case was assigned to a different judge, who then dismissed the complaint with prejudice when he found that the appellant advanced no good cause to excuse his nonattendance. It is within a court’s discretion to dismiss a case if, after considering all the relevant factors, it concludes that dismissal alone would satisfy the interests of justice. We hold that the court adequately considered these factors and accordingly affirm the judgment below.

In May 1989, the appellant, Jack Ehren-haus, filed a complaint alleging securities fraud in the United States District Court for the District of Colorado. As part of pretrial discovery, the appellees, defendants in the action below, deposed Ehren-haus for three days in November 1989, during which time Ehrenhaus repeatedly invoked the attorney-client privilege. The parties agreed to complete the deposition at a later date. Disagreement between Eh-renhaus and his counsel led the latter to move to withdraw from the representation in December 1989. The district court had not ruled on that motion as of the time that the sanction of dismissal was ordered. Hence, during all relevant times, Ehren-haus was represented by counsel.

The appellees scheduled the remainder of Ehrenhaus’ deposition for March 12, 1990. At a hearing on March 2, 1990, Judge Car-[919]*919rigan, the judge originally assigned to hear the case, expressed impatience with Ehren-haus’ conflicts with his attorneys because the judge viewed such conflicts as a delaying tactic. Judge Carrigan ordered the parties to hold the deposition in the Denver federal courthouse so that he could rule immediately on any assertions of attorney-client privilege raised by Ehrenhaus. In addition, the judge warned Ehrenhaus’ counsel that if Ehrenhaus failed to attend the deposition, he would “expect a motion from the defendants that [the] case be dismissed for failure to cooperate in discovery.” 1

On March 8, Ehrenhaus moved for a protective order to delay the scheduled deposition for five days to allow him to attend a business meeting in New York. Ehren-haus’ business was in severe financial trouble, and he asserted that it was essential that he attend this meeting, scheduled for March 12, in order to save his business from bankruptcy. A magistrate denied the motion and warned that Ehrenhaus would subject himself to sanctions provided under Fed.R.Civ.P. 37 if he failed to attend the deposition.

Ehrenhaus did not appear at the March 12 deposition, although his counsel did attend. Ehrenhaus met instead with bankruptcy counsel in New York. The next day, he filed for protection under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. Within several days, the appellees moved to have the complaint dismissed with prejudice pursuant to Fed.R.Civ.P. 37(b)(2)(C). The court immediately issued an order to show cause why it should not dismiss the suit and ordered Ehrenhaus’ counsel to “serve notice of this order on [Ehrenhaus] personally.” R., Vol. 1, Doc. 26.

The case was transferred to Judge Sparr in May 1990. In June 1990, the court held a hearing on the motion to dismiss. At this hearing, Judge Sparr stated he was sitting “as a court reviewing the evidence and the arguments of counsel to determine if good cause is shown why the Court should not dismiss” the case for Ehrenhaus’ violation of the order to appear for the deposition. R., Vol. VI, at 10. Subsequently, Judge Sparr issued an order dismissing the complaint with prejudice. In this order, the judge made specific findings of fact that Ehrenhaus had willfully violated the court’s order to appear.

Ehrenhaus filed a timely notice of appeal.2 We have jurisdiction under 28 U.S.C. § 1291.

[920]*920On appeal, we must consider three issues. First, what effect did Ehrenhaus’ filing for bankruptcy have on the court’s ability to impose a sanction? Second, what factors should a court ordinarily consider in determining whether to dismiss an action as a sanction? Third, did the district court consider these factors before deciding to dismiss?

I.

When Ehrenhaus filed for bankruptcy, his estate became the successor-in-interest to the lawsuit. In re Ozark Restaurant Equip. Co., 816 F.2d 1222, 1225 (8th Cir.), cert. denied, 484 U.S. 848, 108 S.Ct. 147, 98 L.Ed.2d 102 (1987). However, the estate’s property interest in the lawsuit did not come unencumbered. Prior to filing for bankruptcy, Ehrenhaus engaged in conduct that subjected the lawsuit to the risk of dismissal. Because the trustee’s interest is no greater than that of the debt- or, Paul v. Monts, 906 F.2d 1468, 1473 (10th Cir.1990) (per curiam); see Pearlman v. Reliance Ins. Co., 371 U.S. 132, 135, 83 S.Ct. 232, 234, 9 L.Ed.2d 190 (1962), the trustee took possession and control of a lawsuit encumbered by Ehrenhaus’ misconduct and, as successor-in-interest, was subject to sanction for that misconduct. Although the sanction now affects parties other than the one who engaged in the wrongful conduct, the nature of the property interest transferred cannot be altered. Nonetheless, it would not exceed a district court’s discretion to consider whom the sanction affected in determining what sanction was appropriate. Cf In re Sanction of Baker, 744 F.2d 1438, 1442 (10th Cir.1984) (en banc) (impact of sanction should be lodged with either counsel or client, depending on which was at fault), cert. denied, 471 U.S. 1014, 105 S.Ct. 2016, 85 L.Ed.2d 299 (1985).

II.

Rule 37(b)(2)(C) of the Federal Rules of Civil Procedure permits a court to issue “[a]n order ... dismissing the action” “[i]f a party ... fails to obey an order to provide or permit discovery.” Determination of the correct sanction for a discovery violation is a fact-specific inquiry that the district court is best qualified to make. Therefore, we review the district court’s decision to dismiss for discovery violations under an abuse of discretion standard. National Hockey League v. Metropolitan Hockey Club, 427 U.S. 639, 642, 96 S.Ct.

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965 F.2d 916, 1992 WL 113986, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ehrenhaus-v-reynolds-ca10-1992.