Penn West Assoc v. Litman

Opinions of the United
2004 Decisions States Court of Appeals
for the Third Circuit
6-9-2004
Penn West Assoc v. Litman
Precedential or Non-Precedential: Precedential
Docket No. 02-4344
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PRECEDENTIAL On Appeal from the
United States District Court for the
UNITED STATES Western District of Pennsylvania
COURT OF APPEALS D.C. Civil Action No. 97-cv-01678
FOR THE THIRD CIRCUIT (Honorable Alan N. Bloch)
No. 02-4344 Argued September 15, 2003
Before: ALITO, AMBRO and
PENN WEST ASSOCIATES, INC., a CHERTOFF, Circuit Judges
Corporation
t/d/b/a THE WILKINS HOUSE, (Opinion filed June 9, 2004)
Appellant Bela A. Karlowitz, Esquire (Argued)
Daniel M. Flynn, Esquire
v. Karlowitz & Cromer
429 Forbes Avenue
KATHERINE COHEN, Co-Executrix of 1201 Allegheny Building
the Estate of Eugene M. Litman*; Pittsburgh, PA 15219
MICHAEL LITMAN, Co-Executor of
the Estate of Eugene M. Litman*; Attorneys for Appellant
JAMES W. MCCARTHY; PENN WEST
ASSOCIATES, also known as PENN Robert L. Potter, Esquire (Argued)
WEST OFFICE BUILDING, a David A. Strassburger, Esquire
limited partnership; BRANDYWINE Strassburger, McKenna, Gutnick
AGENCY; ALPINE & Potter
CONSTRUCTION CO., a Corporation; 444 Liberty Avenue
PROPERTY DEVELOPMENT Four Gateway Center, Suite 2200
ASSOCATES, INC., a Corporation; Pittsburgh, PA 15222
PITTSBURGH INVESTMENT
COMPANY, a Partnership; James A. Ashton, Esquire
PATRICIA KATZ, general partner; Suite 227
ABLE HOME CENTER, INC.; 500 Lewis Run Road
DIANNA Pittsburgh, PA 15122
BOBACK, an individual; MARGARET
MULL, an individual Attorneys for Appellees
*(Amended pursuant to Court
Order of May 21, 2004) OPINION OF THE COURT
AM BRO, Circuit Judge: cause of action under the Racketeer
Influenced and Corrupt Organizations Act
We review the District Court’s
(“RICO”), 18 U.S.C. §§ 1961-1968.
November 5, 2002 order denying the
According to the complaint, the defendants
motion of Penn West Associates, Inc.
had purportedly looted, and aided in the
(“Penn West”) to re-open its civil RICO
looting of, Penn West’s assets between
case. That case was administratively
February 1988 and late 1993, when
closed by order of the District Court on
Eugene M. Litman, H. Raymond Litman,
August 19, 1999, after both parties
and McCarthy owned the company.
informed the Court that they tentatively
Levine was never a named party to the
settled their dispute. In fact, the civil
action.
RICO case was not concluded. The
District Court mistook its administrative On September 17, 1997, the action
closure of the case as a final decision, was removed to the United States District
which mistakenly led it to treat Penn Court for the Western District of
West’s motion to re-open the case and list Pennsylvania. Prior to trial, all counts of
it for trial as one under Federal Rule of the complaint were dismissed except for
Civil Procedure 60(b). Thus it erred in the civil RICO claim against the Litman
denying Penn West’s motion to re-open. Group. For trial purposes, the case was
also joined with a related qui tam action
I. Background
under the False Claims Act, 31 U.S.C. §§
On September 11, 1997, Penn West 3729-3731, captioned United States ex rel.
filed suit in the Court of Common Pleas of Weinstein v. Litman, No. 96-1860. Robert
Allegheny County, Pennsylvania against Potter, Esq. was lead counsel for the
Eugene M. Litman (individually and in his Litman Group in both actions. Robert
capacity as Executor of the Estate of H. Ridge, Esq. was lead counsel for the
Raymond Litman); James W. McCarthy; private plaintiff in the False Claims Act
Penn West Associates, a partnership case. While the RICO case was pending
comprised of Eugene M. Litman, Michael trial, Penn West and Levine both filed
A. Litman, and James W. McCarthy bankruptcy petitions in the United States
(Eugene M. Litman, James W. McCarthy, Bankruptcy Court for the Western District
and Penn W est Associates being of Pennsylvania. Mary Reitmeyer, Esq.,
hereinafter collectively referred to as the was appointed as Trustee for Penn W est in
“Litman Group”); and numerous other its case, and thereafter obtained an order
defendants. The suit arose from Lawrence appointing John Orie, Esq. as special
A. Levine’s purchase in 1993 of all of the counsel for Penn West for purposes of
capital stock of Penn West from Eugene pursuing the RICO action.
M. Litman, James W. McCarthy, and the
On July 1, 1999, after six days of
Estate of H. Raymond Litman. Penn
trial in the RICO case, counsel for the
West’s complaint contained, inter alia, a
parties informed the District Judge that
2
they had reached a settlement. During a sealed. The District Judge ended the
telephone conference on the record that conference by stating: “We’ll advise the
day among, inter alia, the District Judge, jury that they are discharged, and we’ll
Potter and Orie, Potter informed the wait to receive from you the settlement
District Court that his clients (the Litman papers that I have to approve.”
Group) had agreed to pay $25,000 to the
Seven weeks later, the Court,
United States Department of Justice to
having heard nothing further from the
settle the False Claims Act case and that
parties and making no inquiry of them,
the Department of Justice had approved
issued the following order:
the settlement. Furthermore, the Litman
Group had agreed to pay $75,000 to Penn AND NOW , this 19th day of
West to settle the RICO case. Potter August, 1999, having been
informed the District Court that “[m]utual advised by the parties of the
releases will be exchanged with everybody full and final settlement of
in the RICO case[,] including attorneys.” the above captioned matter
Potter also stated that, as part of the and there are no further
settlement, the Litman Group would be matters pending before the
dropping its claims against Levine Court,
individually in his bankruptcy proceeding
and would assert no further claims in IT IS HEREBY ORDERED
either Levine’s or Penn W est’s bankruptcy that the Clerk of the Court
proceedings. Moreover, the Litman Group mark the above captioned
would be marking as satisfied any state matter closed.
court judgments it had obtained against
Levine personally. 1 The triggering premise of the order (final
settlement) proved, however, to be
Although Orie did not speak at the
premature. No settlement agreement was
conference, at no time did he object to the
ever drafted and settlement papers had
description of the terms of the settlement.
never been sent to, nor approved by, the
The parties then agreed that they would
District Court. Nevertheless, the order
not file the settlement agreement of record
was entered by the Clerk and counsel were
in the District Court because of concern
notified accordingly.2
that, if filed, the agreement could not be
As a result of the August 19, 1999
order, the parties and the District Court
1
The District Court’s opinion notes that
this reference to judgments against Levine
2
relates to a “long history of a The release to settle the False Claims
contemptuous and litigious relationship” Act case was nonetheless executed and the
between Levine and one or more members Litman Group paid the $25,000 settlement
of the Litman Group. amount to the Department of Justice.
3
appear to have operated under the personally represented by Orie and that he
assumption that the litigation was had never authorized Orie to include him
terminated. Approximately three months in the settlement. As later recounted in its
later, Reitmeyer, the bankruptcy Trustee opinion, the District Court found it
for Penn West, filed a motion with the “incredulous that the defendants would
District Court to compel enforcement of pay money to [Penn West], solely owned
the purported settlement terms of the by Lawrence Levine, and yet leave
RICO case. The motion stated that the themselves open to lawsuits filed by
settlement had not been finalized because Levine.” Penn West Associates, Inc. v.
the Litman Group had insisted that Levine Litman, No. 97-1678, slip op. at 6 (W.D.
personally join in the “mutual release” Pa. Nov. 5, 2002). Nevertheless, the
referred to during the July 1, 1999 District Court stated that the case was
teleconference. The Litman Group’s “settled and closed.” The Court further
response to Penn West’s motion stated that stated that the settlement agreement, which
the settlement had not been completed for had not been made a part of the record,
the sole reason that Levine “consistently was a contract between the parties whose
refused to execute a general release in terms would have to be litigated in another
favor of the Litman Group Defendants, forum. It therefore denied Penn West’s
notwithstanding that he expects the Litman motion to enforce the settlement. 4
Group Defendants to release all of their
claims against him individually.” 3
4
A conference with the parties The District Court, in its November 5,
(including Levine) was convened by the 2002 opinion, subsequently noted that its
District Court on November 18, 1999 to refusal to enforce the purported settlement
discuss the motion. During this was based on Kokkonen v. Guardian Life
conference, Levine stated that he was not Ins. Co. of Amer., 511 U.S. 375, 380-81
(1994) (holding that a district court lacks
jurisdiction to enforce a settlement
3
The Litman Group’s response agreement unless the court retains
concerned the substance of the settlement jurisdiction over the agreement or
negotiations, indicating that it was Orie, incorporates the terms of the agreement
special counsel for Penn West, who into its dismissal order), and Sawka v.
intended any settlement to encompass “all Healtheast, Inc., 989 F.2d 138, 141 (3d
matters.” During the negotiations, Potter, Cir. 1993) (holding that a district court
counsel for the Litman Group, apparently does not have the power to exercise
informed Orie that the Litman Group was jurisdiction over a petition to enforce a
willing to release its claims against Levine settlement “unless ... [it] is part of the
individually, but only in return for a record, incorporated into an order of the
general release from, among others, district court, or the district court has
Levine personally. m a n i f e s te d a n inte nt to r e t a in
4
Penn West’s Trustee (Reitmeyer) until March 15, 2002, w hen a plan of
did not seek immediately to re-open Penn reorganization was approved by the
West’s civil RICO case. Instead, she filed Bankruptcy Court. Under the plan, Levine
an adversary proceeding in Penn W est’s regained control of Penn West.
ongoing bankruptcy case to enforce the
Subsequently, on May 10, 2002,
purported settlement against the Litman
Penn West filed with the District Court a
Group. On September 11, 2000, the
Motion to List the Case for Trial and Other
Bankruptcy Court issued an opinion
Relief. The motion related the foregoing
stating that
facts and that the Litman Group had filed
[t]here existed a mistake in a substantial claim against Levine in his
the understanding of the ongoing individual bankruptcy case. Penn
parties as to the terms of West argued that the resolution of its civil
settlement. The mistake RICO case would affect substantially the
was basic and central to any claims of the Litman Group and others in
settlement. Defendants Levine’s individual bankruptcy case.
were not going to settle on Finally, the motion requested that “(i) the
the terms offered without docket entry in this Civil Action showing
the release from Mr. Levine that the case is settled be stricken and (ii)
and Mr. Levine, believing the case be scheduled for trial forthwith . .
he had no control over . .” No legal authority for this request was
matters having to do with cited.
the corporation, was willing
The Litman Group’s memorandum
to let the Trustee settle for
in opposition to Penn West’s motion
the corporation, but he
argued that “[t]o declare a ‘closed’ case
individually was not going
‘open’ for reasons other than clerical
to release the defendants.
mistake, it is necessary to file a motion for
relief from the final order under Federal
The Bankruptcy Court concluded that, due
Rule of Civil Procedure 60(b).” Agreeing
to the mistake, no settlement agreement
with the Litman Group, the District Court
existed and therefore denied Penn West’s
analyzed Penn West’s motion under Rule
motion to enforce the settlement.
The Trustee again did not return to
the District Court to seek re-opening the
closed RICO civil case. Rather, Penn
West proceeded through its bankruptcy
jurisdiction”). See Penn West Associates,
Inc., No. 97-1678, slip op. at 6-7.
5
60(b). 5 On November 5, 2002, the Court denied the motion, holding that Penn West
could not satisfy the requirements of Rule
60(b)(1), (2), (3) or (6). Penn West filed a
5 timely notice of appeal from the District
Rule 60(b) states in pertinent part:
Court’s order.
On motion and upon such
terms as are just, the court II. Jurisdiction
may relieve a party or a
The District Court had jurisdiction
party’s legal representative
over Penn West’s civil RICO action
from a final judgment,
pursuant to 28 U.S.C. § 1331, which
order, or proceeding for the
provides for federal question jurisdiction,
following reasons: (1)
and removal was proper under 28 U.S.C. §
m i s t a k e , i n a d ve r t e n c e ,
1441. With respect to our appellate
surprise, or excusable
jurisdiction, we have noted previously that,
negle ct; ( 2) ne w ly
while “it would appear that an order
discovered evidence which
denying a Rule 60(b) motion is appealable
by due diligence could not
under 28 U.S.C. § 1291,” this may not
have been discovered in
always be the case. See Torres v. Chater,
time to move for a new trial
125 F.3d 166, 167-68 (3d Cir. 1997). In
under Rule 59(b); (3) fraud
Torres, we stated:
( w h e ther her e t o f o re
denominated intrinsic or There is an interdependence
e x t r i n s i c ) , between the “f inality”
misrepresentation, or other required for Rule 60(b) and
misconduct of an adverse section 1291. In some
party; (4) the judgment is instances, the Court of
void; (5) the judgment has Appeals may not entertain
been satisfied, released, or an appeal [from a denial of a
discharged, or a prior Rule 60(b) motion] under
judgment upon which it is section 1291 because the
based has been reversed or underlying order in the
otherwise vacated, or it is no district court is purely
longer equitable that the interlocutory and, thus, not
judgment should have within the scope of Rule
prospective application; or 60(b), which applies only to
(6) any other reason
justifying relief from the
operation of the judgment. (3) not more than one year
The motion shall be made after the judgment, order, or
within a reasonable time, proceeding was entered or
and for reasons (1), (2), and taken.
6
“final” judgments and effect of that denial was to dismiss Penn
orders. West’s action. Thus we hold that the
District Court’s November 5, 2002 order
Id. at 168 (citing Kapco M fg. Co. v. C & O
was a final decision under 28 U.S.C. §
Enters., 773 F.2d 151, 153 (7th Cir.
1291. See Brown Shoe Co. v. United
1985)). Thus, if the denial of the Rule
States, 370 U.S. 294, 306 (1962) (noting
60(b) motion is itself interlocutory, we
that the Supreme Court has adopted a
normally do not have appellate jurisdiction
“pragmatic approach to the question of
to review that denial. Torres recognized,
finality”); cf. In re Grand Jury
however, that even where an underlying
Proceedings (U.S. Steel-Clairton Works),
order is purely interlocutory, we may
525 F.2d 151, 155 (3d Cir. 1975) (holding
nonetheless review a district court’s denial
that a district court’s indefinite stay of
of a Rule 60(b) motion if the denial has the
federal grand jury proceedings pending a
effect of “‘wrap[ping] up all matters
state civil contempt action had “the
pending on the docket,’ thus making the
practical effect of a dismissal of the
decision final.” Id. (quoting Kapco Mfg.
proceedings” and hence was a final order).
Co., 773 F.2d at 153). An example is a
We therefore have jurisdiction over this
district court’s interlocutory order
appeal.
remanding a case to an administrative
agency for reconsideration. See id. If, III. Standard of Review
while the case was pending before the
A District Court’s denial of a Rule
agency, a party filed a Rule 60(b) motion
60(b) motion generally is reviewed for
arguing that the remand had been procured
abuse of discretion. Montgomery County
by fraud on the court, a denial of that
v. Microvote Corp., 320 F.3d 440, 445 (3d
motion would be dispositive of the charge
Cir. 2003). The District Court’s decision
of fraud. Id. Given those circumstances,
to treat Penn West’s motion as a Rule
we held that the underlying remand order
60(b) motion, however, is purely a
may be considered final for purposes of
question of law, which we review de novo.
Rule 60(b) and the denial of a Rule 60(b)
See United States v. Small, 333 F.3d 425,
motion would be a final decision,
427 (3d Cir. 2003) (citing United States v.
reviewable under 28 U.S.C. § 1291. Id.Singletary, 268 F.3d 196, 198 (3d Cir.
We are, however, not presented 2001)).
with the difficulties addressed in Torres
IV. Discussion
because this case does not require us to
review the merits of the denial of a Rule On appeal, Penn West argues that
60(b) motion, for we conclude below that the District Court erred in denying its
it was error to apply Rule 60(b) in this motion to re-open the civil RICO case and
case. The decision before us is the District list it for trial, as its case did not settle and
Court’s denial of a motion to re-open an the District Court’s August 19, 1999 order
administratively closed case. The practical marking the case closed was void. Penn
7
West concludes that the District Court “applies only to ‘final’ judgments and
should have reviewed the motion under orders.” Torres, 125 F.3d at 168; see also
Rule 60(b)(4), which allows relief from a Kapco Mfg. Co., 773 F.2d at 154 (holding
“void judgment,” rather than conducting that “Rule 60(b) must be limited to review
an analysis under Rule 60(b)(1), (2), (3), of orders that are independently ‘final
and (6). We agree that the District Court decisions’ under 28 U.S.C. § 1291”). 6
erred, albeit for different reasons than
The concept of “finality” is well-
those articulated by Penn West. We first
settled. In Catlin v. United States, 324
address whether Rule 60(b) is the correct
U.S. 229, 233 (1945), the Supreme Court
rule governing Penn West’s motion. We
defined a “final decision” for purposes of
next address the significance of the
appeal “generally [as] one which ends the
District Court’s August 19, 1999 order.
litigation on the merits and leaves nothing
Finally, we respond briefly to the concerns
for the court to do but execute the
raised by our dissenting colleague.
judgment.” Interpreting Catlin, we have
A. Application of Rule 60(b) described a final decision as “‘one which
disposes of the whole subject, gives all the
Our analysis of Rule 60(b) begins,
relief that was contemplated, provides with
as it must, with its text (see supra note 5).
reasonable completeness for giving effect
It allows a party to seek relief only from a
to the judgment and leaves nothing to be
“final judgment, order, or proceeding . . .
done in the cause save to superintend,
.” The application of the word “final” is
ministerially, the execution of the
clarified by the Advisory Committee
decree.’” Isidor Paiewonsky Assocs., Inc.
Notes, which explain that
v. Sharp Props., Inc., 998 F.2d 145, 150
the qualifying word “final” (3d Cir. 1993) (quoting In re Moody, 825
emphasizes the character of F.2d 81, 85 n.5 (5th Cir. 1987)) (emphasis
the judgments, orders or in original). Accordingly, “there is no
proceedings from which final order if claims remain unresolved and
Rule 60(b) affords relief; their resolution is to occur in the district
and hence interlocutory court.” Aluminum Co. of Amer. v. Beazer
judgments are not brought East, Inc., 124 F.3d 551, 557 (3d Cir.
within the restrictions of the
rule, but rather they are left
6
subject to the complete In Kapco, the Court reasoned that Rule
power of the court rendering 60(b) must be so limited because “[a] party
them to afford such relief should not get immediate review of an
from them a s justice order for discovery, or one denying
requires. summary judgment and setting the case for
trial, just by filing a Rule 60(b) motion to
Accordingly, we have held that Rule 60(b) set aside the order and then appealing the
denial of this motion.” 773 F.2d at 154.
8
1997) (“Ordinarily, a final decision will importantly, there was more for the
have two effects. First, the decision will District Court to do. The parties had to
fully resolve all claims presented to the continue their litigation in both the District
district court. Second, after the decision Court and the Bankruptcy Court to
has been issued, there will be nothing determine: (1) whether they had indeed
further for the district court to do.”). This “settled” their case in July 1999, and (2)
description accords with several other (a) if so, the terms of that settlement and
courts of appeals. See Moody, 825 F.2d at whether to approve it, or (b) if not, how to
85 n.5; Youghiogheny & Ohio Coal Co. v. achieve a resolution of their ongoing
Baker, 815 F.2d 422, 424 (6th Cir. 1987); dispute. Accordingly, the District Court’s
United States v. Western Elec. Co., 777 order does not satisfy our definition of a
F.2d 23, 26 (D.C. Cir. 1985); see also Otis final decision.
v. City of Chicago, 29 F.3d 1159, 1163
Our conclusion is not altered by the
(7th Cir. 1994) (“[A final judgment]
parties’ mistaken assumption that their
should be a self-contained document,
litigation was terminated by the District
saying who has won and what relief has
Court’s August 19, 1999 order. The Court
been awarded . . . .”).
itself contributed to this misunderstanding
Is the District Court’s August 19, with its November 18, 1999 statement on
1999 order a final decision? If not, relief the record that “our cases are settled and
is unavailable under Rule 60(b). At the closed, and that’s the way they are going to
outset, we note that the order did not stay, and if you have a dispute over the
resolve, or even purport to resolve, any of terms of the settlement, that’s a contract
the claims that Penn West presented to the dispute, and you go ahead and litigate that
District Court. Rather, its purpose was contract dispute wherever you please.”
solely to direct the Clerk of the Court to This mistaken assumption on the part of
mark Penn West’s case as closed.7 More the District Court does not end the case.
See Bensalem Township. v. American
Fidelity Fire Ins. Co., 644 F.2d 990, 994
7
We also note that the factual basis (3d Cir. 1981) (“[T]he boundaries of
given for the order is incorrect. It stated section 1291 jurisdiction do not depend on
that the District Court had been “advised the trial court’s belief that a particular
by the parties of the full and final
settlement” of Penn West’s case. That
event, however, never occurred. All from the record any substantive reason for
parties agree that counsel and the District the issuance of the District Court’s order,
Court did not communicate between the especially after telling the parties on July
July 1, 1999 teleconference and the August 1, 1999 that “[w]e’ll advise the jury that
19, 1999 order. The parties also agree that they are discharged, and we’ll wait to
no final settlement papers were sent to the receive from you the settlement papers that
District Court. We thus cannot discern I have to approve.”
9
decision is or is not ‘final’ . . . .”). That Lehman v. Revolution Portfolio L.L.C.,
the parties followed suit in the belief that 166 F.3d 389, 392 (1st Cir. 1999). There,
the District Court’s order terminated their the plaintiff in a civil action requested the
litigation does not make it so. Cf. Brown District Court to stay its proceedings
Shoe Co. v. United States, 370 U.S. 294, because he had entered bankruptcy. Id. at
305 (1962) (holding that “the mere consent 391. The District Court, responding to this
of the parties to the Court’s consideration request, issued what it termed a
and decision of the case cannot, by itself, “Procedural Order of Dismissal.” Id. It
confer jurisdiction on the Court” in the stated:
absence of a final judgment); Gerardi v.
Pelullo, 16 F.3d 1363, 1368 (3d Cir. 1994) In order to avoid the
(“[W]e directed the parties to brief the necessity for the counsel to
finality issue, notwithstanding their appear at periodic status
agreement that the certification was conferences, it is hereby
proper, for we consider the validity of a ORDERED that the above-
Rule 54(b) certification ourselves.”). entitled action be and hereby
i s d i s m i s se d w i t h o u t
Because the District Court’s August
prejudice to either party
19, 1999 order was not a final judgment or
moving to restore it to the
order, we hold that it erred in analyzing
docket if any further action
Penn West’s motion under Rule 60(b).
is required upon completion
How then should the District Court have
and termination of all
analyzed Penn West’s motion? To that we
bankruptcy or arbitration
now turn.
proceedings.
B. Administrative Closings
Id. Upon receiving the order, “the clerk of
To determine the nature of the relief
court closed the file, but did not enter a
requested in Penn West’s motion to re-
final judgment.” Id. At the request of one
open, we need to clarify the legal
of the parties, the District Court re-opened
significance of the District Court’s August
the case three years later and heard its
19, 1999 order directing the Clerk to mark
merits. Id. One of the appellant’s
Penn West’s civil RICO case closed. We
arguments on appeal was that the Court
conclude that the sole legal consequence
had improperly re-opened the case. Id.of this order was to remove Penn West’s
The appellant argued that the case had
case from the District Court’s active
been dismissed and to re-open it three
docket. Several courts refer to such an
years after dismissal violated the
order as an “administrative closing.”
timeliness requirements of Rule 60(b). Id.The Court of Appeals for the First The First Circuit clarified that the District
Circuit has addressed the purpose and Court’s order, while labeled a “dismissal,”
significance of administrative closings in was not a final judgment that could be
10
corrected under Rule 60. Id. Rather, the (W.D. Pa. 1990),8 aff'd, 931
order did no more than administratively
close the case. Id. at 391-92. The fact that
the order had a misleading label “cannot 8
We think it telling the manner in which
alter the character of its action.” Id. at 392
the District Court in Mercer explained the
n.2.
Western District of Pennsylvania’s
The Lehman Court explained the practice of issuing orders directing the
nature of an administrative closing as Clerk of Court to mark a case “closed.”
follows: It is the practice of this
Court to administratively
Administrative closings
close those cases where
comprise a familiar, albeit
representations are made
essentially ad hoc, way in
that settlement is imminent
which courts remove cases
or some other disposition of
from their active files
the case is contemplated by
without making any final
the parties other than
adjudication. See Corion
a d j u d i ca t i o n . The
Corp. v. Chen, 964 F.2d 55,
administrative closing Order
56-57 (1st Cir. 1992)
reads, in part, “[N]othing
(holding that an order
contained in this Order shall
deeming a case
be considered a dismissal or
“administratively closed”
disposition of this matter,
was not a final, appealable
and shou ld further
order absent a separate
proceedings in it become
document to signal the
necessary or desirable,
court’s “view that the case
either party may initiate it in
had concluded”). The
the same manner as if this
method is used in various
O rd e r h a d n o t b e en
districts throughout the
entered.”
nation in order to shelve
132 F.R.D. at 39 n.1. In this case, the
pending, but dormant, cases.
District Court’s August 19, 1999 order
See, e.g., id.; In re
appears not to conform to the Western
Arbitration Between Phila.
District’s practice described above. If the
Elec. Co. v. Nuclear Elec.
order had contained the language recited
Ins. Ltd., 845 F. Supp. 1026,
by the Mercer Court, Penn West and the
1028 (S.D .N.Y . 1994);
Litman Group likely would have better
Mercer v. Allegheny Ludlum
understood its nature and effect. The
Corp., 132 F.R.D. 38, 38-39
failure to include such language, however,
did not render the District Court’s August
19, 1999 order any less an administrative
11
F.2d 50 (3d Cir. 1991). We Id. at 392 (emphasis added). 9 Lehman
endorse the judicious use of therefore ruled that the District Court’s
administrative closings by “Procedural Order of Dismissal” “did not
district courts in terminate the underlying case, but, rather,
circumstances in which a placed it in an inactive status until such
case, though not dead, is time as the judge, in his discretion or at the
likely to remain moribund request of a party, chose either to
for an appreciable period of reactivate it or to dispose of it with
time. finality.” Id.Lehman’s view of administrative
Properly understood, an
closings has been followed by the Courts
administrative closing has
of Appeals for the Tenth and Eleventh
no effect other than to
Circuits. See, e.g., Florida Ass’n for
remove a case from the
Retarded Citizens v. Bush, 246 F.3d 1296,
court’s active docket and
1298 (11th Cir. 2001) (“Designating a case
permit the transfer of
“closed” does not prevent the court from
records associated with the
reactivating a case either of its own accord
case to an appropriate
or at the request of the parties.”); Cantrell
storage repository. “In no
v. International Broth. of Elec. Workers,
event does such an order
AFL-CIO, Local 2021, 69 F.3d 456, 457
bar a party from restoring
(10th Cir. 1995); see also American
the action to the Court's
Heritage Life Ins. Co. v. Orr, 294 F.3d
active calendar upon an
702, 715 (5th Cir. 2002) (Dennis, J.,
appropriate application.”
concurring) (“[T]he administrative closure
In re Arbitration, 845 F.
reflects nothing more than the federal
Supp. at 1028 (S.D.N.Y.
courts’ overarching concern with tidy
1994). Nor is the power to
dockets; it has no jurisdic tional
resurrect reserved to the
significance.”); cf. Mickeviciute v. I.N.S.,
parties. The court, too,
327 F.3d 1159, 1161 n.1 (10th Cir. 2003)
retains the authority to
(noting that an “[a]dministrative closure of
reinstate a case if it
concludes that th e
administrative closing was 9
The Lehman Court also noted that
improvident or if the
administrative closings “may permissibly
circumstances that sparked
contain a built-in timetable under which it
the closing abate.
automatically will expire, effectively
reinstating the case . . ., or, conversely,
mature into a final judgment if no action
inures within a specified period . . . .” 166
closing. F.3d at 392 n.4 (citations omitted).
12
[an immigration] case temporarily removes request of a party, chose either to
the case from an immigration judge’s reactivate it or to dispose of it with
calendar . . . . The administrative closing finality.” Id. at 392.
of a case does not result in a final order. It
We also recognize the possibility
is merely an administrative convenience
that there are cases in our Circuit in which
which allows the removal of cases from
the last order docketed is an administrative
the calendar in appropriate situations”).
closing order. If those administrative
Lehman presents a reasoned closings comport with the practice
explication of a device that, when used in described in Mercer, 132 F.R.D. at 39 n.1
correct context, enhances a district court’s (i.e., clearly indicating the status of the
ability to manage its docket. We adopt litigation), there is little possibility that the
that rationale and hold that an order merely parties mistake the order as a final
directing that a case be marked closed decision. Here, however, it is easy to
constitutes an administrative closing that understand why counsel believed their
has no legal consequence other than to case over. As noted already, that belief
remove that case from the district court’s does not a final decision make, for an
active docket. administrative closing order is not
sanctioned by the Federal Rules and does
We recognize that, in our case,
not dispense with the technical
nearly three years have passed between the
requirements of finality. These
District Court’s August 19, 1999 order to
requirements include not only a resolution
mark the case closed and Penn West’s May
of the parties’ claims before the District
10, 2002 motion to re-open the case and
Court, but also compliance with Rules 54
list it for trial. Yet we know of no
and 58 of the Federal Rules of Civil
provision in the Federal Rules of Civil
Procedure.10 It is indeed possible that, as
Procedure by which the mere passage of
time can mature an administrative closing
into a dismissal or a final judgment or 10
Fed. R. Civ. P. 54(a) provides, in part:
order. As the Lehman Court noted, a
“‘Judgment’ as used in these rules includes
district court can provide, in the text of its
a decree and any order from which an
order, a built-in timetable under which the
appeal lies.” Fed. R. Civ. P. 58 (as in
administrative closing may automatically
effect when the District Court issued its
expire, or, alternatively, mature into a final
August 19, 1999 order; the rule was
decision. See 166 F.3d at 392 n.4. In this
rewritten, in April 2002, in a manner that
case, however, the District Court’s August
does not affect our analysis) required that
19, 1999 order provided no such feature.
“[e]very judgment shall be set forth on a
We can only conclude that the Court’s
separate document.” The separate
order merely placed Penn West’s civil
document requirement must be applied
RICO case in an “inactive status until such
“mechanically.” United States v.
time as the judge, in his discretion or at the
Indrelunas, 411 U.S. 216, 221-22 (1973);
13
a consequence of our holding that the C. The Dissent
administrative closing order in our case
As a final matter, a brief response
has no legal significance beyond removing
to the dissenting opinion is in order. We
the case from the District Court’s docket,
note that our dissenting colleague does not
litigants will return to the courts to re-open
challenge our application of well-
their administratively closed cases. Our
established principles of finality or the
fidelity to uniform and consistent
conclusion that an administrative closing
application of the Federal Rules, however,
order does not constitute a final decision.
does not permit us to hold otherwise.
Instead, the dissent’s objection is to our
We endeavor today only to correct construction of the District Court’s August
a misapplication of Fed. R. Civ. P. 60(b), 19, 1999 order as an administrative closing
and to clarify the legal significance of the order rather than a dismissal. This
District Court’s August 19, 1999 order objection, however, is based solely on the
administratively closing Penn West’s civil proposition that the District Court’s order
RICO case, so that the motion before the was “ambiguously worded.” 11 Relying on
District Court may be properly analyzed. this supposed ambiguity, the dissent
We decline to address whether Penn proposes that we use extrinsic evidence in
West’s case may be equitably barred from order to conclude that the District Court
restoration to the District Court’s active and the parties actually understood the
docket or whether the case may be August 19th order to constitute a
dismissed for failure to prosecute under dismissal, and that, ergo, it was a
Fed. R. Civ. P. 41(b). The District Court dismissal.
may consider these issues on remand.
We do not agree. The August 19th
order is plain that the case be marked
closed. This was predicated on the District
Court’s statement that it had been “advised
by the parties of the full and final
see also Gregson & Assoc. Architects v.
settlement” of the case and that “there
Government of the Virgin Islands, 675
F.2d 589, 591-92 (3d Cir. 1982)
(mandating a “mechanical” application of
11
Rule 58’s separate document requirement, The dissent does not explain whether
even where the appellant had mistakenly its finding of ambiguity is premised upon
believed that the district court had issued a an ambiguity on the face of the order or,
final judgment); United States v. Fiorelli, alternatively, an ambiguity that is only
337 F.3d 282, 286 (3d Cir. 2003) (applying apparent after considering extrinsic
Rule 58’s separate document requirement statements made by the District Court. As
to determine the timeliness of motions for we describe below, however, we do not
post-judgment relief under Rules 59 and consider extrinsic evidence unless the
60). order is ambiguous on its face.
14
[were] no further matters pending before order.” (citing Adams, 874 F.2d at 395));
the Court.” As we have noted above, this In re UNR Industries, Inc., 143 B.R. 506,
factual predicate was certainly erroneous 516 (Bankr. N.D. Ill. 1992) (“If an order is
because the District Court had yet to clear and unambiguous on its face, there is
receive and approve the final settlement no need to look beyond the face of the
papers from the parties. But nothing in the order to determine its meaning.”).
order mentions dismissal. With no patent Applying this rule of construction, we
ambiguity in the August 19th order, no reject our dissenting colleague’s
need exists for parol or extrinsic evidence. proposition that we may look past the clear
and unambiguous words used in the
District Court’s August 19th order for
The judicial process works
what the Court and the parties intended or
best when orders mean what
understood the order to mean.
they say. Surp rising
interpretations of simple Reminiscent of the emperor’s new
language – perhaps on the clothes, the dissent has us, in effect,
basis of a judicial intent not pretending to see something that does not
revealed in the words – exist. Per the dissent, we should simply
u n n e cessa rily c r e a te pretend that Penn West’s case was
complex questions and can dismissed, even though (1) no language in
cause persons to forfeit their the August 19th order mentioned a
rights unintentionally. Parol dismissal, (2) the District Court ignored
evidence about the judge’s the fact that it was not to act absent
i n t e n t io n s s h o u l d b e receiving and approving settlement papers
irrelevant, just as parol from the parties, and (3) treating the case
evidence is excluded in as dismissed might unknowingly subject
contract cases when the Penn West to a refiling obligation that
language is clear. would trigger a statute of limitations
defense. The upshot: the dissent finds that
our decision is unfair to Penn W est’s
Adams v. Lever Bros. Co., 874 F.2d 393, adversaries; we find unfair the dissent’s
395 (7th Cir. 1989); see also Berke v. treatment of Penn West. Penn West
Bloch, 242 F.3d 131, 136 (3d Cir. 2001) should not be penalized when it was the
(“The judicial process works best when District Judge who failed to terminate
orders mean what they say. . . . Just as properly the case before him.
parol evidence is excluded in contracts
V. Conclusion
cases when the plain language is clear, so
too this type of [extrinsic] evidence about The District Court misunderstood
a party’s intentions must be considered Penn West’s May 10, 2002 motion as one
irrelevant to an unequivocal and final for relief under Fed. R. Civ. P. 60(b). Rule
15
60(b) did not govern Penn West’s motion the order that is at issue here. The order
because the District Court’s August 19, noted that the Court had been informed by
1999 order directing that Penn West’s case the parties “of the full and final
be marked closed was not a final judgment settlement” of the case and that “there
or order. That order accomplished no [were] no further matters pending before
more than an administrative closing of the Court.” The Order then provided that
Penn West’s case. Thus we vacate the “the Clerk of the Court mark the above
District Court’s November 5, 2002 order captioned matter closed.”
denying the motion to re-open and remand
this matter for further consideration
consistent with this opinion. Unfortunately, the order did not
state expressly that the case was dismissed,
but it is clear that the Court and the parties
viewed the order as one that ended the
litigation in the District Court. Indeed, the
Penn West Associates v. Litman
majority notes that “the parties and the
No. 02-4344 District Court appear to have operated
under the assumption that the litigation
was terminated.” Maj. Op. at 3-4.
ALITO, Circuit Judge, dissenting.
The District Court’s understanding
In my view, the District Court was was confirmed a few months later when
correct in denying Penn West’s Motion to the settlement fell apart and the bankruptcy
List the Case for Trial and For Other trustee for Penn West filed a motion
Relief. The majority’s holding – that this asking the District Court to enforce the
case has remained on the District Court’s settlement. The District Court responded
docket in a state of suspended animation that the case was “settled and closed,” that
for nearly five years – is unsound and may it was going to stay closed, and that the
cause problems in other cases. I therefore Trustee would have to file an independent
respectfully dissent. action if it wished to claim that the
settlement had been breached. Neither
before nor after this ruling did any party
I. complain that the Court was failing to
open a case that had not been dismissed
but had merely been administratively
The relevant facts are simple. After closed.
receiving notice that a settlement had been
reached, the District Court waited a few
days and then, on August 19, 1999, signed Several years later, after Penn West
16
emerged from bankruptcy and after the the case was closed. Isn’t
Bankruptcy Court had declared that no that tanta m ount to a
valid settlement agreement existed, Penn dismissal of the complaint?
West filed in the District Court a Motion
Counsel: It certainly is your
to List the Case for Trial and For Other
honor. That’s the reality of
Relief. The motion did not specify the
life, that’s what it is . . . .
legal authority on which it was based, but
the District Court, consistent with its view
that the case had been dismissed long ago, Audio tape: Transcript of Oral Arguments
assumed that Penn West was moving for in Penn West v. Littman, (Sep. 15, 2003)
relief from a final judgment or order under at 093 (emphasis added).
Federal Rule of Civil Procedure 60(b).
Concluding that the motion did not meet
the standard for relief under that rule, the Under further questioning, counsel
Court denied the motion, and Penn West for Penn West held to this position:
took the present appeal.
The Court:. . . [W]hat’s the
On appeal, Penn West has not legal significance of the
argued that the District Court erred in August 19, 1999 order of
treating its motion as a Rule 60(b) motion Judge Bloch ordering that
for relief from a final judgment or order. the case be closed?
Rather, Penn W est’s sole argument is that
it is entitled to relief under Rule 60(b)(4) Counsel:It closes the case.
because the order at issue is void because The Court:What’s the legal
it was based on the mistaken belief that the significance of that?
case had been settled.
Counsel:The case is over.
At oral argument, counsel for Penn The case is over. What the
West insisted, even under questioning that case does. What the order
invited him to change his position, that the does...
August 19 order was a final order and that
the issue before our Court is whether his The Court:Are you sure you
client should have been granted relief from want to say. . . Is the case
that order under Rule 60(b). The over or is it just an
following exchange occurred: administrative closing?
The Court:The effect of the Id. at 111. Even after this suggestion that
order of Judge Bloch saying counsel might not “want to say” that the
August 19 order signified that “[t]he case
17
[was] over,” counsel for Penn West dismissal with prejudice when parties
continued to maintain the position that the engaged in conduct “akin to standing on
August 19 order was a final order from their complaint”), the order was final;
which relief should have been granted Penn West’s motion was properly
under Rule 60(b). See Audio tape: categorized by the District Court as an
Transcript of Oral Arguments in Penn order for relief under Fed. R. Civ. Proc.
West v. Littman, (Sep. 15, 2003) at 163 (“I 60(b); and because Penn West cannot
am appealing [the District Court’s] qualify for such relief, the order denying
application of 60(b)(2) because I suggest its Motion to List the Case for Trial and
that my motion makes it pretty clear that For Other Relief should be affirmed.
there is a denial of due process.”). Id. at
163 (emphasis added).
The majority, however, concludes,
contrary to the understanding of the
II. District Court and the parties, that the case
was never dismissed but merely placed on
hold – apparently indefinitely – and that
In my view, the District Court’s therefore Penn West is entitled to revive
order of August 19, 1999, was exactly the case, unless it is equitably barred from
what the Court and the parties understood doing so. The majority cites nothing in the
it to be: an order dismissing the case. The Federal Rules or in case law that supports
fact that the order did not use the correct this result, and I see no justification for the
terminology is unfortunate but not majority’s approach. When a dispute
dispositive. If the dismissal was without arises as to whether an ambiguously
prejudice, see Fed. R. Civ. Proc. 41(a)(2), worded order is in effect a dismissal, we
the order nevertheless removed the case should take a practical approach. If it
from the District Court’s docket, and Penn appears that the order was intended to have
West could not restore the case to the the same effect as a dismissal and was
docket simply by moving for such relief. understood by all concerned as having the
Rather, Penn West would have to refile its same effect as a dismissal, the order
complaint, assuming that its claims, which should be treated as such.
date from the late 1980s and early 1990s,
were not time-barred.
An example of this approach is
provided by Delgrosso v. Spang and Co.,
Alternatively, if the dismissal 903 F.2d 234 (3d Cir. 1990). The order in
eventually ripened into a dismissal with that case stated:
prejudice when Penn West stood pat, cf.
Berke v. Bloch, 242 F.3d 131 (3d Cir.
2001)(conditional dismissal became IT IS HEREBY ORDERED
18
that the Clerk of Court mark Id. Other courts of appeals have taken a
the above caption case similar tack. See, e.g., American Heritage
closed. Nothing in this Life Ins. Co. v. Orr, 294 F.3d 702, 707-08
order shall be considered a (5 th Cir. 2002), cert. denied, 537 U.S. 1106dismissal or disposition of (2003); Corion Corp. v. Chen, 964 F.2d
this matter and, should 55, 56 (1 st Cir. 1992).
further proceedings in it
b e co m e n e ce ss ar y o r
desirable, either party may The order involved here is nothing
initiate it in the same like the “administrative closing” orders
manner as if this order had that the majority discusses. As the
not been entered. majority notes, those orders typically state
that the parties may restore the case to the
docket if further action is required. See
Id. at 236. We did not hold that this order Maj. Op. at 10. See also Mercer v.
was interlocutory simply because it did not Allegheny Ludlum Corp., 132 F.R.D. 38,
state that the case was dismissed. Rather, 38-39 (W.D. Pa. 1990), aff’d, 931 F.2d 50we analyzed the practical effect of the (3d Cir. 1991(describing order generally
order and observed: entered in the W estern District of
Pennsylvania to accomplish a mere
“administrative closing”). The August 19,
[T]he order in this case 1999, order in this case contained no
permits reinstatement and similar language and, as noted, it recited
contemplates the possibility that there were “no further matters pending
of future proceedings. The before the Court.”
order does not purport to
end litigation on the merits
and the parties agree that it The majority argues that the August
does not determine any 19 order was not a final order, but this
issues or resolve the entire argument does not support vacatur of the
case. We recognize that the order denying the Motion to List the Case
conduct of the district court for Trial and For Other Relief. First, even
raises the question whether if the August 19 order never ripened into a
the order effectively, if not dismissal with prejudice and thus never
expressly, brings the case to became a final order, it would not follow
a close. O n bala nce, that Penn W est, years later, could restore
however, we believe that the the case to the District Court’s active
order is not final. docket simply by moving to do so. Penn
West would have to file a complaint. It
did not do so, and therefore the denial of
19
its motion was correct. Maj. Op. 9.
Second, if the August 19 order This argument confuses the
eventually became a dismissal with question whether an order resolves all the
prejudice, that order resolved all of the claims that are before a court with the
claims that Penn West asserted in its separate and (for present purposes)
complaint and was thus final. Compare irrelevant question whether an order
Maj. Op. 9 (stating that the this order was resolves all the issues that may arise
not final because it “did not resolve, or between the parties in the future. Suppose
even purport to resolve, any of the claims that the August 19, 1999, order had stated
that Penn West presented to the District expressly that all the claims in the case
Court”). Once Penn West’s claims were were dismissed with prejudice. There
dismissed with prejudice and Penn West would then be no basis for disputing the
failed to appeal, further assertion of those finality of the order, but disagreements
claims was barred, and Penn West was might nevertheless arise between the
relegated to asserting claims under the parties regarding the meaning or, indeed,
settlement agreement. the validity of the settlement agreement.
The parties might then wish to return to
the District Court to litigate those
The majority contends that the disagreements, but the parities’ desire to
August 19 order was not final because resume litigation would not undermine the
“there was more for the District Court to finality of the order of dismissal.
do.” Maj. Op. 9. The majority elaborates:
For these reasons, I believe that the
majority’s analysis is incorrect, that the
District Court dismissed this case long
[T]he parties had to
ago, and that Penn West’s motion to
continue their litigation in
restore the case to the active docket was
both the District Court and
properly denied. The majority’s decision
the Bankruptcy Court to
is unfair to Penn West’s adversaries, and I
determine: (1) whether they
have some concern about the effect of this
had indeed “settled” their
decision on other cases. The majority
case in July 1999, and (2)(a)
notes that there may be other “cases in our
if so, the terms of that
Circuit in which the last order docketed is
settlement and whether to
an administrative closing order” and that
approve it, or (b) if not, how
“[it] is indeed possible that, as a
to achieve a resolution of
consequence of our holding that the
their ongoing dispute.
administrative closing order in our case
has no legal significance beyond removing
20
the case from the District Court’s docket,
litigants will return to the courts to re-open
their administratively closed cases.” Maj.
Op. 13-14. I see no justification for
creating this danger.
21