Hibernia Nat. Bank v. Administracion Cent. Sociedad Anonima

• Decision Date: 20 November 1985
• Docket Number: No. 85-3078,85-3078
• Citation: 776 F.2d 1277
• Parties: HIBERNIA NATIONAL BANK, Plaintiff-Appellee, v. ADMINISTRACION CENTRAL SOCIEDAD ANONIMA, et al., Defendants, Jorge Raoul Garcia Granados de Garay, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1277

776 F.2d 1277

3 Fed.R.Serv.3d 1017

HIBERNIA NATIONAL BANK, Plaintiff-Appellee, v. ADMINISTRACION CENTRAL SOCIEDAD ANONIMA, et al., Defendants, Jorge Raoul Garcia Granados de Garay, Defendant-Appellant.

No. 85-3078.

United States Court of Appeals, Fifth Circuit.

Nov. 20, 1985.

James F. Willeford, New Orleans, La., John A. Field, III, Alexandria, Va., for defendant-appellant.

T. Allen Usry, John F. Weeks, II, Metairie, La., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before CLARK, Chief Judge, BROWN, and GEE, Circuit Judges.

OPINION

CLARK, Chief Judge:

Jorge Raoul Garcia Granados de Garay (Granados) appeals from a summary judgment granted in favor of Hibernia National Bank (Hibernia) on Hibernia's claim based on an instrument executed by Administracion Central Sociedad Anonima and endorsed by Granados as guarantor. Granados contends that the district court abused its discretion in refusing to set aside the summary judgment and consider appellant's untimely filed response to Hibernia's summary judgment motion. We agree and reverse.

I

On June 30, 1983, Hibernia filed a debt action in a Louisiana state court against Granados, who subsequently removed the case to the United States District Court for the Eastern District of Louisiana based on diversity of citizenship and the requisite jurisdictional amount. See 28 U.S.C. Sec. 1332, 1441, 1446.

A pretrial conference was held on September 26, 1984, at which time the district judge fixed a trial date of January 28, 1985. At this conference Granados was represented only by John A. Field, III, a member of the Virginia State Bar. James F. Willeford, local counsel for Granados, was absent. During the conference the district judge reminded Field that, under local rules, it would be necessary for him to file a motion to be admitted pro hoc vice and for local counsel to participate responsibly in the case.

On December 20, 1984, Hibernia filed a motion for summary judgment against Granados. Field received the motion in the late afternoon of December 21, 1984. The date set for hearing the motion was January 9, 1985. Field apparently was unaware of Local Rule 3.7, which requires oppositions to motions to be filed 8 days before the hearing date and believed that the deadline for filing a response to the motion was the day prior to the hearing date, i.e., January 8, as provided by Fed.R.Civ.P. 56(c). Field prepared responsive pleadings from December 26 to December 28 and then sent them to his client for execution with instructions to forward them to Willeford for filing.

On January 2, 1985, Field received a letter from the district judge informing him that responsive pleadings to Hibernia's motion for summary judgment were due on January 1 by 5:00 p.m. Field then called the chambers of the district judge and told a law clerk that circumstances had made it impossible to file a timely response, but that he would file an unexecuted copy of the pleadings as soon as possible and that he would seek leave of the court and opposing counsel to file a response out of time. Field spoke with opposing counsel, who agreed to late receipt of the papers, so long as they were received by January 4.

On January 4, the district court granted Hibernia's motion for summary judgment. Later the same day Willeford filed a motion for leave to file a response out of time and an unexecuted copy of Granados's declaration and other documents. He also filed a motion to admit Field as counsel pro hoc vice.

In his minute entry of January 7, the district judge granted the motion to admit Field. However, he denied the motion to file a response out of time. In doing so, the judge noted that he had spoken with counsel for Hibernia, who had objected to late filing of a response. He also noted that neither local counsel nor appellant had signed the responsive pleadings offered. Although the judge had been informed by Field that signed pleadings would be available shortly, he indicated that the pleadings did not meet the form required by 28 U.S.C. Sec. 1746.

On January 11, 1985, Granados filed a motion to set aside the summary judgment and to consider grounds of defense raised by appellant. The district court denied this motion on February 7. This appeal followed.

II

The parties disagree as to the nature of the district court's initial decision to grant Hibernia's motion for summary judgment. Granados argues that the motion was granted by default. He points to the district court's minute entry of January 4, which stated that the "motion ... is GRANTED as unopposed." The district court's decision to grant the summary judgment motion just several days after the appellant's failure to meet the deadline for response and well before the date fixed for the hearing also suggests a judgment by default.

Hibernia, on the other hand, argues that the district judge did not grant the motion by default but rather determined, based on the papers filed by appellee, that there were no genuine issues of material fact in the case. Hibernia points to the minute entry of January 7, which stated that the motion had been granted because it "appeared to be well founded" and to the minute entry of February 7, which stated that the summary judgment was "based upon the state of the record."

A motion for summary judgment cannot be granted simply because there is no opposition, even if the failure to oppose violated a local rule. John v. La. (Bd. of Trustees for State Colleges & Universities), 757 F.2d 698, 709 (5th Cir.1985). The movant has the burden of establishing the absence of a genuine issue of material fact and, unless he has done so, the court may not grant the motion, regardless of whether any response was filed. Id. at 708. Therefore, if the district judge's decision was to grant summary judgment solely because of a default, such decision constituted reversible error.

Based on the record below, we cannot say with assurance that the district judge's decision to grant summary judgment was based on the merits, rather than on Granados's default. However, we need not conclusively resolve this question because the district court abused its discretion in denying Granados's motion to set aside the summary judgment and to consider his grounds of defense. Thus, even if the district court granted summary judgment based on the merits of Hibernia's case, it erred in failing to consider the merits of Granados's defense as reflected in its belated response.

Fed.R.Civ.P. 60(b)(1) provides that "the court may relieve a party or his legal representative from a final judgment, order, or proceeding for ... mistake, inadvertence, surprise, or excusable neglect." This rule is to be liberally construed so that doubtful cases may be resolved upon the merits. Laguna Royalty Co. v. Marsh, 350 F.2d 817, 823 (5th Cir.1965). While a decision to grant or deny relief under 60(b)(1) is within the sound discretion of the trial court, see Vela v. Western Elec. Co., 709 F.2d 375, 376 (5th Cir.1983), the district court abused its discretion under the circumstances presented here.

Although this case does not involve a default judgment as such, it presents many concerns similar to those in a default judgment situation. In granting a default judgment, the court does not consider the substantive merits of the case. Here, the district judge did not consider the substantive merits of the defense Granados wished to raise. ¹ Granados's affirmative defense raised an issue distinct from the issues involved in Hibernia's case. Compare Cline v. Hoogland, 518 F.2d 776, 778-79 (8th Cir.1975) ("appellant's proposed resistance filed with the 60(b) motion fails to raise any new issue of material fact not previously considered in disposing of the motion for summary judgment"). Thus, the district judge's refusal to consider this defense presents a clear analogy to a default judgment.

In ruling on a motion to set aside a default judgment under 60(b)(1), the courts generally look at three factors: (1) the extent of prejudice to the plaintiff; (2) the merits of the defendant's asserted defense; and (3) the culpability of defendant's conduct. United Coin Meter v. Seaboard Coastline R.R., 705 F.2d 839, 845 (6th Cir.1983); Feliciano v. Reliant Tooling Co., 691 F.2d 653, 656 (3d Cir.1982).

In the present case Hibernia alleges no prejudice except that which may result from further delay in collecting its judgment. However, the mere possibility...