TRANSAMERICA LIFE INSURANCE CO V. ARUTYUNYAN, No. 22-55199 (9th Cir. 2024)
Annotate this CaseThe United States Court of Appeals for the Ninth Circuit upheld a district court's default judgment entered against defendants Akop and Anahit Arutyunyan. The defendants were accused by Transamerica Life Insurance Company of engaging in insurance fraud. The district court found that the defendants persistently failed to obey court orders related to discovery and entered a default judgment against them. In the course of the legal proceedings, the court applied escalating sanctions against the defendants for their repeated non-compliance with court orders, eventually leading to the entry of a default judgment. The defendants contested this decision, but the Ninth Circuit Court found that their appeal was frivolous. The court held that the district court had not abused its discretion in entering a default judgment as a sanction for the defendants' violations of court orders. The Ninth Circuit also ordered the defendants and their counsel to show cause why sanctions should not be imposed under various provisions given the frivolous nature of the appeal and multiple misstatements made by counsel during oral argument.
Court Description: Sanctions / Default Judgment The panel affirmed the district court’s default judgment entered against defendants Akop and Anahit Arutyunyan in an action brought by Transamerica Life Insurance Company alleging defendants engaged in insurance fraud.
The district court concluded that defendants repeatedly failed to obey court orders related to discovery and entered default judgment against them. The district court also entered distinct sanctions on defendants in two separate orders.
The panel upheld the district court’s order deeming defendants’ objection to certain items of discovery to be forfeited and requiring production of those items. By failing to present any sufficient argument in their opening brief as to why the district court’s stated grounds for that decision were erroneous, defendants forfeited any challenge to that order on appeal.
The panel held that the district court did not abuse its discretion in entering a default judgment as a sanction for defendants’ violations of court orders. The panel considered whether the district court’s analysis properly considered the factors in Malone v. U.S. Postal Serv., 833 F.2d 128, 130 (9th Cir. 1987), for entering a default judgment. The first two factors—the public’s interest in expeditious resolution of litigation and the court’s need to manage its docket— plainly favored entry of default on this record. The third factor—the risk of prejudice to the other party—favored a default judgment where defendants failed to comply with an order to produce specific discovery materials, and this created a sufficient risk of prejudice. The fourth factor— public policy favoring disposition of cases on their merits— weighed against default judgment, but it provided only little support for that conclusion. The fifth factor—the availability of less drastic sanctions—favored a default judgment because the district court implemented lesser sanctions before ordering a default and warned defendants of such a judgment if the non-compliance continued.
The panel held that this appeal is frivolous. In view of its frivolous nature, and the multiple misstatements made by counsel at oral argument, by separate order the panel ordered defendants and their counsel to show cause why sanctions should not be imposed under 28 U.S.C. § 1912, 28 U.S.C.
§ 1927, Fed. R. App. P. 38, and/or the inherent authority of this court.
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