F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS FEB 5 1998 FOR THE TENTH CIRCUIT PATRICK FISHER Clerk
WILLIAM CURRY MYLES,
Plaintiff-Appellee, Nos. 96-6374 & v. 97-6023 (D.C. No. CIV-95-1794-C) OESMAN SAPTA, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before PORFILIO, KELLY, and HENRY, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The cases are
therefore ordered submitted without oral argument.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. Defendant appeals from two separate decisions of the district court in this
diversity contract/tort action. In appeal No. 96-6374, he challenges the entry of
default judgment for plaintiff, and the dismissal of his own counterclaims, for
noncompliance with court orders regarding attendance at a discovery deposition.
See Fed. R. Civ. P. 37(b)(2)(C). He also objects to the procedure followed, and
the award made, with respect to damages on the defaulted claims. In appeal
No. 97-6023, defendant challenges the post-judgment appointment of a receiver,
deemed necessary by the district court in light of defendant’s return to his native
Indonesia. For reasons explained below, we reverse the judgment entered against
defendant and, consequently, vacate the receiver’s appointment. Any issues
relating to the determination of damages are moot.
Before reaching the merits, we address the suggestion that subject matter
jurisdiction may be undermined by lack of diversity between the parties.
Permanent resident aliens are deemed citizens of their state of domicile under
28 U.S.C. § 1332(a), and defendant notes he acquired such status while residing
in Oklahoma--plaintiff’s domicile as well--shortly after this suit was filed.
However, “diversity of citizenship is assessed at the time the action is filed”
and “may not be divested by subsequent events.” Freeport-McMoRan Inc. v.
K N Energy, Inc., 498 U.S. 426, 428 (1991). When plaintiff brought this action,
diversity existed under § 1332(a)(2) (recognizing diversity “between . . . citizens
-2- of a State and citizens or subjects of a foreign state”). Hence, federal jurisdiction
properly attached at commencement and remained unaffected by later events.
See Foy v. Schantz, Schatzman & Aaronson, P.A., 108 F.3d 1347, 1349-50
(11th Cir. 1997). We therefore turn to the merits.
In light of due process concerns raised by the conclusive foreclosure of
legal rights, the district court may not enter a judgment of dismissal or default as
a sanction without finding “willful” noncompliance or bad faith, which in this
context means a voluntary, intentional refusal to comply with a discovery order.
See Gocolay v. New Mexico Fed. Sav. & Loan Ass’n, 968 F.2d 1017, 1020-21
(10th Cir. 1992); M.E.N. Co. v. Control Fluidics, Inc., 834 F.2d 869, 872-73
(10th Cir. 1987). We review such a sanction generally for abuse of discretion,
see Gocolay, 968 F.2d at 1020, but we assess any supporting factual findings
under the clear error standard, see Olcott v. Delaware Flood Co., 76 F.3d 1538,
1557 (10th Cir. 1996). Thus, while we gauge the appropriateness of the sanction
by reference to the totality of the surrounding circumstances, see id., we must first
determine that sufficient evidence establishes the specific instance(s) of willful
noncompliance on which the sanction is based, compare Toma v. City of
Weatherford, 846 F.2d 58, 60-61 (10th Cir. 1988) (reversing dismissal where
record did not support finding that sanctioned noncompliance was willful)
-3- with Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992) (affirming
dismissal where finding of willful misconduct was “not clearly erroneous”).
Defendant did not appear for a scheduled deposition on August 5, 1996.
He claimed that health problems, associated with an aggravation of uncontrolled
diabetes recently requiring hospitalization, precluded his travel from Indonesia to
Oklahoma City for the deposition. On plaintiff’s ensuing motion to compel, the
district court ordered defendant to pay expenses necessitated by his last-minute
cancellation and to make himself available for deposition within fourteen days,
i.e., by September 13. On September 11, defendant’s counsel moved for a
protective order, seeking to postpone the deposition until receipt of medical
clearance from defendant’s treating physicians. After the deposition deadline
passed, but before any ruling on the protective order, plaintiff moved for default
judgment and the dismissal of defendant’s counterclaims. The district court
granted plaintiff’s motion on September 30, 1996.
Defendant contends that the district court never made the requisite finding
of willful noncompliance and, moreover, that the record is insufficient to support
such a finding in any event. Both of these contentions have merit.
Absent a finding of willfulness to support dismissal or default, “reversal
is required.” Gocolay, 968 F.2d at 1021. Further, an explicit finding is
necessary; this circuit has refused to cure omissions in this regard by inferring
-4- the requisite willfulness from the characterization of noncompliance as merely
unexcused or unjustified. See, e.g., Ruplinger v. Rains (In re Rains), 946 F.2d
731, 733 (10th Cir. 1991) (holding district court’s statement that party “offered
no excuse for his failure to comply” was “not the equivalent of a finding of
willful noncompliance, and thus d[id] not meet the due process standard required
to justify a default”); M.E.N. Co., 834 F.2d at 873 n.4 (refusing to infer finding
of willfulness from district court’s statement that reasons given for parties’
noncompliance were “without legal justification”). Here, the district court found
only that defendant had refused to comply with a deposition order on the basis of
a medical excuse it deemed unsubstantiated; the court did not find, for example,
that defendant had deliberately “fabricat[ed] his health claims to avoid the
deposition.” Gocolay, 968 F.2d at 1021. We cannot meaningfully distinguish the
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F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS FEB 5 1998 FOR THE TENTH CIRCUIT PATRICK FISHER Clerk
WILLIAM CURRY MYLES,
Plaintiff-Appellee, Nos. 96-6374 & v. 97-6023 (D.C. No. CIV-95-1794-C) OESMAN SAPTA, (W.D. Okla.)
Defendant-Appellant.
ORDER AND JUDGMENT *
Before PORFILIO, KELLY, and HENRY, Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The cases are
therefore ordered submitted without oral argument.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. Defendant appeals from two separate decisions of the district court in this
diversity contract/tort action. In appeal No. 96-6374, he challenges the entry of
default judgment for plaintiff, and the dismissal of his own counterclaims, for
noncompliance with court orders regarding attendance at a discovery deposition.
See Fed. R. Civ. P. 37(b)(2)(C). He also objects to the procedure followed, and
the award made, with respect to damages on the defaulted claims. In appeal
No. 97-6023, defendant challenges the post-judgment appointment of a receiver,
deemed necessary by the district court in light of defendant’s return to his native
Indonesia. For reasons explained below, we reverse the judgment entered against
defendant and, consequently, vacate the receiver’s appointment. Any issues
relating to the determination of damages are moot.
Before reaching the merits, we address the suggestion that subject matter
jurisdiction may be undermined by lack of diversity between the parties.
Permanent resident aliens are deemed citizens of their state of domicile under
28 U.S.C. § 1332(a), and defendant notes he acquired such status while residing
in Oklahoma--plaintiff’s domicile as well--shortly after this suit was filed.
However, “diversity of citizenship is assessed at the time the action is filed”
and “may not be divested by subsequent events.” Freeport-McMoRan Inc. v.
K N Energy, Inc., 498 U.S. 426, 428 (1991). When plaintiff brought this action,
diversity existed under § 1332(a)(2) (recognizing diversity “between . . . citizens
-2- of a State and citizens or subjects of a foreign state”). Hence, federal jurisdiction
properly attached at commencement and remained unaffected by later events.
See Foy v. Schantz, Schatzman & Aaronson, P.A., 108 F.3d 1347, 1349-50
(11th Cir. 1997). We therefore turn to the merits.
In light of due process concerns raised by the conclusive foreclosure of
legal rights, the district court may not enter a judgment of dismissal or default as
a sanction without finding “willful” noncompliance or bad faith, which in this
context means a voluntary, intentional refusal to comply with a discovery order.
See Gocolay v. New Mexico Fed. Sav. & Loan Ass’n, 968 F.2d 1017, 1020-21
(10th Cir. 1992); M.E.N. Co. v. Control Fluidics, Inc., 834 F.2d 869, 872-73
(10th Cir. 1987). We review such a sanction generally for abuse of discretion,
see Gocolay, 968 F.2d at 1020, but we assess any supporting factual findings
under the clear error standard, see Olcott v. Delaware Flood Co., 76 F.3d 1538,
1557 (10th Cir. 1996). Thus, while we gauge the appropriateness of the sanction
by reference to the totality of the surrounding circumstances, see id., we must first
determine that sufficient evidence establishes the specific instance(s) of willful
noncompliance on which the sanction is based, compare Toma v. City of
Weatherford, 846 F.2d 58, 60-61 (10th Cir. 1988) (reversing dismissal where
record did not support finding that sanctioned noncompliance was willful)
-3- with Ehrenhaus v. Reynolds, 965 F.2d 916, 921 (10th Cir. 1992) (affirming
dismissal where finding of willful misconduct was “not clearly erroneous”).
Defendant did not appear for a scheduled deposition on August 5, 1996.
He claimed that health problems, associated with an aggravation of uncontrolled
diabetes recently requiring hospitalization, precluded his travel from Indonesia to
Oklahoma City for the deposition. On plaintiff’s ensuing motion to compel, the
district court ordered defendant to pay expenses necessitated by his last-minute
cancellation and to make himself available for deposition within fourteen days,
i.e., by September 13. On September 11, defendant’s counsel moved for a
protective order, seeking to postpone the deposition until receipt of medical
clearance from defendant’s treating physicians. After the deposition deadline
passed, but before any ruling on the protective order, plaintiff moved for default
judgment and the dismissal of defendant’s counterclaims. The district court
granted plaintiff’s motion on September 30, 1996.
Defendant contends that the district court never made the requisite finding
of willful noncompliance and, moreover, that the record is insufficient to support
such a finding in any event. Both of these contentions have merit.
Absent a finding of willfulness to support dismissal or default, “reversal
is required.” Gocolay, 968 F.2d at 1021. Further, an explicit finding is
necessary; this circuit has refused to cure omissions in this regard by inferring
-4- the requisite willfulness from the characterization of noncompliance as merely
unexcused or unjustified. See, e.g., Ruplinger v. Rains (In re Rains), 946 F.2d
731, 733 (10th Cir. 1991) (holding district court’s statement that party “offered
no excuse for his failure to comply” was “not the equivalent of a finding of
willful noncompliance, and thus d[id] not meet the due process standard required
to justify a default”); M.E.N. Co., 834 F.2d at 873 n.4 (refusing to infer finding
of willfulness from district court’s statement that reasons given for parties’
noncompliance were “without legal justification”). Here, the district court found
only that defendant had refused to comply with a deposition order on the basis of
a medical excuse it deemed unsubstantiated; the court did not find, for example,
that defendant had deliberately “fabricat[ed] his health claims to avoid the
deposition.” Gocolay, 968 F.2d at 1021. We cannot meaningfully distinguish the
district court’s finding in this case from those necessitating reversal in Rains and
M.E.N. Co.
Furthermore, the scant evidentiary record regarding defendant’s medical
condition would not warrant a finding that his failure to appear for the ordered
deposition was willful. Documentation from his treating physicians in Indonesia,
though short on specifics, showed that he had been hospitalized at least three
times during the previous year and a half, twice in very close proximity to the
pertinent time-frame (once in mid-July and once in mid-September 1996).
-5- See App. II at 473-75, 513. It also indicated that in between the latter
hospitalizations defendant remained under “treatment/medication” and “in need
of total rest.” Id. at 549. The situation depicted in these materials certainly does
not reflect willful noncompliance in connection with defendant’s failure to travel
halfway round the globe for his deposition. Cf. Gocolay, 968 F.2d at 1021
(reversing dismissal and citing similar medical evidence which “suggest[ed] [the
sanctioned party] did not fabricate his health claims to avoid [his] deposition”).
Plaintiff attempted to undercut defendant’s evidence with affidavits from
two doctors who indicated that they would have cleared defendant to attend the
deposition if all they had to rely on was the meager medical documentation in the
record. See App. II at 499, 527. The latter qualification points up the deficiency
of this evidence--these doctors had never even examined defendant, much less
overseen his course of treatment. The only medical information they possessed
was that which happened to accompany the treating physicians’ directions
regarding hospitalization and rest, and both doctors admitted that, as a result, they
lacked facts needed for a fully informed assessment of defendant’s condition.
Any finding that defendant was fabricating health problems in a willful effort to
subvert discovery would require much more substantial evidence than is present
in our record.
-6- The district court’s determination of the factual premise for the sanctions
imposed was procedurally and substantively deficient. We must therefore reverse
the judgment entered against defendant. Our disposition should not, however, be
understood as approving defendant’s overall conduct of the case, or as affording
him a continuing excuse from discovery. Should he resist subsequent deposition
requests, and the district court expressly find from substantial evidence that such
resistance is unjustified and willful, nothing in our decision today would preclude
the court’s resort to conclusive sanctions. Further, the court may reasonably
insist on additional evidence detailing the nature and extent of defendant’s
medical disability, and sanction defendant if he should willfully refuse to comply
with a direct order to obtain and submit such evidence.
Because we reverse the judgment entered against defendant, the district
court’s appointment of a receiver to assist collection efforts must be vacated.
However, in case a receiver should again be considered, we note that the court’s
use of state law for this purpose, through the general “execution” provision in
Fed. R. Civ. P. 69, was improper. In light of the numerous federal provisions
specifically governing federal receiverships, see, e.g., Fed. R. Civ. P. 66, 17(b);
28 U.S.C. §§ 754, 958, 959(a), “[t]he appointment of a receiver in a diversity case
is a procedural matter governed by federal law and federal equitable principles.”
Aviation Supply Corp. v. R.S.B.I. Aerospace, Inc., 999 F.2d 314, 316
-7- (8th Cir. 1993); see 13 James Wm. Moore, Moore’s Federal Practice § 66.09
(3d ed. 1997); see, e.g., Britton v. Green, 325 F.2d 377, 382 (10th Cir. 1963)
(imposing federal limitation on appointment of receiver “even though a State
court, exercising concurrent jurisdiction, may have appropriately appointed
a Receiver in the same circumstances”); Inland Empire Ins. Co. v. Freed, 239
F.2d 289, 292 (10th Cir. 1956) (holding to same effect and noting that broad state
receivership provisions “cannot therefore add to the equitable powers of a federal
[district court] sitting in that State”).
The judgment of the United States District Court for the Western District
of Oklahoma is REVERSED, and the case is remanded for further proceedings
consistent with this order and judgment.
Entered for the Court
Paul J. Kelly, Jr. Circuit Judge
-8-