Court Without Jurisdiction May Properly Sanction Attorney

An attorney who was the subject of a fine imposed by the district court is properly sanctioned regardless of whether the court had jurisdiction over the underlying matter.

The Nebraska Supreme Court held

that where an attorney pursues a motion for recusal that is frivolous or made in bad faith, the district court has jurisdiction to enter a sanction under § 25-824 when it is timely requested, regardless of whether the district court lacked jurisdiction to adjudicate the merits of the underlying dispute. Accordingly, we conclude that the district court had jurisdiction to sanction Gast.

The case

This case has a long and complicated procedural history, most of which is irrelevant in this appeal. Briefly summarized, this action began in 1998, when the State of Florida filed a complaint on the relation of the Department of Insurance of the State of Florida, which was appointed as receiver of United Southern Assurance Company, an insolvent insurance company. Florida named Countrywide Truck Insurance Agency, Inc. (Truck), Countrywide Insurance Agency, Inc. (Agency), and David L. Fulkerson as defendants. It alleged that Truck owed money to United Southern Assurance Company and that Fulkerson used Truck and Agency to convert that money to his personal use.

In the course of the litigation, this case reached this court at least three times—in 1999, 2005, and 2008. In 2008, we reversed an order directing a verdict in favor of Florida. The state of the record makes it difficult to discern what happened next. Gast did not file a praecipe for a bill of exceptions in this appeal, and he does not cite to a bill of exceptions in his brief.

The parties’ pleadings and the district court’s orders in the transcript indicate that Fulkerson died in 2009 and that probate proceedings began. Diederike M. Fulkerson, Fulkerson’s wife, became personal representative of Fulkerson’s estate. And the estate was added as a defendant in this case. Through Diederike’s filings in the probate proceeding, Florida discovered that Diederike was a partner or co-owner in Truck and Agency and that Fulkerson had transferred certain funds or assets to her before his death. Florida filed a motion for revivor in district court requesting that the court revive the action and allow it to substitute Diederike as a defendant. The district court sustained the motion for revivor, and Florida dismissed Fulkerson’s estate as a party. At the conclusion of the probate proceedings, the probate court discharged Florida’s cause of action against Fulkerson’s estate.

The sanction for the “groundless” recusal motion was a $15,000 payment to Florida. (Mike Frisch)