Penn West Associates, Inc. v. Cohen

Opinions of the United

2004 Decisions States Court of Appeals

for the Third Circuit

6-9-2004

Penn West Assoc v. Litman

Precedential or Non-Precedential: Precedential

Docket No. 02-4344

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PRECEDENTIAL On Appeal from the

United States District Court for the

UNITED STATES Western District of Pennsylvania

COURT OF APPEALS D.C. Civil Action No. 97-cv-01678

FOR THE THIRD CIRCUIT (Honorable Alan N. Bloch)

No. 02-4344 Argued September 15, 2003

Before: ALITO, AMBRO and

PENN WEST ASSOCIATES, INC., a CHERTOFF, Circuit Judges

Corporation

t/d/b/a THE WILKINS HOUSE, (Opinion filed June 9, 2004)

Appellant Bela A. Karlowitz, Esquire (Argued)

Daniel M. Flynn, Esquire

v. Karlowitz & Cromer

429 Forbes Avenue

KATHERINE COHEN, Co-Executrix of 1201 Allegheny Building

the Estate of Eugene M. Litman*; Pittsburgh, PA 15219

MICHAEL LITMAN, Co-Executor of

the Estate of Eugene M. Litman*; Attorneys for Appellant

JAMES W. MCCARTHY; PENN WEST

ASSOCIATES, also known as PENN Robert L. Potter, Esquire (Argued)

WEST OFFICE BUILDING, a David A. Strassburger, Esquire

limited partnership; BRANDYWINE Strassburger, McKenna, Gutnick

AGENCY; ALPINE & Potter

CONSTRUCTION CO., a Corporation; 444 Liberty Avenue

PROPERTY DEVELOPMENT Four Gateway Center, Suite 2200

ASSOCATES, INC., a Corporation; Pittsburgh, PA 15222

PITTSBURGH INVESTMENT

COMPANY, a Partnership; James A. Ashton, Esquire

PATRICIA KATZ, general partner; Suite 227

ABLE HOME CENTER, INC.; 500 Lewis Run Road

DIANNA Pittsburgh, PA 15122

BOBACK, an individual; MARGARET

MULL, an individual Attorneys for Appellees

*(Amended pursuant to Court

Order of May 21, 2004) OPINION OF THE COURT

AM BRO, Circuit Judge: cause of action under the Racketeer

Influenced and Corrupt Organizations Act

We review the District Court’s

(“RICO”), 18 U.S.C. §§ 1961-1968.

November 5, 2002 order denying the

According to the complaint, the defendants

motion of Penn West Associates, Inc.

had purportedly looted, and aided in the

(“Penn West”) to re-open its civil RICO

looting of, Penn West’s assets between

case. That case was administratively

February 1988 and late 1993, when

closed by order of the District Court on

Eugene M. Litman, H. Raymond Litman,

August 19, 1999, after both parties

and McCarthy owned the company.

informed the Court that they tentatively

Levine was never a named party to the

settled their dispute. In fact, the civil

action.

RICO case was not concluded. The

District Court mistook its administrative On September 17, 1997, the action

closure of the case as a final decision, was removed to the United States District

which mistakenly led it to treat Penn Court for the Western District of

West’s motion to re-open the case and list Pennsylvania. Prior to trial, all counts of

it for trial as one under Federal Rule of the complaint were dismissed except for

Civil Procedure 60(b). Thus it erred in the civil RICO claim against the Litman

denying Penn West’s motion to re-open. Group. For trial purposes, the case was

also joined with a related qui tam action

I. Background

under the False Claims Act, 31 U.S.C. §§

On September 11, 1997, Penn West 3729-3731, captioned United States ex rel.

filed suit in the Court of Common Pleas of Weinstein v. Litman, No. 96-1860. Robert

Allegheny County, Pennsylvania against Potter, Esq. was lead counsel for the

Eugene M. Litman (individually and in his Litman Group in both actions. Robert

capacity as Executor of the Estate of H. Ridge, Esq. was lead counsel for the

Raymond Litman); James W. McCarthy; private plaintiff in the False Claims Act

Penn West Associates, a partnership case. While the RICO case was pending

comprised of Eugene M. Litman, Michael trial, Penn West and Levine both filed

A. Litman, and James W. McCarthy bankruptcy petitions in the United States

(Eugene M. Litman, James W. McCarthy, Bankruptcy Court for the Western District

and Penn W est Associates being of Pennsylvania. Mary Reitmeyer, Esq.,

hereinafter collectively referred to as the was appointed as Trustee for Penn W est in

“Litman Group”); and numerous other its case, and thereafter obtained an order

defendants. The suit arose from Lawrence appointing John Orie, Esq. as special

A. Levine’s purchase in 1993 of all of the counsel for Penn West for purposes of

capital stock of Penn West from Eugene pursuing the RICO action.

M. Litman, James W. McCarthy, and the

On July 1, 1999, after six days of

Estate of H. Raymond Litman. Penn

trial in the RICO case, counsel for the

West’s complaint contained, inter alia, a

parties informed the District Judge that

2

they had reached a settlement. During a sealed. The District Judge ended the

telephone conference on the record that conference by stating: “We’ll advise the

day among, inter alia, the District Judge, jury that they are discharged, and we’ll

Potter and Orie, Potter informed the wait to receive from you the settlement

District Court that his clients (the Litman papers that I have to approve.”

Group) had agreed to pay $25,000 to the

Seven weeks later, the Court,

United States Department of Justice to

having heard nothing further from the

settle the False Claims Act case and that

parties and making no inquiry of them,

the Department of Justice had approved

issued the following order:

the settlement. Furthermore, the Litman

Group had agreed to pay $75,000 to Penn AND NOW , this 19th day of

West to settle the RICO case. Potter August, 1999, having been

informed the District Court that “[m]utual advised by the parties of the

releases will be exchanged with everybody full and final settlement of

in the RICO case[,] including attorneys.” the above captioned matter

Potter also stated that, as part of the and there are no further

settlement, the Litman Group would be matters pending before the

dropping its claims against Levine Court,

individually in his bankruptcy proceeding

and would assert no further claims in IT IS HEREBY ORDERED

either Levine’s or Penn W est’s bankruptcy that the Clerk of the Court

proceedings. Moreover, the Litman Group mark the above captioned

would be marking as satisfied any state matter closed.

court judgments it had obtained against

Levine personally. 1 The triggering premise of the order (final

settlement) proved, however, to be

Although Orie did not speak at the

premature. No settlement agreement was

conference, at no time did he object to the

ever drafted and settlement papers had

description of the terms of the settlement.

never been sent to, nor approved by, the

The parties then agreed that they would

District Court. Nevertheless, the order

not file the settlement agreement of record

was entered by the Clerk and counsel were

in the District Court because of concern

notified accordingly.2

that, if filed, the agreement could not be

As a result of the August 19, 1999

order, the parties and the District Court

1

The District Court’s opinion notes that

this reference to judgments against Levine

2

relates to a “long history of a The release to settle the False Claims

contemptuous and litigious relationship” Act case was nonetheless executed and the

between Levine and one or more members Litman Group paid the $25,000 settlement

of the Litman Group. amount to the Department of Justice.

3

appear to have operated under the personally represented by Orie and that he

assumption that the litigation was had never authorized Orie to include him

terminated. Approximately three months in the settlement. As later recounted in its

later, Reitmeyer, the bankruptcy Trustee opinion, the District Court found it

for Penn West, filed a motion with the “incredulous that the defendants would

District Court to compel enforcement of pay money to [Penn West], solely owned

the purported settlement terms of the by Lawrence Levine, and yet leave

RICO case. The motion stated that the themselves open to lawsuits filed by

settlement had not been finalized because Levine.” Penn West Associates, Inc. v.

the Litman Group had insisted that Levine Litman, No. 97-1678, slip op. at 6 (W.D.

personally join in the “mutual release” Pa. Nov. 5, 2002). Nevertheless, the

referred to during the July 1, 1999 District Court stated that the case was

teleconference. The Litman Group’s “settled and closed.” The Court further

response to Penn West’s motion stated that stated that the settlement agreement, which

the settlement had not been completed for had not been made a part of the record,

the sole reason that Levine “consistently was a contract between the parties whose

refused to execute a general release in terms would have to be litigated in another

favor of the Litman Group Defendants, forum. It therefore denied Penn West’s

notwithstanding that he expects the Litman motion to enforce the settlement. 4

Group Defendants to release all of their

claims against him individually.” 3

4

A conference with the parties The District Court, in its November 5,

(including Levine) was convened by the 2002 opinion, subsequently noted that its

District Court on November 18, 1999 to refusal to enforce the purported settlement

discuss the motion. During this was based on Kokkonen v. Guardian Life

conference, Levine stated that he was not Ins. Co. of Amer., 511 U.S. 375, 380-81

(1994) (holding that a district court lacks

jurisdiction to enforce a settlement

3

The Litman Group’s response agreement unless the court retains

concerned the substance of the settlement jurisdiction over the agreement or

negotiations, indicating that it was Orie, incorporates the terms of the agreement

special counsel for Penn West, who into its dismissal order), and Sawka v.

intended any settlement to encompass “all Healtheast, Inc., 989 F.2d 138, 141 (3d

matters.” During the negotiations, Potter, Cir. 1993) (holding that a district court

counsel for the Litman Group, apparently does not have the power to exercise

informed Orie that the Litman Group was jurisdiction over a petition to enforce a

willing to release its claims against Levine settlement “unless ... [it] is part of the

individually, but only in return for a record, incorporated into an order of the

general release from, among others, district court, or the district court has

Levine personally. m a n i f e s te d a n inte nt to r e t a in

4

Penn West’s Trustee (Reitmeyer) until March 15, 2002, w hen a plan of

did not seek immediately to re-open Penn reorganization was approved by the

West’s civil RICO case. Instead, she filed Bankruptcy Court. Under the plan, Levine

an adversary proceeding in Penn W est’s regained control of Penn West.

ongoing bankruptcy case to enforce the

Subsequently, on May 10, 2002,

purported settlement against the Litman

Penn West filed with the District Court a

Group. On September 11, 2000, the

Motion to List the Case for Trial and Other

Bankruptcy Court issued an opinion

Relief. The motion related the foregoing

stating that

facts and that the Litman Group had filed

[t]here existed a mistake in a substantial claim against Levine in his

the understanding of the ongoing individual bankruptcy case. Penn

parties as to the terms of West argued that the resolution of its civil

settlement. The mistake RICO case would affect substantially the

was basic and central to any claims of the Litman Group and others in

settlement. Defendants Levine’s individual bankruptcy case.

were not going to settle on Finally, the motion requested that “(i) the

the terms offered without docket entry in this Civil Action showing

the release from Mr. Levine that the case is settled be stricken and (ii)

and Mr. Levine, believing the case be scheduled for trial forthwith . .

he had no control over . .” No legal authority for this request was

matters having to do with cited.

the corporation, was willing

The Litman Group’s memorandum

to let the Trustee settle for

in opposition to Penn West’s motion

the corporation, but he

argued that “[t]o declare a ‘closed’ case

individually was not going

‘open’ for reasons other than clerical

to release the defendants.

mistake, it is necessary to file a motion for

relief from the final order under Federal

The Bankruptcy Court concluded that, due

Rule of Civil Procedure 60(b).” Agreeing

to the mistake, no settlement agreement

with the Litman Group, the District Court

existed and therefore denied Penn West’s

analyzed Penn West’s motion under Rule

motion to enforce the settlement.

The Trustee again did not return to

the District Court to seek re-opening the

closed RICO civil case. Rather, Penn

West proceeded through its bankruptcy

jurisdiction”). See Penn West Associates,

Inc., No. 97-1678, slip op. at 6-7.

5

60(b). 5 On November 5, 2002, the Court denied the motion, holding that Penn West

could not satisfy the requirements of Rule

60(b)(1), (2), (3) or (6). Penn West filed a

5 timely notice of appeal from the District

Rule 60(b) states in pertinent part:

Court’s order.

On motion and upon such

terms as are just, the court II. Jurisdiction

may relieve a party or a

The District Court had jurisdiction

party’s legal representative

over Penn West’s civil RICO action

from a final judgment,

pursuant to 28 U.S.C. § 1331, which

order, or proceeding for the

provides for federal question jurisdiction,

following reasons: (1)

and removal was proper under 28 U.S.C. §

m i s t a k e , i n a d ve r t e n c e ,

1441. With respect to our appellate

surprise, or excusable

jurisdiction, we have noted previously that,

negle ct; ( 2) ne w ly

while “it would appear that an order

discovered evidence which

denying a Rule 60(b) motion is appealable

by due diligence could not

under 28 U.S.C. § 1291,” this may not

have been discovered in

always be the case. See Torres v. Chater,

time to move for a new trial

125 F.3d 166, 167-68 (3d Cir. 1997). In

under Rule 59(b); (3) fraud

Torres, we stated:

( w h e ther her e t o f o re

denominated intrinsic or There is an interdependence

e x t r i n s i c ) , between the “f inality”

misrepresentation, or other required for Rule 60(b) and

misconduct of an adverse section 1291. In some

party; (4) the judgment is instances, the Court of

void; (5) the judgment has Appeals may not entertain

been satisfied, released, or an appeal [from a denial of a

discharged, or a prior Rule 60(b) motion] under

judgment upon which it is section 1291 because the

based has been reversed or underlying order in the

otherwise vacated, or it is no district court is purely

longer equitable that the interlocutory and, thus, not

judgment should have within the scope of Rule

prospective application; or 60(b), which applies only to

(6) any other reason

justifying relief from the

operation of the judgment. (3) not more than one year

The motion shall be made after the judgment, order, or

within a reasonable time, proceeding was entered or

and for reasons (1), (2), and taken.

6

“final” judgments and effect of that denial was to dismiss Penn

orders. West’s action. Thus we hold that the

District Court’s November 5, 2002 order

Id. at 168 (citing Kapco M fg. Co. v. C & O

was a final decision under 28 U.S.C. §

Enters., 773 F.2d 151, 153 (7th Cir.

1291. See Brown Shoe Co. v. United

1985)). Thus, if the denial of the Rule

States, 370 U.S. 294, 306 (1962) (noting

60(b) motion is itself interlocutory, we

that the Supreme Court has adopted a

normally do not have appellate jurisdiction

“pragmatic approach to the question of

to review that denial. Torres recognized,

finality”); cf. In re Grand Jury

however, that even where an underlying

Proceedings (U.S. Steel-Clairton Works),

order is purely interlocutory, we may

525 F.2d 151, 155 (3d Cir. 1975) (holding

nonetheless review a district court’s denial

that a district court’s indefinite stay of

of a Rule 60(b) motion if the denial has the

federal grand jury proceedings pending a

effect of “‘wrap[ping] up all matters

state civil contempt action had “the

pending on the docket,’ thus making the

practical effect of a dismissal of the

decision final.” Id. (quoting Kapco Mfg.

proceedings” and hence was a final order).

Co., 773 F.2d at 153). An example is a

We therefore have jurisdiction over this

district court’s interlocutory order

appeal.

remanding a case to an administrative

agency for reconsideration. See id. If, III. Standard of Review

while the case was pending before the

A District Court’s denial of a Rule

agency, a party filed a Rule 60(b) motion

60(b) motion generally is reviewed for

arguing that the remand had been procured

abuse of discretion. Montgomery County

by fraud on the court, a denial of that

v. Microvote Corp., 320 F.3d 440, 445 (3d

motion would be dispositive of the charge

Cir. 2003). The District Court’s decision

of fraud. Id. Given those circumstances,

to treat Penn West’s motion as a Rule

we held that the underlying remand order

60(b) motion, however, is purely a

may be considered final for purposes of

question of law, which we review de novo.

Rule 60(b) and the denial of a Rule 60(b)

See United States v. Small, 333 F.3d 425,

motion would be a final decision,

427 (3d Cir. 2003) (citing United States v.

reviewable under 28 U.S.C. § 1291. Id.

Singletary, 268 F.3d 196, 198 (3d Cir.

We are, however, not presented 2001)).

with the difficulties addressed in Torres

IV. Discussion

because this case does not require us to

review the merits of the denial of a Rule On appeal, Penn West argues that

60(b) motion, for we conclude below that the District Court erred in denying its

it was error to apply Rule 60(b) in this motion to re-open the civil RICO case and

case. The decision before us is the District list it for trial, as its case did not settle and

Court’s denial of a motion to re-open an the District Court’s August 19, 1999 order

administratively closed case. The practical marking the case closed was void. Penn

7

West concludes that the District Court “applies only to ‘final’ judgments and

should have reviewed the motion under orders.” Torres, 125 F.3d at 168; see also

Rule 60(b)(4), which allows relief from a Kapco Mfg. Co., 773 F.2d at 154 (holding

“void judgment,” rather than conducting that “Rule 60(b) must be limited to review

an analysis under Rule 60(b)(1), (2), (3), of orders that are independently ‘final

and (6). We agree that the District Court decisions’ under 28 U.S.C. § 1291”). 6

erred, albeit for different reasons than

The concept of “finality” is well-

those articulated by Penn West. We first

settled. In Catlin v. United States, 324

address whether Rule 60(b) is the correct

U.S. 229, 233 (1945), the Supreme Court

rule governing Penn West’s motion. We

defined a “final decision” for purposes of

next address the significance of the

appeal “generally [as] one which ends the

District Court’s August 19, 1999 order.

litigation on the merits and leaves nothing

Finally, we respond briefly to the concerns

for the court to do but execute the

raised by our dissenting colleague.

judgment.” Interpreting Catlin, we have

A. Application of Rule 60(b) described a final decision as “‘one which

disposes of the whole subject, gives all the

Our analysis of Rule 60(b) begins,

relief that was contemplated, provides with

as it must, with its text (see supra note 5).

reasonable completeness for giving effect

It allows a party to seek relief only from a

to the judgment and leaves nothing to be

“final judgment, order, or proceeding . . .

done in the cause save to superintend,

.” The application of the word “final” is

ministerially, the execution of the

clarified by the Advisory Committee

decree.’” Isidor Paiewonsky Assocs., Inc.

Notes, which explain that

v. Sharp Props., Inc., 998 F.2d 145, 150

the qualifying word “final” (3d Cir. 1993) (quoting In re Moody, 825

emphasizes the character of F.2d 81, 85 n.5 (5th Cir. 1987)) (emphasis

the judgments, orders or in original). Accordingly, “there is no

proceedings from which final order if claims remain unresolved and

Rule 60(b) affords relief; their resolution is to occur in the district

and hence interlocutory court.” Aluminum Co. of Amer. v. Beazer

judgments are not brought East, Inc., 124 F.3d 551, 557 (3d Cir.

within the restrictions of the

rule, but rather they are left

6

subject to the complete In Kapco, the Court reasoned that Rule

power of the court rendering 60(b) must be so limited because “[a] party

them to afford such relief should not get immediate review of an

from them a s justice order for discovery, or one denying

requires. summary judgment and setting the case for

trial, just by filing a Rule 60(b) motion to

Accordingly, we have held that Rule 60(b) set aside the order and then appealing the

denial of this motion.” 773 F.2d at 154.

8

1997) (“Ordinarily, a final decision will importantly, there was more for the

have two effects. First, the decision will District Court to do. The parties had to

fully resolve all claims presented to the continue their litigation in both the District

district court. Second, after the decision Court and the Bankruptcy Court to

has been issued, there will be nothing determine: (1) whether they had indeed

further for the district court to do.”). This “settled” their case in July 1999, and (2)

description accords with several other (a) if so, the terms of that settlement and

courts of appeals. See Moody, 825 F.2d at whether to approve it, or (b) if not, how to

85 n.5; Youghiogheny & Ohio Coal Co. v. achieve a resolution of their ongoing

Baker, 815 F.2d 422, 424 (6th Cir. 1987); dispute. Accordingly, the District Court’s

United States v. Western Elec. Co., 777 order does not satisfy our definition of a

F.2d 23, 26 (D.C. Cir. 1985); see also Otis final decision.

v. City of Chicago, 29 F.3d 1159, 1163

Our conclusion is not altered by the

(7th Cir. 1994) (“[A final judgment]

parties’ mistaken assumption that their

should be a self-contained document,

litigation was terminated by the District

saying who has won and what relief has

Court’s August 19, 1999 order. The Court

been awarded . . . .”).

itself contributed to this misunderstanding

Is the District Court’s August 19, with its November 18, 1999 statement on

1999 order a final decision? If not, relief the record that “our cases are settled and

is unavailable under Rule 60(b). At the closed, and that’s the way they are going to

outset, we note that the order did not stay, and if you have a dispute over the

resolve, or even purport to resolve, any of terms of the settlement, that’s a contract

the claims that Penn West presented to the dispute, and you go ahead and litigate that

District Court. Rather, its purpose was contract dispute wherever you please.”

solely to direct the Clerk of the Court to This mistaken assumption on the part of

mark Penn West’s case as closed.7 More the District Court does not end the case.

See Bensalem Township. v. American

Fidelity Fire Ins. Co., 644 F.2d 990, 994

7

We also note that the factual basis (3d Cir. 1981) (“[T]he boundaries of

given for the order is incorrect. It stated section 1291 jurisdiction do not depend on

that the District Court had been “advised the trial court’s belief that a particular

by the parties of the full and final

settlement” of Penn West’s case. That

event, however, never occurred. All from the record any substantive reason for

parties agree that counsel and the District the issuance of the District Court’s order,

Court did not communicate between the especially after telling the parties on July

July 1, 1999 teleconference and the August 1, 1999 that “[w]e’ll advise the jury that

19, 1999 order. The parties also agree that they are discharged, and we’ll wait to

no final settlement papers were sent to the receive from you the settlement papers that

District Court. We thus cannot discern I have to approve.”

9

decision is or is not ‘final’ . . . .”). That Lehman v. Revolution Portfolio L.L.C.,

the parties followed suit in the belief that 166 F.3d 389, 392 (1st Cir. 1999). There,

the District Court’s order terminated their the plaintiff in a civil action requested the

litigation does not make it so. Cf. Brown District Court to stay its proceedings

Shoe Co. v. United States, 370 U.S. 294, because he had entered bankruptcy. Id. at

305 (1962) (holding that “the mere consent 391. The District Court, responding to this

of the parties to the Court’s consideration request, issued what it termed a

and decision of the case cannot, by itself, “Procedural Order of Dismissal.” Id. It

confer jurisdiction on the Court” in the stated:

absence of a final judgment); Gerardi v.

Pelullo, 16 F.3d 1363, 1368 (3d Cir. 1994) In order to avoid the

(“[W]e directed the parties to brief the necessity for the counsel to

finality issue, notwithstanding their appear at periodic status

agreement that the certification was conferences, it is hereby

proper, for we consider the validity of a ORDERED that the above-

Rule 54(b) certification ourselves.”). entitled action be and hereby

i s d i s m i s se d w i t h o u t

Because the District Court’s August

prejudice to either party

19, 1999 order was not a final judgment or

moving to restore it to the

order, we hold that it erred in analyzing

docket if any further action

Penn West’s motion under Rule 60(b).

is required upon completion

How then should the District Court have

and termination of all

analyzed Penn West’s motion? To that we

bankruptcy or arbitration

now turn.

proceedings.

B. Administrative Closings

Id. Upon receiving the order, “the clerk of

To determine the nature of the relief

court closed the file, but did not enter a

requested in Penn West’s motion to re-

final judgment.” Id. At the request of one

open, we need to clarify the legal

of the parties, the District Court re-opened

significance of the District Court’s August

the case three years later and heard its

19, 1999 order directing the Clerk to mark

merits. Id. One of the appellant’s

Penn West’s civil RICO case closed. We

arguments on appeal was that the Court

conclude that the sole legal consequence

had improperly re-opened the case. Id.

of this order was to remove Penn West’s

The appellant argued that the case had

case from the District Court’s active

been dismissed and to re-open it three

docket. Several courts refer to such an

years after dismissal violated the

order as an “administrative closing.”

timeliness requirements of Rule 60(b). Id.

The Court of Appeals for the First The First Circuit clarified that the District

Circuit has addressed the purpose and Court’s order, while labeled a “dismissal,”

significance of administrative closings in was not a final judgment that could be

10

corrected under Rule 60. Id. Rather, the (W.D. Pa. 1990),8 aff'd, 931

order did no more than administratively

close the case. Id. at 391-92. The fact that

the order had a misleading label “cannot 8

We think it telling the manner in which

alter the character of its action.” Id. at 392

the District Court in Mercer explained the

n.2.

Western District of Pennsylvania’s

The Lehman Court explained the practice of issuing orders directing the

nature of an administrative closing as Clerk of Court to mark a case “closed.”

follows: It is the practice of this

Court to administratively

Administrative closings

close those cases where

comprise a familiar, albeit

representations are made

essentially ad hoc, way in

that settlement is imminent

which courts remove cases

or some other disposition of

from their active files

the case is contemplated by

without making any final

the parties other than

adjudication. See Corion

a d j u d i ca t i o n . The

Corp. v. Chen, 964 F.2d 55,

administrative closing Order

56-57 (1st Cir. 1992)

reads, in part, “[N]othing

(holding that an order

contained in this Order shall

deeming a case

be considered a dismissal or

“administratively closed”

disposition of this matter,

was not a final, appealable

and shou ld further

order absent a separate

proceedings in it become

document to signal the

necessary or desirable,

court’s “view that the case

either party may initiate it in

had concluded”). The

the same manner as if this

method is used in various

O rd e r h a d n o t b e en

districts throughout the

entered.”

nation in order to shelve

132 F.R.D. at 39 n.1. In this case, the

pending, but dormant, cases.

District Court’s August 19, 1999 order

See, e.g., id.; In re

appears not to conform to the Western

Arbitration Between Phila.

District’s practice described above. If the

Elec. Co. v. Nuclear Elec.

order had contained the language recited

Ins. Ltd., 845 F. Supp. 1026,

by the Mercer Court, Penn West and the

1028 (S.D .N.Y . 1994);

Litman Group likely would have better

Mercer v. Allegheny Ludlum

understood its nature and effect. The

Corp., 132 F.R.D. 38, 38-39

failure to include such language, however,

did not render the District Court’s August

19, 1999 order any less an administrative

11

F.2d 50 (3d Cir. 1991). We Id. at 392 (emphasis added). 9 Lehman

endorse the judicious use of therefore ruled that the District Court’s

administrative closings by “Procedural Order of Dismissal” “did not

district courts in terminate the underlying case, but, rather,

circumstances in which a placed it in an inactive status until such

case, though not dead, is time as the judge, in his discretion or at the

likely to remain moribund request of a party, chose either to

for an appreciable period of reactivate it or to dispose of it with

time. finality.” Id.

Lehman’s view of administrative

Properly understood, an

closings has been followed by the Courts

administrative closing has

of Appeals for the Tenth and Eleventh

no effect other than to

Circuits. See, e.g., Florida Ass’n for

remove a case from the

Retarded Citizens v. Bush, 246 F.3d 1296,

court’s active docket and

1298 (11th Cir. 2001) (“Designating a case

permit the transfer of

“closed” does not prevent the court from

records associated with the

reactivating a case either of its own accord

case to an appropriate

or at the request of the parties.”); Cantrell

storage repository. “In no

v. International Broth. of Elec. Workers,

event does such an order

AFL-CIO, Local 2021, 69 F.3d 456, 457

bar a party from restoring

(10th Cir. 1995); see also American

the action to the Court's

Heritage Life Ins. Co. v. Orr, 294 F.3d

active calendar upon an

702, 715 (5th Cir. 2002) (Dennis, J.,

appropriate application.”

concurring) (“[T]he administrative closure

In re Arbitration, 845 F.

reflects nothing more than the federal

Supp. at 1028 (S.D.N.Y.

courts’ overarching concern with tidy

1994). Nor is the power to

dockets; it has no jurisdic tional

resurrect reserved to the

significance.”); cf. Mickeviciute v. I.N.S.,

parties. The court, too,

327 F.3d 1159, 1161 n.1 (10th Cir. 2003)

retains the authority to

(noting that an “[a]dministrative closure of

reinstate a case if it

concludes that th e

administrative closing was 9

The Lehman Court also noted that

improvident or if the

administrative closings “may permissibly

circumstances that sparked

contain a built-in timetable under which it

the closing abate.

automatically will expire, effectively

reinstating the case . . ., or, conversely,

mature into a final judgment if no action

inures within a specified period . . . .” 166

closing. F.3d at 392 n.4 (citations omitted).

12

[an immigration] case temporarily removes request of a party, chose either to

the case from an immigration judge’s reactivate it or to dispose of it with

calendar . . . . The administrative closing finality.” Id. at 392.

of a case does not result in a final order. It

We also recognize the possibility

is merely an administrative convenience

that there are cases in our Circuit in which

which allows the removal of cases from

the last order docketed is an administrative

the calendar in appropriate situations”).

closing order. If those administrative

Lehman presents a reasoned closings comport with the practice

explication of a device that, when used in described in Mercer, 132 F.R.D. at 39 n.1

correct context, enhances a district court’s (i.e., clearly indicating the status of the

ability to manage its docket. We adopt litigation), there is little possibility that the

that rationale and hold that an order merely parties mistake the order as a final

directing that a case be marked closed decision. Here, however, it is easy to

constitutes an administrative closing that understand why counsel believed their

has no legal consequence other than to case over. As noted already, that belief

remove that case from the district court’s does not a final decision make, for an

active docket. administrative closing order is not

sanctioned by the Federal Rules and does

We recognize that, in our case,

not dispense with the technical

nearly three years have passed between the

requirements of finality. These

District Court’s August 19, 1999 order to

requirements include not only a resolution

mark the case closed and Penn West’s May

of the parties’ claims before the District

10, 2002 motion to re-open the case and

Court, but also compliance with Rules 54

list it for trial. Yet we know of no

and 58 of the Federal Rules of Civil

provision in the Federal Rules of Civil

Procedure.10 It is indeed possible that, as

Procedure by which the mere passage of

time can mature an administrative closing

into a dismissal or a final judgment or 10

Fed. R. Civ. P. 54(a) provides, in part:

order. As the Lehman Court noted, a

“‘Judgment’ as used in these rules includes

district court can provide, in the text of its

a decree and any order from which an

order, a built-in timetable under which the

appeal lies.” Fed. R. Civ. P. 58 (as in

administrative closing may automatically

effect when the District Court issued its

expire, or, alternatively, mature into a final

August 19, 1999 order; the rule was

decision. See 166 F.3d at 392 n.4. In this

rewritten, in April 2002, in a manner that

case, however, the District Court’s August

does not affect our analysis) required that

19, 1999 order provided no such feature.

“[e]very judgment shall be set forth on a

We can only conclude that the Court’s

separate document.” The separate

order merely placed Penn West’s civil

document requirement must be applied

RICO case in an “inactive status until such

“mechanically.” United States v.

time as the judge, in his discretion or at the

Indrelunas, 411 U.S. 216, 221-22 (1973);

13

a consequence of our holding that the C. The Dissent

administrative closing order in our case

As a final matter, a brief response

has no legal significance beyond removing

to the dissenting opinion is in order. We

the case from the District Court’s docket,

note that our dissenting colleague does not

litigants will return to the courts to re-open

challenge our application of well-

their administratively closed cases. Our

established principles of finality or the

fidelity to uniform and consistent

conclusion that an administrative closing

application of the Federal Rules, however,

order does not constitute a final decision.

does not permit us to hold otherwise.

Instead, the dissent’s objection is to our

We endeavor today only to correct construction of the District Court’s August

a misapplication of Fed. R. Civ. P. 60(b), 19, 1999 order as an administrative closing

and to clarify the legal significance of the order rather than a dismissal. This

District Court’s August 19, 1999 order objection, however, is based solely on the

administratively closing Penn West’s civil proposition that the District Court’s order

RICO case, so that the motion before the was “ambiguously worded.” 11 Relying on

District Court may be properly analyzed. this supposed ambiguity, the dissent

We decline to address whether Penn proposes that we use extrinsic evidence in

West’s case may be equitably barred from order to conclude that the District Court

restoration to the District Court’s active and the parties actually understood the

docket or whether the case may be August 19th order to constitute a

dismissed for failure to prosecute under dismissal, and that, ergo, it was a

Fed. R. Civ. P. 41(b). The District Court dismissal.

may consider these issues on remand.

We do not agree. The August 19th

order is plain that the case be marked

closed. This was predicated on the District

Court’s statement that it had been “advised

by the parties of the full and final

see also Gregson & Assoc. Architects v.

settlement” of the case and that “there

Government of the Virgin Islands, 675

F.2d 589, 591-92 (3d Cir. 1982)

(mandating a “mechanical” application of

11

Rule 58’s separate document requirement, The dissent does not explain whether

even where the appellant had mistakenly its finding of ambiguity is premised upon

believed that the district court had issued a an ambiguity on the face of the order or,

final judgment); United States v. Fiorelli, alternatively, an ambiguity that is only

337 F.3d 282, 286 (3d Cir. 2003) (applying apparent after considering extrinsic

Rule 58’s separate document requirement statements made by the District Court. As

to determine the timeliness of motions for we describe below, however, we do not

post-judgment relief under Rules 59 and consider extrinsic evidence unless the

60). order is ambiguous on its face.

14

[were] no further matters pending before order.” (citing Adams, 874 F.2d at 395));

the Court.” As we have noted above, this In re UNR Industries, Inc., 143 B.R. 506,

factual predicate was certainly erroneous 516 (Bankr. N.D. Ill. 1992) (“If an order is

because the District Court had yet to clear and unambiguous on its face, there is

receive and approve the final settlement no need to look beyond the face of the

papers from the parties. But nothing in the order to determine its meaning.”).

order mentions dismissal. With no patent Applying this rule of construction, we

ambiguity in the August 19th order, no reject our dissenting colleague’s

need exists for parol or extrinsic evidence. proposition that we may look past the clear

and unambiguous words used in the

District Court’s August 19th order for

The judicial process works

what the Court and the parties intended or

best when orders mean what

understood the order to mean.

they say. Surp rising

interpretations of simple Reminiscent of the emperor’s new

language – perhaps on the clothes, the dissent has us, in effect,

basis of a judicial intent not pretending to see something that does not

revealed in the words – exist. Per the dissent, we should simply

u n n e cessa rily c r e a te pretend that Penn West’s case was

complex questions and can dismissed, even though (1) no language in

cause persons to forfeit their the August 19th order mentioned a

rights unintentionally. Parol dismissal, (2) the District Court ignored

evidence about the judge’s the fact that it was not to act absent

i n t e n t io n s s h o u l d b e receiving and approving settlement papers

irrelevant, just as parol from the parties, and (3) treating the case

evidence is excluded in as dismissed might unknowingly subject

contract cases when the Penn West to a refiling obligation that

language is clear. would trigger a statute of limitations

defense. The upshot: the dissent finds that

our decision is unfair to Penn W est’s

Adams v. Lever Bros. Co., 874 F.2d 393, adversaries; we find unfair the dissent’s

395 (7th Cir. 1989); see also Berke v. treatment of Penn West. Penn West

Bloch, 242 F.3d 131, 136 (3d Cir. 2001) should not be penalized when it was the

(“The judicial process works best when District Judge who failed to terminate

orders mean what they say. . . . Just as properly the case before him.

parol evidence is excluded in contracts

V. Conclusion

cases when the plain language is clear, so

too this type of [extrinsic] evidence about The District Court misunderstood

a party’s intentions must be considered Penn West’s May 10, 2002 motion as one

irrelevant to an unequivocal and final for relief under Fed. R. Civ. P. 60(b). Rule

15

60(b) did not govern Penn West’s motion the order that is at issue here. The order

because the District Court’s August 19, noted that the Court had been informed by

1999 order directing that Penn West’s case the parties “of the full and final

be marked closed was not a final judgment settlement” of the case and that “there

or order. That order accomplished no [were] no further matters pending before

more than an administrative closing of the Court.” The Order then provided that

Penn West’s case. Thus we vacate the “the Clerk of the Court mark the above

District Court’s November 5, 2002 order captioned matter closed.”

denying the motion to re-open and remand

this matter for further consideration

consistent with this opinion. Unfortunately, the order did not

state expressly that the case was dismissed,

but it is clear that the Court and the parties

viewed the order as one that ended the

litigation in the District Court. Indeed, the

Penn West Associates v. Litman

majority notes that “the parties and the

No. 02-4344 District Court appear to have operated

under the assumption that the litigation

was terminated.” Maj. Op. at 3-4.

ALITO, Circuit Judge, dissenting.

The District Court’s understanding

In my view, the District Court was was confirmed a few months later when

correct in denying Penn West’s Motion to the settlement fell apart and the bankruptcy

List the Case for Trial and For Other trustee for Penn West filed a motion

Relief. The majority’s holding – that this asking the District Court to enforce the

case has remained on the District Court’s settlement. The District Court responded

docket in a state of suspended animation that the case was “settled and closed,” that

for nearly five years – is unsound and may it was going to stay closed, and that the

cause problems in other cases. I therefore Trustee would have to file an independent

respectfully dissent. action if it wished to claim that the

settlement had been breached. Neither

before nor after this ruling did any party

I. complain that the Court was failing to

open a case that had not been dismissed

but had merely been administratively

The relevant facts are simple. After closed.

receiving notice that a settlement had been

reached, the District Court waited a few

days and then, on August 19, 1999, signed Several years later, after Penn West

16

emerged from bankruptcy and after the the case was closed. Isn’t

Bankruptcy Court had declared that no that tanta m ount to a

valid settlement agreement existed, Penn dismissal of the complaint?

West filed in the District Court a Motion

Counsel: It certainly is your

to List the Case for Trial and For Other

honor. That’s the reality of

Relief. The motion did not specify the

life, that’s what it is . . . .

legal authority on which it was based, but

the District Court, consistent with its view

that the case had been dismissed long ago, Audio tape: Transcript of Oral Arguments

assumed that Penn West was moving for in Penn West v. Littman, (Sep. 15, 2003)

relief from a final judgment or order under at 093 (emphasis added).

Federal Rule of Civil Procedure 60(b).

Concluding that the motion did not meet

the standard for relief under that rule, the Under further questioning, counsel

Court denied the motion, and Penn West for Penn West held to this position:

took the present appeal.

The Court:. . . [W]hat’s the

On appeal, Penn West has not legal significance of the

argued that the District Court erred in August 19, 1999 order of

treating its motion as a Rule 60(b) motion Judge Bloch ordering that

for relief from a final judgment or order. the case be closed?

Rather, Penn W est’s sole argument is that

it is entitled to relief under Rule 60(b)(4) Counsel:It closes the case.

because the order at issue is void because The Court:What’s the legal

it was based on the mistaken belief that the significance of that?

case had been settled.

Counsel:The case is over.

At oral argument, counsel for Penn The case is over. What the

West insisted, even under questioning that case does. What the order

invited him to change his position, that the does...

August 19 order was a final order and that

the issue before our Court is whether his The Court:Are you sure you

client should have been granted relief from want to say. . . Is the case

that order under Rule 60(b). The over or is it just an

following exchange occurred: administrative closing?

The Court:The effect of the Id. at 111. Even after this suggestion that

order of Judge Bloch saying counsel might not “want to say” that the

August 19 order signified that “[t]he case

17

[was] over,” counsel for Penn West dismissal with prejudice when parties

continued to maintain the position that the engaged in conduct “akin to standing on

August 19 order was a final order from their complaint”), the order was final;

which relief should have been granted Penn West’s motion was properly

under Rule 60(b). See Audio tape: categorized by the District Court as an

Transcript of Oral Arguments in Penn order for relief under Fed. R. Civ. Proc.

West v. Littman, (Sep. 15, 2003) at 163 (“I 60(b); and because Penn West cannot

am appealing [the District Court’s] qualify for such relief, the order denying

application of 60(b)(2) because I suggest its Motion to List the Case for Trial and

that my motion makes it pretty clear that For Other Relief should be affirmed.

there is a denial of due process.”). Id. at

163 (emphasis added).

The majority, however, concludes,

contrary to the understanding of the

II. District Court and the parties, that the case

was never dismissed but merely placed on

hold – apparently indefinitely – and that

In my view, the District Court’s therefore Penn West is entitled to revive

order of August 19, 1999, was exactly the case, unless it is equitably barred from

what the Court and the parties understood doing so. The majority cites nothing in the

it to be: an order dismissing the case. The Federal Rules or in case law that supports

fact that the order did not use the correct this result, and I see no justification for the

terminology is unfortunate but not majority’s approach. When a dispute

dispositive. If the dismissal was without arises as to whether an ambiguously

prejudice, see Fed. R. Civ. Proc. 41(a)(2), worded order is in effect a dismissal, we

the order nevertheless removed the case should take a practical approach. If it

from the District Court’s docket, and Penn appears that the order was intended to have

West could not restore the case to the the same effect as a dismissal and was

docket simply by moving for such relief. understood by all concerned as having the

Rather, Penn West would have to refile its same effect as a dismissal, the order

complaint, assuming that its claims, which should be treated as such.

date from the late 1980s and early 1990s,

were not time-barred.

An example of this approach is

provided by Delgrosso v. Spang and Co.,

Alternatively, if the dismissal 903 F.2d 234 (3d Cir. 1990). The order in

eventually ripened into a dismissal with that case stated:

prejudice when Penn West stood pat, cf.

Berke v. Bloch, 242 F.3d 131 (3d Cir.

2001)(conditional dismissal became IT IS HEREBY ORDERED

18

that the Clerk of Court mark Id. Other courts of appeals have taken a

the above caption case similar tack. See, e.g., American Heritage

closed. Nothing in this Life Ins. Co. v. Orr, 294 F.3d 702, 707-08

order shall be considered a (5 th Cir. 2002), cert. denied, 537 U.S. 1106

dismissal or disposition of (2003); Corion Corp. v. Chen, 964 F.2d

this matter and, should 55, 56 (1 st Cir. 1992).

further proceedings in it

b e co m e n e ce ss ar y o r

desirable, either party may The order involved here is nothing

initiate it in the same like the “administrative closing” orders

manner as if this order had that the majority discusses. As the

not been entered. majority notes, those orders typically state

that the parties may restore the case to the

docket if further action is required. See

Id. at 236. We did not hold that this order Maj. Op. at 10. See also Mercer v.

was interlocutory simply because it did not Allegheny Ludlum Corp., 132 F.R.D. 38,

state that the case was dismissed. Rather, 38-39 (W.D. Pa. 1990), aff’d, 931 F.2d 50

we analyzed the practical effect of the (3d Cir. 1991(describing order generally

order and observed: entered in the W estern District of

Pennsylvania to accomplish a mere

“administrative closing”). The August 19,

[T]he order in this case 1999, order in this case contained no

permits reinstatement and similar language and, as noted, it recited

contemplates the possibility that there were “no further matters pending

of future proceedings. The before the Court.”

order does not purport to

end litigation on the merits

and the parties agree that it The majority argues that the August

does not determine any 19 order was not a final order, but this

issues or resolve the entire argument does not support vacatur of the

case. We recognize that the order denying the Motion to List the Case

conduct of the district court for Trial and For Other Relief. First, even

raises the question whether if the August 19 order never ripened into a

the order effectively, if not dismissal with prejudice and thus never

expressly, brings the case to became a final order, it would not follow

a close. O n bala nce, that Penn W est, years later, could restore

however, we believe that the the case to the District Court’s active

order is not final. docket simply by moving to do so. Penn

West would have to file a complaint. It

did not do so, and therefore the denial of

19

its motion was correct. Maj. Op. 9.

Second, if the August 19 order This argument confuses the

eventually became a dismissal with question whether an order resolves all the

prejudice, that order resolved all of the claims that are before a court with the

claims that Penn West asserted in its separate and (for present purposes)

complaint and was thus final. Compare irrelevant question whether an order

Maj. Op. 9 (stating that the this order was resolves all the issues that may arise

not final because it “did not resolve, or between the parties in the future. Suppose

even purport to resolve, any of the claims that the August 19, 1999, order had stated

that Penn West presented to the District expressly that all the claims in the case

Court”). Once Penn West’s claims were were dismissed with prejudice. There

dismissed with prejudice and Penn West would then be no basis for disputing the

failed to appeal, further assertion of those finality of the order, but disagreements

claims was barred, and Penn West was might nevertheless arise between the

relegated to asserting claims under the parties regarding the meaning or, indeed,

settlement agreement. the validity of the settlement agreement.

The parties might then wish to return to

the District Court to litigate those

The majority contends that the disagreements, but the parities’ desire to

August 19 order was not final because resume litigation would not undermine the

“there was more for the District Court to finality of the order of dismissal.

do.” Maj. Op. 9. The majority elaborates:

For these reasons, I believe that the

majority’s analysis is incorrect, that the

District Court dismissed this case long

[T]he parties had to

ago, and that Penn West’s motion to

continue their litigation in

restore the case to the active docket was

both the District Court and

properly denied. The majority’s decision

the Bankruptcy Court to

is unfair to Penn West’s adversaries, and I

determine: (1) whether they

have some concern about the effect of this

had indeed “settled” their

decision on other cases. The majority

case in July 1999, and (2)(a)

notes that there may be other “cases in our

if so, the terms of that

Circuit in which the last order docketed is

settlement and whether to

an administrative closing order” and that

approve it, or (b) if not, how

“[it] is indeed possible that, as a

to achieve a resolution of

consequence of our holding that the

their ongoing dispute.

administrative closing order in our case

has no legal significance beyond removing

20

the case from the District Court’s docket,

litigants will return to the courts to re-open

their administratively closed cases.” Maj.

Op. 13-14. I see no justification for

creating this danger.

21