MIF Realty L.P. v. Rochester Associates

• Decision Date: 16 August 1996
• Docket Number: 95-2864,Nos. 95-2765,s. 95-2765
• Citation: 92 F.3d 752
• Parties: MIF REALTY L. P., substituted as plaintiff for plaintiff RTC; a Delaware limited partnership, Appellant/Cross-Appellee, v. ROCHESTER ASSOCIATES, a New York general partnership; David Glaser; Jeri Glaser; Steven Glaser; Susan Glaser; Edward Lapidus; Kathryn Lapidus; Paul Lapidus; Lori Lapidus; Maynard Koenigsberg; Elaine Koenigsberg; Craig Koenigsberg; Andre Hercz; and Victoria Hercz, Appellees/Cross-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 752

92 F.3d 752

36 Fed.R.Serv.3d 255

MIF REALTY L. P., substituted as plaintiff for plaintiff RTC; a Delaware limited partnership Appellant/Cross-Appellee, v. ROCHESTER ASSOCIATES, a New York general partnership; David Glaser; Jeri Glaser; Steven Glaser; Susan Glaser; Edward Lapidus; Kathryn Lapidus; Paul Lapidus; Lori Lapidus Maynard Koenigsberg; Elaine Koenigsberg; Craig Koenigsberg; Andre Hercz; and Victoria Hercz Appellees/Cross-Appellants.

Nos. 95-2765, 95-2864.

United States Court of Appeals Eighth Circuit.

Argued Feb. 15, 1996.

Decided Aug. 16, 1996.

Glen A. Van Cleve, Bloomington, argued (Sharna A. Wahlgreen, on the brief), for appellants.

Daniel J. Biersdorf, Minneapolis, argued (E. Kelly Keady, on the brief), for appellee.

Before HANSEN, LAY, and JOHN R. GIBSON, Circuit Judges.

HANSEN, Circuit Judge.

Following settlement negotiations between the parties and upon representation that a settlement had been reached, the district court dismissed this foreclosure action with prejudice. Due to difficulties in reducing the settlement agreement to writing, MIF Realty L.P. (MIF) sought to set aside the dismissal. See Fed.R.Civ.P. 60(b). The district court denied MIF's Rule 60(b) motion. MIF appeals, and Rochester Associates cross appeals. We reverse and remand to the district court for further proceedings.

I.

Resolution Trust Corporation (RTC), as conservator for Home Federal Savings Association, brought this action against Rochester Associates to obtain judgment for a default on a note, which was secured by a mortgage on Rochester Associates' eight-story office building, and to initiate foreclosure proceedings to secure payment of the judgment. The RTC also sought to enforce a guaranty agreement against the individually named guarantors to secure any deficiency after foreclosure. In total, the RTC sought a judgment in excess of four million dollars from Rochester Associates and the individually named guarantors.

MIF took an assignment of all of the RTC's interests in Rochester Associate's loan and was substituted as the plaintiff in this case. The parties then entered into settlement negotiations. In August 1994, MIF told its counsel that the parties had reached an oral settlement agreement that would be binding when reduced to writing and that they were in the process of preparing settlement documents. MIF's counsel in turn informed the district court of the settlement. Based on that representation, the district court sua sponte dismissed the action with prejudice, providing a 60-day period after dismissal during which any party could move to reopen the case, file a stipulated form of final judgment, or seek enforcement of the settlement terms.

Neither party sought to reopen the case within the 60-day period following entry of the dismissal order. The parties traded several drafts of settlement documents but never succeeded in reducing their assumed oral agreement to writing. In February 1995, approximately four months after the 60-day period had expired, MIF abandoned its efforts to reduce the agreement to writing due to Rochester Associates' ever-lengthening list of disputed terms and commenced a second foreclosure proceeding in state court. Rochester Associates removed the case to federal district court and asserted that the action was barred by res judicata because the first foreclosure action had been dismissed with prejudice.

MIF then brought a Federal Rule of Civil Procedure 60(b) motion in the first action to set aside the order of dismissal. As grounds for the motion, MIF asserted that the parties' belief that a settlement had been reached and could be reduced to writing had proven to be a mistake. The district court found that the Rule 60(b) motion was timely. The court also found, however, that at the time MIF first represented to the court that the case had settled, MIF knew that its negotiator did not have the necessary committee approval to enter into an initial settlement. Therefore, the district court concluded that the doctrine of judicial estoppel barred MIF from asserting that it had acted under a mistaken belief that the case had settled.

MIF filed a Rule 59(e) motion requesting the district court to reconsider its Rule 60(b) ruling, asserting that the court's fact findings were clearly erroneous. The parties waived their rights to an evidentiary hearing to determine the existence or terms of any settlement. Before the district court ruled on the motion to reconsider, however, MIF timely appealed the order denying its Rule 60(b) motion. The district court determined that the notice of appeal deprived it of jurisdiction to rule on the motion to reconsider, yet the court amended the findings in its original order as follows:

The Court finds that the parties represented to each other that they had agreed to the material terms of settlement at the time MIF informed the Court that the case had settled, and that the necessary decision-makers had already agreed to the terms of settlement. Thus there should have been no need to reach the issue of judicial estoppel in the Order denying MIF's Motion to Set Aside the Order of Dismissal. The Court was not mistaken in its basis for the original dismissal of this case: the parties agreed to a settlement. The parties have simply failed to reduce their settlement to writing. Notwithstanding the parties' ardent dispute about what the terms of the negotiated settlement actually were, this case involves the very elements of settlement breakdown that lead [sic] the Court to retain jurisdiction for a limited period following settlement. In short, the parties' dispute over their settlement should have been brought to the Court's attention within 60 days of the dismissal Order. The Court could have extended its jurisdiction period to allow additional time for the settlement terms to be reduced to writing, or could have returned the case to the trial calendar. The parties' failure to seek the reopening of this matter within 60 days of the dismissal Order under the facts now apparent caused the jurisdiction of the Court to lapse after 60 days. The Court finds this case does not include the type of mistake that warrants setting aside the dismissal.

....

[T]his Court lacks jurisdiction to reconsider its conclusion that MIF is judicially estopped from asserting the case had not settled after formerly representing to the Court that it had. The Court's understanding of the facts now before it, however, would render such reconsideration moot.

(Appellants' Addend. at AD-13 to -14.)

MIF appeals, arguing that the district court abused its discretion by denying its Rule 60(b) motion. Rochester Associates and the named defendants cross appeal, arguing that the district court abused its discretion by finding that MIF's motion was timely. They also contend that the court has no jurisdiction over Jeri Glaser and Steven Glaser because they were not named on the notice of appeal.

II.

We first take a moment to clarify the posture of the district court's orders. While the district court concluded that it did not have jurisdiction to rule on the motion to reconsider, it nevertheless amended the findings of fact in the original order and indicated that, if it had jurisdiction to reconsider the denial of Rule 60(b) relief, its previous ruling based on judicial estoppel would be moot given the amended findings. Contrary to the district court's belief, it did have jurisdiction to reconsider the Rule 60(b) ruling.

Rule 4(a)(4) of the Federal Rules of Appellate Procedure, as amended, provides that when a notice of appeal is filed after a judgment but before a district court has had an opportunity to rule on "a pending tolling motion, the notice of appeal lies dormant until the trial court disposes of the pending motion. Upon such disposition, the notice becomes effective." United States v. Duke, 50 F.3d 571, 575 (8th Cir.), cert. denied, --- U.S. ----, 116 S.Ct. 224, 133 L.Ed.2d 154 (1995). Because MIF's Rule 59(e) motion to reconsider is such a tolling motion, see id. at 574 (noting that a timely Rule 59(e) motion tolls the time for filing a notice of appeal), MIF's notice of appeal did not divest the trial court of jurisdiction to rule on the motion. MIF's notice of appeal was not effective until the district court disposed of the motion to reconsider. Given this posture, we construe the district court's order on the motion to reconsider as properly amending the findings of fact in the order denying the Rule 60(b) motion. We also give effect to the district court's indication that, in light of the amended findings, the judicial estoppel issue is moot. Therefore, we will not consider whether the district court properly applied the doctrine of judicial estoppel. We will consider only whether the district court properly denied Rule 60(b) relief on its merits.

Federal Rule of Civil Procedure 60(b) provides that the court may relieve a party from a final judgment for, among other reasons, mistake, inadvertence, surprise, or excusable neglect. A Rule 60(b) motion is committed to the sound discretion of the trial court, and we review the district court's decision to grant or deny the motion only for an abuse of discretion. Rosebud Sioux Tribe v. A & P Steel, Inc., 733 F.2d 509, 515 (8th Cir.), cert. denied, 469 U.S. 1072, 105 S.Ct. 565, 83 L.Ed.2d 506 (1984). " 'Abuse of discretion occurs if the district court rests its conclusion on clearly erroneous factual findings or if its decision relies on erroneous legal conclusions.' " Hosna v. Groose, 80 F.3d 298, 303 (8th Cir.1996) (quoting International Ass'n of Machinists & Aerospace Workers v. Soo Line R.R., 850 F.2d 368, 374 (8th Cir.1988) (en banc), cert. denied, 489 U.S. 1010, 109 S.Ct. 1118, 103 L.Ed.2d 181 (1989)), petition for cert. filed (U.S. June 28, 1996) (No. 95-9498). Although we have said that Rule 60(b) motions are disfavored, we also recognize that they "serve a useful, proper and necessary...