Schmidt v. Herrmann
| Decision Date | 04 February 1980 |
| Docket Number | No. 77-2821,77-2821 |
| Citation | 614 F.2d 1221 |
| Parties | Gilbert SCHMIDT et al., Appellants, v. Karl HERRMANN et al., Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
J. R. Cissna, Seattle, Wash., for appellants.
Dale B. Ramerman, Bogle & Gates, Seattle, Wash., for appellees.
Appeal from the United States District Court Western District of Washington.
Before KILKENNY and CHOY, Circuit Judges, and GRANT, District Judge. *
This is an appeal from a judgment of the district court dismissing appellants' complaint with prejudice for failure to comply with Rule 9(b), FRCivP, and orders of the court to comply with the Rules of Procedure. The complaint involved the approval by the bankruptcy court of the sale of certain real property of a bankrupt corporation. The litigation has been in the federal courts since 1967, at which time the debtor, Federal Shopping Way, Inc. (FSW), was faced with an involuntary petition for reorganization under Chapter X of the Bankruptcy Act. That the litigation is not a stranger to this court is made evident by our decision in the Chapter X proceeding, In the Matter of Federal Shopping Way, Inc., 433 F.2d 144 (CA9 1970). Subsequent to that proceeding, the debtor was adjudicated a bankrupt and liquidation proceedings under the Bankruptcy Act were ordered. Two appeals from that decision were later dismissed because the docket fees were not paid and the appeals were not pursued. Many of the appellants before us were purchasers of the capital stock of FSW and of its debentures.
The record shows that FSW had acquired considerable real property on each side of Highway 99 near Federal Way in the State of Washington. The land on the west side was developed into a shopping center and carnival rides area. Twenty acres on the east side were divided into 8,000 parts called "Recreplex Units." About half the units were sold to persons who have since, in a class action, obtained a securities fraud judgment against John R. Cissna, now the attorney for the appellants.
Cissna had a controlling interest in the corporation known as Federal Association, Inc. It had sold securities to approximately 2,500 people. Funds of Federal Association were used to form Federal Old Line Insurance Company (FOLI) and FSW. Cissna had the controlling interest in both FOLI and FSW and is the principal actor behind this appeal. Many of the appellants are policyholders of FOLI.
In order to complete the liquidation of the last significant assets of FSW, the trustee in bankruptcy (appellee McQuaid) commenced an action to quiet title in the trustee and to authorize sale of the remaining undeveloped land on the east side of the highway. 1 Various objections to the proposed sale were filed, including those of Cissna on behalf of many, if not all, of the appellants in this action. He claimed to represent 206 creditors of FSW. After an appraisal of the property and a hearing, the bankruptcy court made findings of fact, and entered conclusions of law and an order approving the sale of the property by the trustee. The sale was made to one of the appellees in this action, Andrew Cratsenberg.
Cissna filed three notices of appeal from the order approving the sale. None of the notices were filed on time and the appeals were dismissed by the district court.
Approximately ten months after the entry of the order approving the sale, the proceeding now before us was commenced to set aside that order, to rescind the sale, and to recover damages for alleged frauds. Not all of the appellants and appellees are named in the caption of the complaint, but seem to be included by reference in addenda to the complaint. In any event, it is clear that Cissna is attempting to represent four general classes of appellants (plaintiffs): (1) stock and bond holders of FSW; (2) policyholders of FOLI; (3) purchasers of the recreplex interests; and (4) owners of interests in a tract of land called "Santa Fair." The appellees (defendants) are: (1) Karl Herrmann, the Washington State Insurance Commissioner; (2) Andrew Cratsenberg, the buyer of the property subject to the bankruptcy order authorizing the sale of the property; (3) Joseph McKinnon, the attorney who represented the class which won the securities fraud judgment against Cissna; (4) Thomas McQuaid, the trustee in bankruptcy who sought the sale of the bankrupt's property; (5) the attorneys of the above-mentioned defendants, and; (6) various people alleged to be under the control of the above-mentioned appellees.
The complaint before us consists of 30 pages, including 21 pages of allegations and 9 pages of addenda. From a practical viewpoint, it is impossible to designate the cause or causes of action attempted to be alleged in the complaint. The appellants' main contentions seem to be (1) that the property was sold at a price which should shock the conscience of the court; (2) that the sale should be set aside because of a massive conspiracy among the appellees to defraud appellants, and (3) that the bankruptcy judge was allegedly biased against them. The complaint also demands over $20,000,000.00 in damages.
On the motion of appellee McKinnon, the district court struck appellants' complaint for failure to comply with FRCivP 8(a), 8(e), and 9(b), but granted leave to file an amended complaint. The court specifically ordered that the complaint contain a short, plain, simple, concise, and direct statement on the court's jurisdiction and on the acts or omissions of which the appellants complain.
Cissna then filed a first amended complaint. The court, on motion of appellee McQuaid, dismissed this complaint. Appellants' claim which sought to nullify the bankruptcy court's order approving sales by the trustee was dismissed with prejudice on the grounds that the district court was without jurisdiction to affect title to the property within the jurisdiction of the bankruptcy court and that the order of the bankruptcy court was not subject to collateral attack. Although this order was certified under FRCivP 54(b), no appeal was prosecuted.
Additionally, the first amended complaint was dismissed on the grounds that it failed to present a short, plain statement respecting the alleged wrongdoings of each appellee and that it failed to comply with the previous court order requiring such a statement. The court granted leave to file another amended complaint on the fraud claims.
Subsequently, the second amended complaint was filed and was later dismissed with prejudice on the ground that it failed to set forth with particularity the circumstances constituting fraud as to each appellee in accordance with Rule 9(b). The court also dismissed the complaint for failure to comply with the court's orders to present a short, simple, concise, and direct statement respecting the alleged wrongdoing of each appellee. This appeal is prosecuted from this last mentioned order and judgment of dismissal with prejudice.
The sole issue before this court is whether the district court abused its discretion in dismissing the appellants'...
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Ketayi v. Health Enrollment Grp., Corp.
... ... See Schmidt v. Herrmann , 614 F.2d 1221, 1224 (9th Cir. 1980). ii. Fraud claims Defendants assert that Plaintiffs have failed to meet the heightened pleading ... ...
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Pelletier v. Zweifel
... ... Co., 651 F.2d 671 (9th Cir.1981) (affirming dismissal of pleading that was verbose, confusing and almost entirely conclusory); Schmidt ... Co., 651 F.2d 671 (9th Cir.1981) (affirming dismissal of pleading that was verbose, confusing and almost entirely conclusory); Schmidt v. Herrmann ... ...
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Thunderfoot v. United States
... ... 8(a) is violated ... when a complaint is excessively “verbose, confusing and ... almost entirely conclusory”); Schmidt v ... Herrmann, ... 614 F.2d 1221, 1224 (9th Cir. 1980) (upholding a Fed.R.Civ.P ... 8(a) dismissal of “confusing, ... ...
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Hearns v. San Bernardino Police Dept.
... ... Co., 651 F.2d 671, 673 (9th Cir.1981). We review a Rule 41(b) dismissal for abuse of discretion. Id. at 674 (citing Schmidt v. Herrmann, 614 F.2d 1221, 1224 (9th Cir.1980)). To do so, we must necessarily consider the legal question of whether the district court correctly ... ...