Cyrak v. Lemon
| Decision Date | 17 December 1990 |
| Docket Number | No. 89-1571,89-1571 |
| Citation | 919 F.2d 320 |
| Parties | Fed. Sec. L. Rep. P 95,707, 18 Fed.R.Serv.3d 1080 Mel CYRAK, as Trustee for Steve King, and L.M. Smith, Plaintiffs-Appellees, v. Stan LEMON, Ray Kramer, and R.H. Weber, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Fifth Circuit |
Allen Landerman, Landerman, Dunlap & Jacobs, Dallas, Tex., for Lemon.
R.H. Weber, Boston, Mass., pro se.
Ray Kramer, Dallas, Tex., pro se.
Steve King, Dallas, Tex., pro se.
L.M. Smith, Garland, Tex., pro se.
Appeals from the United States District Court for the Northern District of Texas.
Before JONES, DUHE and WIENER, Circuit Judges.
Defendants-Appellants R.H. Weber, Raymond Kramer, and Stanley Lemon (appellants) appeal final judgment in favor of Plaintiffs-Appellees Stephen King 1 and L.M. Smith (appellees) in their suit against the appellants and others for violations of Section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78j(b), and Rule 10 b-5 promulgated thereunder, 17 C.F.R. Sec. 240.10b-5; and Section 12(2) of the Securities Act of 1933; and for common law fraud, breach of fiduciary duty, and breach of contract. After an interlocutory default judgment was entered on January 12, 1989, against all the defendants but Weber, Kramer and Lemon, the case was tried to a jury which found for King and Smith. Final judgment in their favor was signed on February 17, 1989, and entered on February 22, 1989. Defendants Weber, Kramer and Lemon filed notices of appeal.
We find that Kramer and Lemon did not file their notices timely, so this court lacks jurisdiction and must therefore dismiss their appeals. We affirm the district court's decision as to Weber's liability but reverse its judgment for damages because the court awarded both punitive damages and damages for the Rule 10b-5 violation, a combination not sanctioned under the facts of this case and applicable law.
Final judgment in this securities fraud action was filed on February 17, 1989, and entered on February 22, 1989. On March 8, 1989, defendants Weber, Kramer, and Lemon, who had earlier filed a motion for a directed verdict, 2 filed a motion for a judgment notwithstanding the verdict and, alternatively, for a new trial. The motion indicates that it was served on March 7, 1989, which is within ten days of entry of judgment, when intermediate Saturdays and Sundays are excluded. See Fed.R.Civ.P. 6(a). The motion was, therefore, timely made pursuant to Rules 50(b) and 59(b) of the Federal Rules of Civil Procedure. The motion was denied on March 15, 1989. Consequently, April 14, 1989, was On April 14, 1989, Kramer filed a notice of appeal (No. 89-1354 in this court). On June 12, 1989, the Clerk of Court dismissed Kramer's appeal, pursuant to Local Rule 42.3, for want of prosecution. On May 15, 1989, Weber filed a motion for an extension of time within which to appeal. He filed his motion during the time which Rule 4(a)(5) of the Federal Rules of Appellate Procedure prescribes for making such a motion. The district court granted Weber's motion in an order filed on June 12, 1989, and entered on June 13, 1989, giving Weber ten days following that date to file a notice of appeal. See Fed.R.App.P. 4(a)(5). On June 22, 1989, Weber complied by filing a notice of appeal (No. 89-1571 in this court). On June 29, 1989, Kramer and Lemon filed notices of appeal.
the final day for filing a timely notice of appeal. See Fed.R.App.P. 4(a)(4).
Kramer and Lemon filed their notices of appeals more than 30 days after the date of entry of judgment. 3 They argue that their appeals are nevertheless timely pursuant to Federal Rule of Appellate Procedure 4(a)(3) because they filed notice within 14 days after the filing of Weber's notice of appeal. Rule 4(a)(3) provides:
If a timely notice of appeal is filed by a party, any other party may file a notice of appeal within 14 days after the date on which the first notice of appeal was filed, or within the time otherwise prescribed by this Rule 4(a), whichever period last expires.
Kramer and Lemon argue that the "first notice of appeal" filed was Weber's on June 22, 1989, and not Kramer's on April 14, 1989.
This court strictly applies the language of Rule 4(a)(3). In Welch v. Elevating Boats, Inc., 698 F.2d 230 (5th Cir.1983), we held a cross-appeal untimely because it was filed 16 days instead of 14 days after the appellant had filed its notice of appeal (and more than 30 days after final judgment). Because Rule 4(a)(3) requires a party to file a notice of appeal "within 14 days after the date on which the first notice of appeal was filed," (emphasis added) and not after service of notice upon that party, we rejected the cross-appellant's argument that Fed.R.App.P. 26(c) granted him three extra days in which to file his appeal. 4 Id.
Other circuits too have strictly applied the language of Rule 4(a)(3). In a case in which three notices of appeal were filed, the third circuit rejected as untimely a cross-appeal filed 35 days after the original order and 18 days after the first notice of appeal was filed. IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc., 788 F.2d 118, 122 (3rd Cir.1986). In IUE one party timely filed its appeal, and two cross-appeals followed. Id. One cross-appellant timely filed notice 13 days after the first notice was filed. The court dismissed the other cross-appellant's appeal because that cross-appellant had filed notice after expiration of both the 30-day period following final judgment for filing notice of appeal and the 14-day period for filing cross-appeals. Id. at 122.
Likewise, in a case in which both of those periods had expired by the time one cross-appellant filed notice of appeal, the tenth circuit rejected its notice as untimely. Savage v. Cache Valley Dairy Ass'n, 737 F.2d 887 (10th Cir.1984). The other cross-appellant had filed notice after the fourteen-day period for filing cross-appeals had expired but before the thirty-day period after final judgment had expired. Id. at 888. Its notice of appeal was, therefore, timely. Id.
Strictly applying the language of Rule 4(a)(3) in the instant case, we find that "the first notice of appeal" was filed on April 14, 1989, the last day of the thirty-day period after entry of judgment. Kramer filed that first notice, but his appeal was We also must reject Kramer and Lemon's argument that the district court's grant of Weber's motion to extend time in which to file notice of appeal inures to their benefit. The district court determined only that Weber had shown "good cause" to justify the court's extending him the time to file. 5 Weber's motion and the order granting the extension refer only to his reasons for being late. Furthermore, neither Kramer nor Lemon ever addressed a motion to the district court claiming that excusable neglect or good cause justified their receiving an extension of time in which to file notice of appeal; and this court cannot extend the time in which to file a notice of appeal. Fed.R.App.P. 26(b); see also Savage, 737 F.2d at 889; Wyzik v. Employee Benefit Plan, 663 F.2d 348 (1st Cir.1981).
later dismissed for want of prosecution. If Lemon wished to file a notice of appeal, he had fourteen days from the date of Kramer's filing in which to do so. See Fed.R.App.P. 4(a)(3). Despite having an extra fourteen days during which to consider an appeal, Lemon chose not to appeal. Consequently, we must dismiss his appeal for failure to file his notice timely.
In response to special interrogatories, 6 the jury awarded King and Smith respectively $371,895 and $344,695 for their 10b-5 claims and the same amounts for their 12(2) claims. It awarded King and Smith respectively $328,142 and $304,142 for their contract claims. For their common law fraud claims against Weber, the jury awarded King $144,857 and Smith $135,257. 7 For their breach of fiduciary duty claims against Weber, the jury again awarded King $144,857 and Smith $135,257. 8 Against Weber the jury also assessed punitive damages of $150,000 with respect to both King and Smith. 9 The district court awarded King actual damages of $371,895 from all the defendants, jointly and severally, and punitive damages from Weber of $150,000. It awarded Smith actual damages of $344,695 from all the defendants, jointly and severally, and punitive damages of $150,000.
Weber argues that because he did not participate as a seller in every security purchased by the plaintiffs, no evidence or, alternatively, insufficient evidence supports these damages. We agree that for purposes of Section 12(2) the defendants may not have been sellers of every security. The argument is unavailing, however, because the Section 12(2) definition of seller does not apply to either Section 10(b) or Rule 10b-5. Furthermore, the jury found that the same amount as compensated a Section 12(2) violation also compensated the 10b-5 violation.
The district court instructed the jury that a defendant is a section 12(2) seller
if the injury to the plaintiffs flowed directly and proximately from his actions or if he was a motivating force behind the sale. A "seller" is also one whose participation in the sale of securities is a significant or substantial factor in causing the transaction to take place.
The district court clearly erred in this definition. This court has held that to be defined a "seller," a person must fall within Section 10(b), on the other hand, does not mandate the inquiry that the definition of seller in section 12(2) requires. 11 Section 10(b) generally forbids the use of any manipulative or deceptive device "in connection with the purchase or sale of any security." See 15 U.S.C. Sec. 78j(b). Courts broadly interpret the "in connection with" requirement. Superintendent of Ins. v. Bankers Life & Casualty Co., 404 U.S. 6, 12, 92 S.Ct. 165, 169, 30 L.Ed.2d...
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