Durham v. Kelly
| Decision Date | 24 February 1987 |
| Docket Number | Nos. 86-1669,86-1670,s. 86-1669 |
| Citation | 810 F.2d 1500 |
| Parties | Blue Sky L. Rep. P 72,490, Fed. Sec. L. Rep. P 93,149, 7 Fed.R.Serv.3d 102 David F. DURHAM, Plaintiff-Appellant, v. Walter A. KELLY, Defendant, and Phillip A. Rennert, and Jay L. Anderson, Defendants-Appellees. SCHUTZKY DISTRIBUTORS, INC., Plaintiff-Appellant, v. Walter A. KELLY, Defendant, and Phillip A. Rennert; K. Duane McCleery; Judith Meyers Kelly; Jay L. Anderson; Settler's Energy Corporation; Settlers' Energy Resources, Inc.; Michael R. Marshall; Charles Lyndall Stewart; Payne County Operating Company, Defendants-Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
William J. Hooy, Concord, Cal., for plaintiff-appellant Schutzky Distributors, Inc.
Jeffrey R. Williams, San Francisco, Cal., for plaintiff-appellant David F. Durham.
Loutitia Denison Eason, Oklahoma City, Okl., for defendants-appellees Settlers Energy Corporation, Michael R. Marshall, C. Lyndell Stewart and Payne County Operating Company.
Andrew J. Ogilvie, Weston, Mass., for defendant-appellee Judith Kelly.
Appeal from the United States District Court for the Northern District of California.
Before HUG, SCHROEDER and ALARCON, Circuit Judges.
Schutzky Distributors, Inc. (hereinafter Schutzky) and David F. Durham (hereinafter Durham) appeal the district court's grant of summary judgment in favor of defendant Judith Kelly (hereinafter Kelly). Schutzky also appeals from the dismissal of pendent state claims against Settlers Energy Corporation, Payne County Operating Company, Michael R. Marshall, and Charles Lyndall Stewart (hereinafter referred to collectively as the Settlers).
This dispute arises from the sale in 1981 of oil and gas partnership interests by Earth Energy Resources, Inc. (hereinafter EER), an Oklahoma corporation, to Durham and to BCOM, the assignor and wholly owned subsidiary of Schutzky.
In 1982, the Settlers bought all of EER's outstanding stock and assumed operation and control of the drilling project.
On March 14, 1984, Schutzky filed claims for securities fraud violations against various defendants including the Settlers, Kelly, and Kelly's husband, Walter A. Kelly, who was president of EER. On May 14, 1984, Schutzky filed a first amended complaint. On June 28, 1984, Durham brought an action for securities fraud violations against various defendants including Kelly and her husband, Walter A. Kelly. These actions were consolidated in the district court for all purposes. Schutzky and Durham alleged that the named defendants defrauded them by making material misrepresentations and failing to disclose material facts in the course of selling the partnership interests in certain private drilling projects. These claims were brought under various federal and state laws. The claims against Kelly included liability as an aider and abetter under section 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. Sec. 78j(b) (1982) (hereinafter Exchange Act) and liability as a "controlling person" under section 20(a) of the Exchange Act, 15 U.S.C. Sec. 78t(a) (1982), under section 15 of the Securities Act of 1933, 15 U.S.C. Sec. 77 o (1982) (hereinafter the Securities Act), and under section 25504 of the California Corporations Code (West 1977). The complaint against the Settlers included pendent state claims.
Kelly moved for summary judgment against Durham's complaint and Schutzky's first amended complaint. The district court granted Kelly's motion for summary judgment. All proceedings against Walter A. Kelly were stayed when he filed for voluntary bankruptcy.
The Settlers moved to dismiss Schutzky's first amended complaint under Fed.R.Civ.P. 12(b)(6) for failure to state a claim upon which relief can be granted. Dismissal was ordered on October 18, 1985. The claims asserted under the federal securities On January 8, 1986, the district court entered final judgments in each of the matters filed by Schutzky and Durham. The judgments provided that each party would bear its own costs. On January 21, 1986, Durham timely moved to amend his judgment entered on January 8, 1986, to provide that he recover costs pursuant to Fed.R.Civ.P. 54(d) and 59(e). On February 4, 1986, Durham and Schutzky filed notices of appeal. On May 14, 1986, the district court granted Durham's motion and amended the judgment to award costs to Durham. Schutzky and Durham filed no new notices of appeal after entry of the amended judgment.
law were dismissed with prejudice. The pendent state claims were dismissed without prejudice. After a three-week trial the jury rendered special verdicts awarding money damages to Schutzky and Durham against two other defendants not involved in this appeal.
The Settlers and Kelly ask us to dismiss these appeals as untimely filed. They argue that under Fed.R.App.P. 4(a)(4) the notices of appeal filed by Schutzky and Durham were ineffective because they were filed after Durham filed a motion "for an order amending the Court's judgment entered January 8, 1986, to award plaintiff David Durham his taxable costs of suit incurred herein." Durham's motion provided that it was "based upon Rule 54(d) and 59(e), Federal Rules of Civil Procedure...." Rule 4(a)(4) provides that "[a] notice of appeal filed before the disposition of any ... motion [under Rule 59 to alter or amend the judgment] shall have no effect." Appellees contend that since no further notice of appeal was filed in this matter, this court has no jurisdiction to consider these appeals.
Before we can reach the merits of the appellants' contentions, we must decide whether a motion to amend a judgment to award costs comes within Rule 4(a)(4)'s prohibition against premature appeals filed during the pendency of a Rule 59(e) motion to alter or amend a judgment. We have not been called upon previously to address this issue. The Eleventh Circuit has ruled upon this question in Lucas v. Florida Power & Light Co., 729 F.2d 1300 (11th Cir.1984). In Lucas, after judgment was entered on October 31, 1983, appellants filed on November 10, 1983, a motion pursuant to Rule 59(e), "to alter or amend the final judgment with respect to the allocation of costs." Id. at 1300. Ten days later, on November 20, 1983, appellants filed a notice of appeal. No further notice of appeal was filed by the appellants in Lucas. Id. The appellees in Lucas moved to dismiss the appeal on the ground that the notice of appeal was untimely because it was not filed after the district court's determination of the motion to alter or amend the judgment. Id. at 1301.
The Eleventh Circuit held in Lucas that "[a] motion respecting costs is not a motion to alter or amend a judgment under Rule 59." Id. The court reasoned that a motion to alter or amend a judgment under Rule 59 "applies to motions for reconsideration of matters encompassed in a decision on the merits of the dispute, and not matters collateral to the merits." Id. The Lucas court concluded that a motion for costs does not relate to a substantive issue "but relates exclusively to the collateral question of what is due because of the judgment." Id. The Eleventh Circuit relied on White v. New Hampshire, 455 U.S. 445, 450-56, 102 S.Ct. 1162, 1165-68, 71 L.Ed.2d 325 (1982) in support of this conclusion. Lucas, 729 F.2d at 1301. In White, the Supreme Court held that Rule 59(e) applies "only to support reconsideration of matters properly encompassed in a decision on the merits." 455 U.S. at 451. In Miller v. Transamerican Press, Inc., 709 F.2d 524 (9th Cir.1983), we stated that the words "alter or amend" in Rule 59(e) apply to "a substantive change of mind by the court." Id. at 527 (emphasis added) (citing White v. New Hampshire Dep't of Employment Security, 455 U.S. at 450-51, 102 S.Ct. at 1165-68). In Miller, we held that an amendment to correct clerical errors or omissions did not come within Rule 59(e). 709 F.2d at 527. We are persuaded by the analysis in Lucas. We adopt as the law of this circuit the rule that a motion to alter or amend a judgment to award costs does not come within Rule 59(e). Accordingly, the provisions of Rule 4(a)(4) which render ineffective a notice of appeal filed during the pendency of a motion to alter or amend a judgment are inapplicable with respect to a request for reconsideration concerning costs.
The fact that appellants labelled their motion as a Rule 59(e) motion is not dispositive. In Miller v. Transamerican Press, Inc., we stated: 709 F.2d at 527.
Thus, we are free to construe Durham's motion as a request for an allocation for costs and ignore the label he erroneously attached to it. Because Durham's request for a reconsideration of the order regarding costs was collateral to the judgment awarding damages on his claim, appellants were not required to file new notices of appeal. We have jurisdiction over these appeals.
Schutzky and Durham contend that the district court erred in granting Kelly's motion for summary judgment because genuine issues of material fact exist concerning Kelly's liability as an aider and abetter under section 10(b) of the Exchange Act, 15 U.S.C. Sec. 78j(b), and as a "controlling person" under section 20(a) of the Exchange Act, 15 U.S.C. Sec. 78t(a), under section 15 of the Securities Act, 15 U.S.C. Sec. 77o, and under section 25504 of the California Corporations Code.
An order granting summary judgment is reviewed de novo. Lopez v. Dean Witter Reynolds, Inc., 805 F.2d 880, 883 (9th Cir.1986). We must determine whether the district court properly found that there...
To continue reading
Request your trial
-
In re Worldcom, Inc.
...have exerted actual control and have been a culpable participant in the alleged Securities Act violations") (citing Durham v. Kelly, 810 F.2d 1500, 1503-04 (9th Cir.1987)); Rubke v. Capitol Bancorp Ltd., 460 F.Supp.2d 1124, 1134 (N.D.Cal.2006) ("To state a claim for control person liability......
-
Baker, Watts & Co. v. Miles & Stockbridge
...176 a person, whether through ownership of voting securities, by contract, or otherwise. 17 C.F.R. § 230.405 (1992). In Durham v. Kelly, 810 F.2d 1500 (9th Cir.1987), the Ninth Circuit reviewed its previous decisions that set forth the test to determine if a party was a "controlling To esta......
-
Danner v. Himmelfarb
...218 (1966), it is our practice to dismiss state law claims once the federal claim has been resolved. See, e.g., Durham v. Kelly, 810 F.2d 1500, 1506 (9th Cir.1987) ("Where the district court has properly dismissed federal law claims 'pendent state claims also should be dismissed.' " (citing......
-
Rubke v. Capitol Bancorp Ltd.
...culpable participants in the company's alleged illegal activity, and 3) that the company violated the federal securities laws. Durham v. Kelly, 810 F.2d at 1503-04; see also Howard v. Everex Sys., Inc., 228 F.3d 1057, 1065 (9th 4. The Private Securities Litigation Reform Act The Private Sec......