In re Sanction of Michelson [1997] FMSC 23; 8 FSM Intrm. 108 (App. 1997) (30 June 1997)

FEDERATED STATES OF MICRONESIA
SUPREME COURT APPELLATE DIVISION

APPEAL CASE NO. P8-1996

IN RE SANCTION OF R. BARRIE MICHELSEN,
Appellant.

OPINION

Submitted: March 24, 1997
Decided: June 30, 1997

BEFORE:

Hon. Andon L. Amaraich, Chief Justice, FSM Supreme Court
Hon. Richard H. Benson, Associate Justice, FSM Supreme Court
Hon. Lyndon L. Cornelius, Temporary Justice, FSM Supreme Court*

*Chief Justice, Kosrae State Court, Lelu, Kosrae

APPEARANCE:

For the Appellant: R. Barrie Michelsen, Esq.
Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941

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HEADNOTES

Civil Procedure - Sanctions
A Rule 11 attorney sanction order is immediately appealable, but only if the sanctioned attorney proceeds under his own name, and as the real party in interest. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Appeal and Certiorari - Standard of Review; Civil Procedure - Sanctions
Rule 11 sanction orders are reviewed under an abuse of discretion standard. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Civil Procedure - Sanctions
Rule 11 sanctions are usually sought by a party, but a court may impose sanctions on its own initiative. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Constitutional Law - Due Process - Notice and Hearing
Notice and an opportunity to be heard are the essence of due process of law. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Civil Procedure - Sanctions; Constitutional Law - Due Process - Notice and Hearing
The manner in which Rule 11 sanctions are imposed must comport with due process requirements. At a minimum, notice and an opportunity to be heard are required. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Civil Procedure - Sanctions; Constitutional Law - Due Process - Notice and Hearing
A court's failure to provide adequate notice and the opportunity to be heard when imposing sanctions sua sponte in itself provides the ground for reversal of an order imposing sanctions. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 110 (App. 1997).

Civil Procedure - Sanctions; Constitutional Law - Due Process
A trial judge abuses his discretion when, without due process of law, he sua sponte imposes a Rule 11 sanction on an attorney. In re Sanction of Michelsen[1997] FMSC 23; , 8 FSM Intrm. 108, 111 (App. 1997).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

This is an appeal of a trial court's sua sponte monetary sanction of attorney R. Barrie Michelsen. The sanction was imposed without notice and an opportunity to be heard. We therefore reverse.

I. BACKGROUND

On July 30, 1996, the trial judge in Bank of the FSM v. Bergen, Civ. No,. 1992-109, entered an order modifying a judgment entered May 11, 1994, so as to sua sponte delete the portion of the judgment that awarded the plaintiff $200 in attorney's fees. The ground given was that "[t]he Court sua sponte . . . examine not [and [found] und] no basis for awarding attorney fees." The order also required that the plaintiff provide a Rule 6(d) certification^[1] for theing m (in this and evid evidentldently two or three other cases) for an order in aid of judgment.

On September 2, 1996, Mr. Michelsen filed a motion to vacate the July 30th order. Identical motions, except for the caption, were filed in two other cases. The motions argued that Rule 6(d) certifications are not required in cases where there was a default judgment. In at least one of the other cases, Rayel v. William, Civ. No. 1996-030 (Order Sept. 12, 1996), the trial court granted the motion to vacate. In Bergen, however, the trial court denied the motion, finding that, although the defendants had defaulted - failed to answer or otherwise defend within the time allowed by the rules - the judgment had been entered by joint motion rather than by default and the defendants had thus appeared. The trial judge concluded that since there had been no default judgment the motion could not have been filed with the belief that there was good ground to support it or after a reasonable inquiry by counsel. The judge then sua sponte sanctioned Mr. Michelsen $25 for violating Civil Procedure Rule 11. Bank of the FSM v. Bergen, [1996] FMSC 11; 7 FSM Intrm. 595, 597 (Pon. 1996). The trial judge gave Mr. Michelsen no prior notice that sanctions were contemplated.

II. ISSUES ON APPEAL

Mr. Michelsen raises two issues on appeal: 1) whether it was a violation of due process of law to levy a Rule 11 monetary sanction on counsel without notice and an opportunity to be heard; and 2) whether it was a violation of Rule 11 to file a meritorious motion (granted by the court in at least one other case) and to also simultaneously file in a third case a motion that inadvertently includes an argument not applicable to that case.

III. APPELLATE REVIEW

A Rule 11 attorney sanction "order is immediately appealable, but only if the sanctioned attorney proceeds . . . under h[is] ame, and as t as the real party in interest." In re Sanction of Berman[1996] FMSC 16; , 7 FSM Intrm. 654, 656 (App. 1996). Mr. Michelsen has proceeded as the real party in interest by naming himself e appt. This appeal ieal is thus thus properly before us for review. We review Rule 11 sanction orders under an abuse of discretion standard. Berman v. Kolonia Town, [1994] FMSC 16; 6 FSM Intrm. 433, 435 (App. 1994).

IV. DISCUSSION

Rule 11 sanctions are usually sought by a party, but a court may impose sanctions on its own initiative. FSM Civ. R. 11 ("If a pleading is signed in violation of this rule, the court, upon motion or upon its own initiative, shall impose upon the person who signed it . . . an ariatetionction .&#160 . . .p> A

5A CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1337, at 120 (1990) (otes otes omitted).^[2] In this case the court did act on its own initiative. But it did so without notice of any kinMr. Michelsen. He was sanctioned before he even knew that that a sanction was being considered. Mr. Michelsen contends that this violates his right to due process of law.

Mr. Michelsen's contention is correct. Notice and an opportunity to be heard are the essence of due process of law. In re Extradition of Jano, 6 FSM Intrm. 93, 99 (App. 1993). These due process requirements apply to Rule 11 sanctions as well. "[T]he manner in which [Rule 11] sanctions are imposed must comport with due process requirements. At a minimum, notice and an opportunity to be heard are required." Sanko S.S. Co. v. Galin, 835 F.2d 51, 52-53 (2d Cir. 1987) (citations omitted). See also Childs v. State Farm Mut. Auto. Ins. Co., [1994] USCA5 2219; 29 F.3d 1018, 1027 (5th Cir. 1994) (affording person accused of Rule 11 violation an opportunity to submit brief usually enough to satisfy due process requirement); cf. Senda v. Creditors of Mid-Pacific Constr. Co., [1996] FMSC 18; 7 FSM Intrm. 664, 669 (App. 1996) ("It is constitutional error for the trial court to rely on a special master's report, not a part of the record, without prior notice to the parties and an opportunity for the parties to comment on it."); Moore v. California Minerals Prods. Corp., 262 P.2d 1005, 1007 (Cal. Dist. Ct. App. 1953) (when trial court sua sponte raises issue of law which it deems dispositive, the party against whom the decision impends is denied due process if not afforded opportunity to be heard before decision is announced).

A court's failure to provide adequate notice and the opportunity to be heard when imposing sanctions sua sponte "in itself provide[s] the ground for reversal of an order imposing sanctions." Securities Indus. Ass'n v. Clarke, [1990] USCA2 208; 898 F.2d 318, 322 (2d Cir. 1990). In G.J.B. & Assocs., Inc. v. Singleton, [1990] USCA10 377; 913 F.2d 824, 831 (10th Cir. 1990), the trial court sua sponte imposed a $185 Rule 11 sanction on an attorney without giving notice or an opportunity to respond, either before or after the imposition of the sanction. The appellate court held that "[t]he [trial] court's error in failing to provide [the sanctioned attorney] any due process whatsoever in relation to the Rule 11 sanctions constitutes an abuse of discretion. On remand, the [trial] court must provide [the attorney] with the required process if the court wishes to reconsider Rule 11 sanctions." Id. (citation omitted).

In the case before us, the trial judge imposed a $25 sanction without any notice or opportunity to be heard. The trial judge thus abused his discretion when, without due process of law, he sua sponte imposed a Rule 11 sanction on Mr. Michelsen. We therefore reverse the trial court's sanction order.

Mr. Michelsen also contends that the motion to vacate was not sanctionable. Because we reverse Mr. Michelsen's sanction on due process grounds, we do not reach this question.

V. CONCLUSION

The trial court's imposition of sanction is accordingly reversed. If, on remand, the trial judge wishes to consider reimposing a sanction he must first give Mr. R. Barrie Michelsen appropriate notice and an opportunity to be heard.

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ENDNOTES:

¹ Civil Rule 6(d) provides that motions shall contain the movant's certification that a reasonable effort has been made to obtain the opposing party's agreement or acquiescence and that no agreement has been forthcoming.
² FSM courts may look to U.S. authorities for guidance in interpreting an FSM Rule of Civil Procedure when the rule is nearly identical to a U.S. Federal Rule of Civil Procedure. Senda v. Mid-Pacific Constr. Co., [1994] FMSC 20; 6 FSM Intrm. 440.

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^[1] Civil Rule 6(d) provides that motions shall contain the movant's certification that a reasonable effort has been made to obtain the opposing party's agreement or acquiescence and that no agreement has been forthcoming.

^[2] FSM courts may look to U.S. authorities for guidance in interpreting an FSM Rule of Civil Procedure when the rule is nearly identical to a U.S. Federal Rule of Civil Procedure. Senda v. Mid-Pacific Constr. Co., [1994] FMSC 20; 6 FSM Intrm. 440, 444 (App. 1994).