Buck v. U.S. Dept. of Agriculture, Farmers Home Admin.
| Decision Date | 06 April 1992 |
| Docket Number | No. 91-3597,91-3597 |
| Citation | 960 F.2d 603 |
| Parties | , 17 UCC Rep.Serv.2d 1375 Charles E. BUCK, et al., Plaintiffs-Appellants, v. U.S. DEPARTMENT OF AGRICULTURE, FARMERS HOME ADMINISTRATION, et al., Defendants-Appellees. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Randall J. Luginbuhl, Columbus, Ohio (argued and briefed), for plaintiffs-appellants.
Albert Ritcher, Office of the U.S. Atty., O. Charles Hosterman, Columbus, Ohio (argued and briefed), for defendants-appellees.
Before: KENNEDY and GUY, Circuit Judges; and LIVELY, Senior Circuit Judge.
The plaintiff Charles E. Buck 1 appeals from an order of the district court denying his motion pursuant to Fed.R.Civ.P. 60(b) to set aside the district court's previous judgment dismissing this case for lack of prosecution. No plaintiff appealed from the final judgment of dismissal, and the only question before us is whether the district court abused its discretion in denying the motion to set the judgment aside. In deciding this question, we must examine the complaint and amended complaint to determine whether these pleadings presented one or more meritorious claims. In addition, we will consider the proceedings in the district court that culminated in dismissal.
From 1980 through 1984 Charles and Carol Buck, husband and wife, applied for and received operating loans from the Farmers Home Administration (FmHA), secured by an interest in "crops, livestock, supplies, other farm products, and farm and other equipment" and real estate. FmHA perfected this interest by filing a number of financing statements in Champaign and Logan Counties, Ohio. All but one of the financing statements were later released by FmHA as the Bucks paid off portions of their debt. Because the remaining financing statement was due to lapse under Ohio law on September 5, 1985, FmHA sent the Bucks a "Request for Continuation Statement Filing Fee" on August 14, 1985. The Bucks never remitted the $5.00 filing fee, and FmHA subsequently debited the Bucks' FmHA account $5.00 on December 31, 1985.
The $5.00 was apparently intended to cover the filing cost of a continuation statement in Logan County, which was never filed. After the Bucks complained, FmHA promised to remove the charge from their account. When FmHA officials realized the 1980 financing statement had lapsed, they filed a new financing statement in Champaign County on September 2, 1986, which provided:
This financing statement is signed by secured party only and covers the collateral in which perfected security interest was previously secured by financing statement # 28597 which lapsed on 9/5/85. This collateral is listed on a Security Agreement signed by borrower on May 16, 1984 available at the Bellefontaine FmHA office.
In their original complaint, the plaintiffs charged that during the year in which the financing statement was lapsed "[t]hroughout its correspondence and implicit [in] its dealings" with the Bucks, FmHA represented that it had a perfected security interest in the collateral. They contended that the 1986 financing statement was void because it was filed under the "guise of a Continuation Statement" without notice to the Bucks or a request for their signatures, thereby constituting fraud and misrepresentation. They also charged FmHA with violations of Ohio Rev.Code Ann. § 1309 et seq., the Ohio Uniform Commercial Code. Finally, the Bucks alleged that the filing of the 1986 financing statement was "an unconstitutional encumbering of property without reason."
The original complaint was filed in an Ohio state court in August 1989 and was removed to the district court in September. The complaint named the United States Department of Agriculture, FmHA, and two FmHA officials in Ohio as defendants. The complaint sought a declaratory judgment that the 1980 financing statement had lapsed on August 25, 1985 and that the financing statement filed on September 2, 1986 was void, and an injunction to prevent the defendants from enforcing or attempting to enforce the lapsed financing statement.
Following removal, the district court permitted the plaintiffs to file an amended complaint. The amended complaint repeated the claim of the original complaint as Count I. There followed seventeen additional counts containing a litany of complaints concerning alleged actions and inactions of the defendants that caused the Bucks to suffer financial losses. In addition to the declaratory and injunctive relief prayed for in the original complaint, in the amended complaint the Bucks requested that the court declare void all loans affected by FmHA's allegedly unlawful acts and sought a refund of all amounts paid on the affected loans. Finally the Bucks sought approximately $10,000,000.00 (an aggregate of the itemized damages for each count of the amended complaint) in damages, plus attorney fees and court costs.
The magistrate judge to whom the case was referred for pretrial proceedings held a status conference on November 8, 1990. After noting that the plaintiffs had not filed the amended complaint until seven months after leave was granted and that no significant discovery had taken place, the magistrate set a probable trial date. The magistrate also found that the amended complaint did not contain "a short and plain statement" of the grounds for the court's subject matter jurisdiction as required by Fed.R.Civ.P. 8(a). Plaintiffs' counsel was ordered to file the required statement by November 15, 1990. In addition, the magistrate ordered the attorneys to file statements outlining all anticipated discovery, with scheduling orders, by November 26, 1990.
Both parties filed the required discovery documents on November 26, and the defendants also filed an answer on that date. In addition to responding to 141 paragraphs of the amended complaint, the defendants asked that it be dismissed for failure to state a claim, lack of subject matter jurisdiction, immunity of the FmHA, failure to exhaust administrative remedies, and the bar of the applicable statute of limitations.
The plaintiffs' attorney contacted counsel for the defendants and asked for an extension of time to file the required jurisdictional statement, and the defendants' attorney agreed to a ten-day extension. Plaintiffs' attorney failed to file a motion or any entry regarding this extension, and he did not file the jurisdictional statement within the extended time. On November 28, 1990, the defendants filed a motion to dismiss the action or, in the alternative, to strike the amended complaint. On December 4 the magistrate ordered the plaintiffs to show cause within ten days why the action should not be dismissed for the plaintiffs' failure to comply with the order to file the previously ordered statement of the court's jurisdiction. When the plaintiffs failed to respond to the show cause order, the district judge signed and entered an order of dismissal. The judgment dismissing the action was filed on January 7, 1991. Seven weeks later, on February 26, 1991, the plaintiffs filed a motion for relief from judgment relying on "excusable neglect" under Rule 60(b), and requested a hearing.
The plaintiffs' attorney filed an affidavit with the motion. He acknowledged that he was aware of the deadline for the jurisdictional statement, but claimed that he was unable to file an entry regarding the ten-day extension because of a sudden, severe illness. He stated that he was precluded from working "under medical order" until January 5, 1991. The affidavit also stated that the affiant had moved his office, and had never received a copy of the dismissal, but had learned of it from the defendants' attorney. The affiant claimed to have informed the court of his change of address. In the motion, the attorney stated that other affidavits would be filed, but no additional affidavits appeared.
District Judge Graham denied the Bucks' motion for relief and denied their request for an oral hearing. In his order Judge Graham found that the Bucks' argument that their counsel's failure to comply with the magistrate's orders was the result of excusable neglect or inadvertence was unpersuasive because: counsel was present at the status conference when the magistrate ordered him to submit a short jurisdictional statement; counsel never filed a motion with the court stating that he was ill and that he needed an extension of time; counsel never filed written notice informing the clerk of his address change; and the defendants' service of their "Motion to Dismiss/Strike Pleading" on the plaintiffs' attorney at his proper business address provided adequate notice that the Bucks' case was in jeopardy. The district court added that counsel's filing of the "Plaintiffs' Statement of Deposition Discovery Upon Oral Examination" eleven days after the jurisdictional statement was due indicated that he was not completely incapacitated and observed: "[i]f he was going to prepare and file a document, it should have been the jurisdictional statement, not a discovery document." The court noted that counsel had still not filed the required jurisdictional statement as of May 29, 1991 when the order denying relief from judgment was entered.
The district court then applied the three-part test adopted by this court in United Coin Meter v. Seaboard Coastline Railroad, 705 F.2d 839, 845 (6th Cir.1983) to determine whether granting the plaintiffs' Fed.R.Civ.P. 60(b) motion would be proper. The court noted that the only prejudice to the defendants if the plaintiffs' motion were granted would be a delay in the trial, a hardship that "in itself would not be sufficient to justify a denial of the motion." The court then found, however, that the dismissal of the Bucks' case resulted from culpable conduct on the part of their counsel and noted "[p]arties who choose their attorneys as their representatives must suffer the consequences of...
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