Jalapeno Property Management v. Dukas

• Court: U.S. Court of Appeals — Sixth Circuit
• Writing for the Court: KAREN NELSON MOORE; ALICE M. BATCHELDER
• Citation: Jalapeno Property Management v. Dukas, 265 F.3d 506 (6th Cir. 2001)
• Decision Date: 06 June 2001
• Docket Number: No. 00-5477,00-5477
• Parties: (6th Cir. 2001) Jalapeno Property Management, LLC, Plaintiff-Appellant, v. George Dukas; Justine Dukas, Defendants-Appellees. Argued:

Page 506

265 F.3d 506 (6th Cir. 2001)

Jalapeno Property Management, LLC, Plaintiff-Appellant, v. George Dukas; Justine Dukas, Defendants-Appellees.

No. 00-5477

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

Argued: June 6, 2001

Decided and Filed: September 14, 2001

Appeal from the United States District Court for the Eastern District of Tennessee at Knoxville. No. 83-00693, Curtis L. Collier, District Judge.

Shelby R. Grubbs, Lisa M. Szafranic, Miller & Martin, Chattanooga, TN, Lisa M. Todd, David D. Pavek, DAVID PAVEK & ASSOCIATES, Denver, Colorado, for Appellant.

Douglas L. Dunn, MORRISON, TYREE & DUNN, Knoxville, Tennessee, for Appellees.

Before: BATCHELDER and MOORE, Circuit Judges; BERTELSMAN, District Judge.^*

MOORE, J., delivered the opinion of the court, in which BERTELSMAN, D. J., joined. BATCHELDER, J. (pp. 514-18), delivered a separate concurring opinion.

OPINION

KAREN NELSON MOORE, Circuit Judge.

Plaintiff-Appellant Jalapeno Property Management, LLC brought suit to enforce a judgment against Defendants-Appellees George and Justine Dukas for liability on a defaulted promissory note, which the Dukases had guaranteed. The district court dismissed Jalapeno's claim as barred by the applicable state statute of limitations, and refused to apply a longer federal statute of limitations found in the Federal Debt Collection Procedures Act, ("FDCPA,") 28 U.S.C. §3001 et seq. Jalapeno appeals the district court's dismissal. For the following reasons, we REVERSE the judgment of the district court.

I. BACKGROUND

This case revolves around a now-defaulted promissory note which was executed on September 20, 1982 by a political campaign committee, "Tennesseans for Tyree," and signed by the campaign's chairman, P. Douglas Morrison, for the purpose of funding candidate Randy Tyree's 1982 gubernatorial race in Tennessee. In exchange for the note, which was payable on demand or, in the event of no demand, within 90 days after execution of the note, the United American Bank ("UAB") loaned Tennesseans for Tyree $378,750.00.¹ On November 15, 1982, George and Justine Dukas, Tyree's in-laws, signed a broadly worded "Continuing Guaranty," which guaranteed all of Tennesseans for Tyree's debts "now existing or hereafter arising" for an "unlimited" sum of money. UAB subsequently failed in May 1983, and the Federal Deposit Insurance Corporation ("FDIC"), acting in its corporate capacity, purchased the defaulted promissory note and other assets of the bank from the bank's receiver. The Continuing Guaranty was found in UAB's files with the note; apparently, it had been included in the file to support the loans to Tennesseans for Tyree when the bank was being investigated by federal banking officials.

This litigation began on November 16, 1983, when the FDIC filed a complaint in federal district court against Tennesseans for Tyree, Randy Tyree, P. Douglas Morrison, and George and Justine Dukas as members of the political campaign seeking to enforce the defaulted promissory note; the FDIC also sought to hold the Dukases liable as guarantors of the note. The parties filed cross-motions for summary judgment. On July 24, 1984, the district court granted summary judgment in favor of Tyree, Morrison, and the Dukases as members of the political campaign committee. The district court refused, however, to grant summary judgment for the Dukases in their role as guarantors of the note.² On February 26, 1985, the district court granted the FDIC's motion for summary judgment against the Dukases as guarantors of the note. Judgment was entered for the FDIC in the amount of $378,750.00, plus interest and attorney's fees in accordance with the terms of the note. On March 25, 1985, the FDIC filed a notice of appeal, stating that it appealed the district court's July 24, 1984 judgment upon the conclusion of the action by the February 26, 1985 judgment. The Dukases cross-appealed from the district court's judgment of February 26, 1985.

In an unpublished opinion, FDIC v. Morrison, Nos. 85-5272, 85-5273, 1987 WL 37065 (6th Cir. Apr. 14, 1987), a panel of this court affirmed the district court's grant of summary judgment for the FDIC as to its claim against George and Justine Dukas, but reversed the grant of summary judgment for Tyree and Morrison and remanded for further proceedings.³ The FDIC then filed a Motion for Entry of Judgment Specifying Sum Certain in the district court in the amount of $703,401.71, which included the principal amount of the loan plus interest and attorney's fees. The motion averred that "[t]he time for any further appeal on this matter has expired" and that the judgment is "final." J.A. at 50. On September 15, 1987, the district court entered a Judgment for Sum Certain for the amount requested. On May 3, 1988, the FDIC applied for a Writ of Execution to satisfy the judgment against the Dukases, which was granted by the district court and executed upon local banks. The writs were never satisfied.

On August 1, 1988, in accordance with this court's mandate, the district court held a bench trial on the FDIC's claims against Tennesseans for Tyree, Morrison, and Tyree, in which the FDIC sought to hold the latter two defendants personally liable for the promissory note. At the conclusion of the trial, the district court found that neither Tyree nor Morrison were liable for the note, nor had they intended to mislead banking authorities; the district court also entered a default judgment against Tennesseans for Tyree, finding it liable on the promissory note in the amount of $665,813.57, plus $117,529.11 for attorney's fees, expenses, and costs.

The FDIC then filed a notice of appeal as to the judgment entered in favor of Tyree and Morrison. Another panel of this court affirmed the judgment of the district court in FDIC v. Tennesseans for Tyree, 886 F.2d 771, 773 (6th Cir. 1989); the mandate for that decision issued on October 27, 1989.

On July 26, 1999, almost ten years after this court's last mandate in the litigation, the FDIC filed a Motion to Renew Judgment, claiming that the judgment entered by the district court against the Dukases on September 15, 1987 had not been satisfied. Citing Tenn. Code Ann. §28-3-110,⁴ the FDIC asserted that "[t]he statutory period of ten (10) years since the entry of the judgment has not expired, due to the fact that this matter was appealed and the time during which the appeal was pending is not counted for purposes of determining the expiration date of a judgment." J.A. at 84.

The Dukases failed to respond to this motion because it was not served on their current counsel. On August 4, 1999, the district court determined that the judgment against the Dukases had not expired and that the FDIC was owed $703,401.71 plus interest, as was entered in the September 15, 1987 judgment; the court then ordered that the judgment against the Dukases be renewed and the lien continued for another ten years. On October 20, 1999, the Dukases filed a Motion to Set Aside Order Renewing Judgment, on the ground that the applicable ten-year statute of limitations under Tennessee law had expired and that the court therefore lacked jurisdiction over them.

On October 21, 1999, the FDIC filed a notice that it had transferred and assigned its right, title, and interest to the judgment entered on September 15, 1987, including the promissory note and the Continuing Guaranty which were the basis of that judgment, to Jalapeno Property Management, LLC. On October 27, 1999, Jalapeno filed an Application for Writ of Execution to satisfy the judgment against the Dukases for the amount of $1,371,295.31, which included the amount of the original judgment plus interest from August 15, 1987.

In response to the Dukases' Motion to Set Aside Order, Jalapeno advanced two alternative arguments: first, that the judgment against the Dukases did not expire prior to the FDIC's filing of its Motion to Renew Judgment because the judgment did not accrue until October 27, 1989, when this court issued its mandate affirming the district court's dismissal of the remaining claims against Tyree and Morrison and the rights of all parties had been adjudicated; and, in the alternative, that the FDCPA's twenty-year statute of limitations governed Jalapeno's claim.

On February 29, 2000, the district court granted the Dukases' Motion to Set Aside Order, pursuant to its authority under Fed. R. Civ. P. 60(b). The district court first determined that the FDCPA, 28 U.S.C. §3201, which provides for a twenty-year statute of limitations on the recovery of all judgment liens owed to the United States under the Act, did not govern Jalapeno's claim. The district court agreed with the Dukases that, because the original debt arose between two private parties (UAB and Tennesseans for Tyree), the FDCPA's statutory exclusion for debts "owing under the terms of a contract originally entered into by only persons other than the United States," 28 U.S.C. §3002(3)(B), rendered the statute inapplicable. J.A. at 108. The district court then held that the FDIC did not move to renew the judgment within the ten-year statute of limitations period provided by state law. The court reasoned that because the judgment against the Dukases became final on October 16, 1987, thirty days after the district court's September 15, 1987 judgment against them, and the FDIC did not file its Motion to Renew until after October 16, 1997, which was the ten-year expiration date, the FDIC's motion was untimely. The district court specifically rejected Jalapeno's argument that, pursuant to Fed. R. Civ. P. 54(b), final judgment was not entered until October 27, 1989, this court's ultimate disposition of the case.

Jalapeno timely appealed the district court's judgment.

II. ANALYSIS

A. Standard of Review

The district court granted the Dukases' Motion to Set Aside Order Renewing Judgment pursuant to Fed. R. Civ. P. 60(b). Preliminarily, we note that it is unclear under which...