*1 CORPORA AMERICAN NISSHO-IWAI Plaintiff-Appellee, TION, KLINE, Individually and
R. Sukarno Import-Export Frankenburg
d/b/a Defendants-Appellants. Ltd., 87-2902.
No. Appeals, Court States
United Circuit.
Fifth
May 1988. Rehearing
Opinionon Denial 5,1988.
July
pipe for which willing pay Pemex was approximately million. $5.2 To obtain assistance locating a manu- pipe Pemex, facturer of for resale to Kline agreement entered into an with Aston Oil- Supply (“Aston”) princi- field Co. and its Neal, pals, Richard Douglas, Cliff and Bud (“the group”). Franklin Aston Under this agreement, Aston and each became fifty percent Frankenburg of owners Im- port-Export Limited (“Frankenburg-Cay- man”), Cayman a Island corporation Sulkow, R. Birnbach and Martin Howard supplier formed to locate a to fill the Pe- City, for R. New York Sukarno Kline and purchase mex order. Frankenburg Import-Export. February 1980, In agreed after Pemex Galvin, John, Paul E. Kathleen J. St. price a increase consonant with world mar- Tex., Dallas, plaintiff-appellee. prices, negotiations ket between Aston group representatives and of appellee Nis- (“Nissho”) sho-Iwai American Co. resulted agreement a sales confirmation accord- 92,- to which Nissho contracted to sell POLITZ, SMITH, Before and KING pipe Frankenburg-Cayman meters Judges. Circuit approximately agree- million. $5.6 This SMITH, Judge: JERRY E. Circuit contingent ment made pay- was on a direct arrangement ment that would be consum- appeal In this from a final mated between Pemex and the Bank incorporating partial a summary judgment Tokyo, where Nissho was a customer. liability, appellants on the issue of Rukmini Frankenburg Sukarno Kline Import- and In payment arrange- June a direct Export Ltd. contend that the court below Nissho, ment was finalized between Pe- abused reinstating its discretion in not mex, and Richard Neal on Frank- behalf of pleadings, their a stricken state court enburg-Cayman. so-called Box This “Lock Appellants to removal of this case. Agreement” provided that Pemex would also contrary finding to a below— assert — company issue million made $5.6 check competent evidence the record is payable Frankenburg-Cayman’s raise precluding issues material fact it to a box in York send lock New summary judgment. We AFFIRM. Tokyo the control Bank of Company. Trust I. meantime, In Kline sent a letter Appellant Rukmini Tokyo Company Sukarno Kline Trust autho- Bank (“Kline”) appellant was sole owner of rizing it to collect Pemex’s check and to Frankenburg (“Frank- Import-Export proceeds Ltd. credit the to Nissho’s account. enburg-Kansas”), corporation Assignment a Kansas She also executed an and Se- registered in Agreement Mexico as a middleman-suppli- curity behalf of Franken- on products er of steel In country. burg-Kansas, security granting Nissho a (“Pe- December Petróleos might Mexicanos from interest monies she receive mex”) accepted Kline’s to supply bid Pe- pursuant purchase Pemex to the Pemex 93,000 mex with some oil Agreement meters of steel This Security order. further pipe, field provided and March 1979 pay- forwarded that she would receive such Frankenburg-Kansas purchase order ment Nissho as “trustee” for and deliver (hereinafter order”) “the purchase Pemex immediately comming- “without thereafter requesting types quantities various ling.” moved the state court process. Kline twice shipped Nissho June Throughout orig- pleadings, delivered motions to reinstate pipe to Veracruz shipping doc- lading and other inal bills denied. were Frankenburg-Cayman. These uments August impleaded Pemex to Pemex were forwarded documents party defendant and removed the as a third could issue Before
June 26.
The
federal district court.
follow-
case to
*3
knowledge
however,
the
check,
and without
(i.e.,
month,
rein-
Kline moved to amend
Nissho,
to the Hous-
Kline sent a letter
of
state)
court
pleadings.
Before the
instructing Pemex to
of Pemex
ton office
motion, Nissho
for
rule on this
moved
could
Frankenburg-
payable to
check
its
make
summary
grounds
that
up partial
judgment
pick
for her to
hold it
and to
Kansas
possession
of
of
also demanded
all Kline’s
personally.
presupposed
She
reinstatement
representing ti-
shipping documents
of
argued, among
the
other
Nissho
defenses.
responded that it
Pemex
pipe.
to the
tle
liability
things,
had incurred
for
that Kline
Agreement
Box
the Lock
under
was bound
proceeds
of the check
the amount
York,
to New
and could
check
to
the
send
security
and
the sales confirmation
both
receiving
first
without
do otherwise
reply
response
agreements.
In
to Kline’s
Nissho and Frank-
from
joint instructions
motion,
objected
Nissho
to Nissho’s
thereupon insisted
enburg-Cayman.
linchpin
sum-
affidavit—the
of her
Kline’s
had
purchase order
original Pemex
that
mary judgment proof
unsworn.
—as
Frankenburg-Kansas, mak-
been issued
1983,
granted
In
Nis-
October
company its sole owner.
ing her
and,
from the
in a writ-
sho’s motion
bench
1980,
7,
August
capitulated. On
5,1984,
July
declared as its
ten order dated
$5,584,392.04
pay-
was issued
for
check
plaintiff’s
in
rationale “the reasons stated
ship-
Frankenburg-Kansas, and
able
Meanwhile,
moving papers.”
Kline’s mo-
placed at
dis-
Kline’s
ping documents were
post-
tion to file an amended answer
August
Kline went
Pe-
posal. On
office,
parties to rebrief the
possession
poned
of
to enable the
took
mex's Houston
documents,
exchanged them for
issue;
and
subsequently
denied
this motion was
deposited
She
it in Franken-
the check.
pro-
1983. The case then
on December
Manhat-
burg-Kansas’s account with Chase
damages,
the issue of
ceeded
trial on
promptly
in
Bank New York and
with-
tan
resulting
judgment for
money
in a
Nissho.1
proceeds. Approximately
$1.5
drew
brief,
correctly points out
In
Nissho
spent
personal
as her
million she later
appellants cannot secure a reversal
that
funds,
rest
in an as-
and the
she secreted
(1)
unless
determine
this case
we
yet-undisclosed Lichenstein or Swiss bank.
in not
district court abused its discretion
January
This lawsuit ensued.
In
their de-
permitting appellants to reinstate
petition
Nissho filed its
in Texas state dis-
fenses,
(2)
defenses, if
such
rein-
and
alleging
against
trict court
counts
Kline for
stated,
pre-
raise issues of material fact
contract, fraud,
misappropri-
breach of
cluding summary judgment.
we now
Since
significant
of trust funds. The
as-
ation
did not abuse its
hold that the district court
pect
proceedings
pur-
the state court
summary
appellants’
discretion and that
poses
appeal
judge’s
of this
the state
incompetent,
affirm
judgment proof is
we
7, 1981,
striking
December
Kline’s
court without
judgment
defenses and counterclaims
their entire-
ty
abusing
discovery reaching
appellants’
sanction
the merit
defenses.
$5,584,-
man,
remaining parties
companies,
1. The
had settled
and the two Aston
agreed
$535,000.00
against
damages;
trial: Nissho
to dismiss its claims
in attor-
392.04 in actual
Franklin, Neal, Whalen,
International,
Douglas;
fees;
$4,703,080.24
Aston
pre-judgment
neys’
Inc.,
Supply,
and Aston Oilfield
interest,
$10,822,472.28
post-
plus
for a total of
Inc., agreed
entry
against
judgment
them
Only
Kline and Franken-
interest.
Judgment
in favor of Nissho.
July
In its Final
appeal
burg-Kansas
from the
filed the instant
24, 1987,
Nissho,
against
the court awarded
Judgment below.
Final
Kline, Frankenburg-Kansas, Frankenburg-Cay-
Foods,
In Granny
II.
Goose
Supreme
interpreted
Court
section
give
1450to
inter-
appeal
raised
this
is wheth-
One issue
locutory state court
greater
orders no
is owed to an interlocu-
er
deference
“force and effect”
they
than
would have
a case
tory state court order once
has been
obtained had the case
remained
state
determining
removed to federal court.
436-37,
court.
whether its
state court sets it
just
tion
as it had been
to removal.
apart
any interlocutory
from
order a feder-
General Investment Co. v. Lake Shore &
may
al court
decide to reconsider.
261,
Michigan
267,
Ry.,
Southern
260 U.S.
below,
For reasons stated
we decline to
(1922).
43 S.Ct.
Whenever 742 F.2d 895 Cir. action is removed from a 1984). state court to a To the extent the court order district court of the state Unit- injunctions, orders, requires parties ed States ... to act or refrain from [a]ll proceedings acting other had in such action a manner inconsistent with feder shall remain in procedural full force and al requirements, effect until the district dissolved or modified court to fed must accommodate the order court. Foods, eral Granny law. Goose 415 U.S. 37(b)(2) procedure; Fed.R.Civ.P. federal 1124-25 & n. at S.Ct. & n. 439-41 federal court specifically authorizes a 15.2 pleadings party of a out who strike removed, is sum, case whenever comply discovery with its or- refuses to are trans- court orders
interlocutory state Thus, scope is of our review ders.3 of 28 U.S.C. by operation § formed determining this choice limited whether district court of the federal into orders court choice the district of sanctions—a The district is removed. action which the by operation of 28 U.S.C. adopted the order thereupon free treat is court an discretion abuse of 1450—constitutes interlocutory it any such itas would jurisprudence. Rule under federal might itself have entered. If, example, appears that the discretion of a federal district The inconsistent imposed sanctions court state impose sanctions under Rule standards, federal court federal with 37(b)(2) “broad but unlimited.” fettered considerations not be should Inc., Industries, Fenick Emerick v. developing independently from deference Cir.1976). We have F.2d dissolving modifying or then record and emphasized a dismissal repeatedly order, may re the circumstances remedy, or prejudice is a “draconian” with however, policy of Conversely, quire. resort,” last to be em “remedy Granny economy promoted judicial comply only when the failure ployed against impos mitigates our Foods Goose from wilfull the court’s order results with obligation courts to on the district an *5 than from an ina or faith rather ness bad of the de novo conduct a determination deliberate, Nevertheless, comply.4 bility to carried court sanctions propriety state discovery orders repeated obey to refusals upon removal to federal the case with the of this held to warrant use have been court, is every an order contest time such See, Sciambra, su e.g., ultimate sanction. perfectly free is to ed. The district court Kabbe, supra; v. But pra; Bonaventure the adopt court record as basis the state Cir.1979). 625, (5th ler, 626 We 593 F.2d challenged or sustaining state court for a is not our are further mindful “[i]t der, by the court below. as was done say reviewing responsibility as a court to a more would have chosen whether we moreover, case, present the In the responsibility It our moderate sanction. under no affirmative obli district court was court solely to decide whether magnitude of the gation to harmonize the discretion, could, the in determined its have imposed panoply the of sanc sanction with to flagrant to so appellant’s conduct be tions available for the same abuse under 439-41, Foods, day Granny Supreme at 94 S.Ct. Court after removal. 415 U.S. 2.In Goose the question effect 28 at 1124-25. confronted the of U.S. temporary restraining order §C. 1450 on a 37(b)(2)(C) pertinent provides in 3. Fed.R.Civ.P. (TRO) to issued in California state part: held, all, Supreme removal. The Court first provide party obey ... an order If fails any greater the that since order does obtain discovery permit ... the court in which or if the case had effect than it would have had pending may orders in action is make such court, lapse remained state order would just, among regard are failure as time, court, just as it would state without striking following: order out others the [a]n affirmatively taking for- federal court’s parts pleadings or thereof.... 433-36, mal dissolve it. 415 U.S. 94 action The held S.Ct. at 1121-23. Court next no See, Co., e.g., 4. News 841 Sciambra Graham longer event would the order remain in force 651, (default pursuant judgment 655 F.2d imposed than the time limitations Fed.R.Civ. produce doc- 37 affirmed for failure Rule TRO’s, 65(b) Cir.1988); P. on federal measured from the uments) (5th Speloe Neal Batson v. Thus, although 511, Cir.1985) Associates, Inc., (5th date of removal. California F.2d 516 League Hockey TRO would have remained in effect in state (citing Club, Hockey v. Metro National removal, 2778, 2779, days beyond Inc., court for 13 the date of 96 S.Ct. 427 U.S. Mosle, 65(b) (1976)); 10-day time limitation Rule caused v. Rotan 49 L.Ed.2d Inc., Kabbe 1083, Cir.1985). lapse the order to federal court on the tenth F.2d Emerick, striking pleadings.” carry decided to justify Nissho’s motion yet until date, F.2d at 1381. again ordering later once Kline to appear deposition for produce her cer- deliberately The that Kline record shows documents, tain scheduled to occur on No- repeatedly court orders violated state vember 2. produce subpoenaed doc- requiring her to questions relating to uments and answer appear Kline did not for this court-or- of the Pemex check whereabouts deposition. dered Nor did attorneys her deposition her was noticed funds.5 When notify opposing counsel of her “inability” 8,1981, May protective she for a for moved to attend.7 Kline’s merely prof- counsel order, court denied and state erred unsworn answers to thirty-four appear deposition her ordered her' to for questions she had been ordered to answer. produce subpoenaed documents. and to requested The documents were not includ- 8, ordered, May appeared as On but ed. On November the state court held produced requested neither documents hearing the show cause and determined questions nor answered Nissho’s about the pleadings that Kline’s should be stricken. check funds. We find no abuse discretion. September the state court or- appear
dered Kline to a court re- before porter thirty-four on October answer III. questions she had refused to answer dur- Our need to reach the substantive produce and to certain appellants’ merit of and de counterclaims enumerated documents that had been with- fenses is obviated for ap another reason: ap- held. On October Kline neither pellants’ failure to resist Nissho’s motion peared any explanation nor offered for her partial so, summary judgment prompting compe with failure to do Nissho to move entry judgment against summary judgment of a default tent evidence. At the thereupon her.6 The state court issued an time the court below ruled on Nissho’s requiring appear Kline to and show motion, only summary evidence in the why cause she should not be sanctioned. purporting justify record *6 appropriation Kline’s of the Pemex check On October Nissho’s motion funds was her rendition own of facts con present was heard. Kline was not because notarized, tained in a self-described “affida allegedly business, she was in Mexico on 8 attorneys and her vit.” This affidavit is neither sworn nor the meantime had for a moved continuance. The state court its contents stated to be true and correct However, argument, 5. As noted expert in oral Nissho was seri- Kline’s own medical conceded that, ously prejudiced by comply. hearing although Kline’s failure to at the show cause unable travel, Contemporaneously discovery requests, enough deposed with its to Kline was well to be mandatory injunction hearing Nissho had filed for a to in New York. by offer made No was at the place proceeds regis- deposi- the check into court’s Kline’s counsel to submit to further try theory. under a constructive trust tion in New York. injunction was able to block issuance of the so 8.Essentially, Kline’s version is that the Aston long as Nissho could not inform the court of the group conspired displace from the start to her money’s location. relationship in her business with Pemex. Nis- alleged agreed orally throughout sho is to have with Kline 6. Kline maintained this case that supply pipe knowledge to to fill an additional million $20 she had no of the state court’s order orders, purchase requiring appear worth of Pemex and then to posi- her to on October 8. This undermined, however, joined group’s conspiracy. by have in the Aston presence tion was afoot, apprised When by Kline became of what was of a letter written on her behalf a Mexican appropriated protect September stating she the check to her official in appear funds that she could not original entitlement to a commission under the on that date because she was to have an order, purchase compensate to her audience with the President of Mexico. We damages repudiation for caused Nissho’s thus find no abuse of discretion in the state alleged agreement disregarding its again, explanation. court’s oral with her. Once this opinion we offer no as to the substantive 7. Kline contends that she was unable to attend merit of these facts as a defense to Nissho’s the November 2 because of illness. cause of action. 1306 summary judgment.11 precluding fact issue penalty perjury.9 under nor stated exception to this rule exists statutory A defects, to objected these duly Nissho permits which un- 28 under U.S.C. § to opportunity Kline an giving thereby for an affi- declarations to substitute sworn affidavit file a corrected for leave move oath if the statement contained there- ant’s why her unsworn state- respond or as perjury” penalty made “under in is competent for considered should be ment Kline's “true and correct."12 verified as fact. Kline made
raising
of material
issues
conformity
is not
in substantial
affidavit
Only
appeal
on
does she
response.
now
no
drafted,
because,
with either formula
as
“hypertech-
objection
Nissho’s
characterize
penal-
allows the affiant
to circumvent
drafting attorney’s af-
and offer
nical”
signing
onto intentional
perjury
for
ties
jurat
in Kline’s
as
evidence
fidavit
her
Kline never declared
state-
falsehoods.
expos-
avoid
intended
affidavit
correct;
therefore, her
to be true and
ment
as
penalties
peijury,
Nis-
to the
ing her
disregarded
summary
must be
affidavit
claims.10
sho
v. Abex
See also Flowers
judgment proof.
(N.D.Ill.
F.Supp. 1230,
2n.
Corp.,
in this circuit that an
a
rule
It is
settled
1984)
signature
(merely notarizing
does not
incompetent
is
raise
affidavit
unsworn
summary judgment proof
acknowledgement
pur-
client
establish
at
end
9. The
peijury exposure
false state-
ported
reads as follows:
without
affidavit
contemplated by the federal rules.
ments that is
OF TEXAS
THE STATE
above,
attorneys failed
cor-
As noted
Kline’s
OF HARRIS
COUNTY
ME,
undersigned authority,
pointed
even
it out
BEFORE
the defect
after Nissho
rect
day personally appeared
Su-
summary
pleadings.
Mrs. Rukmini
this
Kline,
person
me to
known to
be
karno
foregoing
e.g.,
v.
W.
Oil Distribu
is subscribed to the
Affi-
See Martin
John
Stone
whose name
11.
davit,
tor, Inc.,
(5th Cir.1987);
acknowledged to
that she exe-
me
Mes
819 F.2d
purposes
for the
and considera-
Belgique,
cuted the same
v.
Fina
736 F.2d
erole M/V
expressed.
Watson,
Cir.1984);
tion therein
(5th
622 F.2d
Gordon v.
Menard,
Rukmini Sukarno Kline
Cir.1980);
(5th
/s/
559 F.2d
123
1282,
Jones
KLINE
RUKMINI SUKARNO
Cir.1977).
n. 4
SEAL OF
GIVEN UNDER MY HAND AND
day April,
1983.
OFFICE this 17th
provides:
12. 28 U.S.C.
Bennett,
C.
Jr.
Robert
/s/
Wherever,
any
of the United
law
Notary Public in and for
rule,
order,
regulation,
or
States or under
County, Texas
Harris
law, any
requirement
pursuant
mat-
made
theory is
10. Nissho’s
that Kline and
attor
permitted
supported,
required
or
to be
ter
evidenced,
her,
intentionally
subjecting
neys
"affidavit,”
avoided
in her
established,
proved
or
penalties
perjury
for a false
to the
certificate,
declaration, verification,
sworn
affidavit,
complica
have caused
would
affidavit,
statement, oath,
writing of the
or
proceeding.
tions
her in
related criminal
(other
making
deposi-
person
tion,
than a
the same
fact,
“affidavit,”
the time she tendered her
office,
required
or
or
oath of
an oath
an
taking
proceeds
she had
indicted for
been
specified
other
to be taken before a
official
*7
the
check. She was convicted
sen
may,
notary public),
such matter
with
than
years
prison.
tenced to fourteen
State,
in
See Kline v.
evidenced,
effect,
supported,
like force and
established,
be
(Tex.App.
and found bereft summary judgment before material fact JACKSON CORPORATION, MARINE entered. may properly be Trudell, Richard G. Denton, Felis F. 56(e) contrary, Fed.R.Civ.P. To the III, al., et Plaintiffs-Appellants, go party to nonmoving “requires ... v. affi by her own beyond pleadings FOX, Tackle, BLUE Gear, Apparel, answers davits, ‘depositions, by the or etc., al., et Defendants-Appellees. file,’ and admissions interrogatories, No. 87-3167. showing that there facts ‘specific designate ” United States Court of Appeals, for trial.’ Celotex issue genuine is a Fifth Circuit. Catrett, 106 S.Ct. 477 U.S. Corp. v. (1986) (quoting L.Ed.2d 265 May 31, 1988. added). 56(e)) (emphasis Fed.R.Civ.P. motion, Kline des Nissho’s response to she testi facts to which ignates specific no only deposi in her first
fies —her court below time the tion of record at sup would motion—that
ruled on Nissho’s We cannot of this case.
port her version or for deposition, her second
consider affidavit,
matter, drafting attorney’s to an exami is confined
because our review the lower court of materials before
nation made; ruling subse
at the time the Ingalls are irrelevant.
quent materials Corp.,
Iron Works Co. Fruehauf Cir.1975); Wright, C. F.2d Kane, Federal Practice and
A. Miller & M. (1983). 2d
Procedure: Civil IV. reasons, foregoing
For the is AF- district court
entered
FIRMED.
ON PETITION FOR REHEARING
PER CURIAM: *8 petiton that the re-
IT IS ORDERED entitled and num-
hearing filed in above hereby DE- and the same is
bered cause be rehearing asserts petition
NIED. The deposition was made
that the second assuming
part of the record. Even the time the was of record at