Fugitive Disentitlement Doctrine Narrowly Applied in Civil Cases — “Necessity” Vital — Indignity, Deterrence Inapt — Prejudice, Delay, Frustration, Unenforceability of Judgment Key — Dodging Prosecution Not Enough
Mastro v. Rigby, 2014 U.S. App. LEXIS 16255 (9th Cir. August 22, 2014):
James Rigby (the "Trustee"), in his capacity as Trustee for the Chapter 7 bankruptcy estate of Linda's husband, Michael Mastro ("Michael"), filed an adversary proceeding against Linda. The Trustee alleged, inter alia, that Linda fraudulently transferred estate assets in violation of 11 U.S.C. §§ 544 and 548, and Wash. Rev. Code, ch. 19.40. Linda did not file any counterclaims against the bankruptcy estate.
The bankruptcy court tried the adversary proceeding, with Linda and other witnesses appearing and testifying at trial. It concluded that Linda and Michael utilized an increasingly elaborate series of transactions to shield estate assets and hinder, defraud, or delay their creditors. See Rigby v. Mastro (In re Mastro), 465 B.R. 576, 601-15 (Bankr. W.D. Wash. 2011). The bankruptcy court held Linda liable for fraudulent transfers under 11 U.S.C. §§ 544 and 548, and Wash. Rev. Code, ch. 19.40. It ordered Linda to turn over certain specified items of personal property, including two "big" diamond rings, or "the value of such items," along with gold bars and money worth $1,394,406.00.
Linda appealed to the district court, arguing that the evidence did not [*4] support the bankruptcy court's judgment or its finding of liability. Linda, however, went missing when she appealed. Eventually, Linda was discovered by authorities living in France with Michael, where she has declared her intent to remain.
Soon after Linda was found in France, she was indicted on criminal bankruptcy charges arising from this adversary proceeding and the bankruptcy court's opinion. Linda has evaded prosecution, however, because of her presence in France, and because a French Court of Appeal has denied U.S. requests to extradite Linda and Michael.
Due to Linda's flight, the district court refused to reach the merits of Linda's civil bankruptcy appeal. Instead, it dismissed Linda's appeal under the fugitive disentitlement doctrine. The district court determined that Linda "is a fugitive," that her "fugitive status is connected to this appeal," and that her "blatant disregard for the authority of the judicial system renders her ineligible to pursue an appeal."
Linda now appeals to this court, arguing that the district court abused its discretion in dismissing her appeal under the fugitive disentitlement doctrine. She seeks remand to the district court for its consideration [*5] of the merits of her appeal.
We now turn to the question whether the district court abused its discretion when it invoked the fugitive disentitlement doctrine to dismiss Linda's appeal. See Bhasin v. Gonzales, 423 F.3d 977, 989 (9th Cir. 2005) (reviewing the application of the fugitive disentitlement doctrine for abuse of discretion); accord Bano v. Union Carbide Corp., 273 F.3d 120, 125 (2d Cir. 2001); FDIC v. Pharaon, 178 F.3d 1159, 1162 (11th Cir. 1999). We conclude that it did.
In its earliest form, the fugitive disentitlement doctrine allowed courts to dismiss appeals by defendants in criminal cases who had become fugitives from justice. See Smith v. United States, 94 U.S. 97, 97-98 (1876). Originally, the doctrine sought to prevent the entry of unenforceable judgments against absent criminal defendants. See id. Later, courts developed new justifications for the doctrine. A defendant's fugitive status, it was said, "disentitle[d] the defendant to call upon the resources of the [c]ourt" whose very authority he was flouting, Molinaro v. New Jersey, 396 U.S. 365, 366 (1970) (per curiam) — a theory akin to abandonment or waiver. Additionally, it was thought that the fugitive disentitlement doctrine "discourage[d] the felony of escape," "encourage[d] voluntary surrenders," and "promote[d] the efficient, dignified operation" of the courts. Estelle v. Dorrough, 420 U.S. 534, 537 (1975) (per curiam).
As courts developed new justifications for the fugitive disentitlement doctrine, they also applied that doctrine in new contexts. By the last decades [*12] of the twentieth century, courts had extended the fugitive disentitlement doctrine to a wide range of non-criminal cases -- cases in fields like tax, Conforte v. Commissioner, 692 F.2d 587, 590 (9th Cir. 1982), immigration, Arana v. INS, 673 F.2d 75, 77 (3d Cir. 1982) (per curiam), and family law, Prevot v. Prevot, 59 F.3d 556, 567 (6th Cir. 1995).
Faced with this expansion of the fugitive disentitlement doctrine, the Supreme Court significantly limited the application of the doctrine in non-criminal contexts. In Degen v. United States, 517 U.S. 820 (1996), the Supreme Court held that federal courts lacked inherent power to dismiss a civil forfeiture appeal, where the appellant was a fugitive criminal defendant.3 Id. at 821-29. Acknowledging the government's interest in preventing Degen from abusing civil discovery to gain an advantage in his criminal case (a tactic that was available to Degen only because of his fugitive status), id. at 825-27, the Supreme Court nevertheless declared that even this interest did not necessitate "the harsh sanction of absolute disentitlement," id. at 827. Likewise, after reviewing the fugitive disentitlement doctrine's other rationales -- including preserving the dignity of the courts and deterring flight from prosecution -- the Court concluded that "disentitlement is too blunt an instrument for advancing" those interests, even when those "interests are substantial." Id. at 828.
3 Congress later [*13] conferred this power on the federal courts by statute. See Civil Asset Forfeiture Reform Act of 2000, Pub. L. No. 106-185, 114 Stat. 202 (codified principally at 18 U.S.C. § 983 and 28 U.S.C. § 2466).
Degen thus stands for the proposition that the fugitive disentitlement doctrine should be narrowly applied and subject to significant scrutiny outside of the direct criminal appeal context. Degen makes clear that fugitive disentitlement is an exceptionally "harsh sanction," to be disfavored whenever its application is not a matter of "necessity." Id. at 827. It cautions against the "danger of overreaching," and "counsel[s] restraint in resorting to inherent power." Id. at 823.
Since Degen was decided, we have taken an increasingly narrow view of the fugitive disentitlement doctrine.4 We have recognized that fugitive disentitlement is "a severe sanction that courts should not lightly impose." United States v. Murguia-Oliveros, 421 F.3d 951, 954 (9th Cir. 2005). Frequently, we have declined to decide appeals based on the doctrine, or reversed dismissals under the doctrine. See, e.g., Mamigonian v. Biggs, 710 F.3d 936, 940 (9th Cir. 2013); Sun v. Mukasey, 555 F.3d 802, 805 (9th Cir. 2009); Bhasin, 423 F.3d at 988; United States v. Gonzalez, 300 F.3d 1048, 1051 (9th Cir. 2002). After Degen, we have generally confined our application of the fugitive disentitlement doctrine to challenges to detentions, where an appellant's status as a fugitive from confinement clearly undercuts his challenge to his confinement. See, e.g., Williams v. Alameida, 511 F.3d 973, 974 (9th Cir. 2007) (dismissing criminal [*14] fugitive's 42 U.S.C. § 1983 challenge to his incarceration); Parretti v. United States, 143 F.3d 508, 509 (9th Cir. 1998) (en banc) (dismissing criminal fugitive's challenge to his pretrial detention).
4 We do not discuss statutory dismissals under the Fugitive Disentitlement Statute, 28 U.S.C. § 2466, which are rooted in an act of Congress. The dismissal in this case, by contrast, concerns a court's inherent powers under the fugitive disentitlement doctrine.
The district court's application of the fugitive disentitlement doctrine to Linda's appeal is inconsistent with Degen and lacks support in our post-Degen precedents. The district court's dismissal of Linda's civil bankruptcy appeal was based solely on Linda's "blatant disregard for the authority of the judicial system." But disregard for the authority of a different court does not constitute a "necessity" capable of "justify[ing] the rule of disentitlement in this case." Degen, 517 U.S. at 829; see also id. at 828 (recognizing that the Supreme Court has "held it unconstitutional to use disentitlement similar to this as punishment [even] for rebellion against the United States"). Because the district court dismissed Linda's civil bankruptcy appeal on a basis that Degen rejected, that dismissal was, as in Degen, "an arbitrary response" to Linda's flight from a related [*15] criminal prosecution.5 Id.
5 The Supreme Court in Degen acknowledged the potential unenforceability of a judgment against a fugitive party as a possible justification for applying the fugutive disentitlement doctrine. See Degen, 517 U.S. at 824-25; see also Walsh v. Walsh, 221 F.3d 204, 215 (1st Cir. 2000) (observing that the Degan Court rejected indignity and deterrence as grounds for applying the fugitive disentitlement doctrine and concluding that the justifications for the doctrine post-Degen included "prejudice to the opponent, delay, frustration, and unenforceability"). Here, the district court did not cite any concerns with unenforceability as the basis for its decision and made no finding of fact on this front. Further, the record does not suggest that Linda's absence impedes the enforcement of a judgment against her.
The district court erred as a matter of law when it determined that the fugitive disentitlement doctrine applied to Linda's civil bankruptcy appeal. Because a "district court by definition abuses its discretion when it makes an error of law," Koon v. United States, 518 U.S. 81, 100 (1996); see also United States v. Hinkson, 585 F.3d 1247, 1261-62 (9th Cir. 2009) (en banc), full court rehearing denied, 611 F.3d 1098 (9th Cir. 2010), the district court abused its discretion by dismissing Linda's appeal under the fugitive disentitlement doctrine.
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