Autorama Corp. v. Stewart, 84-2637

• Decision Date: 07 October 1986
• Docket Number: No. 84-2637,84-2637
• Citation: 802 F.2d 1284
• Parties: AUTORAMA CORPORATION, an Oklahoma Corporation and Ronald I. Swanson, an individual, Plaintiffs-Appellees, v. Joette D. STEWART, as Personal Representative of the Estate of Laurel A. Stewart, Deceased; Harold P. Theilig, an individual, and Estee Oil & Gas Company, Inc., an Oklahoma Corporation, Defendants-Appellants.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1284

802 F.2d 1284

6 Fed.R.Serv.3d 105

AUTORAMA CORPORATION, an Oklahoma Corporation and Ronald I.

Swanson, an individual, Plaintiffs-Appellees, v. Joette D. STEWART, as Personal Representative of the Estate

of Laurel A. Stewart, Deceased; Harold P. Theilig, an

individual, and Estee Oil & Gas Company, Inc., an Oklahoma

Corporation, Defendants-Appellants.

No. 84-2637.

United States Court of Appeals, Tenth Circuit.

Oct. 7, 1986.

James A. Hogue, Sr., of Hogue and Ross, Inc., Tulsa, Okl., for plaintiffs-appellees.

Robert F. Waters, Dickey & Dickey, Oklahoma City, Okl., for defendants-appellants.

Before BARRETT and MOORE, Circuit Judges, and CHILSON, District Judge. ^*

CHILSON, District Judge.

After examining the briefs and the appellate record, this three-judge panel has determined unanimously that oral argument would not be of material assistance in the determination of this appeal. FED.R.APP.P. 34(a), Tenth Circuit Rule 10(e). The cause is therefore ordered submitted without oral argument.

On June 7, 1983, appellees, Autorama Corporation and Ronald I. Swanson, as plaintiffs, filed a complaint in the United States District Court for the Northern District of Oklahoma, premised upon federal question jurisdiction. The plaintiffs alleged that in certain transactions with the defendants (appellants), the latter violated the Federal Securities Acts of 1933 and 1934. 15 U.S.C. Secs. 77a, et seq., 78a, et seq. Plaintiffs prayed for compensatory and exemplary damages.

The defendants filed a Motion to Dismiss for lack of federal court jurisdiction, contending (1) the transaction complained of did not involve a "security" as defined in 15 U.S.C. Sec. 77b(1); (2) consequently, the transaction was not subject to federal statutes; and (3) therefore, no federal question jurisdiction existed. It is admitted that all parties are residents of Oklahoma and diversity jurisdiction did not exist.

The plaintiffs did not respond to the defendants' Motion to Dismiss for lack of jurisdiction. Local Rule 14(a) of the Federal District Court for the Northern District of Oklahoma provides that memoranda in opposition to defendants' Motion to Dismiss must be filed within ten days after the filing of the original motion. The Rule further provides that noncompliance therewith constitutes a waiver of objections to the motion and a confession of the matters raised by such pleadings. Accordingly, the trial court, on May 10, 1984, dismissed the action "in all respects" for "lack of jurisdiction." Plaintiffs did not appeal the trial court's dismissal.

Subsequent to the trial court's May 10 Order dismissing the complaint, the defendants filed several motions to enlarge the time to file motions for attorneys' fees and costs. On June 29, 1984, defendants filed a motion for attorneys' fees and costs. Thereafter, on July 16, 1984, the trial court specifically denied the motion and held "[i]n the Court's sound discretion and after a review of the entire record herein, the Court finds that justice requires each side should bear its own expenses." On July 26, 1984, the appellants filed a timely Motion to Reconsider the above denial. The trial court denied the Motion to Reconsider in its Order of November 8, 1984. On

November 23, 1984, the appellants filed their Notice of Appeal to this Court from the trial court's denial of appellants' motion for attorneys' fees and costs.

QUESTIONS PRESENTED FOR APPEAL

I. WAS APPELLANTS' APPEAL TIMELY FILED?

Federal Rule of Appellate Procedure 4(a) provides that the appellant must file a Notice of Appeal "within thirty (30) days of the date of the entry of the judgment or order appealed from...." (emphasis added). It is the appellees' contention, that because appellants did not file their appeal within 30 days of the May 10 Order, the appeal was not timely and this Court is without jurisdiction. We disagree.

Appellees arrive at their erroneous conclusion in total disregard of the above judicial proceedings which transpired after the entry of the Order of May 10. The appellants' Notice of Appeal clearly states that appellants were appealing "from the Order Denying said defendants' Motion to Reconsider entered in this action on the 8th day of November, 1984", as opposed to the May 10 Order dismissing the appellee's complaint.

This case is governed by the principles espoused in White v. New Hampshire Dept. of Employment Sec., 455 U.S. 445, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982). The Supreme Court held that the question of attorneys' fees was separable from the merits of the case. Because of this "separability", the plaintiff in White was permitted to file a Motion for Attorneys' Fees four and one-half months after the entry of final judgment. White, 455 U.S. at 453, 102 S.Ct. at 1167. The Court held a request for attorneys' fees is not a "motion to alter or amend the judgment" which is subject to the 10-day filing limitation delineated by Federal Rules of Civil Procedure 59(e). White, 455 U.S. at 452-53, 102 S.Ct. at 1166-67. Therefore, because courts view attorneys' fees as collateral to the merits of the original case, a Motion for Attorneys' Fees is not in any way linked to the time for an appeal of the underlying case. As a result, an appeal from the attorneys' fee determination will not be barred solely because the 30-day time limit as delineated in FED.R.APP.P. 4(a) has expired. Cooper v. Singer, 689 F.2d 929, 930 (10th Cir.1982).

Nevertheless, controlling local rules, if any, must be complied with. Local Rule 6(e) of the Northern District of Oklahoma, provides the party recovering costs shall have 10 days after the entry of judgment to file with the Clerk a verified bill of costs. Within this time period, appellants filed a motion to enlarge the time for filing a request for attorneys' fees. Such motion was granted after which appellants filed and were granted two additional extensions of time to file their motion for attorneys' fees and costs. Appellants filed a timely verified bill of costs and attorneys' fees on June 29.

On July 16, 1984, the trial court denied the defendants' June 29 Motion for Attorneys' Fees. Within ten days thereof, or on July 26, 1984, the defendants filed a Motion to Reconsider the Order of July 16, 1984. This Motion to Reconsider is treated as a FED.R.CIV.P. 59(e) motion and acts to toll the running of the 30 days from the entry of the July 16, Order. "Any motion that draws into question the correctness of the judgment is functionally a motion under Civil Rule 59(e), whatever its label. Thus, a motion to 'reconsider' ... is a motion under Rule 59(e) and under Rule 4(a)(4) will postpone the time for appeal if the motion was timely made." 9 Moore's Federal Practice, p 204.12(1), at 4-67 (2d ed.); see Cooper, 689 F.2d at 930; Jones v. Nelson, 484 F.2d 1165, 1167-68 (10th Cir.1973).

Appellants' Motion to Reconsider was timely made since filed within ten days of the July 16 Order as required by FED.R.CIV.P. 59(e). "A timely Rule 59(e) motion tolls the time for appeal until the district court rules on the motion...." Vreeken v. Davis, 718 F.2d 343, 346 (10th Cir.1983). Consequently, the 30-day time limit prescribed by FED.R.APP.P. 4 did not begin

to run until the district court rendered its decision denying the Motion to Reconsider on November 8, 1984. Therefore, appellants had thirty days forward from November 8, 1984, to file their Notice of Appeal. The appellants filed their Notice of Appeal on November 23, well within the time limitations of FED.R.APP.P. 4. We hold the appeal was timely filed.

II. ARE APPELLANTS ENTITLED TO ATTORNEYS' FEES AND COSTS?

Under the "American Rule", the prevailing litigant is not entitled to collect reasonable attorneys' fees from the loser. Ruckelshaus v. Sierra Club, 463 U.S. 680, 685, 103 S.Ct. 3274, 3277, 77 L.Ed.2d 938 (1973). It is the appellants' contention that (1) the underlying action was decided on the merits and (2) the plaintiffs brought the case frivolously and in bad faith; consequently, they should be entitled to an award of their attorneys' fees under the bad faith exception to the American Rule. However, the Tenth Circuit has adopted a two pronged test which must have both legs satisfied before attorneys' fees can be properly awarded. "To be sure, to collect attorneys' fees against a plaintiff, the defendant must not only prevail on the merits, but show plaintiff pursued the litigation in bad faith or brought a frivolous, unreasonable, or groundless action." Glass v. Pfeffer, 657 F.2d 252, 255 (10th Cir.1981); Can-Am Petroleum v. Beck, 331 F.2d 371, 374 (10th Cir.1964).

An involuntary dismissal is with prejudice and on the merits, unless the court order "specifies otherwise" or if there is "a dismissal for lack of jurisdiction...." FED.R.CIV.P. 41(b); 9 C. Wright & A. Miller Federal Practice and Procedure, Sec. 2373 at 234-35 (1971). The trial court Orders, docketed on May 10 and July 16, clearly specified "otherwise." The Order of July 16 stipulated that its earlier May 10 Order was not to infer that a decision on the merits had been reached. Moreover, the July 16 Order stated that the dismissal was pursuant to local Rule 14(a) which is designed only to regulate the Court's docket and "not to adjudicate the merits of the controversy." After exhaustive research, this Court has neither been supplied with, nor discovered, authority indicating the scope of local Rule 14(a) is otherwise. Hence, a decision on the merits clearly has not been rendered.

Furthermore, in accordance with FED.R.CIV.P. 41(b)., the Tenth Circuit has held that "[i]t is fundamental, of course, that a dismissal for lack of jurisdiction is not an adjudication on the merits...." Martinez v. Richardson, 472 F.2d 1121, 1126 (10th Cir.1973); see Costello v. United States, 365 U.S. 265, 284-88, 81 S.Ct. 534, 544-46, 5 L.Ed.2d 551 (1961). In the case at bar, the action was dismissed "for lack of jurisdiction", as recited by the Order of May 10; thus, by...