Lawson v. Brown's Home Day Care Center, Inc.
Annotate this Case
Lawson v. Brown's Home Day Care Center, Inc. (2003-112); 177 Vt. 528;
861 A.2d 1048
2004 VT 61
[Filed 08-Jul-2004]
[Motion for Reargument Denied 20-Aug-2004]
ENTRY ORDER
2004 VT 61
SUPREME COURT DOCKET NO. 2003-112
APRIL TERM, 2004
Katherine Lawson and Bradley Lawson } APPEALED FROM:
}
}
v. } Caledonia Superior Court
}
Brown's Home Day Care Center, Inc. }
and Lucille Nelson and Robert }
Nelson, Jr. (Duncan F. Kilmartin, } DOCKET NO. 195-9-97 Cacv
Appellant) }
Trial Judge: Mary Miles Teachout
In the above-entitled cause, the Clerk will enter:
¶ 1. Duncan Kilmartin appeals from the trial court's order, on
remand, upholding its imposition of $2000 in sanctions. The court found
that Kilmartin acted in bad faith in filing unsealed materials from a
confidential mediation session with the court. Kilmartin argues that the
court's order should be reversed because: (1) he was deprived of his due
process right to advance notice that his conduct was proscribed; (2) due
process required proof of his misconduct beyond a reasonable doubt; (3) the
trial court erred in finding that he acted in bad faith; and (4) the court
lacked jurisdiction to sanction him after August 10, 1998 when the
underlying case was dismissed.
¶ 2. As discussed below, we find these arguments without merit.
The trial court was ordered on remand to determine Kilmartin's motivation
in disclosing confidential materials. See Lawson v. Brown's Day Care Ctr.,
Inc., 172 Vt. 574, 574, 776 A.2d 390, 391 (2001) (mem.) ("We reverse and
remand for a determination on the issue of Kilmartin's motivation in making
the disclosure."). We explained that if the court found that Kilmartin had
revealed the mediation materials in bad faith, "then a sanction would be an
appropriate exercise of the court's inherent powers." Id. at 578, 776 A.2d
at 395. The court's finding that Kilmartin acted in bad faith is supported
by the record, and the court did not abuse its discretion in imposing
sanctions. See Chambers v. NASCO, Inc., 501 U.S. 32, 55 (1991) (court's
exercise of its inherent powers reviewed for abuse of discretion). We
therefore affirm.
¶ 3. The facts underlying this appeal are largely set forth in our
entry order reversing and remanding this case to the trial court. See
Lawson, 172 Vt. 574-76, 776 A.2d 390-93. Briefly restated, Kilmartin was
counsel for defendants in an underlying civil action. Significant
animosity developed between Kilmartin and plaintiff's counsel, Gareth
Caldbeck, which manifested itself in numerous filings with the trial court.
Despite being ordered to refrain from personally attacking one another,
their behavior continued. See id. at 574, 776 A.2d at 391. On June 18,
1998, Kilmartin filed an "emergency" motion to disqualify Caldbeck,
accusing him of obstruction of justice, subornation of perjury, and
presentation of false evidence. See id. The motion was denied.
¶ 4. On June 22, 1998, the parties began court-ordered mediation,
agreeing that all proceedings would remain confidential. Shortly
thereafter, Kilmartin filed unsealed documents with the court accusing
Caldbeck of unethical and illegal conduct. These filings included a copy
of a proposed settlement agreement, and they disclosed discussions that had
occurred during mediation. Caldbeck similarly filed material from the
mediation session with the court. The court ordered the temporary seal of
certain pages of these documents to protect the confidentiality of the
parties' mediation and settlement discussions.
¶ 5. On August 10, 1998, the underlying case was dismissed with
prejudice based on the parties' stipulation. On August 21, the court
issued a show cause order, asking Kilmartin and Caldbeck to demonstrate why
sanctions should not be imposed for their violation of the confidentiality
of the mediation session. After a hearing, the court imposed sanctions
against both attorneys pursuant to its inherent powers.
¶ 6. Kilmartin appealed, arguing that he had been denied procedural
due process, and that his professional responsibilities required him to
make the disclosure that was the subject of sanctions. (FN1) See id. at
574, 776 A.2d at 390. We reversed and remanded, holding that the trial
court lacked the authority to sanction Kilmartin through its inherent
powers absent a finding of bad faith or other exceptional circumstances.
Id. at 576, 776 A.2d at 393. We thus remanded for a determination of
Kilmartin's motivation in making the disclosure. As we explained,
Kilmartin was entitled to "some explanation why the reasons [he offered]
for the disclosure were not only wrong, but so wrong that they were
advanced in bad faith." Id. We recognized that the court's imposition of
sanctions raised due process concerns, but we concluded that these concerns
would be addressed by a finding of bad faith. Id. at 577-78, 776 A.2d at
394 (explaining that "attorneys in this state are on notice that
negotiating in bad faith during settlement negotiations can result in
sanctions.").
¶ 7. On remand, and after a hearing, the trial court issued a
lengthy order upholding its imposition of sanctions after finding that
Kilmartin acted in bad faith. In reaching its conclusion, the court
considered Kilmartin's justification for his behavior, i.e., "to disclose
unethical conduct and/or potentially criminal conduct and to disqualify the
opposing lawyer," in light of all the facts and circumstances. The court
found Kilmartin's explanation inconsistent with his conduct, and, based on
numerous findings, it concluded that Kilmartin had acted in bad faith in
filing confidential materials with the court.
¶ 8. To place Kilmartin's behavior in context, the court first
recounted in detail the "unnecessary, unprofessional, and distracting"
behavior exhibited by counsel in the underlying proceedings. The court
turned next to the specific acts that formed the basis of its sanction
order: Kilmartin's repeated filing of documents protected by the
confidentiality of the mediation process. As the court explained, on July
2, 1998, Kilmartin filed a complicated motion seeking permission to appeal
the court's denial of his emergency motion to disqualify Caldbeck, or
alternatively, to suspend and disqualify Caldbeck. In his motion,
Kilmartin accused Caldbeck of misconduct in preparation of the settlement
agreement, and he repeated his earlier charge that Caldbeck had prepared
false affidavits. Kilmartin described specific discussions that took place
during the June 22 mediation session, and attached a draft settlement
agreement as an exhibit. Kilmartin did not request that any portion of the
motion be sealed, and it became a matter of public record upon filing, even
though the settlement process was ongoing. Kilmartin filed two additional
motions that included discussions of events that had occurred during
mediation, as well as an affidavit from a mediation participant.
¶ 9. The court compared this behavior with the justification
proffered by Kilmartin, and found that, although his claimed purposes
appeared facially valid, they did not justify his actions. The court
explained that if Kilmartin's purpose was to disclose unethical conduct,
the filing of confidential material from the mediation session with the
trial court three times between July 2 and July 10 in the context of the
filing of civil motions was not the way to do it. Similarly, the court
found that if Kilmartin's purpose was to disclose potentially criminal
conduct, the filing of the confidential material in motions with the trial
court was ineffectual. If his intent was to disqualify Caldbeck, the court
found no reason why this required him to place confidential mediation
information into the public record when reasonable alternatives existed.
Moreover, the court found that this asserted purpose did not justify the
filing of confidential material not only once, but repeatedly, including
after the court had ordered that it would temporarily seal such material.
Thus, because Kilmartin's stated objectives were inconsistent with his
conduct, the court found that this raised serious questions about his
motivation.
¶ 10. The court placed significant importance on the context in
which the filings had occurred. As the court found, at the time of
Kilmartin's actions: there was a high degree of animosity between the
parties; Kilmartin had engaged in a pattern of "baiting" Caldbeck;
Kilmartin had been sanctioned twice for discovery violations that involved
wilful, knowing refusals to provide information to Caldbeck; Kilmartin had
already tried twice unsuccessfully to disqualify Caldbeck, and his
behavior occurred in the context of a third attempt; Kilmartin acted
swiftly to seek Caldbeck's disqualification without the support of
defendants' other attorneys at a time when the case was already
substantially settled; the disqualification of Caldbeck would have deprived
plaintiffs of the one attorney familiar with their case at a time when they
were near settlement, and it would have foiled Caldbeck's attempt to settle
the claim in a timely manner; and most importantly, none of Kilmartin's
stated purposes were advanced by the public filing of confidential material
from the mediation process.
¶ 11. Based on its findings, the court found the presence of five
elements that, collectively, compelled a finding of bad faith. These
included: (1) the conduct was in violation of a duty to the court; (2) the
conduct was not the result of an inadvertent mistake but consisted of
conscious acts; (3) the proffered justification, though valid on its face,
was not supported by the actual conduct; (4) the conduct was prompted by an
improper purpose; and (5) it involved ill will. After analyzing
Kilmartin's behavior with respect to each of these factors, the court
upheld its imposition of sanctions.
¶ 12. Kilmartin filed several post-judgment motions. In one of
these motions, Kilmartin asserted, for the first time, that he was
entitled to have proof of his misconduct established beyond a reasonable
doubt because the court's sanction was punitive. The court rejected this
argument. It explained that at the original sanctions hearing, it had made
clear that the sanction was compensatory as it was calculated to reimburse
the court for the time that it took to respond to Kilmartin's actions.
This appeal followed.
¶ 13. We first address Kilmartin's procedural arguments. Kilmartin
asserts that the due process standard articulated by this Court in its
remand order requires that the "bad faith" nature of his acts be
self-evident, both legally and factually. He relies on several contempt
cases to support his assertion that the trial court could not impose
sanctions against him unless he had clear prior notice that his conduct was
proscribed. According to Kilmartin, he was denied due process because at
the time he filed confidential materials with the court, it was not
apparent to him that he was engaging in potentially sanctionable conduct,
nor that he was "negotiating in bad faith." In a related vein, he asserts
that he was entitled to enhanced procedural protections, specifically,
proof of his misconduct beyond a reasonable doubt, because the court's
sanction was punitive. He argues that the evidence is insufficient to
satisfy this standard.
¶ 14. The trial court has inherent power to sanction an attorney
for misconduct, but it must first find the presence of bad faith or other
exceptional circumstances. See Lawson, 172 Vt. at 576, 776 A.2d at 393;
In re Sherman Hollow, Inc., 160 Vt. 627, 630, 641 A.2d 753, 756-57 (1993)
(mem.); Van Eps v. Johnston, 150 Vt. 324, 326-27, 553 A.2d 1089, 1091-92
(1988); see also Chambers, 501 U.S. at 45-46; Roadway Express, Inc. v.
Piper, 447 U.S. 752, 765-66 (1980). Before imposing a sanction based on
its inherent powers, a court must assure that due process requirements are
met, i.e., the party being sanctioned must be provided with fair notice of
the charge against him and an opportunity to be heard. Van Eps, 150 Vt. at
328, 553 A.2d at 1092. Where sanctions are punitive, rather than
compensatory, special due process concerns may arise. See Lawson, 172 Vt.
at 577, 776 A.2d at 394 (citing Bigelow v. Bigelow, 171 Vt. 100, 108-09,
759 A.2d 67, 72-73 (2000)). We recognized in Bigelow, 171 Vt. at 108, 759 A.2d at 72-73, that other courts have held that prior to the imposition of
certain non-compensatory fines, a party is entitled to "specific notice of
the possibility of nonremedial sanctions, the opportunity to respond to
such fines, and other procedural safeguards."
¶ 15. We reject Kilmartin's assertion that the court's imposition
of sanctions violated his due process rights because he did not have clear
notice that his conduct was proscribed. Unlike the cases on which
Kilmartin relies in support of this proposition, see, e.g., Mother African
Union First Colored Methodist Protestant Church v. Conference of African
Union First Colored Methodist Protestant Church, 1992 WL 83518, at *9 (Del.
Ch. April 22, 1992) (unpublished opinion) ("A cardinal requirement for any
adjudication of contempt is that the order allegedly violated give clear
notice of the conduct being proscribed."); Mattingly v. Houston, 250 A.2d 633, 635 (Md. 1969) ("Before a person may be held in contempt for violation
of an order or decree it must be definite, certain and specific in its
terms."); State v. Pownal Tanning Co., 142 Vt. 601, 605, 459 A.2d 989, 991
(1983) ("[A]s a general rule before a person may be held in contempt for
violating a court order, the order should inform him in definite terms as
to the duties imposed upon him."), Kilmartin was not held in contempt for
violating the terms of a court order that was unspecific as to what it
proscribed. In this case, the court sanctioned Kilmartin for acting in bad
faith. Cf. Chambers, 501 U.S. at 45-46 (court's inherent ability to award
attorney's fees for bad-faith conduct vindicates court authority without
resort to the more drastic sanctions available for contempt of court and
makes prevailing party whole for expenses caused by his opponent's
obstinacy).
¶ 16. Although we expressed concern in our remand order that
Kilmartin may not have had "fair warning of the possible consequences of
his actions," we stated that if the trial court found that Kilmartin acted
in bad faith in making the disclosures, "there would be no violation of his
due process rights because attorneys in this state are on notice that
negotiating in bad faith during settlement negotiations can result in
sanctions." Lawson, 172 Vt. at 577-78, 776 A.2d at 394. The trial court's
finding of bad faith thus addresses the due process concerns raised by
Kilmartin on appeal. For a similar reason, we find no merit in Kilmartin's
assertion that he was entitled to enhanced due process protections because
the "law of the case" holds that the sanction imposed by the trial court
was punitive. Kilmartin misreads our prior order. Although we suggested
that the sanction imposed on Kilmartin was "essentially punitive," we did
not hold that, on remand, he was entitled to the full panoply of due
process protections associated with a criminal proceeding. In this case,
Kilmartin received all of the procedural protections to which he was
entitled: notice that sanctions were being considered for his acts of
filing confidential materials, and an opportunity to be heard prior to the
court's imposition of sanctions. See Van Eps, 150 Vt. at 328, 553 A.2d at
1092.
¶ 17. Kilmartin next challenges the substance of the court's
finding that he acted in bad faith. He essentially argues that his conduct
did not constitute bad faith because: (1) he had valid concerns about
Caldbeck's behavior, and the trial court was the proper place to voice
them; (2) he was not prohibited from filing his disciplinary complaint with
the trial court, and thus, he should not be sanctioned for doing so; (3)
the court erred in finding that his purpose in filing the material was to
vex Caldbeck and publicly criticize his alleged misconduct; (4) policy
reasons dictate against a finding of bad faith for revealing confidential
materials related to attorney misconduct; and (5) there was no existing
rule that mediation proceedings must be kept confidential.
¶ 18. We find these arguments unavailing. The trial court was
asked to make a factual determination of Kilmartin's motivation in filing
confidential materials with the court. See Lawson, 172 Vt. at 574, 776 A.2d at 391. Kilmartin essentially asks this Court to re-weigh the
evidence and reach a conclusion opposite to that reached by the trial
court. We will not disturb the trial court's factual findings unless they
are clearly erroneous, meaning there is no credible evidence in the record
to support them. See V.R.C.P. 52(a)(2); Mullin v. Phelps, 162 Vt. 250,
260, 647 A.2d 714, 720 (1994). Kilmartin has not demonstrated that the
court's finding of bad faith, and the factual findings that underlie it,
are clearly erroneous.
¶ 19. Contrary to Kilmartin's suggestion, the trial court did not
sanction him based on the merits of his conclusion that he had a
professional obligation to disclose what he perceived to be professional
misconduct, nor did it sanction him simply because he filed his
disciplinary complaint in the wrong place. Instead, the court evaluated
Kilmartin's behavior in light of all the facts and circumstances and found
that his actions had been taken in bad faith. While Kilmartin asserts that
he engaged in an objectively reasonable course of action, the court found
otherwise; it was unpersuaded by the explanation that Kilmartin offered for
his behavior. The court's bad faith finding does not rest, as Kilmartin
argues, on his decision "to bring his problems with the settlement before
the court." The court's decision was based on its findings as to
Kilmartin's motivation in filing confidential materials with the court. We
need not reiterate all of the court's factual findings in this regard here.
The court made findings opposite to those urged on us by Kilmartin, and
because they are supported by the record, we will not disturb them on
appeal. See Kanaan v. Kanaan, 163 Vt. 402, 405, 659 A.2d 128, 131 (1995)
(trial court's findings entitled to wide deference on review because it is
in unique position to assess the credibility of witnesses and weigh the
evidence presented).
¶ 20. Kilmartin's final argument, raised for the first time on
appeal, is that the trial court lost jurisdiction to sanction him on August
10, 1998 when it dismissed the underlying case. Kilmartin cites no legal
authority for this proposition. Instead, he relies on the language of
V.R.C.P. 11(c)(2)(B) (monetary sanctions "may not be awarded on the court's
initiative unless the court issues its order to show cause before a
voluntary dismissal or settlement of the claims made by or against the
party which is, or whose attorneys are, to be sanctioned") and the notes
accompanying F.R.C.P. 11. The analogy that Kilmartin attempts to draws is
inapt. First, because the court did not impose sanctions under Rule 11,
the rule's requirements are irrelevant here. More importantly, Kilmartin
has not explained how the dismissal of the underlying case deprived the
court of "subject matter jurisdiction" to exercise its inherent power to
sanction him. As the United States Court of Appeals for the Ninth Circuit
observed,
Our inherent jurisdiction to condemn and punish the abusive
conduct of litigants and their attorneys who appear before us is
separate and apart from our jurisdiction to adjudicate the merits
of their claims. In the exercise of our inherent jurisdiction we
may, of course, inform ourselves of the nature and extent of
apparent misconduct and we may condemn it as abusive. Our
condemnation is not the exercise of our jurisdiction over the
merits; it is an exercise of our inherent jurisdiction. That some
issue may be common to both bases of jurisdiction does not
preclude this court from exercising either independently or both
simultaneously.
Trohimovich v. Comm'r of Internal Revenue, 776 F.2d 873, 875 (9th Cir.
1985), abrogation on other grounds recognized by Nordvik v. C.I.R., 67 F.3d 1489, 1493 (1995); see also, Schlaifer Nance & Co. v. Estate of Warhol, 194 F.3d 323, 333 (2d Cir. 1999) (court clearly had jurisdiction to impose
sanctions, irrespective of status of underlying case, because imposition of
sanctions is an issue collateral to and independent from underlying case)
(citing cases). Kilmartin's assertion that the court was without
jurisdiction to sanction him after August 10, 1998 is without merit.
Affirmed.
BY THE COURT:
_______________________________________
Jeffrey L. Amestoy, Chief Justice
_______________________________________
John A. Dooley, Associate Justice
_______________________________________
Denise R. Johnson, Associate Justice
_______________________________________
Marilyn S. Skoglund, Associate Justice
_______________________________________
Frederic W. Allen, Chief Justice (Ret.),
Specially Assigned
------------------------------------------------------------------------------
Footnotes
FN1. Attorney Caldbeck did not appeal from the court's order imposing
sanctions.
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