Opposition Brief — Fine v. Bellefonte Underwriters Insurance

No. 84-1986

IN THE

Supreme Court of the Uni

OctToBerR TERM, 1984

MARTIN FINE, WILLIAM BECKER and

PHILIP BECKER, Individually and WILLIAM BECKER

and PHILIP BECKER d/b/a BECKER « BECKER, all

doing business as 649 BROADWAY EQUITIES CO.,

Petitioners,

vs.

BELLEFONTE UNDERWRITERS INSURANCE CoO.,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

HersBert P. PoLxk

WHITMAN & RANSOM

Attorneys for Respondent

522 Fifth Avenue

New York, New York 10036

(212) 575-5800

Rospert S. NEWMAN

ALLEN A. HANS

Of Counsel

COUNTER-STATEMENT OF QUESTIONS PRESENTED

Having failed in their repeated attempts to have the Second

Circuit find merit in their claims and in an effort to avoid a repeti-

tion of the denial of their earlier “garden variety” petition for

a writ of certiorari, which purported to present the question of

the proper application of state law by a federal court (Pet., fn.

p. 9; 105 S. Ct. 233 (1984)), petitioners now adopt the strategem

of asking the Court whether it should “initiate error-prevention

and error-correction procedures” in the lower federal courts, with

“unirorm exceptions to the ‘law of the case’ doctrine” and “unitorm

rules . . . for applying state law.” This unique set of questions

presented is premised on the assumption that “an acknowledged

mistake” has been made and that this particular case “dramatical-

ly highlights” the desirability of developing procedures to cor-

rect what petitioners contend are inadequacies in the appellate

review process.

It is ironic that the corrective procedures suggested by peti-

tioners, who have unsuccessfully exhausted the existing appeal

remedies, is to impose yet another layer of appellate review, so

as to afford petitioners one more opportunity to plead their cause.

It is submitted that this case is a singularly inappropriate one

on which to base a plea for revamping error-prevention and error-

correction procedures in the federal courts for the simple reason

that no error has been made in the courts below. The questions

actually presented are:

1. Whether the District Court correctly held that absent a

change of circumstances or newly discovered evidence, it was

without power to order an evidentiary hearing on the issue of

willfullness following the issuance of the mandate in the Court

of Appeals directing entry of judgment for respondent and after

two petitions for rehearing, one before the original panel and

one en banc, seeking the same relief, had been denied by the

Court of Appeals.

2. Whether the Court of Appeals, on appeal from the denial

of petitioners’ unsuccessful Rule 60(b) motion, was correct in

refusing to recall the mandate of the original panel where the

alleged mistake of the original panel in disregarding New York

law had been repeatedly urged in two petitions to the Court of

Appeals for rehearing, a third petition for a rehearing and recall

of the mandate, and in a petition for a writ of certiorari to the

Supreme Court, all of which had been denied.

We submit that petitioners’ real reason for seeking review by

this Court does not involve any of the “Questions Presented” which

are set forth in pages i and ii of the petition. In one of petitioners’

petitions for rehearing in the Court of Appeals it was represented:

Petitioner Martin Fine is a lawyer and businessman.

His dealings with associates, third parties and public

agencies are directly dependent on his reputation for

honesty and fair play.

This Court has, in its recent opinion, publicly brand-

ed Martin Fine guilty of perjury and fraud.

From the tone of its opinion it is apparent that the

Court gained the impression that Martin Fine was that

most despised of human species—a heartless, greedy

landlord. Wholly apart frem the truth or falsity of that

conclusion (which we obviously dispute), the Anglo-

American legal tradition accords even the most vile

malefactor a fair standard of proof on charges for

which he stands accused.

Though these representations are not repeated in the present

petition, it seems evident that the primary question presented

here is whether this Court should review a unanimous decision

of the Second Circuit affirming denial of a motion for a new

trial following a prior unanimous decision of the Second Circuit

(which had survived repeated petitions for rehearing and a peti-

tion for a writ of certiorari to this Court) in order to determine

whether Martin Fine should be afforded yet another forum for

attempted personal vindication.

DESIGNATION OF CORPORATE RELATIONSHIPS

Pursuant to Rule 28.1 of the Rules of the Court respondent

submits the following statement:

The parent of Bellefonte Underwriters Insurance Company is

Compass Insurance Company. The parent of Compass Insurance

Company is Armco Inc. Subsidiaries (except wholly-owned sub-

sidiaries) and affiliates of Armco Inc. are: Accerex; Aceros Del

Sur S.A.; Aceros Nacionales, S.A.; Allied Investment Corpora-

tion; Armco Bundy ApS; Armco-Bundy Ror AB; Armco Industrial

S.A.; Armco Armcopaxi; Armco Peruana S.A.; Armco (P.N.G.)

Pty. Limited; Armco Westeel Inc.; Australian Steel & Mining Cor-

poration Pty. Ltd.; PT. Bakrie— Armco; Bienes de Capital Im-

sa, S.A. de C.V.; Big Three Lincoln (U.K.) Limited; Black River

Lime Company; Bundy Venezolana C.A.; Carryore, Limited;

Chatillon-Armco S.A.; Court Galvanizing, Inc.; Court Galvaniz-

ing Limited; D.I.F.S.I.C.A.; Equipetrol Administracao E Par-

ticipacoes Ltd.; Equipetrol, S.A.; Equipetrol Norte Industria E

Commercio Ltd.; Falconbridge Dominicana C. por A.; Charles

Fulton (Asia) Holdings Ltd.; Charles Fulton (Australia) Pty. Ltd.;

Charles Fulton (Malaysia) Sendirian Berhad; Charles Fulton

(Singapore) Holdings Ltd.; Charles Fulton (Singapore) 1982 Ltd.;

Herman Smith HITCO Ltd.; IMSA National, S.A. de C.V.; In-

dustrias National Supply C.A.; Inmobiliara Hierro y Accro, S.A.;

Mansion Management Services Limited; Marine Mineral In-

dustries, Inc.; Metaltubos C.A.; Middletown Enterprises, Inc.;

Minera Cerro de plata, S.A. de C.V.; Northern Land Company;

Nuovi Tubi Brindisi SpA; Obras Civiles e Industrias C.A.; Oregon

Metallurgical Corporation; Productos Metalicso Armco S.A.; Pro-

lansa (Productora de Alambres y Derivados S.A.); Limited; State

Surety Company; Technocargo-Transportes Especializados Ltd.;

Torcad Limited; Winning Post Investments Ltd.

iv

TABLE OF CONTENTS

COUNTER-STATEMENT OF QUESTIONS

ER ee a eee ree ee i

DESIGNATION OF CORPORATE

re ee ee iii

COUNTER-STATEMENT OF THE CASE ...... 1

COUNTER-STATEMENT OF THE FACTS..... 4

REASONS FOR DENYING THE PETITION .... 6

1. THERE IS NOTHING IN THIS CASE

WHICH “DRAMATICALLY

HIGHLIGHTS” OR “TYPIFIES” A NEED

TO DEVELOP IMPROVED PROCEDURES

FOR ERROR PREVENTION OR

eo BEE OP ee ee eee tree 6

2. THE DECISION BELOW CORRECTLY

APPLIED THE LAW OF THE CASE

DOCTRINE IN AFFIRMING THE

DECISION OF THE TRIAL COURT AND

REFUSING TO DISTURB THE DECISION

CR BOM US WEES 6x occ ie ceca easvess 8

3. THE COURT OF APPEALS CORRECTLY

APPLIED NEW YORK LAW IN

ADHERING TO THE LAW OF THE

CASE, IF NEW YORK LAW WAS EVEN

REQUIRED TO BE APPLIED ............ 13

ee A rere rere s err Ne rr eee 16

TABLE OF AUTHORITIES

Cases Cited

Arizona v. California, 460 U.S. 605 (1983) ......

Claflin v. Commonwealth Insurance Co., 110

eS ESRB SRE elie

Conway v. Chemical Leaman Tank Lines, Inc.,

644 F.2d 1059 (5th Cir. 1981) ...............

Deeves v. Fabric Fire Hose Co., 14 N.Y.2d 633,

249 N.Y.S.2d 423, 198 N.E.2d 595 (1964)

DI ii an RMD we ee ie ee ee deca g sae

Deitsch Textiles, Inc. v. New York Property Ins.

Underwriting Ass’n, 62 N.Y.2d 999, 479

N.Y.S.2d 487, 468 N.E.2d 669 (1984) .........

Delano v. Kitch, 663 F.2d 990 (10th Cir. 1981),

cert. denied, 456 U.S. 946 (1982) ............

Doe v. New York City Department of Social

Services, 709 F.2d 782 (2d Cir. 1982), cert.

denied, 104 S.Ct. 195 (1983) ..............0.

Erie R.R. v. Tompkins, 304 U.S. 64 (1938) ......

Fogel v. Chestnutt, 668 F.2d 100 (2d Cir. 1981),

cert. denied, 459 U.S. 828 (1982) ............

Gager v. White, 53 N.Y.2d 475, 442 N.Y.S.2d

463, 425 N.E.2d 851, cert. denied sub. nom.

J.E. Gvertin Co. v. Cachat, 454 U.S. 1086

MONS i ges sae Mee

Page

15

9, 10, 13

13, 14,

15

15

Gurnee v. Aetna Life & Casualty Co., 55 N.Y.2d

184, 448 N.Y.S.2d 145, 433 N.E.2d, cert.

dented, 450 'U.S.. 637 (1068) ...... 2.0... cee,

Holcomb v. United States, 622 F.2d 937 (7th Cir.

Mh te es een

Johnson v. Bernard Insurance Agency, Inc., 532

fog fs | ee ee

Jonari Management Corp. v. St. Paul Fire &

Marine Ins. Co., 58 N.Y.2d 408, 461 N.Y.S.2d

760, 448 N.E.2d 427 (1983) .................

Key v. Wise, 629 F.2d 1049 (5th Cir. 1980), cert.

denied, 454 U.S. 1103 (1981) ................

Matter of Huie, 20 N.Y.2d 568, 285 N.Y.S.2d

610, 232 N.E.2d 642 (1967), modified, 21

N.Y.2d 1036, 291 N.Y.S.2d 14, 238 N.E.2d 503

UE ik nce

NLRB v. Brown & Root, Inc., 206 F.2d 73

(1953), enforced, 311 F.2d 447 (8th Cir. 1963) .

Otten v. Stonewall Insurance Co., 538 F.2d 210

Se Gk ME 6c bcs o waa weeece eras ans

People v. Pepper, 53 N.Y.2d 213, 440 N.Y.S.2d

889, 423 N.E. 2d 366, cert. denied, 454 U.S.

EE Aika kU chk WER eee ORES U a <4

Petition of United States Steel Corp., 479 F.2d

489 (6th Cir.), cert. denied, 414 U.S. 85y

EN igs hak hake Ba

Seese v. Volkswagenwerk A.G., 679 F.2d 336 (3d

Cae, ree NP GION 5. 5k nivicinsacauvescss

Page

13

12

15

12

13

15

Vii

Page

Signal Oil & Gas Co. v. Barge W-701, 654 F.2d

1164 (5th Cir. 1981), cert. denied, 455 U.S.

fd Tse Per Te Te errr 9

Standard Oil Co. v. United States, 429 U.S. 17

(1G7E) Cer CUsIOMA) 2... ccc cece ecess 10

Trice v. Commercial Union Assurance Co., 397

F.2d 889 (6th Cir. 1968), cert. denied, 393

- 5 | IRR eRe tener ennr a rere 13

United States v. DeJesus, 752 F.2d 640 (1st Cir.

See rrr yr errr ree rrr g

White v. Murtha, 377 F.2d 428 (5th Cir. 1967) .. 2, 10, 13

Zichy v. City of Philadelphia, 590 F.2d 503 (3d

es hoc ce sewkdg id pene ePASe ees 13

Statutes

New York Insurance Law, Sec. 3404............ 3

Fed. R. Civ. P. SB and GOB) ...... ecw eee passim

Other Authorities

Black’s Law Dictionary, Rev. 5th ed., 1979, p.

er re ee ee ee ee eek se bane 3

1B J. Moore, J. Locas and T. Currier, Moore's

Federal Practice, ¢ 0.404 [10] (2d Ed. 1984)... ll

No. 84-1986

IN THE

Supreme Court of the United States

Ocroser TERM, 1984

MARTIN FINE, WILLIAM BECKER and

PHILIP BECKER, Individually and WILLIAM BECKER

and PHILIP BECKER d/b/a BECKER « BECKER, all

doing business as 649 BROADWAY EQUITIES CO.,

Petitioners,

vs. |

BELLEFONTE UNDERWRITERS INSURANCE CoO.,

Respondent.

STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

ON PETITION FOR WRIT OF CERTIORARI TO THE UNITED

|

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI

COUNTER-STATEMENT OF THE CASE

In their statement of the case and elsewhere throughout the

petition, petitioners rely on two basic false premises:

(1) That the decision of the New York Court of Appeals in

Deitsch Textiles, Inc. v. New York Property Ins. Underwriting

Ass'n, 62 N.Y.2d 999, 479 N. Y.S.2d 487, 468 N.E.2d 669 (1984),

represents a new “intervening decision” (decided two weeks after

a ee TT

the District Court denied the Rule 60(b) motion) setting forth,

for the first time, controlling New York substantive law that an

insurance company must prove willfullness to void a fire insurance

policy by reason of false swearing on an examination under oath.

The Deitsch case, involving false statements made by an in-

sured in a proof of loss, does not represent new controlling law

in New York. This was recognized by the petitioners in their earlier

petition for certiorari in this case, where Deitsch is referred to

as reaffirming a basic principle stated in Jonari Management

Corp. v. St. Paul Fire & Marine Ins. Co., 58 N.Y.2d 408, 461

N.Y.S.2d 760, 448 N.E.2d 427 (1983) (decided March 30, 1983)

and earlier New York cases cited in the Jonari opinion. (See Peti-

tion in Docket No. 84-105, pp. 19-20):

(2) More important is the petitioners’ repeated flat assertion

that “the first panel made a mistake” (in allegedly failing to

recognize that willfullness is an element of the false swearing

defense) and that the second panel in the decision now sought

to be reviewed recognized that the first panel had made a mistake

but refused to do anything about it.

These assertions distort the decisions below. The fact that there

was not an express finding of willfullness does not mean that the

first panel (or the second panel) overlooked or ignored the

willfulness requirement.’ Thus, the first panel in its decision rever-

sing the trial court’s determination that the false statements made

by the insureds on the examination under oath were not material

and directing judgment in favor of the defendant refers to the

“obvious theory” being pursued by the insurance company on its

' Not being a new or intervening controlling authority announced for the first

time by a state court after the initial Second Circuit decision in this case, Deitsch

therefore could not be the basis for invoking the second exception to the law

of the case rule set forth in the Fifth Circuit decision of White v. Murtha, 377

F.2d 428 (Sth Cir. 1967), as claimed by petitioners (Pet. p. 20).

* We do note, however, that the first panel concluded that the false answers

would be deemed material, “if they may be said to have been calculated either

to discourage, mislead or deflect the company’s investigation.” (B-12). Using that

criterion, it is most difficult to conclude that the first Court of Appeals panel

did not treat the willfullness issue.

examination under oath, suggested by the failure of the sprinkler

system to operate during the fire and indications that the insured

had followed a freeze-out policy in order to get rid of the tenants

in the insured buildings. (B-6-8). The findings by the district

court, referred to by the first Court of Appeals panel, of repeated

instances of false swearing by both Fine and Peters on the ex-

amination under oath regarding sprinkler maintenance and

heating practices, particularly with regard to the heat-timer set-

tings, do not permit an inference of mistaken recollection; rather,

the findings are consistent only with deliberate and willful false

swearing sufficient to void the policy.

Indeed, as recognized by the second panel of the Court of Ap-

peals in the decision now sought to be reviewed, a finding of false

testimony or false swearing on an examination under oath im-

plies willfullness. Thus, the court below in its decision noted that

Black’s Law Dictionary defines false swearing as “swearing know-

ingly and intentionally false and not through mere mistake” (Rev.

5th ed., 1979, p. 725; D-5). It should also be noted that the

statutory provision provides for voiding the policy by reason of

“any fraud or false swearing by the insured” relating to a material

fact. New York Insurance Law, § 3404 (McKinney Special Pam-

phlet 1984 and Supp. 1984-85 (original codified as §168.) The

statute is silent as to whether there must be willful false swear-

ing (in contrast to instances of concealments or misrepresenta-

tions), doubtless because a finding of false swearing necessarily

implies willfullness. Here, of course, we have the necessary prere-

quisite to void the policy by the finding that both Fine and Peters

swore falsely on the examination under oath as to material facts

under circumstances which preclude innocent mistake.

COUNTER-STATEMENT OF THE F4CTS

Petitioners have attached as Appendix E to the petition the

same recitation of the purported “Statement of the Facts” as con-

tained in their brief to the second Court of Appeals panel.

Without attempting to correct the many irrelevancies and distor-

tions in that recitation,’ the essential facts before this Court and

the Court of Appeals can be reduced to the following:

The District Court found that petitioners, by Messrs. Fine and

Peters, had testified falsely on their examination under oath con-

cerning sprinkler maintenance practices and temperature settings,

but nevertheless held for the petitioners under the mistaken no-

tion that such false swearing did not concern material facts. On

appeal, the first Court of Appeals panel held that such false swear-

ing by petitioners did concern material facts, and therefore revers-

ed the decision of the District Court and “remanded to the District

Court with instructions to enter judgment for the defendant.”

(Pet. App. B-3).

In two petitions for rehearing, one addressed to the original

panel and one requesting a rehearing en banc, petitioners raised

the argument that the Court of Appeals had failed to consider

that the District Court had not made any express finding that

their false swearing on the examination under oath was “willful”

and “with intent to defraud” the insurer, both of which, peti-

tioners maintained, were required under governing New York law.

* For example, petitioners make the gratuitous and completely unfounded sug-

gestion that the cause of the fire was “tenant arson” (Pet. App. E-6). The fire

department official who speculated that there may have been arson would be

surprised to find his suspicion directed away from petitioners.

And the implication that the sprinkler system in the fire buildings was

operative is likewise bereft of any record support, as the District Court found

that the sprinklers did not operate during the fire due to ice blockage (Pet. App.

A-13). The plaintiffs’ freeze-out policy included a complete shut-down of the

furnace from ll a.m. to 2 p.m. every day, and temperatures in the buildings

were deliberately kept so low as to cause freeze-up of radiators and consistent

complaints from tenants of lack of heat (Pet. App. A-9).

The petitioners asked in each petition that the case be remand-

ed to the District Court for the purpose of clarifying its findings

in two respects:

1. Did the District Court conclude that the “false”

testimony of Fine and Peters concerning the

temperature setting on the heat timer and the sprinkler

maintenance instructions given to Aloisio was given

“knowingly and willfully, with intent to deceive the

insurer”?

2. If so, did the District Court reach that conclu-

sion based on “clear and convincing proof” or simply

based on a “preponderance of the evidence”?

In denying the second petition, by order dated April 24, 1984,

the Court of Appeals stated:

“A petition for rehearing filed herein by counsel for

the plaintiffs-appellees — cross-appellants, Martin Fine,

et al., and the panel that heard the appeal having

denied said petition for rehearing in an order filed on

February 21, 1984,

It is further noted that a poll of the judges in regular

active service having been taken on the suggestion for

rehearing in banc and there being no majority in favor

thereof, rehearing en banc is DENIED.

Petitioners then brought a motion in the District Court under

Fed. R. Civ. P. 59 and 60(b) for a new trial or an evidentiary

hearing on the issue of whether the false testimony given at the

examination under oath was willful. The District Court denied

the motion on the ground that “the Court of Appeals’ rulings

are the law of the case,” and pointing out that petitioners had

cited no material change of circumstances or newly discovered

evidence which would warrant departure from the law of the

case doctrine. Petitioners then appealed from the denial of such

relief by the District Court to a different Second Circuit panel,

which unanimously affirmed the order of the District Court.

Based on the foregoing facts, the affirmance by the Court of

Appeals of the order of the District Court denying petitioners’

motion was clearly correct, as was its admonition that petitioners

“have more than had their day in court” and that their dissatisfac-

tion with the result is “no reason to change the process of review

fully afforded them. All disputes, including this litigation, must

finally end.” Petitioners’ present petition for a writ of certiorari

clearly does not implicate any matters that would warrant a reex-

amination of the appellate review process which petitioners seem

to believe so important.

REASONS FOR DENYING THE PETITION

1. THERE IS NOTHING IN THIS CASE WHICH

“DRAMATICALLY HIGHLIGHTS” OR “TYPIFIES” A

NEED TO DEVELOP IMPROVED PROCEDURES FOR

ERROR PREVENTION OR CORRECTION.

Petitioners argue that the Court of Appeals, in acknowledg-

ing that “it is not inconceivable that on occasion a judgment of

this court may be in error,” “threw down its gauntlet to this Court”

(Pet. p. 12), to emphasize the alleged need for improved pro-

cedures to prevent error and thus improve the quality of appellate

justice. Petitioners then criticize the effectiveness of petitions for

rehearing, petitions for rehearing en banc and petitions for a writ

of certiorari to this Court as not providing a “realistic chance”

that error, however egregious, will be corrected (Pet. pp. 12-13).

Petitoners would therefore have this Court establish new rules

discarding the petition for rehearing (because the decision-making

panel is reluctant to correct its mistakes) and the petition for

rehearing en banc (ostensibly because the case loads of the Courts

of Appeals have increased so dramatically in recent years that

such petitions are seldom granted). Though not presuming to sug-

gest to this Court “the direction its initiative should take for more

sweeping change in Court of Appeals procedures,” petitioners

nevertheless attach as Appendix F a number of suggestions, to

wit, (1) that petitions for rehearing be directed to another panel

(which could presumably reverse the first panel, requiring rehear-

ing en banc to resolve any conflict, however trite, between panels),

and (2) that draft opinions be circulated to the parties for com-

ment (because this procedure allegedly worked well in a “huge

environmental case”). (Pet. App. F-2). Petitioners also complain

that the District Court is powerless to correct “even the most

outrageous holding of a circuit panel” (Pet., p. 14), and would

presumably have this Court invest the District Court with the

power to review and overturn the Court of Appeals where, in

the opinion of a single District Court judge, there is error or

“manifest injustice” in a decision of a superior tribunal.‘

Though it seems improbable that these proposals would do

anything more than create chaos, increase the burden on the

courts and the time to complete the appellate process, regardless

of the desirability or lack of desirability of the proposed error

prevention or correction procedures, this case is certainly not a

“lodestar” or the “perfect case” for the Court to embark on a reex-

amination of existing appellate procedures (Pet. p. 8), and it cer-

tainly does not typify whatever need may be said to exist to

develop such procedures (Pet. Caption, Point 1, p. 1i). There simp-

ly h~ not been a “mistake” either on the part of the initial panel

in. nolding that the policy is voided by false answers on an ex-

amination under oath concerning matters relevant to the in-

surance company’s investigation (occurring under circumstances

which preclude mistake and, by definition, were “knowingly and

intentionally false and not through mere mistake”) or in deny-

ing petitions for rehearing and recall of the mandate, or by the

entire Second Circuit in denying the petition for rehearing en

banc, or by this Court in denying the first petition for a writ

of certiorari, or by the District Court in denying petitioners’ Rule

60(b) motion, or by the second Court of Appeals panel in affir-

ming the District Court’s denial of the 60(b) motion and declin-

ing to reverse the prior decision of the first panel, pointing out

that petitioners “have more than had their day in court.”

* The logical extension of this modest proposal, of course, is that a Court of

Appeals or District Judge could ignore the mandate of this Court to ameliorate

what is perceived to be “manifest injustice.”

2. THE DECISION BELOW CORRECTLY APPLIED THE

LAW OF THE CASE DOCTRINE IN AFFIRMING THE

DECISION OF THE TRIAL COURT AND REFUSING

TO DISTURB THE DECISION OF THE FIRST PANEL.

Petitioners maintain that both the District Court and the Court

of Appeals adopted a “wooden and inflexible” formulation of the

law of the case doctrine which is contrary to that applied in other

circuits. The argument is that the law of the case doctrine ap-

plies only with respect to issues determined in the litigation and

that an essential issue in this case, i.e., whether plaintiffs had

willfully sworn falsely, had not been determined earlier in the

lawsuit.

We have seen that the initial Court of Appeals decision, in

holding that plaintiffs repeatedly swore falsely concerning

material facts on an examination under oath, did in fact satisfy

the willfullness requirement of New York law so that no new ex-

press finding in this regard was necessary. The initial Second Cir-

cuit panel specifically noted that willfullness was an element of

the false swearing defense (e.g., B-10-11), and determined that

respondent had established that defense. To argue that the first

Court of Appeals panel had disregarded the issue, especially after

the willfullness argument had been raised on no less than three

unsuccessful post-appeal motions and a petition for certiorari,

is to engage in fantasy.

And even if it could be said that the question of willfullness

was not expressly considered by the initial Second Circuit panel,‘

notwithstanding petitions for rehearing and rehearing en banc

which centered on the issue of willfullness, the second Court of

Appeals panel quite properly deferred to the decision of its

predecessor panel. Once an issue is decided, either expressly or

* Having considered numerous false statements under oath by two witnesses,

it is most difficult to conceive of any court determining that these statements

were anything but willful. Clearly, when a person utters a host of false statements

on material points, the law may properly infer willfullness and an intent to

deceive. See Claflin 0. Commonwealth Insurance Co., U0 U.S. 81, 95 (1884).

by necessary implication, that decision should govern in subse-

quent stages of the same litigation in the absence of extraordinary

circumstances. Arizona v. California, 460 U.S. 605 (1983); Fogel

v. Chestnutt, 668 F.2d 100, 108 (2d Cir. 1981), cert. denied, 459

U.S. 828 (1982). At the very least, the willfullness issue was decided

by the Court of Appeals “by necessary implication.”

This principle is uniformly adopted in the various circuits, and

is not confined only to the Second Circuit, as petitioners main-

tain. E.g., United States v. DeJesus, 752 F.2d 640 (Ist Cir. 1985);

Doe v. New York City Department of Social Services, 709 F.2d

782 (2d Cir. 1982), cert. denied, 104 S. Ct. 195 (1983); Signal

Oil & Gas Co. v. Barge W-701, 654 F.2d 1164 (5th Cir. 1981),

cert. denied, 455 U.S. 944 (1982); Conway v. Chemical Leaman

Tank Lines, Inc., 644 F.2d 1059 (5th Cir. 1981); Petition of United

States Steel Corp., 479 F.2d 489 (6th Cir.), cert. denied, 414 U.S.

859 (1973); Holcomb v. United States, 622 F.2d 937 (7th Cir.

1980).

The law of the case doctrine is dramatically illustrated in the

decision of the Third Circuit in Seese v. Volkswagenwerk A.G..,

679 F.2d 336 (3d Cir. 1982) (per curiam). There, a car accident

in North Carolina gave rise to a diversity action brought in New

Jersey District Court. The jury found for the plaintiffs on two

claims, one based on a theory of strict liability and the other based

on a theory of negligent design. On appeal, the Third Circuit

held that North Carolina would not recognize the theory of strict

liability, but would recognize a negligence cause of action. The

Third Circuit then denied the defendants’ petition for a rehearing.

Thereafter, the Fourth Circuit Court of Appeals ruled that

North Carolina would not recognize the negligence theory ad-

vanced by the plaintiffs, and based on that Fourth Circuit deci-

sion the defendants moved for a stay of the Third Circuit man-

date and for leave to file another petition for rehearing. The Third

Circuit denied this motion as well, and the defendants then

returned to the district court, moving under Rule 60(b) to vacate

the original judgment. The district court ruled that the Third

Circuit mandate was final and that it was without jurisdiction

10

to entertain the motion. In affirming that decision, the Third

Circuit stated that a district court is powerless to alter the man-

date of an appellate court “on the basis of matters included or

includable in defendants’ prior appeal.” 679 F.2d at 337. The

Court specifically stated that this Court’s decision in Standard

Oil Co. v. United States, 429 U.S. 17 (1976) (per curiam), was

not to the contrary:

The [Supreme] Court in Standard Oil Co. stated that,

“the appellate mandate relates to the record and issues

then before the court, and does not purport to deal

with possible later events. Hence, the district judge is

not flouting the mandate by acting on the motion.” [429

U.S. at 18] In the present case, however, the basis of

the Rule 60(b)(6) motion was before this court and the

Supreme Court, and thus could not be considered by

the District Court.

679 F.2d at 337, n.l.

There are, to be sure, limited instances where before direct

appeals have been exhausted departure from the law of the case

doctrine may be warranted, i.e., where the evidence on a subse-

quent trial is substantially different, or there has been an interven-

ing change of controlling law or the prior decision was clearly

erroneous and would work a manifest injustice. White v. Mur-

tha, 377 F.2d 428, 431-32 (5th Cir. 1967). Contrary to petitioners’

claims, the Second Circuit has indeed recognized that, in a pro-

per case, there can be departure from the law of the case if there

are “cogent” and “compelling” reasons to do so. Doe v. New York

City Department of Social Services, 709 F.2d at 789; Fogel v.

Chestnutt, 668 F.2d at 108. What petitioners have refused to

recognize, however, is that theirs is not a situation which would

warrant such a departure.

As noted, the false premises underlying petitioners’ claims

render their arguments inapposite. Deitsch Textiles is not a new

formulation of the law; it merely restated general, well-accepted

propositions. Moreover, it is obvious that the issue of willfullness

was indeed before the first Court of Appeals panel on the direct

11

appeal and on the petitions for rehearing and before this Court

on the first petition for certiorari.

Having exhausted their rights of direct appeal, petitioners

mounted a collateral attack on the mandate of the first Court

of Appeals panel under Fed. R. Civ. P. 59 and 60(b). Under these

circumstances, the District Court, even if it perceived that the

Court of Appeals had made a mistake and that there has been

a miscarriage of justice, cannot ignore the mandate of the Court

of Appeals and, in effect, overrule the court to which it owes

obedience. An ordered system of justice demands no less.

Arguments in support of a departure from a mandate of the Court

of Appeals must be addressed to the Court of Appeals by peti-

tion or motion to recall the mandate. 1B J. Moore, J. Locas and

T. Currier, Moore’s Federal Practice, { 0.404{10] (2d ed. 1984).

It would be all the more improper for the trial court to depart

from the mandate where, as here, petitioners had already been

denied such retief by the first Court of Appeals panel and by the

Court en banc.

The court below noted the following chronology of events in

this case preceding its decision. (Pet. App. D-7):

January 3, 1984 ~- panel decision handed down that reversed

the district court judgment

January 30 - appellants’ motion to have entire transcript

of the examination of Fine and Peters fil-

ed with the court granted

February 22 - petition for rehearing before original panel

denied

April 24 - petition for rehearing in banc on the basis

that the district court had not found that

false testimony was willfully made denied.

May 1 - mandate of this Court issued

June 15 - motion in district court betore Judge Sweet

for Fed. R. Civ. P. 60(b) relief denied

12

September 12 - notice of appeal from denial of 60(b) relief

filed

October 1 - petition to the Supreme Court for certiorari

denied

October 18 - application to original panel for leave to

file a second petition for rehearing, recall

of the May | mandate and consolidation

of the previous appeal with an appeal from

denial of 60(b) relief denied

January 12, 1985 ~- oral argument before the present panel (on-

ly Judge Oakes was on the previous panel)

seeking reversal of denial of 60(b) relief.

Faced with the foregoing chronology, the court below correctly

noted that the original panel, having denied two petitions for

a rehearing based on this same willfullness argument, “must be

presumed to have considered it,” citing the Eighth Circuit deci-

sion in NLRB v. Brown & Root, Inc., 206 F.2d 73, 74 (1953),

enforced, 311 F.2d 447 (8th Cir. 1963). See also Key v. Wise, 629

F.2d 1049, 1055 (Sth Cir. 1980), cert. denied, 454 U.S. 1103 (1981)

(law of the case doctrine applicable unless earlier decision is

“necessarily inconsistent with every possible correct basis”).

At some point all things, even litigation, must come to an end.

If anything, the history of this action demonstrates that a well

heeled or obsessive party can prolong a case for years after what

should have been its final conclusior. Law of the case and other

related doctrines serve to guard against seemingly interminable

litigation, while at the same time preserving an escape hatch

which allows for departure in an exceptional case. But even in

an exceptional case (and this is certainly not one of them), there

must be some point at which the prevailing party can be free

to enjoy the fruits of victory. That is why the judicial process

quite properly is structured to afford litigants numerous oppor-

tunities to correct perceived error on direct appeal, but severely

limits the avenues of relief on a collateral attack once the direct

appeal process has been exhausted.

13

Petitioners’ plaintive cries that the Second Circuit has arrogated

to itself an imperial attitude of never admitting or correcting

“mistakes” it has made to the contrary notwithstanding, the fact

is that no Court of Appeals will depart from the law of the case

because of any change in the law where the direct appeal pro-

cess has been exhausted. In each case where a Court of Appeals

has departed or endorsed in theory departure from the doctrine,

the action had not been finally concluded. E.g., White v. Mur-

tha, supra; Doe v. New York City Deptartment of Social Ser-

vices, supra; Zichy v. City of Philadelphia, 590 F.2d 503 (3d Cir.

1979) (new, contrary controlling law); Delano v. Kitch, 663 F.2d

990 (10th Cir. 1981), cert. denied, 456 U.S. 946 (1982) (new, con-

trary controlling law); Johnson v. Bernard Insurance Agency, Inc..,

532 F.2d 1382 (D.C. Cir. 1976) (new evidence on retrial after re-

mand); Otten v. Stonewall Insurance Co., 538 F.2d 210 (8th Cir.

1976) (new evidence on retrial after remand). Where, however,

as in this case what is reputed to be a change in controlling law

occurs after direct appeal and while a collateral attack on the

final judgment is being mounted, the final judgment must stand.

E.g., Seese v. Volkswagenwerk, A.G., supra; Trice v. Commer-

cial Union Assurance Co., 397 F.2d 889 (6th Cir. 1968), cert.

denied, 393 U.S. 1018 (1969).

In short, there is no real conflict among the circuits, and

nothing warranting this Court's review, in the application of the

law of the case doctrine under the circumstances presented here.

3. THE COURT OF APPEALS CORRECTLY APPLIED

NEW YORK LAW IN ADHERING TO THE LAW OF

THE CASE, IF NEW YORK LAW WAS EVEN RE-

QUIRED TO BE APPLIED

Petitioners devote considerable attention to the proposition that

the Second Circuit should have applied the New York rules on

law of the case, rather than “arrogating” to itself the right to utilize

what is claimed to be its own unique version of that doctrine.

(Pet. pp. 25-28). We do not believe it productive to discuss whether

application of the law of the case doctrine is “substantive” or “pro-

cedural” for purposes of Erie R.R. v. Tompkins, 304 U.S. 64

14

(1938).° For as set forth above, the Second Circuit’s formulation

and application of the doctrine comports with that of every other

circuit; as we shall demonstrate, the doctrine in New York is ap-

plied no differently.

We have seen that Deitsch Textiles, Inc. v. New York Property

Ins. Underwriting Ass'n, supra, does not represent a subsequent,

intervening change in decisional law, but is merely a reaffirma-

tion of well settled principles. Thus since willfullness was always

an element of the false swearing defense, this Petition for Cer-

tiorari can be seen to be nothing more than yet another attempt

by a disappointed litigant to again have some court align itself

with his position after all avenues of direct appeal have been

exhausted.’

But even if the decision in Deitsch Textiles constituted a change

in decisional law and if the Second Circuit was bound to follow

the New York formulation of the law of the case doctrine, peti-

tioners have still failed to demonstrate error by the court below

much less any of the considerations listed in Rule 17 which would

lead the Court, in the exercise of its discretion, to grant certiorari.

While relegating discussion of the New York formulation of

the law of the case doctrine to an abbreviated footnote, petitioners

* Of course, this is not the first time that petitioners have accused the Second

Circuit of doing violence to the Erie doctrine. In their first Petition for a Writ

of Certiorari, No. 84-105, petitioners unsuccessfully attempted to persuade this

Court that, in determining that petitioners had falsely sworn on a material issue

under oath, the Second Circuit chose “not to apply the New York law but in-

stead formulated a contrary federal rule and then applied it to this case” (p.

i). That claim was shown to be, as we are confident petitioners’ current asser-

tions will be found to be, without merit.

’ In their first Petition for Certiorari, for example, petitioners maintained that

the failure of the first court of appeals panel to address the issue of willfullness

was “contrary to a long line of decisions of New York State's highest court.” (p.

19). And the second Court of Appeals panel recognized that in Deitsch Tex-

tiles, “the New York Court of Appeals reaffirmed . . . that in addition to

materiality, an insurance company must prove willfullness to avoid a fire in-

surance policy.” (D-5).

15

nevertheless maintain that a New York State court would have

; come to a contrary conclusion than that of the Second Circuit.

Petitioners are wrong. To be sure, the law of New York, as does

the law of the Second Circuit, provides that a change in deci-

sional law will usually be applied during the normal appellate

process. Compare Fogel v. Chestnutt, supra, with Gurnee v. Aet-

. na Life & Casualty Co., 55 N.Y.2d 184, 448 N.Y.S.2d 145, 433

) N.E.2d 128, cert. denied, 459 U.S. 837 (1982), and Gager v.

White, 53 N.Y.2d 475, 442 N.Y.S.2d 463, 425 N.E.2d 851, cert.

denied sub nom., J.E. Guertin Co. v. Cachat, 454 US. 1086

(1981).

Where, however, as here, what is represented to be a change

in decisional law occurs after direct review, the law of the case

doctrine will preclude departure from the earlier decision. Peo-

) ple v. Pepper, 53 N.Y.2d 213, 440 N.Y.S.2d 889, 423 N.E. 2d 366,

cert. denied, 454 U.S. 967 (1981). New York holds, therefore, that

a decision from which the right of direct appeal has been ex-

hausted should not be disturbed by any court on the ground that

a subsequent decision has overruled its own or another statement

of existing law. Matter of Huie, 20 N.Y.2d 568, 285 N.Y.S.2d 610,

232 N.E.2d 642 (1967), modified, 21 N.Y.2d 1036, 291 N.Y.S.2d

14, 238 N.E.2d 503 (1968); Deeves v. Fabric Fire Hose Co., 14

N.Y.2d 633, 249 N.Y.S.2d 423, 198 N.E.2d 595 (1964) (mem.).

Thus no matter whether under Erie the Second Circuit was

bound to apply its own or New York’s formulation of the law

of the case doctrine, its decision is unimpeachable. The purported

“change in existing law” occurred in the midst of petitioners’

repeated attempts to have the decision of the first panel over-

turned. The “change” was brought to the attention of both the

original Second Circuit panel and this Court, where it was claim-

ed, as it is here, that the court of appeals had vitiated the Erie

doctrine. All direct appeals were denied.

Petitioners also mounted a collateral attack on the mandate

of the Second Circuit under Fed. R. Civ. P. 59 and 60(b)(1) on

the selfsame issue that was the subject of the direct appeal, viz.,

that a new trial should be held on the issue of the insureds’

Ooo

16

willfullness in making the false statements. As that issue had been

repeatedly raised on direct appeal, the Second Circuit most pro-

perly affirmed the District Court’s adherence to the law of the

case. All of the circuit Courts of Appeals and the courts of New

York would have treated the issue no differently.

In the guise of a request that this Court formulate yet another

layer of appellate review for the benefit of litigants who have

invoked all possible avenues of direct appeal, petitioners in reality

seek an additional opportunity to raise the same issue that has

repeatedly been raised and rejected. But it does not follow from

the fact that various panels of the Second Circuit and this Court

have rejected petitioners’ ceaseless entreaties that there exists some

necessity “to improve the quality of appellate justice.” (Pet. p.

i). Indeed, the fact that petitioners have been afforded in-

numerable opportunities to plead their case leads to the opposite

conclusion. Litigation must end some time, else the courts will

be repeatedly subject to endless requests for relief by disgruntl-

ed litigants. We submit it is time for this Court to sound the death

knell on petitioners’ tired claims.

CONCLUSION

For the foregoing reasons, it is respectfully submitted that the

petition for a writ of certiorari should be denied.

Respectfully submitted,

HERBERT P. POLK

WHITMAN & RANSOM

Attorneys for Respondents

522 Fifth Avenue

New York, New York 10036

(212) 575-5800

~

Rosert S. NEWMAN

ALLEN A. Hans

Of Counsel