Rezzonico v. H&R Block

Decision Date01 August 1998
Docket NumberDocket No. 98-7060
Citation182 F.3d 144
Parties(2nd Cir. 1999) JOHN REZZONICO and JACQUELYN REZZONICO, Defendant-Plaintiff-Counterclaim-Defendant-Appellant, v. H & R BLOCK, INC. and H & R BLOCK EASTERN TAX SERVICES, INC., Defendant-Counterclaim-Plaintiff-Appellee, HRB ROYALTY, INC., Add as party from consolidated case, Plaintiff
CourtU.S. Court of Appeals — Second Circuit

NORMAN A. OLCH, New York, New York, for Appellants.

PETER J. KLARFELD, Wiley, Rein & Fielding, Washington, D.C., for Appellees.

Before: KEARSE, CARDAMONE, and POOLER, Circuit Judges

CARDAMONE, Circuit Judge:

We must decide two preliminary questions that will determine whether we reach the merits of this appeal: first, whether we may properly reconsider a decision of a motions panel denying defendant's motion to dismiss the appeal for lack of appellate jurisdiction; second, whether upon reconsidering the subject of our jurisdiction we must dismiss this appeal as untimely. We answer both of these questions in the affirmative. Also before us is whether "unique circumstances" exist that will excuse an otherwise untimely appeal. We answer this question in the negative because we are not persuaded that the elements of the "unique circumstances" test are met; that is, specific assurances, with respect to an act effectively postponing the filing deadline for taking an appeal, were not given by a judicial officer. Hence, while the merits of the appeal present an engaging question of contract interpretation in the face of new computer technology, we do not reach that issue.

Plaintiffs John and Jacquelyn Rezzonico (plaintiffs or appellants) appeal from a judgment entered November 26, 1997 in the United States District Court for the District of Vermont (Murtha, C.J.), granting H&R Block, Inc., H&R Block Eastern Tax Services, Inc., and HRB Royalty, Inc.'s (collectively, Block or defendant) motion for summary judgment. On March 24, 1998 a motions panel of this Court denied Block's motion to dismiss the appeal as untimely. Subsequently, the present merits panel heard the appeal. We conclude that because plaintiffs did not file their appeal in a timely fashion we lack jurisdiction to hear it. It must therefore be dismissed.

BACKGROUND

Plaintiffs had franchise contracts with Block to operate three H&R Block tax return preparation offices, one in New Hampshire and two in Vermont. In January 1994 defendant terminated those agreements for alleged underpayment of royalties and other breaches of contract. The following month, plaintiffs responded by filing suit against defendant in state court, asserting claims for breach of contract and bad faith, and seeking declaratory relief under the terms of their franchise agreements. Block removed the action to the United States District Court for the District of Vermont and asserted counterclaims for fraud and breach of contract and sought declaratory relief. In a separate action, HRB Royalty, Inc., the owner of the H&R Block service mark, sued the Rezzonicos for service mark infringement and unfair competition. HRB Royalty's action was consolidated with the action filed by the Rezzonicos. The underlying dispute in the consolidated actions involved, inter alia, whether the terms "preparation of income tax returns" and "related services," upon which plaintiffs were required to pay royalties to defendant, included the electronic filing of tax returns, a system of filing made possible by new technology that was introduced after the parties entered into the subject franchise agreements.

In March 1996 Block moved for summary judgment with respect to all claims and counterclaims asserted in the consolidated actions. A year later the district court by order dated March 21, 1997 adopted the report and recommendation of a magistrate judge and granted defendants' motion. In May 1997 it held an evidentiary hearing to determine the appropriate relief, and on November 20, 1997 issued an order for entry of final judgment, awarding defendants' monetary, injunctive and declaratory relief, and dismissing all of plaintiffs' claims with prejudice. The memorandum and order provided, in part

Upon review, the Court finds Block is entitled to an additional award of $237,324. Under the contracts at issue, the Rezzonicos are not entitled to take advantage of the discount royalty rate otherwise afforded franchisees who are not in breach of their franchise agreement. (emphasis added)

On November 26, 1997 judgment was entered, mistakenly omitting the word "not" from the emphasized portion, and copies were served on the parties. Along with the judgment the parties were sent, pursuant to Fed. R. Civ. P. 77(d), a form signed by a deputy clerk, entitled "Notice to Litigants," which stated that "the Judgment or Order" had been filed and entered on the docket on November 26, 1997 and that a notice of appeal must be filed on or before December 29, 1997.

On December 1, 1997 the clerk of the district court entered an amended judgment, adding the mistakenly omitted word "not" to the referenced sentence. The docket entry relating to the amended judgment states that the purpose of the amendment was "to correct [a] clerical error." Copies of the amended judgment were sent to the parties with another Rule 77(d) "Notice to Litigants," this time stating that the judgment was filed and entered on December 1, 1997 and that a notice of appeal must be filed on or before December 30, 1997.

On December 15, 1997 appellants filed with the district court a "Motion for Reconsideration" and a "Motion for New Trial" pursuant to Fed. R. Civ. P. 59. Both motions were denied by orders entered on December 17, 1997. In denying the motion for reconsideration, the trial court stated that "[b]ecause plaintiffs primarily seek reconsideration of issues determined months ago on summary judgment, the motion to reconsider is DENIED as untimely." The district court endorsed the motion for a new trial "DENIED."

On January 13, 1998 plaintiffs filed a notice of appeal. Defendant then filed a motion seeking to dismiss the appeal for lack of appellate jurisdiction. A motions panel of this Court denied the motion to dismiss on March 24, 1998.

DISCUSSION
I Decision of Motions Panel

Appellants aver in their brief that application of the law of the case doctrine bars us from reconsidering the question of appellate jurisdiction because it was previously considered and decided by the motions panel, which denied Block's motion to dismiss the appeal. Law of the case and res judicata are closely related legal concepts both resting on policy considerations favoring putting an end to litigation, saving judicial time, and bringing certainty to legal relations. See Commissioner v. Sunnen, 333 U.S. 591, 597 (1948). Since we deal on this appeal with the former legal concept, it is helpful to distinguish the latter.

After a final judgment on the merits rendered by a court of competent jurisdiction, res judicata bars subsequent litigation between the same parties and those in privity with them involving the same cause of action. See Anaconda-Ericsson Inc. v. Hessen (In re Teltronics Servs., Inc.), 762 F.2d 185, 190 (2d Cir. 1985). If subsequent litigation arises from the same cause of action, both those matters actually offered to sustain the claim and those that might have been offered in the prior action are barred from being relitigated; that is, there is claim preclusion. See id.

If subsequent litigation arises from a different cause of action, the prior judgment bars only those matters or issues common to both actions that were expressly or by necessary implication adjudicated in the prior litigation. This prong of res judicata is referred to as issue preclusion. The Supreme Court has stated that issue preclusion means that when an issue has been determined by a valid and final judgment, that issue cannot again be litigated between the same parties in any future lawsuit. See Schiro v. Farley, 510 U.S. 222, 232 (1994).

The doctrine of law of the case is similar to the issue preclusion prong of res judicata in that it limits relitigation of an issue once it has been decided. However, law of the case is concerned with the extent to which law applied in a decision at one stage of litigation becomes the governing principle in later stages of the same litigation. Res judicata does not speak to direct attacks in the same case, but rather has application in subsequent actions.

Questions regarding application of law of the case arise when a party directly attacks a decision by attempting to have it corrected, annulled, reversed, vacated or declared void by the court that made it. "As most commonly defined, the doctrine [of law of the case] posits that when a court decides upon a rule of law, that decision should [generally] continue to govern the same issues in subsequent stages in the same case." Arizona v. California, 460 U.S. 605, 618 (1983); see also 18 Charles Alan Wright et al., Federal Practice and Procedure §4478, at 788-89 (1981). Application of the law of the case doctrine varies depending upon the context. Although rulings of the district court are subject to revision by that court "at any time before the entry of final judgment," Fed. R. Civ. P. 54(b); accord Cullen v. Margiotta, 811 F.2d 698, 708 (2d Cir. 1987), overruled on other grounds Agency Holding Corp. v. Malley-Duff & Assocs., Inc., 483 U.S. 143 (1987), under law of the case a trial court cannot reconsider on remand an issue decided by an appellate court, see Insurance Group Comm. v. Denver & Rio Grande W. R.R., 329 U.S. 607, 612 ...

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