Under Rule 54(b) and applicable precedent, “a partial final judgment is not appealable under Rule 54(b) absent an express determination that there is no just reason for delay.”
How later courts described this case
- Under Rule 54(b) and applicable precedent, “a partial final judgment is not appealable under Rule 54(b) absent an express determination that there is no just reason for delay.”
Written by the judges who cited it.
The opinion
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
SPRINGFIELD DIVISION
CSMC 2007-C4 EGIZII PORTFOLIO LLC, )
)
and )
)
U.S. BANK NATIONAL ASSOCIATION, )
as Trustee for the Registered Holders of )
the MEZZ CAP COMMERCIAL )
MORTGAGE TRUST 2007 C-5, )
COMMERCIAL MORTGAGE PASS- )
THROUGH CERTIFICATES, SERIES )
2007-C5, )
)
Plaintiffs, )
)
v. ) Case No. 15-3195
) (consolidated)
SPRINGFIELD PRAIRIE PROPERTIES, )
LLC, an Illinois limited liability company; )
ROBERT W. EGIZII, an individual; THOMAS )
EGIZII, an individual; MICHAEL EGIZII, an )
individual; RODNEY EGIZII, an individual; )
JODI BAPTIST, an individual; JOHN PRUITT, )
an individual; PAMELA JOHNSON, )
EXECUTOR OF THE ESTATE OF CLYDE )
BEIMFOHR; EEI HOLDING )
CORPORATION, an Illinois )
Corporation; and EGIZII PROPERTY )
MANAGERS, LLC, an Illinois limited )
liability company, )
)
Defendants. )
OPINION
RICHARD MILLS, United States District Judge:
Plaintiffs move for certification pursuant to Federal Rule of
Civil Procedure 54(b).
I. INTRODUCTION
The Plaintiffs seek certification as to the Court’s Opinion
following the bench trial of this action. Because the Opinion set
forth final judgment on all counts in the Plaintiffs’ Complaint
except those asserted against Robert W. Egizii (Count III for
partial recourse Breach of Guaranty and Count IV for full
recourse Breach of Guaranty) due to the bankruptcy stay as to
him, the Plaintiffs claim there is no just reason to delay
enforcement of the Court’s Opinion.
The Defendants claim the Plaintiffs request should be denied
because (1) the Court dismissed the Law Firm Defendants with
prejudice and Plaintiffs’ request is thus moot; and (2) Plaintiffs’
request is a covert attempt to enlarge their expired appeal deadline
against the Law Firms.
II. BACKGROUND
Lawsuit against the Law Firms (Case No. 15-3195)
This is a consolidated case that began as two separate
lawsuits: Case Number 15-cv-3195 and Case Number 15-cv-
3199. The first-filed case was asserted against Law Firm
Defendants Londrigan, Potter & Randle, P.C.; Perkins Coie LLP;
Scott & Scott, P.C.; and Sgro, Hanrahan, Durr & Rabin, LLP
(collectively referred to as the “Law Firm Defendants”).
The Plaintiffs asserted four counts against the Law Firm
Defendants. The claims in that Lawsuit were alleged only against
the Law Firm Defendants. The Plaintiffs alleged the Law Firm
Defendants accepted funds from their clients that violate
provisions of the Uniform Fraudulent Transfer Act (“UFTA”). In
their Complaint, the Plaintiffs also alleged that the Law Firm
Defendants’ clients—who are Defendants in the second-filed
case--entered into commercial loan agreements with Plaintiffs
that include an Assignment of Rents and other loan agreements
and, instead of paying their mortgage, the Law Firm Defendants’
clients transferred those monies to the Defendant Law Firms.
The Plaintiffs further asserted that the equitable lien created
by the loan documents constitutes a “claim” to those funds as
defined by UFTA; that the transfers were done at a time when
their clients were insolvent; and, that their clients did not receive
reasonably equivalent value for the funds that were transferred.
The Plaintiffs allege that because the Law Firms accepted these
funds, they became a transferee under UFTA.
Lawsuit against the Borrower, its Members and Related
Entities (Case No. 15-3199)
In the second-filed case, the Plaintiffs filed suit against the
clients of the Law Firm Defendants, which included the Borrower
pursuant to a certain commercial real estate loan agreement and
the Borrower’s individual Members/Partners, an
Indemnitor/Guarantor and other related entities (the “Borrower
Lawsuit”). The Borrower Lawsuit contains no claims and seeks
no relief against the Law Firm Defendants.
Motions to Dismiss and Motion to Consolidate
Motions to dismiss were filed in both cases. Both sets of
Defendants moved to dismiss all claims. On December 26, 2015,
while the motions to dismiss were pending, the Court granted the
Defendants’ motion to consolidate, thereby consolidating the
cases for all purposes.
On August 15, 2016, the Court granted the Law Firm
Defendants’ motion to dismiss the Law Firm Lawsuit. If the cases
had not been consolidated, the Order would have been a final
ruling as to all claims. Because they were consolidated, the Court
did not enter a “final judgment” as to the dismissal of the
Plaintiffs’ complaint in the Law Firm Lawsuit.
On October 26, 2016, the Court denied the Plaintiffs’ first
motion for a Federal Rule of Civil Procedure 54(b) certification.
On August 14, 2018, the Court denied the Plaintiffs’ motion for
leave to amend their complaint against the Law Firms. On March
6, 2019, the Court denied the Plaintiffs’ second motion for a Rule
54(b) certification against the Law Firms in which the Plaintiffs
sought to have the dismissal of the Law Firms be with prejudice.
Opinion Following Trial
Following a lengthy bench trial, the Court issued its final
Opinion on Trial on March 16, 2021. The Opinion disposed of
all claims that were not stayed due to Defendant Robert W.
Egizii’s bankruptcy filing. The Law Firms were dismissed “with
prejudice” in Case Number 15-3195. The Opinion held that
several of the Defendants in Case Number 15-3199 (Thomas
Egizii, Michael Egizii, Rodney Egizii, Jodi Baptist, John Pruitt
and Executor of the Estate of Clyde Beimfohr) were not liable to
the Plaintiffs. The Opinion ordered the entry of Judgment against
other Defendants in Case Number 15-3199 (Springfield Prairie
Properties LLC, EEI Holding Corporation and Egizii Property
Managers, LLC). Because of the bankruptcy stay as to Robert W.
Egizii, no judgment was entered on Counts III (breach of contract,
partial recourse on Egizii’s Guaranty) and IV (breach of contract,
full recourse, on Egizii’s Guaranty), which were asserted solely
against him.
Appellate proceedings
On April 15, 2021, the Plaintiffs filed a notice of appeal
seeking to “appeal the decision of this Court entered on March
16, 2021. The Defendants state that Plaintiffs failed to file their
docketing statement, which would have informed the Seventh
Circuit of: (1) the different defendant groups in the two cases,
including that Robert W. Egizii was a defendant only in Case
Number 15-3199; and (2) this Court’s separate rulings in each
case.
On April 21, 2021, the Seventh Circuit issued an Order
noting the bankruptcy stay as to Egizii, questioning whether this
Court’s Order was a final appealable judgment under 28 U.S.C. §
1291 and directing the Plaintiffs to file a memorandum by May 5,
2021, stating why the appeal should not be dismissed for lack of
jurisdiction.
On May 3, 2021, the Seventh Circuit issued a Rule to Show
Cause against the Plaintiffs for failure to file a docketing
statement, stating:
Circuit Rule 3(c) directs the appellant to file and serve a
Docketing Statement, which meets the requirements of
Circuit Rule 28(a), with the Clerk of the District Court at
the time of the filing of the notice of appeal or with the
clerk of this court within seven (7) days of filing the notice
of appeal. Your Rule 3(c) Docketing Statement has not been
filed to date. Accordingly, IT IS ORDERED that the
appellant file this overdue Docketing Statement with the
clerk of this court within fourteen (14) days of the date of
this order. Failure to do so will result in a one hundred dollar
($100.00) fine and/or dismissal of this notice of appeal.
Based on the foregoing the Defendants state that, in order to
continue prosecuting their appeal against the Law Firms in Case
Number 15-3195, the Plaintiffs simply had to: (1) file a docketing
statement; and (2) respond to the Seventh Circuit’s April 21 order
to inform the court that an appeal against the Law Firms was
proper under Hall v. Hall, 138 S. Ct. 1118 (2018), because this
Court’s March 16 Judgment dismissing the Law Firms with
prejudice was a final, appealable Order in Case Number 15-3195.
The Defendants allege the Seventh Circuit was correct that an
appeal in Case Number 15-3199 cannot proceed absent a Rule
54(b) certification due to Robert Egizii’s bankruptcy filing.
On May 5, 2021, the Plaintiffs filed a motion to voluntarily
dismiss their entire appeal and the Seventh Circuit granted the
dismissal.
The Plaintiffs state that, although the Court addressed each
count of Plaintiffs’ Complaint, the Opinion did not contain the
requisite language of Federal Rule of Civil Procedure 54(b),
which would permit the Plaintiffs to appeal. Rule 54(b) language
would be required to grant Court of Appeals jurisdiction over any
appeal. Otherwise, the fact that no judgment issued on Counts III
and IV because of the bankruptcy stay precludes an appeal.
The Defendants note that the dismissal of the Law Firms in
the March 16 Judgment was “with prejudice.” Accordingly, it
was a final judgment and instantly appealable without an express
Rule 54(b) certification.
III. DISCUSSION
The Plaintiffs ask the Court to certify the Opinion under Rule
54(b) so that it becomes final. Rule 54(b) provides:
Judgment on Multiple Claims or Involving Multiple
Parties. When an action presents more than one claim for
relief—whether as a claim, counterclaim, crossclaim, or
third-party claim—or when multiple parties are involved,
the court may direct entry of a final judgment as to one or
more, but fewer than all, claims or parties only if the court
expressly determines that there is no just reason for delay.
Otherwise, any order or other decision, however designated,
that adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties does not end the action
as to any of the claims or parties and may be revised at any
time before the entry of a judgment adjudicating all the
claims and all the parties’ rights and liabilities.
Fed. R. Civ. P. 54(b). In a case involving multiple defendants, if
the claims are stayed against one defendant because of a
bankruptcy filing, the plaintiff may appeal if the court issues a
Rule 54(b) certification stating “its dismissal of the claims against
the noninsolvent defendant constituted a final judgment despite
the pending stay against the insolvent defendant.” Kimbrell v.
Brown, 651 F.3d 752, 758 (7th Cir. 2011); see also Wilhelm v.
Eastern Airlines, Inc., 927 F.2d 971, 973 (7th Cir. 2001) (Under
Rule 54(b) and applicable precedent, “a partial final judgment is
not appealable under Rule 54(b) absent an express determination
that there is no just reason for delay.”).
The Plaintiffs claim that the relevant law strongly favors
Rule 54(b) certification. Because the Court’s recent Opinion and
Order resolved all claims that did not involve a bankruptcy stay—
those being Counts III and IV asserted solely against Egizii--there
is no just reason to delay Rule 54(b) certification. All of the
requirements under Rule 54(b) are satisfied. Although the
Court’s Opinion at least functionally provided finality at the
district court level, certification of the Opinion under Rule 54(b)is
necessary to formally provide finality and vest the Seventh
Circuit with jurisdiction.
The Plaintiffs state that undue hardship would result if the
Court were to deny the motion for certification. They would be
functionally barred from appealing. Therefore, the Plaintiffs ask
the Court to certify the Opinion as a final order under Rule 54(b).
The Defendants claim the Plaintiffs’ motion is a covert
attempt to extend the appeal deadline, which expired 30 days after
the entry of the March 16 Judgment, on April 15, 2021. The
Plaintiffs filed the notice of appeal on April 15 and dismissed
their appeal on May 5, 2021, after the Seventh Circuit issued the
Rule to Show Cause. The Plaintiffs were not precluded from
continuing to prosecute their appeal as to the Law Firm
Defendants. Because they dismissed the appeal, the Plaintiffs are
time-barred from pursuing another appeal against the Law Firms.
The Defendants claim that because the deadlines for perfecting an
appeal are jurisdictional and Plaintiffs are time-barred from
seeking any extension of the appellate deadline against the Law
Firms under Federal Rule of Appellate Procedure 4, the Plaintiffs
are precluded from pursuing a further appeal against the Law
Firms.
In Hall v. Hall, 138 S. Ct. 1118 (2018), the United States
Supreme Court observed that “constituent cases retain their
separate identities at least to the extent that a final decision in one
is immediately appealable by the losing party. That is, after all,
the point at which, by definition, a ‘district court disassociates
itself from a case.’” Id. at 1131. A consequence of consolidation
is that “when one of several consolidated cases is finally decided,
a disappointed litigant is free to seek review of that decision in
the court of appeals.” Id.
Based on the reasoning of Hall, the March 16 Judgment
dismissing the Law Firm Defendants with prejudice was instantly
appealable because the Court had rendered a final judgment in
Case Number 15-3195 in favor of the Law Firms. The fact that
claims remained pending in what originally was Case Number 15-
3199 due to Defendant Robert Egizii’s bankruptcy case did not
affect the finality of the Court’s dismissal of the Law Firms with
prejudice. Hall makes that clear. Because only the Law Firms
were originally named as defendants in Case Number 15-3195,
Robert Egizii’s bankruptcy has no effect on the finality of the
Court’s March 16 Judgment as to those entities. It does not appear
there is a basis under Federal Rule of Appellate Procedure 4 to
grant Rule 54(b) certification.
The Plaintiffs also provide no basis under Federal Rule of
Appellate Procedure 4(a)(5)(A) for extending the time to file a
notice of appeal.
For the reasons stated herein, the Court cannot grant Rule
54(b) certification. The March 16 Judgment dismissing the Law
Firms with prejudice was instantly appealable under Hall.
Ergo, the Plaintiffs’ Motion for Certification pursuant to
Federal Rule of Civil Procedure 54(b) [d/e 254] is DENIED.
ENTER: June 2, 2021
FOR THE COURT:
/s/ Richard Mills
Richard Mills
United States District Judge