Prudential-Bache Securities, Inc. v. Fitch

Decision Date24 July 1992
Docket NumberNo. 91-2244,PRUDENTIAL-BACHE,91-2244
Citation966 F.2d 981
PartiesFed. Sec. L. Rep. P 96,955, 23 Fed.R.Serv.3d 373 SECURITIES, INC., William Erik Byrne and Don Robbins, Plaintiffs-Appellees, v. James Forrest FITCH and Marion T. Fitch, Defendants-Appellants.
CourtU.S. Court of Appeals — Fifth Circuit

Rollins M. Koppel, William Kimball, Koppel, Ezell, Powers & Kimball, Harlingen, Tex., for defendants-appellants.

Wilson Calhoun, Meredith, Donnel & Abernethy, Corpus Christi, Tex., for plaintiffs-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before DAVIS, JONES and EMILIO M. GARZA, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

James and Marion Fitch appeal from the order of the district court enjoining them from proceeding with their litigation against Prudential-Bache except in arbitration ordered earlier by the same court. We conclude that the district court did not have jurisdiction over Prudential-Bache's petition to compel arbitration or for injunctive relief. Accordingly, we vacate the district court's orders and dismiss this action.


In 1984, James and Marion Fitch purchased certain limited partnership investments through Prudential-Bache Securities, Inc. (Prudential). In conjunction with those purchases, the Fitches executed a joint account agreement which included an agreement to arbitrate any dispute relating to the account, the transaction or the agreement itself.

In July 1988, the Fitches filed suit against Prudential and its sales representatives, William Byrne and Don Robbins, in Texas state court. The Fitches sought damages from the defendants for fraud, breach of fiduciary duties, and violations of federal securities laws. In October 1988, Prudential attempted to remove this action to federal district court. Because the petition for removal was not timely filed, the district court entered an Agreed Order remanding the case to state court.

Until March of 1989, the case proceeded in state court. At that time, Prudential made a settlement offer and also demanded arbitration as provided for in the agreement. The Fitches filed an amended petition in state court requesting a declaratory judgment that the arbitration agreement was unenforceable. The Fitches also obtained a temporary restraining order (TRO) prohibiting Prudential from enforcing its arbitration rights in any forum other than the state court where the action was pending. The TRO dissolved on May 4, 1989.

Five days later, Prudential filed suit in federal district court seeking an order to compel arbitration. The Fitches answered and filed a motion to dismiss based on lack of jurisdiction, abstention, comity and other grounds. In the meantime, the Fitches were proceeding with their case in state court and filed a motion for partial summary judgment declaring the arbitration agreement null, void or inapplicable. The state court denied Prudential's plea in abatement and request to defer consideration of the Fitches' motion for summary judgment pending resolution of the arbitration issue in federal court.

On June 4, 1990, before the state court ruled on the Fitches' motion for summary judgment, the federal district court entered an order compelling arbitration pursuant to 9 U.S.C. § 4. The district court found that it had subject matter jurisdiction over Prudential's complaint based on the Federal Arbitration Act and the Securities Exchange Act and denied the Fitches' motion to dismiss. We dismissed the Fitches' attempt to appeal that order to this court because the order compelling arbitration was not a final and appealable order under 28 U.S.C. § 1291. Despite the federal court's order compelling arbitration, the Fitches continued to litigate in state court. After a second plea in abatement was denied by the state court, Prudential filed a motion in federal district court for an order enjoining the Fitches from proceeding in state court. The district court granted Prudential's motion without hearing on February 9, 1991. The order of injunction was entered on February 11, 1991.

On February 20, 1991, the Fitches filed a motion to vacate the order of injunction which was heard on March 1, 1991. Immediately following the hearing the court issued its order denying the Fitches' motion. The Fitches filed their notice of appeal the same day. The Fitches' attorneys received in the mail from the clerk a copy of the March 1, 1991 order which was stamped "ENTERED" and dated March 1, 1991. They later learned, after the period for appeal had expired, that the order was not actually docketed until March 12, 1991.


The first issue we must consider in this case is whether we have jurisdiction over this appeal. Federal Rule of Appellate Procedure (FRAP) 4(a) provides, in part:

(2) Except as provided in (a)(4) of this Rule 4, a notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the date thereof.


(4) If a timely motion under the Federal Rules of Civil Procedure is filed in the district court by any party: ... (iii) under Rule 59 to alter or amend the judgment; or (iv) under Rule 59 for a new trial, the time for appeal for all parties shall run from the entry of the order denying a new trial or granting or denying any other such motion. A notice of appeal filed before the disposition of any of the above motions shall have no effect. A new notice of appeal must be filed within the prescribed time measured from the entry of the order disposing of the motion as provided above. No additional fees shall be required for such filing.

FRAP 4(a)(6) specifies that "A judgment or order is entered within the meaning of this Rule 4(a) when it is entered in compliance with Rules 58 [order set forth on separate document] and 79(a) [entry on docket sheet] of the Federal Rules of Civil Procedure."

Prudential argues that the Fitches' motion to vacate the injunction was a motion under Federal Rules of Civil Procedure (FRCP) 59. According to Prudential, it follows that the Fitches' notice of appeal had no effect because it was filed on March 1, before the "entry of the order" denying the motion, i.e., before the order was entered on the docket sheet on March 12 in accordance with FRCP 79(a).

The Fitches respond first that their motion to vacate the injunction was not a motion to alter or amend the judgment under FRCP 59; rather it was made pursuant to FRCP 60(b)(5). FRCP 60(b)(5) permits the trial court to grant relief from a judgment or order if "... it is no longer equitable that the judgment should have prospective application." FRCP 59 motions must be filed within 10 days of the entry of judgment. FRCP 60(b) extends the time within which relief may be sought.

Recognizing that FRCP 59 and 60 may be used to correct similar errors, this Circuit has established a bright line rule for distinguishing Rule 59 motions from Rule 60 motions. If a motion is served within 10 days following the entry of judgment and draws into question the correctness of the judgment, it will be treated as a Rule 59 motion for purposes of determining the timing of notices of appeal from the judgment. Harcon Barge Co. v. D & G Boat Rentals, Inc., 784 F.2d 665, 669 (5th Cir.1986) (en banc). The Fitches' motion to vacate the injunction was filed within 10 days of the entry of the order of injunction. The motion primarily reargued points previously briefed. Indeed, Fitches' counsel announced at the hearing that the filing was only to formally object to the injunction for the record. Because the Fitches' motion calls into question the correctness of the district court's judgment and was filed within 10 days of the order it sought to vacate, we treat it as a Rule 59(e) motion. Id.

Under FRAP 4(a)(4), any notice of appeal filed before the ruling on a FRCP 59(e) motion is entered on the docket is ineffective. An aggrieved party must file a new notice of appeal within the time period for appeal after the district court enters its order ruling on the motion. The Fitches did not file a notice of appeal after March 12, the date the district court's order denying their motion to vacate was actually entered on the docket. Therefore, under a technical application of the Rules of Civil and Appellate Procedure, the Fitches' notice of appeal was not timely and absent any saving principle, we do not have jurisdiction over this appeal.

The Fitches urge in the alternative that the facts of this case present a "unique circumstance" which requires this court to look beyond a formalistic application of the rules. The Fitches point to their reliance on the copy of the district court's order disposing of their motion which was stamped as "ENTERED" on March 1, 1991. This notation on the order led them to conclude that their March 1, 1991 notice of appeal was not premature. If it was not premature, then no additional notice of appeal was required to perfect their appeal. The Fitches did not receive a copy of the docket sheet, showing that the order was actually entered on March 12, until after the time for filing a notice of appeal based on the March 12th entry date had passed.

The "unique circumstances" remedy applies "where counsel fails to file a notice of appeal within the prescribed time based on its good faith reliance on a mistaken assurance or statement of the district court." In re MDL 262, 799 F.2d 1076, 1079 (5th Cir.1986). For example, in Thompson v. I.N.S., 375 U.S. 384, 386, 84 S.Ct. 397, 398, 11 L.Ed.2d 404 (1964), the trial court stated that an untimely motion for new trial was made "within ample time." FRAP 4(a)(4) only tolls the time for filing a notice of appeal until the disposition of "timely" FRCP 59 motions. In Thompson, however, because the trial court specifically announced that it considered the motion for new trial as timely, the Supreme Court held that the time for filing the...

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