AUTO-OWNERS INSURANCE COMPANY, a Michigan corporation, Plaintiff Counter Defendant-Appellee,
SUMMIT PARK TOWNHOME ASSOCIATION, a Colorado corporation, Defendant Counterclaimant. WILLIAM C. HARRIS; DAVID J. PETTINATO, Appellants.
from the United States District Court for the District of
Colorado (D.C. No. 1:14-CV-03417-LTB)
A. Vaka, Vaka Law Group, Tampa, Florida (Michael L.
Hutchinson and Kathleen M. Byrne, Treece Alfrey Musat, P.C.,
Denver, Colorado, on the briefs), for Appellants.
Terence M. Ridley (Michael L. O'Donnell, Evan Bennett
Stephenson, and Cedric D. Logan, with him on the brief),
Wheeler Trigg O'Donnell LLP, Denver, Colorado, for
Plaintiff Counter Defendant-Appellee.
TYMKOVICH, Chief Judge, BRISCOE, and BACHARACH, Circuit
BACHARACH, Circuit Judge.
William Harris and Mr. David Pettinato are two attorneys who
represented Summit Park Townhome Association. While
representing Summit Park against its insurer, the two
attorneys were sanctioned for failing to disclose
information. In this appeal, the attorneys challenge the
sanctions based on five arguments:
1. The district court lacked authority to require the
2. The attorneys did not violate the court's disclosure
3. The district court awarded attorneys' fees beyond the
scope of an earlier sanctions order.
4. The district court's award of attorneys' fees
resulted in a deprivation of due process.
5. The amount of attorneys' fees awarded was
affirm. Regardless of whether the district court had
authority to require the disclosures, the attorneys were
obligated to comply. They did not, and the district court
acted reasonably in issuing sanctions, determining the scope
of the sanctions, and calculating the amount of the
I. Mr. Harris and Mr. Pettinato were sanctioned for
failing to comply with the disclosure order.
appeal grew out of an insurance dispute. Summit Park
sustained hail damage and filed a claim with its insurer,
Auto-Owners Insurance Company. The parties agreed that damage
had occurred but disagreed on the dollar amount of the
damage. Auto-Owners sued for a declaratory judgment to decide
Park retained Mr. Harris and Mr. Pettinato, who successfully
moved to compel an appraisal based on the insurance policy.
In the event of an appraisal, the insurance policy required:
[E]ach party will select a competent and impartial appraiser.
The two appraisers will select an umpire. If they cannot
agree, either may request that selection be made by a judge
of a court having jurisdiction. The appraisers will state
separately the value of the property and amount of loss. If
they fail to agree, they will submit their differences to the
umpire. A decision agreed to by any two will be binding.
Appellee's Supp. App'x, vol. 1 at 123.
on continuing disputes between the parties, Auto-Owners asked
the district court to resolve these disputes by ordering an
"appraisal agreement." The court did so and ordered
disclosure of facts potentially bearing on the
An individual who has a known, direct, and material interest
in the outcome of the appraisal proceeding or a known,
existing, and substantial relationship with a party may not
serve as an appraiser. Each appraiser must, after making a
reasonable inquiry, disclose to all parties and any other
appraiser any known facts that a reasonable person would
consider likely to affect his or her impartiality, including
(a) a financial or personal interest in the outcome of the
appraisal; and (b) a current or previous relationship with
any of the parties (including their counsel or
representatives) or with any of the participants in the
appraisal proceeding . . . . Each appraiser shall have a
continuing obligation to disclose to the parties and to any
other appraiser any facts that he or she learns after
accepting appointment that a reasonable person would consider
likely to affect his or her impartiality.
Appellants' App'x, vol. 1 at 245-46. The court
warned: "Notice is given that, if the court finds that
the parties and/or their counsel have not complied with this
order, the court will impose sanctions against the parties
and/or their counsel pursuant to the court's inherent
authority." Id. at 248 (capitalization
the court imposed these requirements, Summit Park selected
Mr. George Keys as its appraiser. This selection led
Auto-Owners to express doubt about Mr. Keys's
impartiality. But Auto-Owners did not object to Mr. Keys or
move to compel further disclosures.
Keys and the court-appointed umpire agreed on an appraisal
award of over $10 million, which was 47% higher than Summit
Park's own public adjuster had determined. Auto-Owners
then launched an investigation, which culminated in an
objection to Mr. Keys. In the objection, Auto-Owners argued
that Mr. Keys was not impartial and that Summit Park had
failed to disclose evidence bearing on his impartiality. The
district court credited these arguments, disqualifying Mr.
Keys and vacating the appraisal award.
vacatur of the appraisal award, Auto-Owners moved for
sanctions against Mr. Harris and Mr. Pettinato, seeking
attorneys' fees and expenses based on violation of the
disclosure order. The district court granted the motion,
assessing sanctions against Mr. Harris and Mr. Pettinato for
$354, 350.65 in attorneys' fees and expenses.
Mr. Harris and Mr. Pettinato were bound by the court's
Harris and Mr. Pettinato challenge the district court's
authority to enter the disclosure order. But even if the
court had exceeded its authority, Mr. Harris and Mr.
Pettinato would still have needed to comply with the
disclosure order. If the two attorneys believed that the
order had been unauthorized, they could have sought
reconsideration or a writ; but they could not violate the
order. See Maness v. Meyers, 419 U.S. 449, 458
(1975) ("If a person to whom a court directs an order
believes that order is incorrect the remedy is to appeal,
but, absent a stay, he must comply promptly with the order
is "impressive authority for the proposition that an
order issued by a court with jurisdiction over the subject
matter and person must be obeyed by the parties until it is
reversed by orderly and proper proceedings." United
States v. United Mine Workers, 330 U.S. 258, 293 (1947).
The parties agree that the district court had jurisdiction
over the subject matter and parties; thus, the attorneys and
parties bore an obligation to comply in the absence of an
appellate challenge. See United States v. Beery, 678
F.2d 856, 866 (10th Cir. 1982) ("Since the court
entering these orders had jurisdiction over both the subject
matter and [the defendant], [the defendant] was bound by
these orders until reversed or otherwise set aside . . .
."); see also GTE Sylvania, Inc. v. Consumers Union
of U.S., Inc., 445 U.S. 375, 386 (1980) (applying
"the established doctrine that persons subject to an
injunctive order issued by a court with jurisdiction are
expected to obey that decree until it is modified or
reversed, even if they have proper grounds to object to the
order"). In light of the duty to comply, violation of
the order would constitute "'contempt of [the
court's] lawful authority, to be punished.'"
United Mine Workers, 330 U.S. at 294 (quoting
Howat v. Kansas, 258 U.S. 181, 190 (1922)).
* * *
of whether the district court had authority to issue the
disclosure order, Mr. Harris and Mr. Pettinato
. bore an obligation to comply in the
absence of an appellate challenge and
. could be sanctioned for noncompliance.
Mr. Harris and Mr. Pettinato violated the disclosure
district court concluded that the two attorneys had violated
the disclosure order. Challenging this conclusion, Mr. ...