Estrada v. Spend & Cohen

244 F.3d 1050
CourtCourt of Appeals for the Ninth Circuit
DecidedMarch 30, 2001
DocketNo. 99-56013
StatusPublished
Cited by1 cases

This text of 244 F.3d 1050 (Estrada v. Spend & Cohen) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Estrada v. Spend & Cohen, 244 F.3d 1050 (9th Cir. 2001).

Opinion

TROTT, Circuit Judge:

In this appeal, we must decide whether the district court abused its discretion by ordering default judgment against a party on the basis of the party’s repeated, persistent refusal to follow court orders. Our jurisdiction over this appeal derives from 28 U.S.C. § 1291. Under the egregious circumstances presented in this case, we conclude that the district court did not abuse its discretion, and therefore affirm.

I

Background

Appellee Douglas Estrada (“Estrada”) was the president and sole shareholder of Allstate Mortgage Company (“Allstate”), a California corporation. In September of 1997, another company, Norwest Mortgage Company (“Norwest”), sued Allstate and Estrada personally in the Los Angeles County Superior Court asserting several fraud causes of action. Estrada hired New York attorneys Sarah Speno (“Spe-no”) and David Cohen (“Cohen”) (collectively “Speno and Cohen”) of Speno & Cohen, LLP to represent him and Allstate in the Norwest civil action and in any other matter arising out of the operation of [1053]*1053Allstate. In two separate installments, Estrada paid Speno and Cohen $325,000 as a retainer.

Because Speno and Cohen were New York attorneys, they could not immediately appear on behalf of Estrada in Los Angeles County. Consequently, Speno and Cohen hired a California attorney, Patrick Thistle, to defend Estrada and Allstate against Norwest’s allegations.

Late in September of 1997, Norwest obtained an injunction from the Los Angeles County Superior Court forbidding Estrada from transferring funds from his personal or corporate bank accounts to any other bank accounts. According to Estrada’s complaint, in direct defiance of the court’s order, Speno and Cohen each advised Estrada to transfer funds from his accounts to off-shore banks to avoid detection by Norwest or by any criminal prosecutorial agency. Purportedly following their advice, Estrada transferred seven million dollars to bank accounts in New Zealand and Singapore.

About a month later, Estrada, accompanied by Speno and Cohen, met with two Assistant United States Attorneys in Los Angeles. At the meeting, the Assistant United States Attorney informed the trio that Estrada would be indicted for committing various crimes involving fraud. According to Estrada’s complaint, Speno advised Estrada to flee the United States and go into hiding. Purportedly following Speno’s advice, Estrada fled to Rosarito, Mexico.

Estrada also averred in his complaint that Speno arranged for him to travel to New York under an assumed name so that the two could have a meeting. At this meeting, Speno allegedly instructed Estrada not to surrender and advised him that he would have to live outside of the United States for approximately two years in order to avoid being arrested. Shortly thereafter, in mid-December of 1997, Estrada dismissed Speno and Cohen as his counsel and hired a new lawyer.

It is unclear exactly what happened next with respect to the criminal case brought by the government or to the civil case brought by Norwest. What is clear, however, is that Estrada turned around and sued Speno and Cohen, individually and as a law firm, in the United States District Court for the Central District of California under diversity jurisdiction, alleging negligence, negligent representation, conversion, fraud, and breach of fiduciary duty. United States District Judge Dickran Tev-rizian (“Judge Tevrizian”) was assigned the case.

Acting pro se, Speno and Cohen answered Estrada’s complaint denying his allegations and asserting various affirmative defenses. Judge Tevrizian set a Mandatory Status Conference for August 10, 1998. Three days prior to the conference, attorney Brian Shear served notice of association of counsel on behalf of Speno and Cohen. Shear’s representation, however, was short-lived — on October 28, 1998, Spe-no and Cohen asked Judge Tevrizian to allow Shear to withdraw as counsel and to permit them to “continue as sole counsel of record.” Judge Tevrizian allowed Shear to withdraw.

On November 5, 1998, Speno and Cohen, acting pro se, filed several motions, including a motion to dismiss Estrada’s complaint and a motion for summary judgment. Judge Tevrizian scheduled the motions for a hearing on December 7, 1998. Although Speno and Cohen filed a formal notice of appearance as “Defendants Pro Se” on November 12, 1998, neither appeared for the December 7th hearing. Instead, another lawyer, Lawerenee Young, showed up. Judge Tevrizian refused to allow Young to appear on behalf of Speno and Cohen because Young had not filed an association of counsel form with the court.

Nevertheless, Judge Tevrizian decided Speno’s and Cohen’s motions on the merits. In so doing, he dismissed four of Estrada’s claims — negligence, negligent misrepresentation, fraud, and breach of fiduciary duty — because the doctrine of unclean hands precluded Estrada from recovering compensatory or punitive damages [1054]*1054from Speno and Cohen. See Blain v. The Doctor’s Co., 222 Cal.App.3d 1048, 272 Cal.Rptr. 250 (1990); Feld and Sons, Inc. v. Pechner, Dorfman, Wolfee, Rounick, and Cabot, 312 Pa.Super. 125, 458 A.2d 545 (1983). However, Judge Tevrizian granted Estrada leave to file an amended complaint seeking only restitution for the fees paid to Speno and Cohen. Finally, Judge Tevrizian denied Speno’s and Cohen’s motion for summary judgment.

Following Judge Tevrizian’s order, Estrada filed his amended complaint seeking restitution on December 17, 1998. Speno and Cohen moved to dismiss Estrada’s amended complaint claiming insufficient service of process. The court set their motion to dismiss for hearing on February 22, 1999. For the second time, Speno and Cohen failed to appear to argue their own motion. Judge Tevrizian denied the motion to dismiss, and admonished Speno and Cohen that if they “fail to personally attend future regularly scheduled court proceedings, their responsive pleadings will be struck and a default will be entered against them.... ”

In the meantime, Estrada sought to depose Speno. He served Speno with a formal notice identifying the date, time, and place (Los Angeles) for a scheduled deposition. Speno neither objected, to the deposition nor sought a protective order. However, when Estrada, his lawyer, and a shorthand reporter went to the designated place for the deposition, Speno never showed up. Speno admits that she received Estrada’s notice, but simply “disregarded” it because she did not consider Los Angeles an appropriate venue for the deposition.

Estrada filed a motion to compel Speno to submit to a deposition and for sanctions. Pursuant to local court rules, the court ordered the parties to “meet and confer” regarding the motion to compel. See LoCAL Rules of the United States District Court for the Central District of California (“Local Rules”), Rule 7.15.1 (“Prior to the filing of any motion relating to discovery pursuant to F.R.Civ.P. 26-37, counsel for the parties shall confer in a good faith effort to eliminate the necessity for hearing the motion or to eliminate as many of the disputes as possible.”). Estrada sent Speno a letter in an effort to “meet and confer,” suggesting several dates and times to reschedule a deposition. Speno did not respond to the letter in any way.

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244 F.3d 1050, Counsel Stack Legal Research, https://law.counselstack.com/opinion/estrada-v-spend-cohen-ca9-2001.