S.E.C. v. Capital Consultants LLC
| Citation | 453 F.3d 1166 |
| Decision Date | 12 July 2006 |
| Docket Number | No. 04-35967.,No. 04-35339.,04-35339.,04-35967. |
| Parties | SECURITIES AND EXCHANGE COMMISSION, Plaintiff, and Karen Lynn Benson; P.J. Brix, LLC, Claimants-Appellants, v. CAPITAL CONSULTANTS LLC; Jeffrey L. Grayson; Barclay L. Grayson, Defendants, Thomas F. Lennon, Receiver-Appellee. Securities and Exchange Commission; Carolyn L. Arntson; Arntson Family Holdings, LLC; Mary Arntson; Jerry L. Baker; Mary Beth Baker; Karen Lynn Benson; Roderick A. Livesay; Brix Dearmond Llc; John R. Chaney; J. David Coughlin and Jennifer Lee Coughlin Trust; J. David Coughlin; Marlene Dutcher; Robert Dutcher; Davol Family Trusts A and B; Ann Hazen Francis; Fremont Land Company LLC; Funeral Associates LLC; Jay A. Hinz; Holtz Joint Trust; Kenneth E. Holtz; Rosella G. Holtz; Paula J. King; Shelley King; Laborers International Union of North America, Local 296; Elizabeth McNally; James Murphy; Patricia J. Murphy; Wayne Musgrove; Estate of Bennie Kay Musgrove; Betty Norrie; Intertribal Timber Council; P.J. Brix, LLC; Kenneth R. Poorman; Poorman Family LLC; Quality Electric Money Purchase Plan; Scott Thomason; Donald E. Tykeson Trust; Donald E. Tykeson; Donald E. Tykeson Foundation; Boyd Van Ness; Wand's Funeral Home Defined Benefit Pension Plan; Robert J. Wilhelm Trust; Allen and Esther Wilson Revocable Trust; Leslie R. Wolf; Martin Wolf; Deborah Wolf; Nancy M. Gabriel; Joseph Gabriel; Robert B. Gutterman Trust; S.M. Gutterman, MA, JD, Profit-Sharing Plan; G.S. Gutterman, MD; S.M. Gutterman; G.S. Gutterman; Ibew Local Union 1245; Noel B. Flynn; Jeld-Wen Foundation; Quality Electric, Inc.; Aftcs-Preferred Endowment Care-California; American Funeral & Cemetery Trust Services Preferred Endowment Care — Oregon/Washington, Plaintiffs, Eighth District Electrical Pension Fund; Eighth District Electrical Benefit Fund, Claimants, and American Funeral and Cemetery Trust Services; Virginia K. Mudd; Virginia B. Mudd Revocable Trust, Plaintiffs-Appellants, v. Capital Consultants LLC; Jeffrey L. Grayson; Barclay L. Grayson; Capital Consultants LLC; Andrew Wiederhorn; Lawrence A. Mendelsohn; Jeffrey L. Grayson; Barclay L. Grayson; Capital Consultants, Inc.; Wilshire Credit Corporation; Wilshire Financial Services Group, Inc.; Wilshire Servicing Corporation; Portland Servicing Corporation; Capital Wilshire Holdings, Inc.; Sterling Capital LLC; Daniel Dyer; Ted Wiederhorn; Specialty Finance Investors LLC; Tiffany Wiederhorn; Joyce Mendelsohn; Wilshire Real Estate Investment Trust, Inc.; First Bank of Beverly Hills FSB; Wilshire Acquisition Corporation; Wilshire Funding Corporation; Cf Credit LLC; Bud Coleman; David Frey; Foley McIntosh Frey & Claytor PC; Oxbow Capital Partners, LLC; Oxbow Capital 1999 Fund I, LLC; Oxbow Capital 1999 Fund B, LLC; Bear Stearns & Co.; Moss Adams LLP; Consillium, Inc.; Suzanne Perkins; Larry Tapanen; Stephen Olson; Shawn Olson; O'Melveny & Myers LLP; Robert N. Eccles; Mark Peterman; Ellis & Howard PC; Weiss Jensen; McCarter & English; Brooks Financial LLC, Defendants, Thomas F. Lennon, Receiver-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
John W. Stephens, Esler, Stephens & Buckley, Portland, OR, for the appellants.
Loraine L. Pedowitz, Allen Matkins Leck Gamble & Mallory LLP, San Diego, CA, for the appellee.
Appeal from the United States District Court for the District of Oregon; Garr M. King, District Judge, Presiding. D.C. Nos. CV-00-01290-KI, CV-01-00609-KI.
Before MELVIN BRUNETTI, THOMAS G. NELSON, and RICHARD A. PAEZ, Circuit Judges.
Pursuant to 28 U.S.C. § 1291, we have jurisdiction over appeals from "all final decisions of the district courts of the United States."1 This appeal presents the question of whether a district court's order determining the rights and liabilities of some, but not all, claimants with claims to receivership assets is a final decision under § 1291.2 We conclude that, unless the district court certifies the order and directs entry of judgment pursuant to Federal Rule of Civil Procedure 54(b), such an order is not a final decision. Thus, we lack jurisdiction over the appeal of one set of claimants/appellants, Benson and Brix, LLC ("Benson and Brix"), but we have jurisdiction over the appeal of the other set, the American Funeral and Cemetery Trust Services, MUDD, and the Mudd Revocable Trust. We address the merits of the second set of claimants' appeal in a memorandum disposition issued with this opinion.
These consolidated appeals arise from a civil suit against an investment advisor, Capital Consultants, LLC ("CCL"), by the SEC ("the SEC litigation"). The appellants were all clients of CCL and are thus claimants in the SEC litigation. To understand their appeal, one must not only understand the appellants' position in the SEC litigation, but also in another suit.
The appellants are part of a group known as the American Funeral Plaintiffs. Along with other clients of CCL, the American Funeral Plaintiffs sued CCL and third parties directly ("the direct action") when CCL's fraud became known. When settlement talks with the third party defendants in the direct action stalled due to differences of opinion between the American Funeral Plaintiffs and the other plaintiffs, a settlement agreement among the plaintiffs was reached. The American Funeral Plaintiffs agreed to exchange their rights to certain claims against the third party defendants in the direct action — and therefore their ability to block settlement — in exchange for $9.975 million, plus interest. Because CCL was, at the time of the settlement in the direct action, under receivership in the SEC litigation, the district court in the SEC litigation had to approve the settlement agreement among the plaintiffs in the direct action. It did so. Thus, the American Funeral Plaintiffs ended their involvement in the direct action.
Meanwhile, the SEC litigation continued. Eventually, the court adopted a second amended distribution plan. It interpreted that plan to allow claimants, including the appellants, to receive a set distribution or to trace their investments if they wished. However, in an order dated August 18, 2003, the court held that American Funeral Plaintiffs had to remit any funds they had received pursuant to the settlement agreement among the plaintiffs in the direct action, if they elected to trace their investments. Both sets of appellants elected to trace, and now challenge this remittance requirement, arguing that it is neither true to the terms of the distribution plan nor to the terms of the settlement agreement.
The receiver did not object to the tracing claims of the American Funeral and Cemetery Trust Services, MUDD, and the MUDD revocable trust. Thus, the August 18, 2003 order provided the method by which the receiver ultimately determined the sums this first set of claimants would receive. The claimants sought Rule 54(b) certification of, and entry of judgment on, the district court's August 18, 2003 order as it applied to them. The district court granted their request. Accordingly, they appeal from a judgment the district court certified as final.
The receiver did object to the tracing claims of Benson and Brix. However, in an order dated February 9, 2004, the district court approved their claims. Thus, the August 18, 2003 order provided the method by which the receiver ultimately determined the sums Benson and Brix would receive, but the court's February 9, 2004 order allowed the award of those sums over the receiver's objection. Without seeking Rule 54(b) certification, Benson and Brix appealed the district court's February 9, 2004 order.
In the appellants' initial briefing, they argued that this court has jurisdiction over Benson and Brix's appeal because the district court's February 9th order was a final order or judgment pursuant to § 1291. They argued for a liberal interpretation of finality, drawing analogies to bankruptcy. At oral argument, they supplemented their briefing with two citations to out-of-circuit cases that held similar orders appealable under the collateral order doctrine. They argued for jurisdiction over the American Funeral and Cemetery Trust Services, MUDD, and the Mudd Revocable Trust's appeal pursuant to Rule 54(b) and § 1291.
Generally, a final decision under § 1291 "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment."3 However, in certain circumstances, a decision that does not end the litigation may be considered final under the statute. The collateral order doctrine defines one such circumstance; Rule 54(b), another.
No one contends that either the August 18th order or the February 9th order ends the litigation. Accordingly, neither order is a final decision in the usual sense. To determine if we nonetheless have jurisdiction under § 1291, then, we must determine whether the collateral order doctrine or Rule 54(b) applies to those orders.4
The collateral order doctrine was designed to allow appeal from a "narrow class of decisions that do not terminate the litigation, but must, in the interest of achieving a healthy legal system[,] nonetheless be treated as final."5 Requirements of the doctrine are often described as three-fold. Orders that do not dispose of the entire litigation are appealable as collateral orders if they "[1] conclusively determine the disputed question, [2] resolve an important issue completely separate from the merits of the action, and [3] [are] effectively unreviewable on appeal from a final judgment."6 The Supreme Court has emphasized that these requirements are to be applied strictly and that only a "narrow class of decisions" satisfy them.7
Strict application of the requirements is particularly important because, when a court identifies an order as an appealable, collateral one, it determines the appealability of all such...
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