*Pursuant to Rule 12(a), FRAP
ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA (D.C. Civil No. 94-cv-04388)
BEFORE: STAPLETON, LEWIS and ALDISERT, Circuit Judges.
(Filed September 22, 1997)
In this case, a defendant and a nonparty deponent were held in contempt of court, pursuant to Federal Rule of Civil Procedure 37(b), for failing to appear at their respective depositions. As one of the sanctions imposed, the district court took as established certain facts relating to both the defendant and nonparty deponent. The issue we confront on appeal is whether the district court abused its discretion in holding the defendant and the nonparty deponent in contempt and in fashioning sanctions with respect to its contempt order.
We will hold that the district court abused its discretion in holding the defendant in contempt for failure to appear because the plaintiff failed to set a time and place for his deposition, as required by the district court's order. We further find that the district court did not err in holding the nonparty deponent in contempt, inasmuch as he failed to attend a scheduled deposition. However, we conclude that the district court abused its discretion in sanctioning the nonparty deponent by binding him to the established facts. As a result, we will remand to the district court so it may reconsider appropriate sanctions consistent with this opinion.
In 1994, Appellee General Insurance Company of America sued John L. Daddona ("Daddona"), Eastern Consolidated Utilities, Inc., Mid-Atlantic Pipeline, Inc., Eastern Excavating, Inc., Judy Daddona, Frank P. Daddona and Katherine M. Daddona. Daddona and the other defendants had executed an indemnity agreement and other agreements in which they essentially promised to reimburse General for potential losses arising from its issuance of certain bonds connected to several construction projects. The contractor, and the principal on the bonds, was defendant Eastern Consolidated Utilities, Inc., a company affiliated with Daddona. General had lost several million dollars as a result of issuing those bonds.
Daddona employed extraordinary delaying tactics during pre-judgment discovery. As a result, the court, by Order filed May 10, 1995, granted a motion compelling Daddona to submit to a deposition and produce documents. After the deposition, General moved for summary judgment on all of its claims in the amount of $3,993,566.96 against Daddona and certain of the other defendants (Eastern Consolidated Utilities, Inc., Mid-Atlantic Pipeline, Inc., Eastern Excavating, Inc. and Judy Daddona). Final judgment was entered on August 30, 1995, against these defendants. Prior to entry of judgment, General settled with the remaining defendants, Frank P. Daddona and Katherine M. Daddona, and the case was dismissed as to them.
General sought postjudgment discovery because the judgment remained unsatisfied. Daddona has neither appealed the judgment nor sought a stay of enforcement.
Enforcement of the Judgment
On November 21, 1995, in aid of its enforcement of the judgment, General took the deposition of Charles Hair, an attorney Daddona retained to incorporate various entities. Daddona was given notice of the deposition, but did not attend. Hair testified that he incorporated Five-Star, Ltd.; Par-3, Ltd.; D.G. Holding, Inc.; The Master at Shepherd Hills, Inc.; and The Golf Course at Shepherd Hills, Inc. He also testified that Five-Star was owned in three equal shares by Gubitosi, the Culnen Family Trust and the Dadd Partnership. The Dadd Partnership was owned in equal parts by Daddona and his two brothers. Five-Star owned 100% of the shares in Par-3, Ltd. Five-Star also owned 85% of the shares in D.G. Holding, Inc.; The Dadd Partnership owned 10% and Gubitosi 5% of the remainder. D.G. Holding, in turn, owned The Masters at Shepherd Hills, Inc. and The Golf Course at Shepherd Hills, Inc. Together, Par- 3, Ltd. and D.G. Holding, Inc. operated a golf course and country club known as Shepherd Hills. Hair also testified that he had owned 5% of D.G. Holding which he later transferred to Gubitosi. Hair's testimony was limited to the events surrounding the incorporation of these entities; he did not purport to describe their current ownership structure.
General also noticed Daddona's deposition. The notice demanded certain documents and designated November 21, 1995, as the date for the deposition. Daddona did not provide the requested documents and did not attend the deposition. General then moved for an order compelling Daddona to comply with the notice. On January 19, 1996, the district court, apparently pursuant to Federal Rule of Civil Procedure 37(a)(2) and (4), granted General's motion and ordered Daddona to pay a sanction of $100 by February 5, 1996 and to attend his deposition "at a time and place designated by Plaintiff within thirty (30) days . . . ." General Ins. Co. of Am. v. Eastern Consol. Utils., Inc. et al., slip op. at 1, dated January 19, 1996 (No. 94-4388) (A. at 1). General never sent a letter setting a date for a deposition and Daddona never attended one.
Appellant David M. Gubitosi, Daddona's business partner, was not a defendant in the underlying action and became involved only after judgment was entered. Seeking to acquire information concerning Daddona's business interests, General served Gubitosi with a subpoena on December 29, 1995. The subpoena ...