In re Cendant Corp. Prides Litigation, No. CIV. 98-2819(WHW).

• Decision Date: 07 June 2000
• Docket Number: No. CIV. 98-2819(WHW).
• Citation: 98 F.Supp.2d 602
• Parties: In re CENDANT CORPORATION PRIDES LITIGATION.
• Court: U.S. District Court — District of New Jersey

98 F.Supp.2d 602

In re CENDANT CORPORATION PRIDES LITIGATION.

No. CIV. 98-2819(WHW).

United States District Court, D. New Jersey.

June 7, 2000.

B. John Pendleton, Jr., McCarter & English, Newark, NJ, for Mellon.

Gerald Ford, Landman Corsi Ballaine & Ford, Newark, NJ, for Chase.

Carl Greenberg, Budd Larner Gross Rosenbaum Greenberg & Sade, Short Hills, NJ, for Cendant.

OPINION

WALLS, District Judge.

On October 21, 1999, this Court published an opinion which addressed late-filed and late-cured claims (collectively referred to as "late claims") filed by holders of Cendant Prides for the period ending April 15, 1998. In re Cendant Corporation Prides Litig., 189 F.R.D. 321 (D.N.J.1999) ("October Decision"). The Court determined that each late claim must be examined for "excusable neglect." On January 14, 2000, the Court finished its analysis of the late claims and issued another Order which allowed certain late claims. In re Cendant Corporation Prides Litig, slip. op. (D.N.J. Jan. 14, 2000) ("January 14 Decision"). A February 22, 2000 Order authorized distribution of rights to settling Prides plaintiffs and designated the October and January Decisions as final and appealable judgments.

Mellon Bank and Boston Safe & Trust Co. (collectively "Mellon") and The Chase Manhattan Bank ("Chase") move to modify the Court's Orders of January 14, 1999 and February 22, 2000 to approve their Prides settlement claims. Mellon moves under Federal Rules of Civil Procedure 6(b) (enlargement of court deadline for excusable neglect); 23(d) (orders entered in a class action); and 60(b) (relief from judgment due to "mistake, inadvertence, or excusable neglect"). Chase moves under Rule 60(b) and also seeks an extension of time to appeal under Federal Rule of Appellate Procedure 4(a)(5) (extension of time allowed if excusable neglect for failure to timely appeal is shown) if its 60(b) motion is denied.

Background

Mellon Bank

Mellon states that its claims were submitted on June 18, 1999. Between June 22 and August 17, 1999, the bank received four letters from Valley Forge Administrative Services (the claims administrator) requesting additional information. These requests to cure were handled by a Mellon clerk, John Anthony. Mellon did not respond. Anthony telephoned Valley Forge in January 2000 to check on the claims' status and was told that "Valley Forge was still waiting from a final ruling from the Judge" (presumably the Court's January 14, 2000 ruling). On March 23, 2000, Anthony called Valley Forge and was told the claims had been rejected by letter on August 17, 1999. Mellon now asserts that the letters sent between June 22 and August 17 were ignored by Mr. Anthony because he was mentally ill.

Mellon's states that its "neglect" of the claims is excusable because: (1) "Mellon only recently learned that its employee charged with responsibility of filing the claims was experiencing extreme psychological and emotional distress"; (2) the claims administrator should have sent Mellon more than "a few form letters"; and (3) relief will not prejudice Cendant or the class.

Chase Manhattan Bank

Chase Manhattan submits the motion on behalf of three clients: Capital Income Builder ("CIB"), Income Fund of America ("IFA"), and World Growth.

CIB Claim

Chase asserts that on June 15, 1999, it submitted proofs of claim for the three accounts. The claims included computer printouts of holdings. Valley Forge determined that the printouts did not accurately state holdings as of April 15, 1998 and sent requests to cure on July 19, 1999 which Chase asserts it did not receive. Brf. at 4 ("Chase has no record of receiving that letter"). Valley Forge also states that it sent Chase an August 17, 1999 letter which rejected the CIB claim for failure to cure. Chase asserts that this letter was never received. Valley Forge also sent, and Chase received, an August 5, 1999 letter which stated that the CIB claim was deficient. According to Chase that letter did not arrive at the Chase class action claims group, the group handling the Prides claims, until November 15, 1999.

IFA/World Growth Claims

As described, by letter dated July 15, 1999, Valley Forge requested Chase cure IFA (claim number 7807) and World Growth (8529) claims for the same reason the CIB claim was rejected — insufficient supporting information for the claims. Due to Chase's internal mail routing system, these letters did not arrive at Chase's class action claims group until July 28, 1999. At this point, Chase claims that the employee who received the requests to cure was "confused" by the requests to cure and her supervisor was out of the office. Chase responded to the requests to cure on August 12th by fax to Valley Forge.

Valley Forge, however, maintains that by letter dated August 27, 1999, Chase was advised that a reason needed to be provided for the late cures. Chase claims that this letter was misdirected because Valley Forge placed the wrong control number on IFA's account — 7808 instead of 7807. Chase also states that the letters did not include that name of Chase's contact person on the address label.

Cendant filed objections to the two claims in September 1999 because of the late cures. Cendant's submissions also recited an incorrect name for IFA, Investment Co. of Am. instead of Income Fund of Am., but the correct control number, 7807. In January, the Court rejected World Growth's claim and claim number 7807, and used the name provided by Cendant for the claim holder. The Court reasoned that "no excuse" was provided for the late cures.

By Federal Express, Lead Counsel advised Chase of the rejections on January 21, 2000, and this letter too was "apparently lost in transit." It was received and signed for by Chase on January 24th and now cannot be located. Valley Forge also advised Chase of the rejections by letter of March 14, 2000, which was received by Chase.

Chase contends that (1) excusable neglect exists because it did not receive a number of key letters from Valley Forge; (2) no prejudice to Cendant exists; (3) Chase acted in good faith; (4) lack of notice to Chase about claim rejections violated due process; and (5) the unreasonably strict settlement deadlines violated due process.

Analysis

Rule 60(b)

Rule 60(b) allows that:

On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect....

Such motions seek "extraordinary relief [and] should be granted only where extraordinary justifying circumstances are present." Bohus v. Beloff, 950 F.2d 919, 930 (3d Cir.1991). This Court has previously reviewed the excusable neglect standard. In re Cendant Corp. Prides Litig., 189 F.R.D. 321, 324 (D.N.J.1999):

The Supreme Court has decreed that the determination of whether one party's neglect to adhere to a deadline is excusable should take into account all relevant circumstances surrounding the delay. See Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993). Relevant factors include "the danger of prejudice to the [nonmovant], the length of the delay and its potential impact on judicial proceedings, the reason for the delay, including whether it was within the reasonable control of the movant, and whether the movant acted in good faith." Id. at 395, 507 U.S. 380, 113 S.Ct. 1489, 123 L.Ed.2d 74. To this roster, the Third Circuit has added "(1) whether the inadvertence reflected professional incompetence such as ignorance of the rules of procedure, (2) whether an asserted inadvertence reflects an easily manufactured excuse incapable of verification by the court, and, (3) a complete lack of diligence." Dominic v. Hess Oil V.I. Corp., 841 F.2d 513, 517 (3d Cir.1988).

See also MCI Telecommunications Corp. v. Teleconcepts, Inc., 71 F.3d 1086 (3d Cir.1995). That said, as to Mellon:

Cendant first argues that it should not be responsible for Mellon's failure to supervise a clerk in its class action filings department. As a fiduciary for its investors, Mellon should have a procedure to review class action notices and ensure compliance. Cendant adds that the clerk's illness was over by June 1999 (medical treatment ceased in May 1999) and the error could and should have been caught and resolved much earlier.

Cendant further argues that Mellon is moving for relief over four months after it actually learned claims were rejected: Mr. Anthony's supervisor, Tina Davis, learned that the claims were rejected in January 2000 when TIS, a client of Mellon, called about a rejection it had received directly from Valley Forge.

Cendant also argues that the "excusable neglect" issue is already before the Third Circuit on the appeal filed by Santander Bank, another rejected claimant, and is no longer before this Court. See Venen v. Sweet, 758 F.2d 117 (3d Cir.1985) (if subject matter of a Rule 60(b) motion is on appeal, district court must first advise circuit of its intention to grant 60(b) motion and circuit would remand case to district court).

Cendant additionally posits that Mellon cannot object to timelines set in the settlement order as too short; Mellon should have objected to the scheduling at time of settlement if at all. Finally Cendant requests the opportunity to re-review Mellon's claims because it maintains that the supporting documentation remains deficient.

Mellon responds that Cendant does not challenge its records which indicate that Mellon owned the Prides as of April 1998. And adds that the computer records originally (and timely) submitted were sufficient because proof of holdings could be shown through records kept "in the ordinary course of business." Further, Mellon urges that the 60(b) motion is timely as brought within one year of entry of judgment. See Fed.R.Civ.P. 60(b). It also contends that Santander's appeal is...