Diaz v. Southern Drilling Corp.Diaz v. Southern Drilling Corp.
- Reporters:
- Before:
- Thornberry, Godbold, Morgan
THORNBERRY, Circuit Judge:
The trial court
The appeal before us is a relatively simple portion of a lengthy, complicated case. The suit began with drilling contract work done in Argentina by Southeastern Drilling Company, a Panamanian
The performance of the commission agreement was rendered more complicated by a claim of the Internal Revenue Service that Southeastern owed income tax on the proceeds of the drilling contract. The Government moved to intervene in this case to assert a lien against the funds claimed by Trefina. The case had been divided into separate trials, one of which concerned a dispute between the claimants themselves and the other of which concerned Southeastern‘s liability; the Government had no interest
Having intervened, the Government sought to take the deposition of Trefina‘s officer Widmer. It gave Trefina notice, through its attorney of record, that it intended to take the deposition on a fixed date in Dallas, Texas. Mr. Widmer did not appear. Instead, Trefina filed a motion to quash the deposition notice on the day set for the taking of the deposition. The Government promptly moved for default judgment. The trial court denied both motions and ordered that the deposition be taken within 60 days. Again the Government gave proper notice for the deposition; again Mr. Widner failed to appear without prior communications from Trefina; and again the Government moved for default judgment. Trefina filed a ‘medical certificate’ (consisting of a letter written by a doctor in Zurich) advising that because of his health Mr. Widmer would not undertake any trip ‘of major importance.’ For the first time, Trefina also opposed the intervention of the United States, eight months after the trial court‘s allowance of that intervention. The trial court again sustained the intervention and ordered for the third time that the deposition be taken, this time within 30 days. As a pointed hint to Trefina, the court did not deny the Government‘s motion for default judgment this time, but stated that it would delay ruling on the motion until after the 30-day period. When this time had elapsed, having been presented with an affidavit of the Government to the effect that Trefina had been ‘unable’ on two occasions to specify a date for the deposition, the trial court held a hearing on the default judgment motion and granted it.
I. THE APPEALABILITY OF THE ORDER
Before considering the merits of appellant‘s case, we are faced with a jurisdictional question. We must decide whether this order, disposing of only a part of the case, is appealable in the context of this multiple-party, multiple-claim litigation. There is no question that the order is final in the sense that it completely determines the priority of the United States’ rights as against Trefina, but
It has long been recognized, however, that there is a narrow class of orders, known as ‘collateral orders,’ that may be considered final for purposes of appeal even though they issue in the context of incomplete multiple-claim or multiple-party suits. The Supreme Court has defined collateral orders as ‘that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. * * * We hold this order appealable because it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it.’ Cohen v. Beneficial Industrial Loan Corp., 1949, 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528; see C. Wright, Federal Courts, 398-99 (1963).
The default judgment here was issued as a sanction for appellant‘s failure to produce its officer for deposition, an issue that depends entirely on the circumstances surrounding that failure as considered in light of a procedural rule,
II. THE INTERVENING ISSUE
We turn next to consideration of the question whether intervention by the United States was proper under
A. The Government‘s Right to Intervene
The Government asserts that a statute,
This latter intervention provision requires three things: (1) the assertion of interest in the subject of the action, (2) a possibility that the disposition of the action may as a practical matter impede protection of the interest, and (3) inadequacy of representation of the interest by existing parties. Appellants contend that the intervention here fails to meet the Rule in all three respects. They first argue that the Government does not assert a sufficient interest in the subject of the action. It is true that, even though
Appellants also contend that the Government has not shown that it may be impeded as a practical matter in protecting its interest if intervention is denied. This argument is based upon the undeniable proposition that if the Government is not in the suit, it will not be affected by stare decisis, res judicata, the law of the case, or any other doctrine that could render its claim incapable of legal enforcement. The Government, we recognize, could simply file an independent suit once the winners of the present action were determined. The soundness of this premise, however, is no guarantee against sophistry in the conclusion. Obviously, legal concepts do not completely determine practical relationships, and that is the reason the rule is written as it is. Trefina is a Swiss corporation. As appellants themselves point out, the United States cannot get in personam jurisdiction over it to here.3
Finally, appellant asserts that the rights of the Government are adequately protected by the existing parties to the main action. We disagree. Appellant is correct in stating that the Government is adequately represented as to the issue of Trefina‘s recovery from Southeastern. Trefina entered the suit with the sole purpose of effecting this recovery. Nonetheless, the argument is lacking in merit. Appellant ignores the fact that no existing party to the suit views the Government‘s tax lien favorably. Certainly Trefina does not. Where the supposed representative actually represents an interest adverse to the intervenor, the representation is obviously not adequate. See Martin v. Kalvar Corp., 5th Cir. 1969, 411 F.2d 552, 553.
Since the Government thus asserts a cognizable interest that is not adequately represented by existing parties and may be impeded as a practical matter if intervention is denied, the requirements of
B. The timeliness of the Government‘s Application
Appellant Trefina points out that the application of the Government to intervene came a little over a year after the commencement of this litigation and approximately a year after the date that the Government clearly knew of the suit. Trefina also asserts that the application was filed only five days before trial. This contention misrepresents the circumstances, because the case had been broken into two separate lawsuits, and the United States was not concerned in the one that was set five days after the application. The trial court informed the parties that it would hold a hearing on the intervention before that trial was over, and it did so. At the time of the intervention, there had been no legally significant proceedings in the second of the two lawsuits other than completion of discovery and a pretrial that determined that there were to be two separate suits. There is no showing of any delay in the process of the overall litigation by the Government‘s filing of its application at the time it did.
Under these circumstances, we clearly cannot hold that the application was untimely. In the first place, timeliness is a question addressed to the sound discretion of the trial court, and we cannot reverse its allowance of the intervention absent an abuse of that discretion. 2 W. Barron & A. Holtzoff, Federal Practice and Procedure 594 (Wright ed. 1961); 3B J. Moore, Federal Practice P24.13(1) (1969). There is no abuse of discretion here. Timeliness of intervention is to be judged by two criteria: (1) The length of time during which the proposed intervenor has known about his interest in the suit without acting, and (2) the harm or prejudice that results to the rights of other parties by delay. In the context of this lengthy, complicated litigation, based on a contract signed over a decade ago, we do not think that the Government forfeited its right to intervene solely by the passage of a year after it knew of the suit. Cf. Kozak v. Wells, 8th Cir. 1960, 278 F.2d 104 (application timely even though a year late); Innis, Speiden & Co. v. Food Mach. Corp., D.C.Del.1942, 2 F.R.D. 261 (application timely after four years); Alleghany Corp. v. Kirby, 2d Cir. 1965, 344 F.2d 571 (application untimely after sixteen months). Furthermore, the more important question is not the mere length of time but the possibility of prejudice to existing parties that the delay may cause. This consideration is to be evaluated against the liberal treatment that is to be accorded applications for intervention of right; such applications ‘may well be granted at a time in the suit when it would be wise to deny permissive intervention.’ J. Moore, supra at P24.13(1). Since few legally significant events have occurred in the separate part of the case in which the Government is involved, and since many courts have allowed intervention in meritorious cases after trial, after judgment, and even after settlement, see W. Barron & A. Holtzoff, supra at 368 n. 36, J. Moore, supra at 24-526 to 24-528, we cannot find that the time of the application caused prejudice to Trefina‘s rights of a magnitude sufficient to justify overturning the trial court‘s decision.
III. THE APPROPRIATENESS OF DEFAULT JUDGMENT
The trial court granted default judgment as a sanction against Trefina pursuant to
If a party or an officer or managing agent of a party willfully fails to appear before the officer who is to take his deposition, after being served with a proper notice, * * * the court on motion or notice may strike out all or any part of any pleading of that party, or dismiss the action or proceeding or any part thereof, or enter a judgment by default against that party. Professor Wright observes that ‘without adequate sanctions, the procedure for discovery would be ineffectual. Under
Trefina attempts to show abuse of discretion by comparing each of the clauses of the Rule with the facts of this case and concluding that none of the requirements are met. It begins by stating that default judgments under
18$ Similarly, Trefina argues that it was not served with proper notice of the deposition. The argument as Trefina has presented it appears to hypothesize that the deponent was ordered to appear in his individual rather than official capacity, as in Gillam v. A. Shyman, Inc., D.Alas.1962, 205 F.Supp. 534. The notice, however, was addressed to ‘Mr. Widmer, Officer/ Trefina, A.G.,’ and was served simultaneously on Trefina‘s attorney of record, and therefore this argument is without merit.
Next, Trefina argues that the record does not show that its agent acted ‘willfully’ in failing to appear.
Finally, Trefina argues that abuse of discretion inheres in the application to these facts of the harshest sanction available under the Rules. We have found, however, that the requirements of the Rule were met and that consequently one of the sanctions should have been applied, and we are unable on review to hold that the trial court could have fashioned an equally effective but less drastic remedy. The Rule provides three possible actions: Striking of pleadings, dismissal, or default judgment. Since Trefina is defending this part of the action against the Government, dismissal or striking of pleadings would be inappropriate. Dismissal of Trefina‘s affirmative complaint seeking its commission would be a sanction against it also but would operate to cut off the derivative rights of the United States in the fund Trefina claims. The default judgment was warranted, also, in light of the strong showing of willful evasion by the proposed deponent. As the court stated in Pioche Mines Consolidated, Inc. v. Dolman, 9th Cir. 1964, 333 F.2d 257, 269, in sustaining a similar default: ‘The court kept the door open until it became very clear that (the proposed witness) would depose only upon his own terms, regardless of what the court‘s terms might be.
Affirmed.
It should be noted that Trefina‘s special counsel on this appeal became counsel of record only on October 3, 1968, and did not participate in the events prior to that date which contributed to the granting of the default judgment.