Richardson Greenshields Securities, Inc. v. Lau

• Decision Date: 30 July 1987
• Docket Number: No. 944,D,944
• Court: U.S. Court of Appeals — Second Circuit
• Parties: , 8 Fed.R.Serv.3d 584 RICHARDSON GREENSHIELDS SECURITIES, INC., Plaintiff-Appellee, v. Mui-Hin LAU, Ho Sih Fong, Kau-Ying Lau, Ying Lup Lau, and Wai Yau Chi, Defendants-Appellants. ocket 87-7057.

Page 647

825 F.2d 647

56 USLW 2146, 8 Fed.R.Serv.3d 584

RICHARDSON GREENSHIELDS SECURITIES, INC., Plaintiff-Appellee, v. Mui-Hin LAU, Ho Sih Fong, Kau-Ying Lau, Ying Lup Lau, and Wai Yau Chi, Defendants-Appellants.

No. 944, Docket 87-7057.

United States Court of Appeals, Second Circuit.

Argued March 6, 1987.

Decided July 30, 1987.

Michael S. Devorkin, John Doar Law Offices, New York City (Michael Q. Carey, Julia S. Robbins, Carey & Deinoff, New York City, of counsel), for defendants-appellants.

John Linsenmeyer (Peter G. McDonough, Morgan, Lewis & Bockius, New York City, of counsel), for plaintiff-appellee.

Before OAKES and WINTER, Circuit Judges, and METZNER, ^* Senior District Judge.

WINTER, Circuit Judge:

Defendants appeal from Judge Kram's denial of their motion for leave to file an amended answer asserting counterclaims against plaintiff and third-party claims against four of plaintiff's former employees. The denial of that motion to amend a pleading is not appealable in the circumstances of this case. We treat the attempted appeal as a motion for leave to file a petition for a writ of mandamus, however, and grant the motion if Judge Kram refuses on remand to permit the amendment of the answer.

The issue before us concerns the practice of some district judges to require parties to attend a conference with the court before filing a motion. We do not disapprove of this practice where the required conference is timely arranged by the district judge. In the present case, however, the failure to afford a timely conference had the effect of preventing a party from filing a motion, a power district courts do not have.

BACKGROUND

This is a diversity action brought by Richardson Greenshields Securities, Inc. ("Richardson") against five members of the Lau family ("the Laus"). ¹ Richardson is a commodity futures commission merchant that traded commodities accounts opened in the names of each of the Laus in December 1982. ² Richardson liquidated the accounts in July 1984 following the Laus' failure to pay $167,212.48 in deficit balances that had become due.

This collection action was brought on August 27, 1984. The Laus filed an answer on April 15, 1985, denying, inter alia, that any of them except defendant Ying Lup Lau had ever opened an account with Richardson. The answer contained no counterclaims or third-party claims. The parties thereafter engaged in discovery.

Judge Kram conducted a pre-trial conference on June 13, 1986, at which she set a trial date of January 26, 1987. At the conference, counsel for the Laus indicated his desire to file a motion for leave to file an amended answer asserting counterclaims. Judge Kram responded that she would consider such a motion only after a pre-motion conference. This response was pursuant to her rule of practice that "[a]ny party wishing to make a motion should arrange for a pre-motion conference prior to the preparation and submission of any papers."

On June 25, 1986, counsel for the Laus wrote to Judge Kram requesting an immediate conference "to discuss whether the Court will permit Defendants to file a counterclaim in the pending matter." The hand-delivered letter urged that the conference In an attempt to prevent the statute of limitations from running on their claims against Richardson and simultaneously to avoid flouting Judge Kram's request of a pre-motion conference, the Laus filed a separate action in the Southern District of New York on July 2, 1986 asserting common law and statutory claims of fraud and conversion against Richardson and four of its former employees. The Laus indicated at the time that the new action was related to the action pending before Judge Kram and that they intended to move to consolidate the cases.

                be scheduled for June 27 "or as soon thereafter as is convenient for the Court" because "the statute of limitations for filing certain counterclaims may expire before July 4, 1986."    Judge Kram's chambers subsequently informed counsel that no conference could be scheduled prior to July 4 but did not give permission to file the motion for leave to file an amended answer
                

Notwithstanding the Southern District's rule governing the assignment of related cases, and the obvious fact that the July 2 action was related to the present proceeding, Judge Kram appears to have explicitly rejected assignment of the case to her. ³ The case was then assigned to Judge Goettel, who dismissed the complaint on September 19, 1986 "without prejudice to application to Judge Kram to amend answer and assert counterclaims in [the case pending before her] and upon representation of counsel for defendants that they will not assert a statute of limitations defense to any counterclaims that were timely when [the Laus] instituted this suit."

The Laus' counsel sent a letter to Judge Kram later that day again requesting a conference to discuss the motion for leave to amend the answer. Nearly three weeks later, on October 7, Judge Kram's chambers scheduled the requested conference for November 14. When the conference was finally held, Judge Kram indicated that she would not be inclined to grant the motion to amend "after this case has been pending all this time." However, recognizing that a judge "can't deny an attorney the right to make a motion," she permitted the Laus' counsel to file the motion to amend. The motion was filed on November 24.

Judge Kram denied the motion in a memorandum opinion and order entered December 30, 1986 on the ground that the Laus had "offered no justifiable excuse for [the] delay" between the filing of their original answer and the filing of their motion to amend. She rejected the Laus' contention that they lacked sufficient knowledge to plead the counterclaims until the discovery process had been completed, reasoning that "the elements of the claims were within the Laus' sphere of knowledge at the time the Richardson complaint was filed." Judge Kram found further support for the denial of the motion to amend in the Laus' need for an additional two months discovery on the counterclaims.

On January 20, 1987, the district judge denied the Laus' motion to stay the bench trial of this action pending appeal of her ruling on the motion to amend. On February 3, a panel of this court stayed the trial, which was then in progress, pending an expedited appeal of that ruling.

DISCUSSION

An order denying a motion to amend a pleading is not appealable as a "final decision" within the meaning of 28 U.S.C. Sec. 1291 (1982). See D'Ippolito v. Cities Serv. Co., 374 F.2d 643, 648 (2d Cir.1967); DeNubilo v. United States, 343 F.2d 455 (2d Cir.1965) (per curiam); Wolfson v. Blumberg, 340 F.2d 89 (2d Cir.1965) (per curiam). Neither is such an order immediately appealable under the "collateral order" exception to the final judgment rule identified in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949). See DeNubilo, 343 F.2d at 457. An interlocutory order is immediately appealable under Cohen only if, inter alia, it would "be effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468, 98 S.Ct. 2454, 2458, 57 L.Ed.2d 351 (1978). We would not be foreclosed on appeal following a final judgment in this case, however, from reviewing the district court's denial of the motion to amend the answer. See D'Ippolito, 374 F.2d at 648-49.

The Laus contend that the particular order at issue here is "effectively unreviewable on appeal from a final judgment" because they might be collaterally estopped from relitigating at a jury trial on their counterclaims any factual issues decided at a prior bench trial on Richardson's claims. It is argued that "[s]uch an estoppel would deprive the Laus of their constitutional right to a jury trial." We believe that this argument does not provide a basis for an interlocutory appeal in the circumstances of this case.

We need not consider every conceivable consequence of an interlocutory order in determining whether that order is "effectively unreviewable on appeal from a final judgment." For example, many interlocutory orders may have the incidental effect of precluding a jury determination of particular issues at a subsequent trial. ⁴ If we were to permit an immediate appeal whenever such a possibility existed, we would violate our own instruction that "Cohen must be kept within narrow bounds, lest this exception swallow the salutory 'final judgment' rule." Weight Watchers v. Weight Watchers Int'l, Inc., 455 F.2d 770, 773 (2d Cir.1972) (citations omitted); see also United States Tour Operators Ass'n v. Trans World Airlines, Inc., 556 F.2d 126, 128 (2d Cir.1977) ("Attempts to come within the scope of the Cohen doctrine have been legion, but we have not been receptive to an expansive reading of this exception to the final judgment rule."); UAW v. National Caucus of Labor Comms., 525 F.2d 323, 325 (2d Cir.1975) ("Cohen may not be abused by indiscriminate extension").

We are particularly reluctant to adopt the proposed expansion of Cohen in the circumstances of this case, where the Laus' assertion of their right to a jury trial appears to have been primarily designed to create appellate jurisdiction. The Laus passed up one opportunity for a jury determination of such issues by failing to make a timely demand for a jury trial on Richardson's claims. See Fed.R.Civ.P. 38(b), (d). Furthermore, after the denial of their motion to amend, the Laus did not attempt to obtain a jury trial on Richardson's claims pursuant to Fed.R.Civ.P. 39(b), which permits a court to order a jury trial despite the parties' failure to make a timely jury demand. Indeed, they made no mention of their desire for a jury trial on the common issues until January 14, 1987, when they asked Judge Kram to stay the bench trial on Richardson's claims pending this appeal. The Laus' belated interest in their seventh amendment rights thus seems motivated...