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Thursday, September 20, 2007

Ind. Decisions - 7th Circuit opinion today orders plaintiff-appellant's attorney to show cause why he should not be sanctioned

In Charles Price v. Wyeth Holdings (ND Ind., Judge Simon), a 15-page opinion, Judge Sykes writes:

Charles Price voluntarily dismissed his Indiana state-court lawsuit against American Cyanamid Company and Lederle Laboratories in 1993. Unbeknownst to the defendants, Price then reinstated the suit five years later and obtained a $5 million default judgment from the state court. Price’s attorney gave the defendants no notice of these proceedings until he soughtt o collect on the judgment in 2004, at which point the defendants quickly removed the case to federal court and had the default judgment vacated based on the lack of notice. The district court ultimately granted summary judgment for the defendants dismissing Price’s claim on statute of limitations grounds.

Price has appealed, challenging the removal of the action and the district court’s orders granting relief from the default judgment and summary judgment for the defendants. Price’s attorney takes the extraordinary position that his ex parte reinstatement of the lawsuit was perfectly appropriate under Indiana law. It certainly was not. The defendants were entitled to notice of the motion to reinstate and all subsequent proceedings under Indiana’s trial procedure rules; ex parte conduct of this sort also violates Indiana’s Rules of Professional Conduct for attorneys. We affirm the orders of the district court and order Price’s attorney to show cause why he should not be sanctioned for filing this frivolous appeal. We also direct the clerk of this court to transmit a copy of this opinion to the Indiana Supreme Court Disciplinary Commission for any action it deems appropriate. * * *

Price maintains that he voluntarily dismissed only his “cause of action” in 1993; he insists that his “cause” remained pending (emptied, as it were, of its “cause of action”), and the 30-day removal clock kept on ticking and expired.

What utter nonsense. To the extent there is a difference between a “cause” and a “cause of action” under Indiana law, that difference is completely irrelevant here. * * * Price cannot identify a single case supporting the notion that a voluntary dismissal terminates the “cause of action” but not the “cause.” This is undoubtedly because the idea is so ridiculous; a “cause” (that is, lawsuit) cannot continue to exist once every “cause of action” within it has been dismissed. The Prices’ voluntary dismissal terminated the entire case against the defendants. The “cause” did not remain pending, nor did the removal clock continue to run after the voluntarily dismissal.

Based on this same theory of a continuously pending lawsuit, Price also maintains that the defendants had a duty to continuously check the docket and therefore should be charged with constructive notice of the reinstated proceedings. This argument badly misconstrues basic principles of voluntary dismissal under Indiana law. * * *

Before moving on, we pause to emphasize the absurdity of Price’s arguments about the timeliness of the removal. Neither the language of nor the purposes behind the time limits contained in § 1446(b) could possibly support a reading that the limits run against defendants who are unaware of the pending claim. * * * That an attorney could in good faith expect to prevail on such baseless arguments is difficult to fathom. * * *

As is clear from the 1993 correspondence in the record, Price’s attorney knew the defendants had legal representation, yet he made no effort to inform either the defendants or known counsel that the default proceedings were occurring. Because the default judgments failed to comply with these requirements of Indiana law, they were void; the district court was therefore required to vacate the judgments, making this appeal of its order doing so frivolous. * * *

Conclusion. For the foregoing reasons, we affirm the district court’s orders denying remand, vacating the default judgments, and dismissing Price’s claim on statute of limitations grounds. Price’s attorney, Delmar Kuchaes, is ordered to show cause why he should not be sanctioned for filing a frivolous appeal. See FED. R. APP. P. 38. He has 21 days to file a response. We also direct the clerk of this court to transmit a copy of this opinion to the Indiana Supreme Court Disciplinary Commission for any action it deems appropriate.

Robert Loblaw of the blog Decision of the Day writes about this ruling today, under the heading "Another Seventh Circuit Lawyer Gets Reamed for Frivolous Appeal."

Posted by Marcia Oddi on September 20, 2007 01:09 PM
Posted to Ind. (7th Cir.) Decisions