Armstead v. Allstate Property & Casualty Insurance Company

Filing 159

OPINION AND ORDER. The Court shall hold a hearing on November 22, 2016, at 9:30 a.m., in Courtroom 1705, United States Courthouse, 75 Ted Turner Drive SW, Atlanta, Georgia 30303, to determine whether the Court should exercise its inherent authority and, if so, whether sanctions are appropriate. Signed by Judge William S. Duffey, Jr on 10/26/2016. (bgt)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
ELAINE ARMSTEAD,
Plaintiff,
v.

1:14-cv-586-WSD

ALLSTATE PROPERTY &
CASUALTY INSURANCE
COMPANY,
Defendant.

OPINION AND ORDER
This matter is before the Court on Attorney Sandra Finch’s (“Respondent”)
Memorandum of Law in Response to the Court’s Order to Show Cause for
Contempt [158] (“Contempt Memo”).
I.

BACKGROUND
On June 28, 2016, Defendant Allstate Property & Casualty Insurance

(“Defendant”) provided an affidavit, in which Defendant’s witness Mark Gould
states that he believes Respondent “entered areas of [his] office building without
permission and took many photographs without permission . . . .” (Gould Aff.
[115.1] ¶ 13). The affidavit further provides that, during Mr. Gould’s deposition,
Respondent handed him a document titled “Steamatic Guide to Restoration

Services,” which had been photographed page-by-page. (Id. ¶ 5). The
photographs also showed Respondent’s letterhead in the background. (Id.).
Mr. Gould testified that it “became apparent to [him] Plaintiff’s counsel had
obtained the document from [his] office without [his] permission.” (Id. ¶ 6). After
he accused Respondent of trespassing in his office, Respondent stated, “I caution
you on defaming me, because if you defame me, I can promise you it will not be
good.” (Id. ¶ 9). Mr. Gould considered this a threat. (Id.). At the deposition,
Respondent stated that, in order for trespassing to occur, “you have to have told
somebody they can’t come on your property . . . .” (Id. ¶ 8).
After the deposition, Mr. Gould went to his office and confirmed the
location of the Steamatic Guide, which was on a bookshelf in his project
manager’s office. (Id. ¶ 11). Mr. Gould’s office manager, Leonor Alarez, later
told him:
On May 20, 2016, she heard some noise in the office and asked if
anyone was there. There was no response. So, Ms. Alarez continued
working. Approximately 30 minutes later, Ms. Alarez was walking to
the copier and came upon Plaintiff’s counsel sitting in the reception
area. Ms. Alarez asked Plaintiff’s counsel how long she had been
there, but she never received an answer. At which point, Plaintiff’s
counsel hand delivered the subpoena.

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(Id. ¶ 12). It is Mr. Gould’s opinion and belief “that Plaintiff’s counsel entered
areas of [his] office building without permission and took many photographs
without permission . . . .” (Id. ¶ 13).
Respondent, in a sworn affidavit filed with the Court [116.1], denied these
accusations. The Court found Respondent’s explanations insufficient and evasive.
In light of Mr. Gould’s affidavit, and because Respondent sought to admit into
evidence at trial the Steamatic Guide and a photograph depicting certifications that
were displayed in a hallway away from the public reception areas of Mr. Gould’s
office, on July 1, 2016, the Court entered an Order [121] (“July 1st Order”)
requiring Respondent to provide, on or before July 5, 2016, an affidavit stating, in
detail, how and under what circumstances she obtained the photographs of
Mr. Gould’s office and the Steamatic Guide so the Court could consider if these
proposed exhibits would be allowed into evidence at trial.
On July 5, 2016, Respondent filed her Objections to Court Order to Produce
an Affidavit [122] (“Objections”). After considering Respondent’s Objections, on
July 6, 2016, the Court entered an Order [127] (“July 6th Order”) overruling them
and requiring her to file the affidavit on or before 5:00 p.m. EST on July 6, 2016.
Respondent failed to file the required affidavit by the time ordered, and otherwise
failed to respond to the July 6th Order, or explain why she could not or did not

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comply. During the pretrial conference held on July 7, 2016, the Court reiterated
that Respondent was under a Court order to provide the required affidavit, and
explained to her the information required in the affidavit was to determine its
impact on evidence that Respondent stated she intended to offer at trial. The Court
offered to allow Respondent to file the affidavit later that day. Respondent again
failed to file the required affidavit or explain why she would not or could not
comply.
On July 7, 2016, the Court entered an order requiring Respondent to show
cause [136] (“Show Cause Order”) why the Court should not hold her in contempt
of the Court’s July 1st Order and July 6th Order. On July 11, 2016, the Court held
a hearing on the Show Cause Order. During the hearing, Respondent requested,
and the Court allowed, that the hearing be continued so that she could be
represented by counsel. (See Tr. [147] at 17-18). Respondent also suggested, for
the first time, that she should not be required to file the required affidavit based on
her Fifth Amendment right against self-incrimination. On August 17, 2016, the
Court entered an order [152] clarifying that “it has not found [Respondent] in
contempt, because [Respondent] advised the Court she needed more time to
prepare and wanted to be represented at the hearing.”

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On August 22, 2016, the Court held a pre-hearing status conference with
Respondent’s attorney. At the hearing, Respondent’s attorney indicated his
position that, should the Court conduct contempt proceedings, the proceedings are
required to be criminal in nature and comply with the requirements of Fed. R.
Crim. P. 42. The same day, the Court issued an order [155] requiring Respondent
to file, on or before September 14, 2016, her legal authority and argument
regarding her opinion as to the nature of the hearing and the procedural
requirements to conduct it. The Court continued the contempt hearing scheduled
for August 23, 2016.
On September 19, 2016, Respondent filed the memorandum the Court
ordered her to submit. Respondent argues that, the principal case having been
dismissed, there is no possibility of civil contempt, and, where the sole purpose of
a sanction is to vindicate the Court’s authority, criminal contempt proceedings are
required. Respondent also argues no contempt sanctions can be imposed for the
valid exercise of the Fifth Amendment.
II.

DISCUSSION
A.

Legal Standard

In reviewing a contempt judgment, the Eleventh Circuit first determines
whether the nature of the contempt proceeding was civil or criminal.

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Afro-American Patrolmen’s League v. City of Atlanta, 817 F.2d 719, 723 n.3 (11th
Cir. 1987). “[C]onclusions about the civil or criminal nature of a contempt
sanction are properly drawn, not from the subjective intent of a State’s laws and its
courts, but from an examination of the character of the relief itself.” Int’l Union,
United Mine Workers of Am. v. Bagwell, 512 U.S. 82, 828 (1994) (internal
quotation marks and citations omitted). If the relief is designed to compensate a
complainant for losses or to coerce a party into complying with a court order, the
contempt sanction is civil in nature. See id. Contempt is criminal in nature “if it is
imposed retrospectively for a completed act of disobedience.” Id. (internal
quotation marks omitted).
Fed. R. Crim. P. 42 governs criminal contempt proceedings. Rule 42(a)
provides that “[a]ny person who commits criminal contempt may be punished for
that contempt after prosecution on notice.” Rule 42(a)(1) describes what the notice
must contain; Rule 42(a)(2) indicates who the court must appoint as a prosecutor;
and Rule 43(a)(3) provides that a person prosecuted for criminal contempt is
entitled to a jury trial if federal law allows. Because of these requirements, “[a]
district court may not use the civil contempt power to impose what amounts to a
punitive or criminal contempt sanction.” SEC v. Pension Fund of Am., L.C., 396
F. App’x 577, 583 (11th Cir. 2010) (internal quotation marks omitted) (quoting

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United States v. City of Miami, 195 F.3d 1292, 1298 (11th Cir. 1999)); see also
DuPont De Nemours & Company-Benlate Litig., 99 F.3d 363, 369 (11th Cir. 1996)
(reversible error to impose criminal sanctions in a civil proceeding, which “did not
afford [the contemnor] the procedural protections the Constitution requires for the
imposition of criminal contempt sanctions”).
The contempt power, however, “is merely one of many inherent powers that
a court possesses; it is not the only type of inherent power that can be deployed.”
In re Charbono, 790 F.3d 80, 85 (1st Cir. 2015) (citing Chambers v. NASCO, Inc.,
501 U.S. 32, 43-44 (1991)). “The authority to issue a punitive sanction also may
reside in a court’s inherent power to police itself, thus . . . vindicating judicial
authority without resort to the more drastic sanctions available for contempt of
court.” Id. (internal quotation marks and brackets omitted) (citing Chambers, 501
U.S. at 46). Courts have consistently recognized that, in addition to the contempt
power, courts have the inherent power to sanction attorneys. See, e.g., id.; In re
Sunshine Jr. Stores, Inc., 456 F.3d 1291, 1304 (11th Cir. 2006) (“Federal courts
have the inherent power to impose sanctions on parties, lawyers, or both.”); Mark
Indus., Ltd v. Sea Captain’s Choice, Inc., 50 F.3d 730, 733 (9th Cir. 1995)
(non-contempt inherent-power sanction can be employed to vindicate a court’s
authority); United States v. Shaffer Equip. Co., 11 F.3d 450, 457 (4th Cir. 1993)

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(inherent power to impose sanctions “is organic, without need of a statute or rule
for its definition, and it is necessary to the exercise of all other powers”);
Harlan v. Lewis, 982 F.2d 1255, 1259 (8th Cir. 1993) (approving non-contempt
monetary sanction as within district court’s inherent powers); Eash v. Riggins
Trucking Inc., 757 F.2d 557, 565-66 (3d Cir. 1985) (en banc) (noting that a court’s
“broad power to discipline attorneys as officers of the court for misconduct not
properly categorized as contempt is substantially different from the contempt
power”). The “inherent power of a court can be invoked even if procedural rules
exist which sanction the same conduct.” Chambers, 501 U.S. at 46.
Exercise of a court’s inherent power is appropriate where a client or her
attorney has “acted in bad faith, vexatiously, wantonly, or for oppressive reasons.”
Byrne v. Nezhat, 261 F.3d 1075, 1106 (11th Cir. 2001), abrogated on other
grounds by Douglas Asphalt Co. v. QORE, Inc., 657 F.3d 1146 (11th Cir. 2011)
(quoting Chambers, 501 U.S. at 46). “The key to unlocking a court’s inherent
power is a finding of bad faith.” Barnes v. Dalton, 158 F.3d 1212, 1214 (11th Cir.
1998). “A court should be cautious in exerting its inherent power and ‘must
comply with the mandates of due process, both in determining that the requisite
bad faith exists and in assessing fees.’” Byrne, 261 F.3d at 1106 (quoting
Chambers, 501 U.S. at 50). “Because the court’s inherent power is so potent, it

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should be exercised ‘with restraint and discretion.’” Id. (quoting Chambers, 501
U.S. at 50).
Exercising its inherent power, a “court[] may levy sanctions (including
punitive sanctions) for such varied purposes as disciplining attorneys, remedying
fraud on the court, and preventing the disruption of ongoing proceedings.”
Charbono, 790 F.3d at 96 (citing Chambers, 501 U.S. at 43-44); see also Eash, 757
F.2d at 564 (“myriad violations of court rules, deadlines, or orders” may be
grounds to impose sanctions based on a court’s inherent authority, grounded in
“the control necessarily vested in courts to manage their own affairs so as to
achieve the orderly and expeditious disposition of cases.” (quoting Link
v. Wabash RR Co., 370 U.S. 626, 630-31 (1962))). A court exercising its inherent
power may, among other remedies, “issue orders, punish for contempt, vacate
judgments obtained by fraud, conduct investigations as necessary to exercise the
power, bar persons from the courtroom, assess attorneys’ fees, and dismiss
actions.” Shaffer, 11 F.3d at 462.
B.

Analysis

As a result of the dismissal of the principal case, civil contempt is not an
available remedy. Here, the sole purpose of any sanction is to vindicate the
Court’s authority, and contempt proceedings would be criminal in nature and

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would need to comply with the requirements of Fed. R. Crim. P. 42. As detailed
above, courts have consistently recognized that, in addition to the contempt power,
courts have the inherent power to sanction attorneys. “Requiring courts to await
the conclusion of extensive investigation and prosecution procedures [for criminal
sanctions] following every courtroom infraction would greatly compromise the
court’s ability to direct and control the proceedings.” Goldstein v. Forbes, 260
F.3d 183, 199 (3d Cir. 2001). That was the case involving this infraction where the
trial was about to commence. Under the circumstances of this case, the Court finds
that a hearing to determine whether and how the Court should exercise its inherent
power is appropriate.1
The Court addresses next Respondent’s argument that a contempt sanction
cannot be imposed for the valid exercise of the Fifth Amendment. “Disobedience
of a court order unequivocally merits punishment save in instances in which
compliance would necessarily result in an irrevocable and permanent surrender of
a constitutional right.” Kleiner v. First Nat. Bank of Atlanta, 751 F.2d 1193, 1208
(11th Cir. 1985) (internal quotation marks and emphasis omitted). Here,
1

The Court notes that it has explicitly invoked its inherent power in
connection with this matter. In its July 6, 2016, Order overruling Respondent’s
objections to the Court’s July 1st Order, the Court noted its inherent authority to
regulate Respondent’s conduct in her capacity as an officer of the court. ([127] at
1-2 (quoting In re Gopman, 531 F.2d 262, 266 (5th Cir. 1976)).

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Respondent ultimately—after multiple Court orders and conferences—asserted her
Fifth Amendment right against self-incrimination to protect her from filing the
affidavit required by the Court’s orders. The Court does not—nor could it—now
require Respondent to forego her asserted Fifth Amendment rights by requiring her
to comply with the Court’s July 1st and July 6th Orders. Rather, the misconduct
at issue at this stage of the proceedings is Respondent’s pattern of disruptive
behavior and her flagrant disregard for the Court’s orders without adequate
justification or explanation. Respondent’s belated Fifth Amendment assertion does
not, in itself, excuse her pattern of conduct leading up to her assertion of her right
against self-incrimination.
In accordance with the requirement that a court’s use of its inherent power
must comply with the mandates of due process, Byrne, 261 F.3d at 1106 (quoting
Chambers, 501 U.S. at 50), the Court shall hold a hearing to determine whether the
Court should exercise its inherent power, and, if it should, what sanctions are
appropriate. The Court will not, at this stage, hold contempt proceedings in this
matter.

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III.

CONCLUSION
For the foregoing reasons,
IT IS HEREBY ORDERED that the Court shall hold a hearing on

November 22, 2016, at 9:30 a.m., in Courtroom 1705, United States Courthouse,
75 Ted Turner Drive SW, Atlanta, Georgia 30303, to determine whether the Court
should exercise its inherent authority and, if so, whether sanctions are appropriate.

SO ORDERED this 26th day of October, 2016.

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