Figueroa Ruiz v. Alegria

• Decision Date: 23 February 1990
• Docket Number: No. 89-1563,89-1563
• Parties: , RICO Bus.Disp.Guide 7426 Rafael FIGUEROA RUIZ, et al., Plaintiffs, Appellants, v. Jose E. ALEGRIA, et al., Defendants, Appellees.
• Court: U.S. Court of Appeals — First Circuit

Page 645

896 F.2d 645

16 Fed.R.Serv.3d 104, RICO Bus.Disp.Guide 7426

Rafael FIGUEROA RUIZ, et al., Plaintiffs, Appellants, v. Jose E. ALEGRIA, et al., Defendants, Appellees.

No. 89-1563.

United States Court of Appeals First Circuit.

Submitted Nov. 9, 1989.

Decided Feb. 23, 1990.

Edelmiro Salas Garcia, Santurce, P.R., on brief for plaintiffs, appellants.

Roberto Boneta and Enrique Peral, Hato Rey, P.R., on brief for defendant, appellee, Chase Manhattan Bank, N.A.

Arturo J. Garcia-Sola, and McConnell Valdes Kelley Sifre Griggs & Ruiz-Suria, Hato Rey, P.R., on brief for defendant, appellee, City Federal Sav. Bank.

Benjamin Rodriguez Ramon and Rodriguez Ramon, Pena & Diaz, Hato Rey, P.R., on brief for defendant, appellee, Banco Nacional, N.A.

Ralph J. Rexach and Rexach & Pico, Santurce, P.R., on brief for defendant, appellee, Rafael Perez-Bachs.

Before BOWNES, ALDRICH and SELYA, Circuit Judges.

BOWNES, Circuit Judge.

The four stockholders of Plaza de Diego Shopping Center, Inc. ("Plaza") brought this action against various financial institutions and others following the collapse of an arrangement to finance the shopping center's expansion. Alleging that the defendants' fraudulent conduct resulted in the demise of the construction project and Plaza's ultimate bankruptcy, they sought treble damages under both the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. Sec. 1964(c), and the Bank Holding Company Act, 12 U.S.C. Sec. 1975, as well as further damages under a variety of pendent claims predicated upon Commonwealth law. Some three months after the filing of the complaint, the district court dismissed it with prejudice under Fed.R.Civ.P. 41(b) because of plaintiffs' lack of prosecution and disregard of a court order. The plaintiffs now appeal, arguing that such a drastic sanction was unwarranted under the circumstances. Except as to the disposition of the pendent claims, we find no abuse of discretion and therefore affirm.

The procedural history of this case can be summarized briefly. Plaintiffs filed their original complaint on February 8, 1989 (all dates are from that year) and an amended complaint as of right on March 6. On March 28, the district court, apparently in accordance with its practice in all civil RICO cases, issued a four-page form order calling for detailed explication of the factual underpinnings of the RICO claims. This order closed with the admonition: "Failure to timely and completely furnish all information called for in this order may result in dismissal of the RICO claim and/or other appropriate sanctions." (Emphasis in original.) Also on March 28, defendant Chase Manhattan Bank, N.A. ("Chase") moved to dismiss for failure to state a claim, and defendant City Federal Savings Bank ("City") moved for dismissal two days later for improper service of process. Plaintiffs never responded to the court order or to either motion to dismiss, nor did they seek an extension of time within which to respond. Accordingly, on April 17, the court sua sponte entered separate orders granting Chase's motion to dismiss, granting City's motion to dismiss, and independently dismissing the complaint "as to all plaintiffs for failure to answer the interrogatory" contained in the March 28 order; the court entered judgment that same day dismissing the complaint "without prejudice."

On April 26, the defendant Perez-Bachs moved to amend the judgment to provide for dismissal with prejudice, and defendant Banco Nacional, N.A. ("Nacional") sought the same relief in a motion filed on May 3. ¹ Two days later, in their first court filing since the March 6 amended complaint, the plaintiffs submitted what was captioned simply a "motion." There, after intimating that their prolonged silence was attributable to "extreme" financial pressures caused by the defendants' "outrageous" conduct, the plaintiffs indicated that they were "working very hard" to prepare a "very extensive and detailed amended complaint," which would be "in full compliance" with the March 28 order and which was "expected to be filed within the next 10 days." This motion, however, failed to respond directly to the two pending motions to amend the judgment, and the relief requested was simply that the court "take notice of what has been transpiring between the parties in this case." On May 11, six days later, the court rejected plaintiffs' motion as "evasive and superficial" and, "[b]ased upon the argument and authorities cited in" Nacional's motion, ordered that the judgment be amended to read "with prejudice." ² The amended judgment, dismissing the complaint with prejudice, was issued on May 25 and was made effective as of April 17 nunc pro tunc. Without seeking any further relief below, plaintiffs filed the instant appeal.

Rule 41(b) expressly authorizes a district court to dismiss a case with prejudice for "failure of the plaintiff to prosecute or to comply with ... any order of court...." A district court's "choice of remedy under Rule 41(b) is reviewable only for abuse of discretion," HMG Property Investors, Inc. v. Parque Industrial Rio Canas, Inc., 847 F.2d 908, 916-17 (1st Cir.1988), and claims of such abuse of discretion typically "have not received a sympathetic ear from us." Damiani v. Rhode Island Hospital, 704 F.2d 12, 17 (1st Cir.1983) (collecting cases). At the same time, this "does not mean we have rubber-stamped the decisions of the district court." Id. Dismissal with prejudice "is a harsh sanction," Richman v. General Motors Corp., 437 F.2d 196, 199 (1st Cir.1971), which runs counter to our "strong policy favoring the disposition of cases on the merits." Zavala Santiago v. Gonzalez Rivera, 553 F.2d 710, 712 (1st Cir.1977). As a result, we have indicated that such an option should be employed only when a plaintiff's misconduct has been extreme. See, e.g., Enlace Mercantil Internacional, Inc. v. Senior Industries, Inc., 848 F.2d 315, 317 (1st Cir.1988). A finding of extreme misconduct is warranted in the face of "extremely protracted inaction (measured in years), disobedience of court orders, ignorance of warnings, contumacious conduct ...," Cosme Nieves v. Deshler, 826 F.2d 1, 2 (1st Cir.1987), or some other aggravating circumstance such as "prejudice to the defendant, glaring weaknesses in the plaintiff's case, and the wasteful expenditure of a significant amount of the district court's time." Enlace Mercantil, 848 F.2d at 317 (footnotes omitted). In reviewing the trial court's actions, we consider "all pertinent circumstances," Richman, 437 F.2d at 199, in accordance with an "open-ended balancing test." HMG Property, 847 F.2d at 917 n. 13.

We are persuaded that the district court did not abuse its discretion under the circumstances in resorting to the ultimate sanction of dismissal with prejudice. The plaintiffs' misconduct here can justifiably be considered extreme. They filed an initial complaint which was artlessly drafted and conspicuously deficient. They amended it once by adding a single paragraph. They then proceeded to disappear for two months, ignoring during such time both a court order and a series of pivotal defense motions. The court order required that a statement from plaintiffs be filed within fifteen days and explicitly warned that noncompliance might result in dismissal. The plaintiffs neither complied nor requested an extension of time in which to do so. Two motions to dismiss similarly received no response. Following the court's dismissal without prejudice on April 17, plaintiffs never sought to have the judgment altered. No objections were filed to the subsequent defense motions to amend the judgment to read with prejudice. When plaintiffs finally resurfaced on May 5, they provided no explanation for their inaction other than to indicate they were under "stress." In their "motion" of that date, instead of responding to the pending motions to amend the judgment, they requested as relief simply that the court "take notice of what has been transpiring between the parties." Following the court's dismissal of the case with prejudice, plaintiffs again failed to move under Rule 59(e) to have the judgment altered. And although they had represented on May 5 that an amended complaint would be completed within ten days that would particularize their factual allegations as requested by the March 28 order, such a complaint has never materialized; plaintiffs never proffered any such complaint to the district court in conjunction with a request for postjudgment relief, nor have they appended one to their memorandum on appeal.

This pattern of behavior can reasonably be construed as an indication of "plaintiffs' lack of interest in vindicating whatever rights they might have had." Zavala Santiago, 553 F.2d at 713. The repetition involved in their inaction suggests conduct of a deliberate rather than inadvertent nature. Their disobedience of a court order containing an explicit warning that noncompliance could lead to dismissal, their repeated failure to respond to defense motions, and the absence of any reasonable explanation for such misbehavior--all are factors counseling strongly in favor of dismissal. In addition, our review of the amended complaint convinces us that plaintiffs' case suffers from "glaring weaknesses." ³ Enlace Mercantil 48 F.2d at 317. In light of such basic infirmities in the complaint, and upon consideration of plaintiffs' rather muddled May 5 motion, the district court could justifiably have concluded that affording plaintiffs an opportunity to resubmit another complaint would likely have been an exercise in futility.

Several of the relevant factors here, of course, pull in the opposite direction. The time involved was relatively short; little more than three months elapsed between the filing of the original complaint and the court order dismissing the case with prejudice. The district court had not expended a significant amount of time on the case. Little if any...