No. 15-1153
RDLG, LLC,
Plaintiff - Appellee,
v.
FRED M. LEONARD, JR., a/k/a Chip Leonard,
Defendant Appellant,
and
RPM GROUP BROKERAGE, LLC; JESSICA LEWIS LEONARD; JASON
BENTON; NICK JAMES; DEXTER HUBBARD; GLENN G. GOLDAN; RPM
GROUP, LLC,
Defendants.
Appeal from the United States District Court for the Western
District of North Carolina, at Asheville.
Dennis L. Howell,
Magistrate Judge. (1:10-cv-00204-DLH)
Argued:
Decided:
PER CURIAM:
RDLG,
LLC
(RDLG)
sued
Fred
M.
default
judgment
in
RDLGs
favor
Jr.
Leonard,
as
sanction
for
A jury
and
an
opportunity
to
oppose
imposition
of
the
We,
I.
A.
RDLG filed this diversity action in the United States
District Court for the Western District of North Carolina in
September
of
2010.
RDLG
sued
Leonard,
number
of
other
events
underlying
this
appeal
began
on
May
2,
on
defendants.
behalf
of
Leonard
and
two
business-entity
the
pretrial
withdraw as counsel.
communicating
Lankford
had
representation
with
conference
Lankford 2
of
separate
motion
to
informed
as
and
or
paying
Leonard
September
for
that
1.
She
her
she
had
services,
so
would
cease
waited
until
The court
ordered
both
represent
Leonard
and
Lankford
the
and
related
Neyhart
business
to
appear
entities
at
and
the
pretrial
filing
declaration.
The
declaration
expanded
her
court that both Leonard and Neyhart would appear at the pretrial
3
promised,
However,
the
Leonard
and
pretrial
Neyhart
both
conference
did
appeared
not
go
in
well.
and
the
trial,
Leonard
and
his
counsel
were
not
that
potential
aside,
Neyhart
worried
the
pretrial
conference,
RDLG
moved
RDLG argued
Civ.
P.
16(f)(1)(B),
37(b).
Neyhart
for
opposed,
See Fed.
arguing
as
consideration.
sanction.
But
prior
The
to
court
took
concluding
the
the
motion
under
conference,
it
to
Federal
Rule
of
Civil
6
Procedure
16(f)
and
the
RDLG,
Id. at *5.
with this Order within the time frame set forth in this Order
will result in the Court striking the answer . . . and entering
default judgment.
Id.
additional
sanctions
pursuant
to
Rule
Federal
of
against
Civil
Lankford
Procedure
11
and
and
Neyhart
directed
fines on time.
October 11 as directed.
the
district
court
decided,
warranted
That
striking
reasoned,
bankruptcy,
Its
the
excusable . . . .
my
belief
court
that
ordered
even
though
sanctions
The
hes
filed
are
not
J.A. 204-05. 4
failure
to
pay
any
assessed
fine
would
result
in
default.
more
blameworthy
J.A. 211.
than
[Leonard]
manipulated
counsel
ability
prepare
the
to
for
his
and
Pretrial
attorneys,
concluding,
undermined
Conference
and
counsels
for
the
trial.
Id. at 211-12.
Id. at 212.
B.
The default judgment resolved the issue of liability
but
did
not
set
an
amount
of
damages.
That
determination
trial,
Actual
Leonard
damages
requested
recoverable
that
by
the
the
jury
be
plaintiff
for
services,
by
misrepresentations.
or
means
credit
of
J.A. 243.
obtained
by
defendant
defendants
from
fraudulent
This
A.
Normally, [w]e review the district courts grant of
sanctions
under
[Federal]
Rule
[of
Civil
Procedure]
37,
of Am. Indians, 155 F.3d 500, 504 (4th Cir. 1998); see also
Natl Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639,
642 (1976) (per curiam).
Rather, Leonard
10
to
the
allegations
leveled
against
him
prior
to
the
court
power
provisions
to
of
person
shall
law,
impose
sanction
through
Fifth
Amendment[,
the
be
deprived
of
constitutional
default
judgment.
which
property
provide]
without
limitations
due
upon
[T]he
that
no
process
of
power
of
the
the
merits
of
his
cause.
Societe
Internationale
Pour
U.S.
197,
209
(1958).
Accordingly,
default
judgment
of . . .
intent
to
do
so
and
without
affording
an
case.
district
Prior
court
to
issued
imposing
both
the
oral
and
sanction
at
written
issue,
warnings
the
that
At
considering
strik[ing]
default.
J.A. 118.
could
have
not
been
the
answer . . .
and
rul[ing]
in
clear,
11
warning,
failure . . .
to
RPM
Grp.,
LLC,
No.
1:10-cv-204,
2012
WL
RDLG, LLC
4755669,
at
*5
Additionally, the
it
were
not,
Leonard
fails
to
demonstrate
And even
that
he
was
district
court
and
Leonards
inability
to
show
prejudice
in
turn.
B.
In
notice
to
conditions
this
circuit,
parties
[of
adjudication
on
when
court
the
we
requir[e]
their
order]
merits.
failure
will
Choice
explicit
to
and
clear
meet
the . . .
preclude
their
right
to
Hotels
Intl,
Inc.
v.
Goodwin & Boone, 11 F.3d 469, 471 n.2 (4th Cir. 1993); see also
Hathcock,
53
F.3d
at
40
([T]his
court
has
emphasized
the
Murray,
Inc.,
816
F.2d
951,
954
n.2
(4th
Cir.
1987)
had
there
been,
(citations omitted)).
another
case
would
be
presented.
constitutionally adequate.
in
this
received
case.
the
requisite
Choice
explicit
Hotels,
11
F.3d
and
at
clear
471
n.2.
J.A. 118.
[Leonard]
[him] . . . .
supplied).
*7
(The
dilatory
and
RDLG,
entering
LLC,
default
2012
WL
judgment
4755669,
at
however,
will
warns
result
in
[Leonard]
the
that
Court
*5
against
(emphasis
See id. at
any
striking
future
[his]
this
Order
will
result
in
the
Court
striking
the
answer
of
against
due
process
challenge
because
counsel[]
Link,
every
preliminary
370
U.S.
[dismissal]
adversary
at
632.
order
hearing
entered
offends
Following
Link,
due
other
circuits have expressly held that a court need not hold an oral
hearing before entering a default judgment sanction.
See FDIC
judgment
sanction
despite
the
lack
of
oral
hearing
evidentiary
hearing);
Spiller
v.
U.S.V.
Labs.,
Inc., 842 F.2d 535, 538 (1st Cir. 1988) (Lack of a hearing does
14
not offend due process where the plaintiff had ample warning of
the consequences of his failure to comply with court orders.).
We need not go that far today, though, because Leonard
was
permitted,
through
default judgment.
counsel,
to
oppose
RDLGs
motion
for
the
conference
pretrial
and
the
As discussed, as between
October
order,
it
is
No further hearing
was necessary.
Leonard
concedes
as
much.
At
oral
argument,
his
11
hearing,
the
district
court
had
simply
entered
See
15-1153
(Mar.
24,
2016),
available
http://www.ca4.uscourts.gov/oral-argument/listen-to-oral15
at
he
could
have
done
it
essentially
with
one-sentence
order.).
D.
Leonard nevertheless contends that his right to due
process was violated because he lacked notice that his failure
to pay his fine would be discussed at the October 11 hearing.
That hearing was set to address potential Rule 11 sanctions for
Leonards attorneys, but the district court proceeded further,
raising
Leonards
Leonard,
relying
failure
on
to
pay,
information
and
drawn
then,
from
according
the
October
to
11
as
credible
evidence
supporting
entry
of
default
prepare
it
for
trial.
J.A.
205.
Leonard
maintains
that
district
court
could
have
[entered
default
judgment]
attended
and
testified
at
the
October
11
hearing,
Even
the
g[ave]
was
harmless
school
board
no
beyond
identified
that
inkling
[the
of
reasonable
nothing
school]
what
the
did
would
doubt
where
investigators
not
have
already
changed
the
shared
know
and
had
the
17
And
if
cannot succeed.
showing
of
afford . . .
Leonard
cannot
is
no
prejudice,
his
argument
any
possible
notice
and
prejudice[,] . . .
hearing
show
indication
that
before
failure
imposition
of
show
cause
hearing,
to
the
Here,
Leonards
A party who
And no
was
well
aware.
He
is
not
entitled
to
relief
from
the
turn
next
to
the
award
of
damages.
Leonard
court
erred
when
instructing
disagree.
18
the
jury.
Again,
we
A.
We review a district courts decision to give (or
not
give)
jury
instruction
and
the
content
of
an
United States ex
rel. Drakeford v. Tuomey, 792 F.3d 364, 382 (4th Cir. 2015)
(alteration in original) (quoting United States v. Russell, 971
F.2d 1098, 1107 (4th Cir. 1992)).
when
the
requested
instruction
was
correct;
(2)
was
not
is
not
appropriate
here
because
Leonards
jury.
Irrelevant
instructions
do
not,
by
definition,
case.
Tuomey,
792
F.3d
at
382
(alterations
supplied)
19
381 (1865).
Leonard asked the district court to instruct the jury
that damages must be limited to the amount of money, property,
services, or credit obtained by [Leonard] from [RDLG] by means
of [Leonard]s fraudulent misrepresentations.
J.A. 243.
This
judgment
bankruptcy
Rountree
by
was
11
dealt
limitation
set
excepted
U.S.C.
from
discharge
523(a)(2)(A).
entirely
with
forth
Leonards
in
federal
See
in
id.
bankruptcy
proposed
Chapter
at
219-23.
law.
jury
The
instruction
issue
of
federal
bankruptcy
law,
however,
was
while
Rountree
is
the
a
issue
of
matter
of
nondischargeability
federal
law
governed
addressed
by
in
the . . .
279,
presented
283-84
(1991).
The
question
to
the
jury
--
North
Carolina
law
--
thus
remains
question
of
proposed
instruction
about
the
federal
state
law
Therefore,
dischargeability
question
whether
Leonards
judgment
debt
is
decision
Circuit.
was
See id.
appealed
to
(and
affirmed
by)
the
Sixth
The
district
courts
decision
to
enter
default
21
appropriate
workflow
the
in
busy
supervision
United
States
and
control
District
over
Court
the
for
the
his
counsel
for
failing
to
prepare
for
the
pre-trial
Leonards
failure
to
timely
pay
the
fine
previously
of
the
plaintiff
against
22
Leonard.
In
my
view,
these
litigant
as
disreputable
as
Leonard,
who
clearly
manipulated his own counsel, his adversary and its counsel, and
the district court, alike.
Manifestly, the district court would have been wise to have
built a more convincing record to explicate the appropriateness
of
the
ultimate
sanction
of
default
by
affording
Leonard
an
why
something
short
of
default
would
have
been
more
appropriate sanction.
such
to
circumstances
constrained,
circumstances
is
hold
nonetheless,
shown
by
the
show
under
record,
23
the
to
cause
hearing.
totality
join
in
the
of
am
the
judgment