Provident Sav. Bank v. Popovich

• Decision Date: 11 December 1995
• Docket Number: Nos. 94-1489,94-2242 and 94-3817,s. 94-1489
• Parties: PROVIDENT SAVINGS BANK, Plaintiff-Appellee, v. Nick POPOVICH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 696

71 F.3d 696

33 Fed.R.Serv.3d 705

PROVIDENT SAVINGS BANK, Plaintiff-Appellee, v. Nick POPOVICH, Defendant-Appellant.

Nos. 94-1489, 94-2242 and 94-3817.

United States Court of Appeals Seventh Circuit.

Argued April 20, 1995.

Decided Dec. 11, 1995.

Warren J. Marwedel, Dennis Minichello, Shari L. Friedman (argued), Keck, Mahin & Cate, Chicago, IL, for Plaintiff-Appellee in No. 94-1489.

Michael H. Moirano (argued), Nisen & Elliott, Chicago, IL, Patricia Susan Spratt, Shefsky, Froelich & Devine, Chicago, IL, for Defendant-Appellant in Nos. 94-1489, 94-2242 and 94-3817.

Warren J. Marwedel, Dennis Minichello, Shari L. Friedman (argued), Keck, Mahin & Cate, Chicago, IL, Joseph Stalmack, Galvin, Stalmack & Kirschner, Hammond, IN, for Plaintiff-Appellee in No. 94-2242.

Warren J. Marwedel, Dennis Minichello, Shari L. Friedman (argued), Keck, Mahin & Cate, Chicago, IL, Joseph Stalmack, John J. Murphy, Galvin, Stalmack & Kirschner, Hammond, IN, for Plaintiff-Appellee in No. 94-3817.

Before KANNE and ROVNER, Circuit Judges, and SHABAZ, District Judge. ^*

ILANA DIAMOND ROVNER, Circuit Judge.

In August 1989, Marine Partners Ltd., Inc., a corporation of which Nick Popovich was President and sole shareholder, purchased a marine vessel for the price of $340,000. The corporation made a $100,000 down payment and borrowed the remaining $240,000 from Yegen Marine, in whose favor it executed a note on August 31, 1989. The note promised monthly payments of $2800. On the same date, Yegen assigned its interest in the note to Provident Savings Bank, and on September 1, Marine Partners executed a mortgage on the vessel in favor of Provident. All of these documents were signed by Popovich in his capacity as president of Marine Partners. Finally, on September 7, 1989, Popovich executed a personal guaranty on the note that provided:

FOR VALUE RECEIVED, the undersigned ... hereby guarantee(s) to YEGEN ASSOCIATES, INC., Yegen Marine Division ... its endorsees or assigns, the prompt payment of the loan evidenced by a Promissory Note dated 8-31, 1989, by Marine Partners Limited, Inc....

Sometime after these documents had been executed, Marine Partners assigned all of its rights and interest in the vessel to Popovich.

On February 10, 1992, Provident sued Marine Partners and Popovich, alleging that it had received no payments on the note since July 1990. Popovich defended the suit pro se, and the district court entered a default judgment against the partnership and the vessel in the amount of $297,297. After the vessel was sold to Provident at a United States Marshal's sale for $50,000, Provident moved for summary judgment against Popovich for the remaining deficiency of $246,367. Still proceeding pro se, Popovich did not contest his personal liability for the deficiency. Instead, he focused exclusively on whether the offset amount should be based on the foreclosure sale price or on the fair market value of the vessel. Finding for Provident on that issue, the district court entered a judgment against Popovich for the full $246,367. Provident then moved for attorney's fees, which were provided for in both the note and the mortgage, ¹ and the district court granted its motion.

After these judgments had been entered, Popovich retained counsel and filed a motion for relief from judgment under Fed.R.Civ.P. 60(b)(2), (3) and (6), which respectively provide for relief on the grounds of "newly discovered evidence," "fraud ... misrepresentation, or other misconduct," and "any other reason justifying relief from the operation of judgment." It was in his Rule 60(b) motion that Popovich asserted for the first time that he was not personally liable under the note and mortgage. Yet because Rule 60(b) does not provide a forum for reviving issues that were not raised prior to the entry of judgment (see Anderson v. Flexel, Inc., 47 F.3d 243, 247 (7th Cir.1995) (collecting cases)), the merits of this issue were still not before the district court. Instead, the court's ruling on Popovich's Rule 60(b) motion was limited to whether Popovich had established any of the asserted grounds for relief under the rule. Finding that he had not, the district court denied Popovich's motion. Popovich now appeals the court's ruling as to subsections (3) and (6) of Rule 60(b). He also appeals the district court's award of attorneys' fees to Provident, asserting again that he should not be held personally liable for any promises contained in the note or mortgage. We affirm on both issues.

Rule 60(b)

Relief under Rule 60(b) is an extraordinary remedy that is to be granted only in exceptional circumstances. Camp v. Gregory, 67 F.3d 1286, 1290 (7th Cir.1995); Mares v. Busby, 34 F.3d 533, 535 (7th Cir.1994); Dickerson v. Bd. of Educ., 32 F.3d 1114, 1116 (7th Cir.1994). In addition, we review a district court's denial of relief under Rule 60(b) for an abuse of discretion, and we will reverse only if we conclude that no reasonable person could agree with the district court's determination. United States v. Indoor Cultivation Equip. from High Tech Indoor Garden Supply, 55 F.3d 1311, 1313 (7th Cir.1995); Mares, 34 F.3d at 535. Because we are limited to the question of whether a district court's Rule 60(b) determination involved an abuse of discretion, we do not review the merits of the underlying judgment, and our review is far narrower than it would be on direct appeal. Lee v. Village of River Forest, 936 F.2d 976, 979 (7th Cir.1991). We emphasize this limitation here because of Popovich's persistent but belated focus on the merits of the personal liability issue.

Rule 60(b)(3)

Rule 60(b)(3) provides for relief from judgment on the grounds of "fraud ..., misrepresentation, or other misconduct of an adverse party...." To obtain relief under this subsection, a party must prove, by clear and convincing evidence, that:

(1) the party maintained a meritorious claim at trial; and (2) because of the fraud, misrepresentation or misconduct of the adverse party; (3) the party was prevented from fully and fairly presenting its case at trial.

Lonsdorf v. Seefeldt, 47 F.3d 893, 897 (7th Cir.1995).

We need not concern ourselves with the merits of Popovich's prejudgment position before the district court because he has failed to satisfy either the second or the third prongs of the Lonsdorf formulation. First, he has not established any fraud, misrepresentation or misconduct on the part of Provident. The "misrepresentation" that Popovich identifies is Provident's position before the district court that Popovich was personally liable to the bank for repayment of the loan. Popovich contends that this representation was false because Provident was not covered by his personal guaranty, which had not been assigned to the bank. He also asserts that he was not personally liable to Provident under the mortgage, because he had executed that document only in his capacity as president of Marine Partners.

As to the facts surrounding Popovich's execution of the mortgage, the guaranty and the assignment, however, the parties are not now and never have been in dispute. Both sides recognize that the guaranty was not itself formally assigned to Provident. The assignment was executed on August 31, 1989, a week before the guaranty was signed, and the assignment refers only to the "Promissory Note, Security Agreement and all other related documents dated 8-31-89." The guaranty, not executed until September 7, was neither referenced in this assignment nor assigned by way of any subsequent document. It is also both true and undisputed that Popovich executed the mortgage only in his capacity as president of Marine Partners.

Not only are these facts undisputed, but Popovich does not contend that they were misrepresented in any way to the district court. Instead, the misrepresentation that he asserts lies in Provident's interpretation of these facts. Popovich argues that the guaranty's promise to make "prompt payment of the loan evidenced by a Promissory Note dated 8-31, 1989" to "Yegan Associates, Inc., Yegan Marine Division, its endorsees or assigns " (emphasis added) did not extend to Provident, even though Provident was the assignee of Yegan's note, because the guaranty was not itself assigned to the bank. Under Popovich's theory, the term "assigns" in the guaranty refers only to assignees of the guaranty, but not to assignees of the note. Provident, not surprisingly, takes the opposite view, just as it did (albeit implicitly) before the district court, when it proceeded under the theory that Popovich was personally responsible for the debt.

But the parties' competing positions on this issue amount to nothing more than differing legal theories as to the significance of the undisputed facts. This purely legal dispute has nothing to do with misrepresentation or misconduct. Provident merely adopted a litigation position and presented it to the district court. In our adversarial system, the obligation to present the contrary legal argument fell on Popovich, not Provident. As already noted, Popovich did not contest his personal liability prior to judgment, but focused instead on the calculation of the offset amount.

Popovich's suggestion of impropriety in Provident's failure to apprise the court of what should have been his own legal position seems to rest in large part on the fact of his pro se status during the proceedings. But the pro se status of an opponent does not impose any special duty on a litigant. Provident was under no obligation, legal or ethical, to fill in any gaps caused by Popovich's choice to proceed without the benefit of counsel. Although pro se litigants are entitled to some procedural protections (see, e.g., Jones v. Phipps, 39 F.3d 158, 163 (7th Cir.1994); Timms v. Frank, 953 F.2d 281, 283-84 (7th Cir.), cert. denied, 504 U.S. 957, 112 S.Ct. 2307, 119 L.Ed.2d 228 (1992)), they are in general subject to the same waiver rules that apply to parties who are represented by couns...