Federal Land Bank of St. Louis v. Cupples Bros., 89-1491

• Decision Date: 05 January 1990
• Docket Number: No. 89-1491,89-1491
• Citation: 889 F.2d 764
• Parties: The FEDERAL LAND BANK OF ST. LOUIS, Appellee, v. CUPPLES BROTHERS, a Partnership; Horace E. Cupples, Jr.; Jacob W. Cupples, a/k/a J.W. Cupples and Thomas E. Cupples, individually and as members of the partnership; Gracie M. Cupples; Gloria J. Cupples; Dorothy A. Cupples Gush and Milton J. Gush, her husband; Stephen D. Cupples and Sandra Cupples, his wife; Gwen C. Cupples Pospisil and Mark G. Pospisil, her husband; Linda D. Cupples; Cynthia J. Cupples and Larry C. Cupples; Horace E. Cupples III and Pamela Cupples, his wife; Forrest City Production Credit Association, a federally chartered corporation; The United States of America, acting through the Farmers Home Administration, U.S. Department of Agriculture; Richard T. Doughtie III, Trustee in Bankruptcy for Malcolm Gravette, d/b/a Mac's Flying Service; The Commissioner of Revenue for State of Arkansas; Ferry Morse Seed Co.; and Simboro Farms, a partnership, Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 764

889 F.2d 764

15 Fed.R.Serv.3d 541

The FEDERAL LAND BANK OF ST. LOUIS, Appellee, v. CUPPLES BROTHERS, a Partnership; Horace E. Cupples, Jr. Jacob W. Cupples, a/k/a J.W. Cupples and Thomas E. Cupples individually and as members of the partnership; Gracie M Cupples; Gloria J. Cupples; Dorothy A. Cupples Gush and Milton J. Gush, her husband; Stephen D. Cupples and Sandra Cupples, his wife; Gwen C. Cupples Pospisil and Mark G Pospisil, her husband; Linda D. Cupples; Cynthia J. Cupples and Larry C. Cupples; Horace E. Cupples III and Pamela Cupples, his wife; Forrest City Production Credit Association, a federally chartered corporation; The United States of America, acting through the Farmers Home Administration, U.S. Department of Agriculture; Richard T. Doughtie III, Trustee in Bankruptcy for Malcolm Gravette, d/b/a Mac's Flying Service; The Commissioner of Revenue for State of Arkansas; Ferry Morse Seed Co.; and Simboro Farms, a partnership, Appellants.

No. 89-1491.

United States Court of Appeals, Eighth Circuit.

Submitted June 14, 1989.

Decided Nov. 8, 1989.

Rehearing and Rehearing En Banc Denied Jan. 5, 1990.

Roy C. Lewellen, Marianna, Ark., for appellants.

Bill Waddell, Little Rock, Ark., for appellee.

Before ARNOLD and MAGILL, Circuit Judges, and ROSS, Senior Circuit Judge.

MAGILL, Circuit Judge.

The Cupples Brothers (Cupples), an Arkansas farming partnership, appeals from the district court's ¹ order denying its motion to restrain the sale of farmland under a foreclosure judgment entered in favor of the Federal Land Bank of St. Louis (FLB). The motion alleged that injunctive relief was needed to protect Cupples' rights under the Agricultural Credit Act of 1987 (the Act). ² The district court denied the motion, holding that (1) the Act is inapplicable to a loan that merged into a foreclosure judgment prior to the Act's effective date, and (2) the motion was untimely under Fed.R.Civ.P. 60(b). We affirm.

I.

Cupples executed promissory notes in favor of FLB in 1974. Two mortgages secured the notes. After Cupples defaulted, FLB brought a foreclosure action on February 4, 1986. The case was set for trial on two different occasions. The district court continued the first trial date to permit further motions to be filed. On the morning of the second scheduled trial, Cupples filed another motion, in which it took issue with previous orders of the district court. Although distressed by this late filing, the district court again continued the trial. The district court entered summary judgment for FLB on October 21, 1987, and a judgment and decree of foreclosure on December 29, 1987. The Act became effective on January 6, 1988. On January 28, 1988, Cupples filed a notice of appeal from the judgment, and a motion to stay the scheduled foreclosure sale was granted by the district court on April 25, 1988. This court affirmed the foreclosure judgment on January 3, 1989. Federal Land Bank of St. Louis v. Cupples Bros., 871 F.2d 1092 (8th Cir.1989) (per curiam). On February 6, 1989, FLB filed a second notice of marshal's sale, and a foreclosure sale was scheduled for March 28, 1989.

On March 16, 1989, Cupples filed a motion in the district court entitled "Motion for Temporary Restraining Order for Failure to Follow Statutory Requirements." The motion sought injunctive relief to prevent the foreclosure sale on the ground that Cupples has restructuring rights under the Act because its indebtedness to FLB is a "distressed loan." The district court denied the motion, holding that the Act is inapplicable because the loan merged into the foreclosure judgment under Arkansas law and therefore ceased to exist prior to the Act's effective date. The district court further held that Cupples' motion was untimely under Rule 60(b) because it was not made within a reasonable time. The appeal to this court followed. ³

II.

The district court found that Rule 60(b) was the only conceivable jurisdictional basis for Cupples' motion. ⁴ On appeal, Cupples states that its motion was made pursuant to subdivisions (b)(5)-(6) of Rule 60. As with all Rule 60(b) motions, motions under either of these subdivisions must be made within a reasonable time after entry of the judgment from which relief is sought, but they are not subject to the additional one-year time limit placed on motions under subdivisions (b)(1)-(3).

The district court included the time during which Cupples' appeal from the foreclosure judgment was pending in calculating how long the motion was delayed. Cupples argues that this time cannot be counted against it because the district court had no jurisdiction to entertain a Rule 60(b) motion while the appeal was pending. This is clearly incorrect.

[I]n such a situation the district court has jurisdiction to consider the motion and if it finds the motion to be without merit to enter an order denying the motion, from which order an appeal may be taken.... If, on the other hand, the district court decides that the motion should be granted, counsel for the movant should request the court of appeals to remand the case so that a proper order can be entered.

Pioneer Ins. Co. v. Gelt, 558 F.2d 1303, 1312 (8th Cir.1977). It is well established that the pendency of an appeal does not toll the one-year maximum period for filing motions under Rule 60(b)(1)-(3). See, e.g., Hancock Indus. v. Schaeffer, 811 F.2d 225, 239 (3d Cir.1987); Egger v. Phillips, 710 F.2d 292, 329 (7th Cir.), cert. denied, 464 U.S. 918, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983); Carr v. District of Columbia, 543 F.2d 917, 925-26 (D.C.Cir.1976); Transit Casualty Co. v. Security Trust Co., 441 F.2d 788, 791 (5th Cir.), cert. denied, 404 U.S. 883, 92 S.Ct. 211, 30 L.Ed.2d 164 (1971); Corn v. Guam Coral Co., 318 F.2d 622, 629 n. 13 (9th Cir.1963). The reason behind this principle is that such motions "can be made even though an appeal has been taken and is pending." Transit Casualty, 441 F.2d at 791. This reasoning applies with equal force to motions under Rule 60(b)(5)-(6), and nothing in the case law suggests otherwise. See Harris v. Union Elec. Co., 846 F.2d 482, 484-85 (8th Cir.1988) (including time during which appeal pending in calculating delay in filing of Rule 60(b)(5)-(6) motion). Accordingly, the question in this case is whether the year and eleven weeks from entry of judgment to the filing of the Cupples' motion was a reasonable time for purposes of Rule 60(b).

What constitutes a reasonable time under Rule 60(b) depends on the particular facts of the case in question. Harris, 846 F.2d at 484. Because it involves an assessment of all the attendant facts and circumstances, the district court's determination as to whether a motion was made within a reasonable time is reviewed only for abuse of discretion. Id. at 485; 7 J. Moore & J. Lucas, Moore's Federal Practice p 60.19, 148-49 (2d ed. 1987). In Harris, we declined to find that the district court abused its discretion in entertaining a Rule 60(b)(5)-(6) motion made after exhaustion of the appeals process and almost twenty-three months after judgment was entered. ⁵ Harris, however, differs from the instant case in one critical respect. There was no indication in Harris that the motion was filed for the purpose of delaying implementation of the underlying judgment. The motion sought credit for partial satisfaction of the judgment and was made "[s]imultaneously" with full payment of the judgment after the close of the appeals process. Harris, 846 F.2d at 484. By contrast, Cupples waited an additional ten weeks after the foreclosure judgment was affirmed and filed its motion only twelve days before the scheduled sale date. Cupples has not provided an adequate explanation for this delay. Moreover, other than its incorrect view of the district court's jurisdiction, Cupples has not explained its failure to bring the motion in the twelve months between the Act's effective date, when the basis for the motion arose, and affirmance of the foreclosure judgment. In finding the motion untimely, the district court concluded that Cupples "continues to file motions for the purpose of delay." The record supports this appraisal of the situation. Under these circumstances, we are not prepared to say that the district court abused its discretion in finding Cupples' Rule 60(b) motion was not made within a reasonable time.

III.

Even if Cupples' motion were deemed timely, it provides no basis for disturbing the foreclosure judgment or preventing the sale. An appeal from an order denying a Rule 60(b) motion raises for review only the propriety of the denial, not the merits of the underlying judgment. See, e.g., Mohammed v. Sullivan, 866 F.2d 258, 260 (8th Cir.1989). The denial here was proper. Under Arkansas law, the promissory notes and mortgages in favor of FLB merged into the foreclosure judgment and ceased to exist. See Steelman v. Planters Prod. Credit Ass'n, 285 Ark. 217, 685 S.W.2d 800 (1985). Because only the judgment and no loan existed as of the Act's effective date, the district court was correct in holding that Cupples has no loan restructuring rights under the Act.

The district court relied on Griffin v. Federal Land Bank of Wichita, 708 F.Supp. 313 (D.Kan.1989), in reaching this conclusion. In Griffin, a foreclosure sale took place after the Act's effective date on a judgment entered before the effective date. The court determined that "because of the merger doctrine in Kansas, once the judgment of foreclosure was entered there was no longer a distressed loan under the terms of [12 U.S.C.] Sec. 2202a(b)(3)." ⁶ Id. at 317. After a lengthy analysis of the Act's provisions and legislative history, the court held that the borrowers had no restructuring rights which were denied by the foreclosure sale. Id. at 319.

We adopt Griffin's thorough and well-reasoned analysis. The Act entitles borrowers to restructure "distressed loans" if the cost of restructuring is less than or equal to the potential cost of...