Peterson v. Jones ( 2021 )

Case: 20-20130 Document: 00515810422 Page: 1 Date Filed: 04/06/2021
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
April 6, 2021
No. 20-20130 Lyle W. Cayce
Clerk
Don Peterson; Mackey Peterson; Lonny Peterson,
Plaintiffs—Appellants,
versus
Russ Jones; Underwood, Jones, Scherrer, P.L.L.C.;
Harris County, Texas,
Defendants—Appellees.
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:16-CV-733
Before Higginbotham, Costa, and Oldham, Circuit Judges.
Per Curiam:*
Usually a final judgment is just that—final. But the Federal Rules of
Civil Procedure provide a limited escape valve for parties to allege, even years
after a judgment, that the decision was based on certain errors of jurisdiction
or due process: Rule 60(b)(4). If such an error occurs, the judgment is void.
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
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No. 20-20130
FED R. CIV. P. 60(b)(4); United Student Aid Funds, Inc. v. Espinosa, 559 U.S.
260, 271 (2010).
This appeal concerns the denial of a Rule 60(b)(4) motion. The
motion argues that a sanctions order the district court issued more than four
years ago is void for lack of subject matter jurisdiction. Because the court did
have jurisdiction to sanction appellants, we affirm.
I.
The litigation that sparked the district court’s award of sanctions and
the Rule 60(b)(4) motion began in 2016. That year, the Petersons and their
coplaintiffs filed a 192-page complaint alleging a RICO conspiracy, fraud, and
breach of fiduciary duty. The claims stemmed from probate disputes in
which the plaintiffs contended that more than thirty people—judges and
court personnel included—“conspired to cheat them out of property” by
“tak[ing] over” Harris County Probate Court One. In response, the
defendants moved to dismiss and notified the plaintiffs of their intent to seek
sanctions for filing frivolous litigation.
The district court held that the plaintiffs failed to establish subject
matter jurisdiction and failed to plead their RICO claims with particularity,
calling their arguments “pure zanyism.” See Bell v. Hood, 327 U.S. 678, 681–
83 (1946) (explaining that while the mere assertion of a federal claim typically
will support subject matter jurisdiction, even if the claim later fails, there is
an exception for claims that are “wholly insubstantial and frivolous”); see also
Arbaugh v. Y&H Corp., 546 U.S. 500, 513 n.10 (2006) (reiterating this
exception). For example, the court explained that the defendants’ use of mail
and wire services for “routine communications” did not indicate that they
were engaged in a RICO conspiracy, nor did the defendants’ acts of “simply
filing papers with the Harris County Clerk or entering into an agreement to
resolve disputes.” The court dismissed the RICO claims with prejudice and
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indicated that the defendants’ motions for sanctions should be resolved in
the state probate proceedings, dismissing those motions without prejudice
Not to be deterred, the plaintiffs then filed a motion for a new trial
“without meaningful or substantive facts or arguments.” At that point, the
court decided to impose sanctions. The sanctions order emphasized that the
plaintiffs had “more than 40 opportunities” to drop their claims and received
ten safe harbor letters from the defendants, yet they pressed on. The court
also noted that the motion for a new trial was constructed with such
“minimal effort” that it could have only been brought in “bad faith,” “for
the improper purpose of escalating costs.”
Citing both Rule 11 and 28 U.S.C. § 1927, the court used its inherent
authority to impose sanctions in the amount of the defendants’ costs for
responding to the “groundless” motion. The order also provided for
“conditional appellate fee awards” to be imposed against the plaintiffs “in
the event of an appeal by any party.” The conditional fees totaled $140,000,
including $15,000 to each set of attorneys for “handling an appeal to the Fifth
Circuit” and $7,500 for “successfully defending” against a petition for
certiorari to the Supreme Court.
The plaintiffs appealed anyway, seeking relief from the dismissal of
their claims and the grant of sanctions for litigation costs. We affirmed on
both grounds, holding that the plaintiffs’ pleadings evinced “little to no
factual specificity as to injury or causation” and that the district court did not
abuse its discretion by imposing sanctions. Sheshtawy v. Gray, 697 F. App’x
380, 382–83 (5th Cir. 2017) (per curiam). The opinion noted, however, that
although the district court “imposed conditional sanctions for appeal,” the
plaintiffs “d[id] not appear to challenge this award.” Id. at 383 n.7. The
plaintiffs then sought Supreme Court review, finding another unreceptive
audience.
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Over three years after the district court sanctioned them, the
Petersons filed the Rule 60(b)(4) motion, arguing that the order is void
because the court committed “fundamental error” by awarding conditional
appellate fees. 1 The motion asserted that the prospective fee award lacked
subject matter jurisdiction and “abridge[d] core First Amendment
freedoms,” denying the plaintiffs (who have been litigating their claims for
years) access to the courts. The district court denied the motion, refusing to
reopen the case, and the Petersons appealed to this court once more.
II.
The single issue is whether the district court erred in denying the
Petersons’ Rule 60(b)(4) motion challenging the conditional appellate
sanctions. Because there is no room for discretion in determining whether a
judgment is void, we review de novo. Carter v. Fenner, 136 F.3d 1000, 1005
(5th Cir. 1998).
A.
Rule 60(b) “provides an ‘exception to finality,’. . . that ‘allows a party
to seek relief from a final judgment, and request reopening of his case, under
a limited set of circumstances.’” Espinosa, 559 U.S. at 269–70 (quoting
Gonzalez v. Crosby, 545 U.S. 524, 528–29 (2005)). A motion brought under
Rule 60(b)(4) authorizes the court to “relieve a party or its legal
representative from a final judgment, order, or proceeding . . . [if] the
judgment is void.” Fed. R. Civ. P. 60(b)(4); Espinosa, 559 U.S. at 270.
To warrant relief, the judgment must be “so affected by a fundamental
infirmity that the infirmity may be raised even after the judgment becomes
final.” Espinosa, 559 U.S. at 270. Rule 60(b)(4) “applies only in the rare
1
Only Don, Lonny, and Mackey Peterson filed the Rule 60(b)(4) motion and are
pursuing this appeal. The other plaintiffs are not involved in this latest round.
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instance” when the moving party can show either that the court lacked
subject matter or personal jurisdiction or that the court committed “a
violation of due process that deprive[d] a party of notice or the opportunity
to be heard.” Id. at 271; Carter, 136 F.3d at 1006; see Callon Petroleum Co. v.
Frontier Ins. Co., 351 F.3d 204, 208 (5th Cir. 2003).
B.
The Petersons’ motion challenges the district court’s sanctions order
as “void for lack of subject matter jurisdiction.” Yet it is difficult to decipher
why the Petersons believe that the district court lacked jurisdiction to
sanction them. Although they characterize the conditional sanctions as a
prior restraint that violates the First Amendment, they do not cite any
caselaw suggesting that the court lacked jurisdiction to sanction them.
Perhaps they assume there was no jurisdiction to sanction because the district
court dismissed their complaint for lack of subject matter jurisdiction.
But the district court had jurisdiction to sanction the Petersons
despite the general absence of subject matter jurisdiction. Even after a court
dismisses a case, it retains authority to sanction. See Willy v. Coastal Corp.,
503 U.S. 131, 137 (1992) (upholding a Rule 11 award following dismissal for
lack of subject matter jurisdiction); cf. Automation Support, Inc. v. Humble
Design, L.L.C., 982 F.3d 392, 394–95 (5th Cir. 2020) (citing cases describing
a district court’s broad power to award attorneys’ fees even when an action
is no longer pending). In fact, “regardless of a court’s ability to hear the
merits of a suit, it possesses the power to sanction a noncompliant party that
stands before it.” DTND Sierra Invs., L.L.C. v. HSBC Bank USA, N.A., 627
F. App’x 285, 287 (5th Cir. 2015) (citations omitted). If the law were
otherwise, a court would be powerless to punish misconduct, however
extreme, in a case filed in federal court despite a lack of subject matter
jurisdiction.
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As a final note, there is some confusion in the briefing about whether
the Petersons’ motion also challenges the sanctions order as void for violating
due process. It is not clear that the plaintiffs are pressing this issue, but even
if they are, the Petersons admit that they “have never complained and do not
now complain in this appeal of a lack of notice or substantive opportunity to
be heard.” These are the only components of due process that can support
a Rule 60(b)(4) motion. Espinosa, 559 U.S. at 271.
No jurisdictional or due process error occurred here.
***
We AFFIRM the district court’s denial of the Rule 60(b)(4) motion.
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