PUBLISHED
`
`UNITED STATES COURT OF APPEALS
`FOR THE FOURTH CIRCUIT
`
`
`No. 24-1335
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`
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`MATTHEW W. SMITH, Chapter 11 Trustee for BK RACING, LLC,
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`
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`
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`RONALD C. DEVINE; BRENDA S. DEVINE; RANDALL DEVINE 2010
`IRREVOCABLE TRUST; CHRISTOPHER DEVINE 2010 IRREVOCABLE
`TRUST; BENJAMIN DEVINE 2010 IRREVOCABLE TRUST; BRC LOANS,
`LLC; BRC REAL ESTATE HOLDINGS, LLC; A&R FOODS, INC.; VIRGINIA
`RACERS GROUP, LLC; PROPERTY SERVICES, INC.; US FINANCIAL
`COMPANIES, LLC; DEVINE FAMILY FOUNDATION,
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`
`
`
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`
`
`Plaintiff – Appellee,
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`
`
`v.
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`
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`Defendants – Appellants.
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`
`Appeal from the United States District Court for the Western District of North Carolina, at
`Charlotte. Frank D. Whitney, District Judge. (3:23-cv-00001-FDW)
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`
`
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`Argued: October 29, 2024
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`
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`Decided: January 17, 2025
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`
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`Before WILKINSON and BENJAMIN, Circuit Judges, and Rossie D. ALSTON, Jr.,
`United States District Judge for the Eastern District of Virginia, sitting by designation.
`
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`Affirmed by published opinion. Judge Alston wrote the opinion, in which Judge Wilkinson
`and Judge Benjamin joined.
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`
`
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`Anthony Roelof Coppola, CHAP PETERSEN & ASSOCIATES, PLC, Fairfax, Virginia,
`for Appellant. Andrew T. Houston, MOON WRIGHT & HOUSTON, PLLC, Charlotte,
`North Carolina, for Appellee.
`
`
`
`

`

`ROSSIE D. ALSTON, JR., District Judge:
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`Appellants Ronald C. Devine; Brenda S. Devine; the Randall Devine 2010
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`Irrevocable Trust; the Christopher Devine 2010 Irrevocable Trust; the Benjamin Devine
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`2010 Irrevocable Trust; BRC Loans, LLC; BRC Real Estate Holdings, LLC; A&R Foods,
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`Inc.; Virginia Racers Group, LLC; Property Services, Inc.; US Financial Companies, LLC;
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`and the Devine Family Foundation (collectively “Appellants”)1 seek review of the entry of
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`default judgment against them as a discovery sanction in an adversary proceeding initiated
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`by Appellee Matthew W. Smith, the Trustee for Debtor BK Racing LLC (“BK Racing”).
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`This appeal arises from a bankruptcy case and related adversary proceeding marked
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`by Appellants’ willful disregard of the Bankruptcy Code and the orders of the bankruptcy
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`court. Despite repeated warnings and directives to comply with their discovery obligations,
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`Appellants deployed a strategy of obstruction and delay over the course of the bankruptcy
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`proceedings, refusing to produce requested information even after being ordered to do so
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`on multiple occasions. The bankruptcy court ultimately entered a $31,094,099.89 default
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`judgment as a discovery sanction against Appellants, which the district court affirmed.
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`For the reasons set forth below, we conclude that the entry of default judgment
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`against Appellants was not an abuse of discretion. We therefore affirm the district court’s
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`opinion reaching the same conclusion.
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`1 Appellants consist of a married couple, Ronald and Brenda Devine (the
`“Devines”), and ten wholly owned corporate entities and family trusts (the “Devine
`Affiliates”).
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`
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`2
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`

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`I.
`
`A.
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`BK Racing owned and operated a NASCAR Cup Series race team from 2012 to
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`2018. The Devines were the indirect majority owners of BK Racing through their
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`ownership of Appellant Virginia Racers Group, LLC. Appellant Ronald Devine ran BK
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`Racing on a day-to-day basis making most of its decisions, while his wife, Appellant
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`Brenda Devine, was the corporate manager.
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`On February 15, 2018, BK Racing filed an emergency petition for relief under
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`Chapter 11 of the United States Bankruptcy Code. Despite seeking bankruptcy protection,
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`BK Racing, under the control and direction of the Devines, failed to file the required
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`bankruptcy schedules. The failure to file those schedules meant that millions of dollars of
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`pre-petition transfers to Appellants were concealed from the bankruptcy court and from
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`creditors. An email sent by Appellant Ronald Devine to counsel for BK Racing at the time
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`revealed that the Devines refused to disclose the pre-petition transfers made to “insiders”
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`because they did not want to provide “the enemies anymore ammo.” J.A. 354. The
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`enemies referred to were BK Racing’s creditors.
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`
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`Due to BK Racing’s failure to provide the required financial information, Appellee
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`was appointed as the Chapter 11 Trustee on March 30, 2018. Despite a statutory obligation
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`to provide BK Racing’s records to the Trustee, no voluntary production was made. Instead,
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`Appellant Ronald Devine threatened in an email to “let the lawyers fight forever” if
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`Appellee took the creditors’ side in the case. J.A. 355.
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`3
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`

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`On May 1, 2019, the bankruptcy court granted Appellee’s motion to conduct
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`discovery pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. Appellee
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`subsequently served subpoenas duces tecum (the “Rule 2004 Subpoenas”) on the Devines
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`and on several of the Devine Affiliates. Appellant Ronald Devine opposed the Rule 2004
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`Subpoenas on behalf of all Appellants through various objections and motions for
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`protective orders, which the bankruptcy court repeatedly overruled and denied.2
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`Specifically, the June 10, 2019 Order denying Appellant Ronald Devine’s objections (the
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`“Rule 2004 Discovery Order”) found that Appellee’s requests for financial records, tax
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`returns, corporate records, and information related to family trusts were “relevant to the
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`Trustee’s investigation of the Debtor’s financial affairs,” J.A. 357, and required the
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`subpoenaed parties to comply with the requests within ten days of the order. Despite the
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`ten-day deadline, Appellants did not attempt to comply with the Rule 2004 Subpoenas and
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`related Rule 2004 Discovery Order until August 9, 2019, when they produced “two and
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`one-half banker’s boxes of documents” to Appellee on behalf of all Appellants. J.A. 357.
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`These boxes did not include many of the business and financial documents that were
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`requested in the Rule 2004 Subpoenas and ordered to be provided by the bankruptcy court.
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`
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`On December 13, 2019, Appellee proposed a liquidating Chapter 11 plan that was
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`supported by all creditors. Only Appellant Ronald Devine took a position against the plan,
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`which was ultimately confirmed. Under the plan, Appellee became the sole manager of
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`2 The bankruptcy court also informed Appellant Ronald Devine that he could not
`represent the other parties because he is not an attorney.
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`
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`4
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`BK Racing and was charged with investigating the company’s financial transactions and
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`bringing causes of action for the benefit of all creditors.
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`B.
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`
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`On February 14, 2020, Appellee initiated the subject adversary proceeding against
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`Appellants. In the fifteen-count adversary complaint, Appellee sought monetary damages
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`from Appellants based on two categories of transactions. First, Appellee alleged that the
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`Devines fraudulently siphoned off approximately $6.4 million from BK Racing to the
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`Devine Affiliates and the Devines, using hundreds of transfers (the “Transfers”) to conceal
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`that the funds were ultimately for the benefit of the Devines and the Devine Affiliates.
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`Appellee further alleged that BK Racing and the Devine Affiliates are alter egos of the
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`Devines, because the Devines operated BK Racing and the Devine Affiliates “as extensions
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`or mere instrumentalities of themselves [with] little to no attention [] paid to corporate
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`formalities.” J.A. 117. The complaint sought treble damages for this category of
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`transactions based on Appellants’ alleged violations of North Carolina’s Unfair and
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`Deceptive Trade Practices Act, N.C. Gen. Stat. § 75-1.1 et seq., which mandates the
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`recovery of treble damages for violations of the Act. See Bhatti v. Buckland, 328 N.C. 240,
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`243 (1991) (“If a violation of Chapter 75 is found, treble damages must be awarded.”).
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`Second, Appellee also alleged that the Devines caused BK Racing to guaranty existing
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`debts owed by Appellant Ronald Devine and his other companies with an aggregate
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`principal balance of over $11,965,000.00 (the “Ron Devine Debt Assumption
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`Transactions”).
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`5
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`Appellee also filed two additional adversary actions bringing fraudulent transfer
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`avoidance and recovery claims against other putative “insiders” of BK Racing: Smith v.
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`O’Haro, Adv. No. 20-03007, and Smith v. DiSeveria, Adv. No. 20-03057 (collectively with
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`the instant adversary proceeding, the “Related Adversary Cases”).3 In the Related
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`Adversary Cases, the parties were represented by the same attorneys who appeared in the
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`bankruptcy proceeding and protracted discovery disputes arose in each. J.A. 352.
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`After pleadings were complete in the Related Adversary Cases, months of delay
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`ensued, stemming from failed efforts to schedule a joint mediation of the cases. Appellant
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`Ronald Devine caused the delay due to his insistence that the IRS participate in a mediation.
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`In multiple status and scheduling hearings, the bankruptcy court expressly warned the
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`defendants in the Related Adversary Cases, including Appellants, that further delays and
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`noncompliance with discovery obligations in these cases could result in stricken pleadings
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`and default judgments. The bankruptcy court also set a firm discovery deadline of
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`September 30, 2021.
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`C.
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`In May 2021, Appellee discovered an irrevocable self-settled spendthrift trust, the
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`BRBRC Irrevocable Trust (the “BRBRC Trust”), which the Devines formed in August
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`2018 after losing control of BK Racing when Appellee was appointed as Trustee and which
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`the Devines used to pay their personal expenses. Although the bankruptcy court’s Rule
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`3 In addition to the Related Adversary Cases referred to here, there are a number of
`other adversary cases associated with the bankruptcy case that Appellee filed against
`various parties.
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`
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`6
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`2004 Discovery Order required the disclosure of any trusts, the Devines failed to disclose
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`the existence of the BRBRC Trust. Suspecting that the Devines were using the trust to
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`hide assets from their creditors, Appellee issued a subpoena duces tecum to the BRBRC
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`Trust, requesting documents related to the trust. The Devines and the BRBRC Trust
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`ignored that subpoena and failed to respond by the deadline.
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`Appellee subsequently filed a motion to hold Appellant Ronald Devine in civil
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`contempt and to compel discovery from the BRBRC Trust in the adversary proceeding.
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`During an evidentiary hearing on July 23, 2021, the bankruptcy court found Appellant
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`Ronald Devine in civil contempt for his willful failure to identify and produce documents
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`related to the BRBRC Trust. The bankruptcy court also warned Appellants once again
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`about the potential consequences of noncompliance with discovery, stating “it’s time to get
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`serious about making discovery fully, completely and within the rules.” J.A. 362.
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`D.
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`
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`In the adversary proceeding, Appellee served the First Set of Interrogatories and
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`Requests for Production of Documents between May 25-28, 2021. Appellants provided
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`written responses between June 28-30, 2021. Appellant Ronald Devine signed his
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`responses and the responses of the corporate Appellants, while Appellant Brenda Devine
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`signed her own responses and the responses of the trust Appellants. Each of the Appellants
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`objected to most of the discovery requests; and the responses that they did provide were
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`generally cursory, evasive, or only partially responsive. Appellants also produced only a
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`few documents. Despite Appellee detailing these deficiencies in a letter to Appellants and
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`7
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`giving them further opportunity to address them by August 2, 2021, Appellants failed to
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`do so, prompting Appellee to file a motion to compel on August 25, 2021.
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`Following an evidentiary hearing on the motion to compel, the bankruptcy court
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`found Appellants’ responses insufficient and their objections overbroad. Accordingly, the
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`bankruptcy court granted the motion to compel in a discovery order entered on October 12,
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`2021, and ordered Appellants to amend their responses and to produce all requested
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`documents that same day.
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`
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`Appellants again failed to comply with this discovery order. Some of the Appellants
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`did not amend their responses at all, while others failed to amend specific responses as
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`instructed. Several Appellants produced no documents, and others produced only a small
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`number of documents that Appellee had previously provided to Appellants’ counsel.4
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`Thus, despite the bankruptcy court’s order, Appellants continued to fail to provide adequate
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`responses to the outstanding discovery requests.
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`E.
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`On December 22, 2021, Appellee renewed his motion to compel and filed a detailed
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`noncompliance report describing each of Appellants’ discovery failures. Given
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`Appellants’ history of nondisclosure, false statements, and obstructive conduct in both the
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`bankruptcy and the adversary proceedings, Appellee also requested that Appellants be
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`4 In contrast to Appellants’ delay in discovery, Appellee had produced all of his
`discoverable material in response to Appellants’ discovery requests, as they were kept in
`the ordinary course of business and in electronic, searchable format.
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`8
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`sanctioned pursuant to Rule 37(b)(2). Specifically, Appellee asked that his costs and
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`attorneys’ fees be covered, that Appellants’ answers be stricken, and that default judgment
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`be entered against Appellants pursuant to Rule 37(b)(2)(A)(iii) and (iv).
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`In response, Appellants argued, among other things, that they had done their best to
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`respond to Appellee’s discovery requests, that the bankruptcy estate was not harmed by
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`any alleged noncompliance, and that default judgment was too harsh a sanction.
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`On August 23, 2022, after holding two evidentiary hearings on the renewed motion
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`to compel and to impose sanctions, the bankruptcy court granted the motion.5 In an
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`extensive 70-page order, the bankruptcy court outlined the most significant of Appellants’
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`numerous discovery failures: (1) “None of the Discovery Responses, Original or Amended,
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`was Properly Verified;” (2) “The Defendants Failed to Meet the Discovery Order Deadline:
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`Some were Late; Other Defendants Failed to File Amended Discovery Responses, as
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`Required by the Discovery Order;” (3) “The Defendants Amended Discovery Responses
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`to the Identified Interrogatories were Incomplete and Inadequate;” and (4) “The
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`Defendants’ Amended Document productions also failed to comply with the Discovery
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`Order.” J.A. 374–88. More specifically, several Appellants “produced virtually nothing,
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`and those that did, largely just returned to [Appellee] documents which he had previously
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`5 On the same day, the bankruptcy court also issued a separate order granting
`Appellee’s motion for a protective order limiting or forbidding Appellants’ discovery
`requests and denying Appellants’ motion to compel discovery responses. See J.A. 348
`(explaining “Defendants have argued that the Plaintiff has failed to make discovery. This
`is false. The Plaintiff produced all his files as kept in the ordinary course of business.”).
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`9
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`

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`given them.” J.A. 383. The documents that were produced were late, confusing,
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`mislabeled, or duplicates; and many were heavily or totally redacted.6
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`The bankruptcy court ultimately ordered Appellants’ answers and defenses stricken,
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`entered default judgment against Appellants on a joint and several bases, and taxed
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`Appellants with Appellee’s costs and attorneys’ fees. The judgment entered on December
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`19, 2022, authorized Appellee to recover $31,094,099.89 based on the damages sought in
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`the complaint, including the treble damages sought for the North Carolina Unfair and
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`Deceptive Trade Practices Act claim, as well as attorneys’ fees and costs. J.A. 433.
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`F.
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`
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`On January 3, 2023, Appellants appealed to the district court the following orders
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`of the bankruptcy court: (1) the Order Holding Ronald C. Devine in Civil Contempt, (2) the
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`Order Granting Appellee’s Motion for Protective Order and Denying Appellants’ Motion
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`to Compel, (3) the Order Granting Appellee’s Renewed Motion to Compel and Imposing
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`Sanctions (the “Order Imposing Sanctions”), and (4) the Judgment entered. The district
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`court affirmed the bankruptcy court on all four orders in an opinion dated March 5, 2024.
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`The district court affirmed the bankruptcy court’s Order Holding Ronald C. Devine
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`in Civil Contempt and Order Granting Appellee’s Motion for Protective Order and
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`6 Moreover, Appellants failed to produce requested tax returns; bank account
`records; accounting
`records; corporate
`records;
`loan documents and
`ledgers;
`communications regarding inter-Appellant transfers; communications regarding BK
`Racing’s
`transfers
`to Appellants; communications
`regarding alleged
`loans;
`communications regarding the Ron Devine Debt Assumption Transactions; or emails. J.A.
`374–88.
`
`
`
`10
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`

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`Denying Appellants’ Motion to Compel, noting that Appellants had waived those
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`arguments because they failed to brief them on appeal.
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`
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`Regarding the Order Imposing Sanctions, the district court observed that, on at least
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`three occasions, the bankruptcy court had determined that Appellants had failed to comply
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`with discovery obligations by not fully answering interrogatories or producing all
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`responsive documents under their control. The district court concluded that these findings
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`were not clearly erroneous, stating that “Appellants undoubtedly undermined the integrity
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`of the judicial process and wasted resources of the court through their numerous failures to
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`comply with the bankruptcy court’s discovery orders.” J.A. 1086–87.
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`To evaluate whether default judgment was a proportionate sanction for the severity
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`of Appellants’ misconduct, the district court reviewed the bankruptcy court’s application
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`of the four factors set forth in Wilson v. Volkswagen of America, Inc., 561 F.2d 494 (4th
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`Cir. 1977) (the “Wilson factors”). Finding no clear error in the bankruptcy court’s analysis
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`of those factors, the district court held that the bankruptcy court did not abuse its discretion
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`by imposing default judgment as a discovery sanction in this case. Further, addressing
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`Appellants’ argument that the bankruptcy court improperly pierced the corporate veil by
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`imposing the judgment against Appellants on a joint and several bases, the district court
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`found no clear error, stating that “[t]he bankruptcy court properly identified and
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`concentrated on several of the relevant factors” in deciding to pierce the veil. J.A. 1091.
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`Finally, the district court rejected Appellants’ arguments that the judgment amount was not
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`for a sum certain.
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`11
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`After entry of default, Appellee filed a motion in bankruptcy court asserting that the
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`amount sought was a sum certain, and during a hearing on December 6, 2022, Appellants’
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`counsel informed the bankruptcy court that Appellants agreed to the judgment amount. On
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`appeal before the district court, Appellants argued for the first time that the amount was
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`not for a sum certain and that the complaint lacked the particularity required to plead fraud
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`under Federal Rule 9. These arguments were deemed waived as they were not raised before
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`the bankruptcy court.
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`
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`Appellants subsequently appealed the district court’s order to this Court.
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`II.
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`When reviewing the judgment of a district court sitting in review of a bankruptcy
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`court, we apply the same standard of review as applied by the district court. Copley v.
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`United States, 959 F.3d 118, 121 (4th Cir. 2020). “That is, we review the bankruptcy
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`court’s legal conclusions de novo, its factual findings for clear error, and any discretionary
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`decisions for abuse of discretion.” Id.
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`The entry of default judgment, the grant of a contempt motion, and the entry of a
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`protective order are all discretionary decisions reviewed for abuse of discretion.7 Mey, 71
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`7 Appellants’ insistence that the district court applied the wrong standard of review
`in reviewing the entry of default is incorrect. Appellants argue that the district court should
`have used a de novo standard, rather than an abuse of discretion standard because
`Appellants assert that they were challenging the misapplication of law. Appellants’
`Opening Br. at 24. But Appellants’ framing of the issues on appeal does not change the
`fact that the entry of default judgment as a discovery sanction is reviewed for abuse of
`discretion. Mey v. Phillips, 71 F.4th 203, 217 (4th Cir. 2023). Appellants further assert
`that the district court misapplied the abuse of discretion standard by primarily determining
`whether the bankruptcy court’s factual findings were clearly erroneous. Appellants’
`(Continued)
`
`
`
`12
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`

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`F.4th at 217 (reviewing imposition of default judgment for abuse of discretion); JTH Tax,
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`Inc. v. H&R Block Eastern Tax Servs., Inc., 359 F.3d 699, 705 (4th Cir. 2004) (reviewing
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`denial of contempt motion for abuse of discretion); Fonner v. Fairfax Cnty., 415 F.3d 325,
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`330 (4th Cir. 2005) (reviewing entry of protective order for abuse of discretion). The
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`decision to pierce the corporate veil is reviewed under a clear error standard. In re Cnty.
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`Green Ltd. P’ship, 604 F.2d 289, 294 (4th Cir. 1979) (reviewing bankruptcy court’s refusal
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`to pierce corporate veil for clear error).
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`III.
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`
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`In their statement of the issues, Appellants contest the entry of default judgment, the
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`order holding Appellant Ronald Devine in civil contempt, the grant of Appellee’s
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`protective order, and the piercing of the corporate veil. Appellants’ Opening Br. at 2. In
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`the body of their briefs, however, Appellants fail to substantively address the civil contempt
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`finding or the protective order. Consequently, Appellants have waived these issues both
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`by not raising them below and by not addressing them in their briefing before this Court.
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`In re Wallace & Gale Co., 385 F.3d 820, 835 (4th Cir. 2004) (explaining that failure to
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`raise argument before district court results in waiver of argument on appeal “absent
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`exceptional circumstances”); Grayson O Co. v. Agadir Int’l LLC, 856 F.3d 307, 316 (4th
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`Cir. 2017) (stating that “[a] party waives an argument by failing to present it in its opening
`
`
`Opening Br. at 23, 29–30. Contrary to this assertion, however, the district court correctly
`applied the standard because a reviewing court finds abuse of discretion where the lower
`court’s “conclusions are based on mistaken legal principles or clearly erroneous factual
`findings.” Parkway 1046, LLC v. U.S. Home Corp., 961 F.3d 301, 311 (4th Cir. 2020)
`(emphasis added) (citation omitted).
`
`
`
`13
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`

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`brief” on appeal); J.A. 1182 (noting that Appellants “failed to address [the contempt order]
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`in their briefings to” the court); J.A. 1184 (affirming protective order because “Appellants
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`raised no arguments in the briefing before this Court regarding the order”).8
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`
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`The remaining issues properly before this Court include Appellants’ assertions that:
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`(i) the default judgment was inappropriate; (ii) the amount of the default judgment was
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`unduly severe as a matter of law; and (iii) the decision to pierce the corporate veil was
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`erroneous. We address these arguments as they arise in review of the district court’s order
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`affirming the bankruptcy court’s entry of default judgment as a discovery sanction.
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`A.
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`Courts have broad discretion to manage discovery, including the authority to impose
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`sanctions for discovery abuses as part of their case management responsibilities. Russell
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`v. Absolute Collection Servs., Inc., 763 F.3d 385, 396 (4th Cir. 2014) (citing Saudi v.
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`Northrop Grumman Corp., 427 F.3d 271, 278–79 (4th Cir. 2005)). Given this “wide
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`latitude in controlling discovery,” a court’s “rulings will not be overturned absent a
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`showing of clear abuse of discretion.” Ardrey v. United Parcel Serv., 798 F.2d 679, 682
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`(4th Cir. 1986). An abuse of discretion occurs when a court’s “conclusions are based on
`
`
`8 Appellants do briefly suggest, without further explanation, that the bankruptcy
`court improperly made findings of fact in the civil contempt and protective orders.
`Appellants’ Opening Br. at 24. But Appellants fail to identify which specific findings they
`contest in these orders. To the extent that Appellants challenge the bankruptcy court’s
`authority to make factual findings altogether, it is well-established that a court must
`determine whether the elements of contempt and the standards for a protective order are
`met before issuing such orders. Thus, the bankruptcy court properly made necessary
`findings of fact in issuing those rulings.
`
`
`
`14
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`

`

`mistaken legal principles or clearly erroneous factual findings.” Parkway 1046, 961 F.3d
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`at 311 (citations and quotations omitted). A lower “court’s finding that [a party]
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`deliberately disregarded [a] pre-trial order is a factual finding . . . that can be overturned
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`by this [C]ourt only if clearly erroneous.” Rabb v. Amatex Corp., 769 F.2d 996, 1000 (4th
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`Cir. 1985). If a party “fails to obey an order to provide or permit discovery,” Rule 37 of
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`the Federal Rules of Civil Procedure authorizes a court to impose sanctions, including
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`default judgment. Fed. R. Civ. P. 37(b)(2)(A).
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`Nevertheless, “[w]hen the sanction involved is judgment by default, the district
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`court’s ‘range of discretion is more narrow’ because the district court’s desire to enforce
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`its discovery orders is confronted head-on by the party’s rights to a trial by jury and a fair
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`day in court.” Mut. Fed. Sav. & Loan Ass’n v. Richards & Assocs., Inc., 872 F.2d 88, 92
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`(4th Cir. 1989). To balance those competing interests in determining whether default
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`judgment is an appropriate sanction, courts must consider the Wilson factors: “(1) whether
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`the noncomplying party acted in bad faith; (2) the amount of prejudice his noncompliance
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`caused his adversary; (3) the need for deterrence of the particular sort of noncompliance;
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`and (4) the effectiveness of less drastic sanctions.” Mey, 71 F.4th at 217 (quoting Richards,
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`872 F.2d at 92).
`
`On appeal, Appellants do not engage in a substantive analysis of the Wilson factors
`
`but instead contend that the Wilson factors have been superseded by the test set forth in
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`U.S. v. Shaffer Equip. Co., 11 F.3d 450, 462–63 (4th Cir. 1993). Appellants’ Opening Br.
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`at 16–20. The Shaffer test, however, is designed to evaluate the appropriateness of a
`
`different sanction – dismissal of a party’s action. See Shaffer, 11 F.3d at 461 (noting that
`15
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`

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`the district court in that case imposed “the most severe sanction” in dismissing the
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`government’s action); see also Fed. R. Civ. P. 37(b)(2)(A)(v) (listing dismissal of an action
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`or proceeding as a separate sanction from rendering default judgment against a disobedient
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`party). Our precedent remains clear that the Wilson factors govern decisions on whether
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`to impose default judgment as a sanction. Mey, 71 F.4th at 218 (stating that “district courts
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`must consider the following Wilson factors in determining whether to sanction a party with
`
`default judgment”).9
`
`
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`In its order imposing default judgment, the bankruptcy court clearly and correctly
`
`applied the Wilson factors and, in affirming that order, the district court found no clear
`
`error in the bankruptcy court’s factual findings.10 We also find that the bankruptcy court
`
`
`9 It is worth noting that analysis under the Shaffer factors would not compel a
`different result here.
`
`10 Appellants broadly challenge the bankruptcy court’s factual findings in
`determining that Appellants disobeyed court orders and that default judgment was an
`appropriate sanction. Appellants’ Opening Br. at 23 (asserting that the bankruptcy court
`“inexplicably made 70 pages of evidentiary findings, which at its core is incompatible with
`a default”). Yet, these findings were necessary to justify the imposition of discovery
`sanctions. When imposing default judgment as a sanction for failing to comply with a
`discovery order, a court must find in this context that the party disobeyed an order by not
`providing the required discovery. See Fed. R. Civ. P. 37(b)(2)(A) (providing for sanctions
`if a party “fails to obey an order to provide or permit discovery”). The court must then
`make further findings to determine whether the sanction it imposes is proportionate to the
`severity of the misconduct. See In re Jemsek Clinic, P.A., 850 F.3d 150, 158 (4th Cir.
`2017) (explaining that a court “abuses its discretion when it imposes sanctions
`disproportionate to the severity of a party's misconduct.”). Accordingly, the bankruptcy
`court properly fulfilled this responsibility by issuing a comprehensive 70-page order
`documenting Appellants’ extensive failures to comply with its directives to make discovery
`and determining that the four factors set forth in Wilson were met, thus making default
`judgment an appropriate sanction.
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`16
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`appropriately applied the Wilson factors to determine that Appellants’ obstructive and bad
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`faith conduct required the entry of default. On review, it appears that the bankruptcy court
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`exercised an extraordinary level of patience in dealing with Appellants’ efforts to bring the
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`bankruptcy and adversary proceedings to a standstill.
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`First, as the bankruptcy and district courts correctly found, Appellants engaged in a
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`“pattern of bad faith” by repeatedly failing to make discovery as required, neglecting to
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`correct discovery deficiencies, and providing false interrogatory responses. J.A. 411.
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`Appellant Ronald Devine’s communications reveal that his refusal to engage in the
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`discovery process on behalf of himself or any of the entities for whom he was providing
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`responses was intentional. See J.A. 354 (explaining that email revealed that the Devines
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`refused to disclose pre-petition transfers made to “insiders” because they did not want to
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`provide “the enemies anymore ammo”). Thus, Appellants have “demonstrate[d] a
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`continued pattern of discovery abuse that we simply cannot chalk up to inadvertence or
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`mistake.” Mey, 71 F.4th at 220.
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`Second, Appellants’ dilatory tactics in refusing to comply with discovery
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`obligations caused substantial prejudice to Appellee. Assessing whether Appellee
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`experienced prejudice “necessarily includes an inquiry into the materiality of the evidence
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`[Appellants] failed to produce.” Richards, 872 F.2d at 92. As the bankruptcy court
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`highlighted, the evidence Appellants withheld was essential to the litigation:
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`The relationship between Defendants and BK Racing, the financial condition
`of the Debtor at the time of the Transfers, the large sums transferred to the
`Defendants by BK Racing and the reasons why, the considerable sums
`moving between the Defendants’ accounts and those of Related Case
`defendants—all go to the heart of this action. These matters are material to
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`whether the Transfers to these Defendants are avoidable; to whether the
`Devines have breached fiduciary duties owed to BK Racing’s creditors; to
`whether the Defendants have engaged in unfair trade practices; and to
`whether the corporate veil should be pierced and the Defendants held liable
`as alter egos for the BK Racing creditor claims.
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`J.A. 412. By withholding such material evidence, Appellants denied Appellee the
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`opportunity to develop an effective litigation strategy to prove his case and to have a fair
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`trial. See Richards, 872 F.2d at 93 (affirming entry of default where a plaintiff “suffered
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`great prejudice as a result of defendants’ misconduct because [the plaintiff] could not prove
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`its case . . . without the business and bank records withheld”). We agree that Appellant’s
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`failure to meaningfully participate in discovery caused significant prejudice to Appellee
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`and, thus, find that there was no error, let alone clear error, with respect to the district
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`court’s or the bankruptcy court’s analysis reaching the same conclusion.
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`Third, the need for deterrence is particularly strong where, as here, a party is
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`“stalling and ignoring the direct orders of the court with impunity.” Id. Such defiance not
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`only undermines the opposing party’s ability to seek justice but, if left unchecked,
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`emboldens other litigants to flout the authority of the court. Id. at 92. As the bankruptcy
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`court observed, Appellants’ conduct in this case exemplifies the kind of misconduct that
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`must be deterred. The Devines voluntarily placed BK Racing into bankruptcy, thereby
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`assuming the duties a