Ordower v. Feldman
| Decision Date | 21 August 1987 |
| Docket Number | No. 86-2588,86-2588 |
| Citation | 826 F.2d 1569 |
| Parties | Lawrence B. ORDOWER, et al., Plaintiffs-Appellants, v. Leonard FELDMAN, et al., Defendants, and Sinclair Global Brokerage Corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Lawrence B. Ordower, Ordower & Ordower, P.C., Chicago, Ill., for plaintiffs-appellants.
Philip M. Bloom, Bloom & Bloom, Chicago, Ill., for defendant-appellee.
Before COFFEY and MANION, Circuit Judges, and ESCHBACH, Senior Circuit Judge.
Plaintiffs and their counsel appeal the district court's imposition of sanctions against them. For the reasons set forth below, we affirm.
On August 2, 1985, Lawrence Ordower, an Illinois attorney, filed a complaint against numerous defendants on behalf of himself, his law firm, Ordower & Ordower, P.C., and Ordower & Ordower, P.C. Pension Trust. 1 The complaint alleged that the defendants maintained a scheme to defraud the plaintiffs in violation of the Securities Exchange Act of 1934, the Commodities Exchange Act, and the Racketeer Influenced and Corrupt Organizations Act (RICO). The complaint also alleged three pendent state claims.
We have difficulty determining from whom the plaintiffs intended to recover on these claims. For some unknown reason the complaint names eight defendants in the caption but then names twelve defendants in the portion of the complaint under the heading "Defendants." Moreover, two of the captioned defendants are not listed in "Defendants" portion of the complaint but do receive attention elsewhere in the complaint. Thus, it appears that plaintiffs named fourteen defendants in the complaint.
Plaintiffs also left everyone guessing as to which defendants would be served with the complaint and when plaintiffs would attempt service. In three separate installments over the course of the seven and one-half months from the time of filing, plaintiffs served only six of the fourteen defendants.
The defendants served first, Berwyn National Bank and Charles F. Krcilek, filed their answer on September 4, 1985. Plaintiffs soon settled with these defendants, and the district court dismissed the complaint with prejudice as to Berwyn National Bank and Krcilek in December, 1985.
The next round of service occurred in January, 1986, over 150 days after the complaint was filed. During this round, plaintiffs served the Chicago Mercantile Exchange, K & S Commodities, Inc. and Morris Krumhorn. All three defendants quickly responded with motions to dismiss under Fed.R.Civ.P. 4(j) 2 because service was effectuated beyond that rule's 120-day limit. Pursuant to a settlement, the exact terms of which are not in the record, plaintiffs After the district court dismissed the complaint against K & S Commodities, Krumhorn, and Schiller, plaintiffs concentrated on Sinclair Global Brokerage Corporation (Sinclair Global). On March 18, 1986, seven and one-half months after the complaint was filed, plaintiffs served Sinclair Global. Sinclair Global wasted no time in moving to dismiss the complaint for untimely service under Rule 4(j). Sinclair Global also moved for sanctions under 28 U.S.C. Sec. 1927 claiming that plaintiffs' untimely service was unreasonable and vexatious. Sinclair Global contended that there was no excuse for untimely service because the parties were quite familiar with one another due to their involvement in related litigation. Sinclair Global also noted that, due to the filing of the previous Rule 4(j) motions by other defendants, plaintiffs were clearly aware that service upon Sinclair Global was untimely. As such, Sinclair Global argued that plaintiffs acted unreasonably and vexatiously when they served the complaint knowing that a Rule 4(j) motion was inevitable and that the motion would be granted.
stipulated to dismiss the complaint with prejudice against these defendants. The stipulation also agreed to dismiss an unserved defendant, Ronald Schiller. The district court dismissed the complaint against the Chicago Mercantile Exchange on February 28, 1986. On March 7, 1986, the district court dismissed the complaint against K & S Commodities, Morris Krumhorn and Ronald Schiller.
In response to Sinclair Global's motions, plaintiffs did not attempt to avoid a Rule 4(j) dismissal of their complaint by showing good cause for untimely service. Rather, plaintiffs filed a motion to voluntarily dismiss their complaint under Fed.R.Civ.P. 41(a)(2). Lawrence Ordower did reply to Sinclair Global's motion for sanctions, arguing that his service of the complaint did not violate 28 U.S.C. Sec. 1927.
The district court denied plaintiffs' Rule 41 motion and dismissed the complaint without prejudice under Rule 4(j) on the grounds that plaintiffs' untimely service had not been justified by a showing of any good cause for the delay. The district court further found that, under the circumstances of the case, plaintiffs' conduct was "vexatious and unreasonable" and imposed sanctions against "plaintiffs and their counsel of record." Stating that it was sufficiently familiar with the litigation to impose sanctions "without the necessity of time sheets and other evidence of costs," the district court ordered "plaintiffs and their counsel of record" to pay $1,000 to Sinclair Global.
Plaintiff presents two grounds of error on appeal. These are: (1) that the district court abused its discretion in imposing sanctions against the plaintiffs; and (2) that the district court abused its discretion in ordering plaintiffs to pay $1,000 to Sinclair Global without first receiving evidence regarding Sinclair Global's expenses.
Before addressing the merits, we must first determine whether we have jurisdiction to hear this appeal. Under 28 U.S.C. Sec. 1291 courts of appeals are empowered to hear appeals from "final decisions" of a district court. The record before us raises two significant questions as to the finality of the district court's order. First, the district court's order did not finally dispose of plaintiffs' action against Sinclair Global on the merits. Rather, the district court simply dismissed plaintiffs' complaint without prejudice for untimely service under Rule 4(j). Second, several defendants named in the complaint have not been served by plaintiffs. These particular circumstances present substantial questions as to the finality of the district court's order. 3 Unfortunately, the parties have "In general, a decision is final for the purpose of Sec. 1291 if it ends the litigation on the merits and leaves nothing for the district court to do but execute the judgment." Baltimore Orioles, Inc. v. Major League Baseball Players Association, 805 F.2d 663, 666 (7th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1593, 94 L.Ed.2d 782 (1987). The fact that a complaint is dismissed without prejudice, however, does not bar a decision from being considered "final" for purposes of appeal. This circuit has held on previous occasions that such orders may be considered final under Sec. 1291. See Car Carriers, Inc. v. Ford Motor Co., 789 F.2d 589, 591 n. 4 (7th Cir.1986); United States v. Mt. Vernon Memorial Estates, Inc., 734 F.2d 1230, 1234 (7th Cir.1984).
not enlightened the court on these jurisdictional issues. Plaintiffs' brief gives us a conclusory citation to 28 U.S.C. Sec. 1291. Defendant does not even do that much. We remind counsel that they have an obligation to fully brief jurisdictional issues. Ignoring them does not establish jurisdiction by default.
The dispositive issue in determining the finality of a district court's order for purposes of appeal is whether the dismissal effectively terminates plaintiff's litigation in federal court. See generally Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 9-10, 103 S.Ct. 927, 933-934, 74 L.Ed.2d 765 (1983); Mazanec v. North Judson-San Pierre School Corp., 750 F.2d 625, 627 (7th Cir.1984); Bragg v. Reed, 592 F.2d 1136, 1138 (10th Cir.1979). If a district court's dismissal leaves a plaintiff free to file an amended complaint, the dismissal is not considered a final appealable order. See Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1111 (7th Cir.1984); Petty v. Manpower, Inc., 591 F.2d 615, 617 (10th Cir.1979). However, "[i]f it is clear that the plaintiff may not start over again with a properly drawn complaint, because of limitations problems or otherwise, the action is treated as final and the order is appealable." Bragg, 592 F.2d at 1138; see also Gray v. Fidelity Acceptance Corp., 634 F.2d 226, 227 (5th Cir.1981).
Here, the district court's order is final for purposes of appeal because it effectively terminated plaintiffs' federal litigation. The complaint states that plaintiffs became aware of defendants' allegedly fraudulent activities in September of 1982. The most generous limitations period on any of their federal claims, however, was three years, 4 and the defendants made no secret of the fact that they sought a Rule 4(j) dismissal because of plaintiffs' limitations problems. Had plaintiffs attempted to file a new complaint containing their federal claims after the district court's Rule 4(j) dismissal in 1986, their federal claims would have been dismissed as untimely, see generally Winters v. Teledyne Movible Offshore, Inc., 776 F.2d 1304, 1307 (5th Cir.1985); Wei v. Hawaii, 763 F.2d 370, 372 (9th Cir.1985), and their pendent state claims would have been dismissed as well. See United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). Thus, the The fact that plaintiffs' federal claims against Sinclair Global are time-barred does not end our jurisdictional inquiry. We must next consider the effect that the presence of unserved defendants has on the finality of the district court's order. This problem has received differing treatment among the circuits. The...
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