Opposition Brief — Fidelity & Deposit Co. v. USAFORM Hail Pool, Inc.
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No. 75-1172
In The
Supreme Court of the United States
FIDELITY AND DEPOSIT COMPANY
OF MARYLAND,
Petitioner,
vs.
USAFORM HAIL POOL, INC., et al.,
Respondents.
BRIEF IN OPPOSITION TO PETITION FOR A
WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
Tuomas T. Coss
Coss, Coie, Sicerson, McCoy,
Bett & Bonp
P. O. Box 191
Daytona Beach, Florida 32015
Counsel for Respondents
E. L. Mendenhall, Inc., 926 Cherry St., Kansas City, Mo. 64106, 816-421-3030
SUBJECT INDEX
og es Pry tee ee Tee ee ee eR ee ae
RESPONSE TO PETITIONER’S REASONS—
RESPONSE TO PETITIONER’S REASON I:
The Court of Appeals’ Decision That It Had
Jurisdiction of This Cause (A) Is an Applica-
tion of This Court’s Prior Decisions, (B) Does
Not Conflict With the Decision of Any Other
Court of Appeals Reported to Date, and (C)
Involves Such a Unique Set of Circumstances
That Review by This Court Is Unwarranted
RESPONSE TO PETITIONER’S REASON II:
Petitioner Is Complaining of an Irregularity
Which Caused No Prejudice to Petitioner,
Was Treated As Frivolous by the Court of
Appeals, and Deserves the Same Treatment
err cr ae tre a spiny a a! meee
RESPONSE TO PETITIONER’S REASON
III: Petitioner's Complaints Are Predicated
Upon a Misinterpretation of the Decision
Below, and Are Therefore Fallacious ........
RESPONSE TO PETITIONER’S REASON IV:
The Court of Appeals Did Not Alter Its 1972
Decision, but Merely Clarified It, Although
It Had the Power to Alter It Through the
Use of Its Sound Discretion ...............
RESPONSE TO PETITIONER'S REASON V:
The Court of Appeals Found That Most of
the District Court’s Findings Violated the
Court’s Prior Mandate, Constituting Clear
WS idx Sascha eee Peep res
II
RESPONSE TO PETITIONER’S REASON VI:
The Court of Appeals Did Not Change the
Law to Be Applied and Therefore No New
GG I eee rT eee eee 26
CONCLUSION ....... lent RERWRAS ERNE DR as sos ok oe 27
Index of Authorities
CasEs
Brainerd v. Beal, 498 F. 2d 901 (7th Cir. 1974)
Brubaker v. Board of Education, School District
149, 502 F. 2d 973 (7th Cir. 1973) ............. 14
Erie Railroad Company v. Tompkins, 1938, 304
U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 ....16, 20, 26
Expeditions Unlimited Aquatic Enterprises, Inc. v.
Smithsonian Institute, 500 F. 2d 808 (D.C. Cir.
II GPE TIES 158 ghey pelo gear a 6, 12
Fidelity and Deposit Company v. Usaform Hail
Pool, Inc., 523 F. 2d 744 (5th Cir. 1975) ....4, 20, 21
Fidelity and Deposit Company v. Usaform Hail
Pool, Inc., 463 F. 2d 4 (5th Cir. 1972) ......... 15
Files v. City of Rockford, 440 F. 2d 811 (7th Cir.
RE Sie tks Send eR baal kG Ges a bis.ca ee dnans 8,9
Geddes v. Anaconda Copper Mining Company,
1920, 254 U.S. 590, 41 S. Ct. 209, 65 L. Ed. 425 20
Greater Boston Television Corporation v. FCC, 463
Fee Gir, Ri, PEED sie cnececsncssesce 25
Harris Truck Lines, Inc. v. Cherry Meat Packers,
Inc., 303 F. 2d 609 (7th Cir. 1962), rev’d 371
U.S. 125, 83 S. Ct. 283, 9 L. Ed. 2d 261 ....4, 9, 10
Hodgson v. United Mine Workers of America, 433
ee SA Gee, GOs PE nv ddeckivelauieavess 5, 6
, BLEED THROUGH
. ~~
Il
In Re Morrow, 502 F. 2d 520 (5th Cir. 1974) ....10, 11
Jones v. Chaney and Janes, 399 F. 2d 84 (5th Cir.
LN a che hhh nee Sb cna bas ok hea A eRe 13
Knapp v. North American Rockwell Corp., 506 F.
fie - & a Sanaa earns ee ee 23, 24
Knox Mutual Insurance Company v. Kallen, 376 F.
ee NPE ik och sk vcd evaase nes eaees 8
Lathrop v. Oklahoma City Housing Authority, 438
ae a | eee 10, 11
Lord v. Helmandollar, 384 F. 2d 780 (D.C. Cir.
RNS e ee he Si ei as Se Rew ho ok wb A dane slo 6
Messinger v. Anderson, 1912, 225 U.S. 436, 32 S.
ay 8 Se RS rr re 24
Moss v. Ramey, 239 U.S. 538, 36 S. Ct. 183, 60
ee ER at ant anda hak SA Oe eRe 25
Nichols-Morris Corp. v. Morris, 279 F. 2d 81 (2nd
PT Tre Wyk heck aah Wa bond ee shih ee 90's 7
Pepper v. Litton, 1939, 309 U.S. 295, 60 S. Ct.
EE een aks Reads ols Khe 6 whoo 20
Radack v. Norwegian American Line Agency, Inc.,
318 F. 2d 538 (2nd Cir. 1963) ................. 6, 12
Smith v. Jackson Tool and Die, -Inc., 426 F. 2d
ss Sk wick a Bh 6 Nese wake’ 10, 11, 12
Sonnenblick-Goldman Corp. v. Nowalk, 420 F. 2d
Se SE Gb a Sk kw hcseeawses we kiaaaes 7-8
Thompson v. Immigration and Naturalization Ser-
vice, 1964, 375 U.S. 384, 84 S. Ct. 397, 11
ee es ae ie eae ae kr nr ety 5, 8
Wolfsohn v. Hankin, 1964, 376 U.S. 203, 84 S.
a ee wi cecbaswakebe bs haem 4-5
Wright v. American Home Assurance Company, 488
PS ON os os cua nena a ob W bear's 13
STATUTES
_ RI AR beta coe pater a ee wher $3
FEDERAL RuLEs
aT al rr ris om ers es Le 2
8 I IR Sg a Sars y DOE Bein Roa 25, 26
Fed.R.Civ.P. 60(b)(6) ............. 2, 2 o, & 80, 11,12
Fn TE Bie) | EN SRR Rel oT Stet, ie aie E .. 3. ii
MISCELLANEOUS
Moore’s Federal Practice (2d Ed. 1974), 4 0.404(1) 24
, BLEED THROUGH
-——
No. 75-1172
In The
Supreme Court of the United States
FIDELITY AND DEPOSIT COMPANY
OF MARYLAND,
Petitioner,
vs.
USAFORM HAIL POOL, INC., et al.,
Respondents.
BRIEF IN OPPOSITION TO PETITION FOR A
WRIT OF CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE FIFTH CIRCUIT
Respondents pray that the Petition be denied.
OPINIONS BELOW
The opinion of the Court of Appeals rendered on
November 20, 1975 is now officially reported at 523
F. 2d 744 (5th Cir. 1975). Respondents will refer to
the opinions below by reference to Petitioner’s Ap-
pendices A thru H, as well as to the official citations
for those opinions which have been officially reported.
BR
;
&
'
5
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2
RESPONSE TO PETITIONER’S REASONS
RESPONSE TO PETITIONER’S REASON I:
The Court of Appeals’ Decision That It Had Jurisdic-
tion of This Cause (A) Is an Application of This Court's
Prior Decisions, (B) Does Not Conflict With the Deci-
sion of Any Other Court of Appeals Reported to Date,
and (C) Involves Such a Unique Set of Circumstances
That Review by This Court Is Unwarranted.
A.
Petitioner launches its initial attack on the Court of
Appeals’ acceptance of jurisdiction of this cause on
grounds that the Court’s ruling violates the express pro-
visions of Rule 4(a), F.R.A.P., Rule 77(d), F.R.Civ.P.,
and 28 USCA, § 2107.
The ruling of the Court below violates neither of
the cited rules nor the statutory provision. Concisely
stated, the holding of the Court of Appeals was that
where there were unique circumstances present, in addi-
tion to the failure of the Clerk to discharge his duty
under Rule 77(d), F.R.Civ.P., the District Court prop-
erly used its broad discretion under Rule 60(b)(6),
F.R.Civ.P., in setting aside its judgment and re-enter-
ing it to preserve the right of appeal. This constitutes
neither an application of, nor a repudiation of the rules
and statute that Petitioner claims have been contra-
vened.
Rule 4(a), F.R.A.P., provides the time for filing a
notice of appeal after the entry of an appealable order
or judgment, and further provides that an extension of
thirty days in addition to the initial thirty days may
be granted where there is a showing of excusable ne-
glect.
, BLEED THROUGH
° ~
3
Rule 77(d), F.R.Civ.P., states that the failure of
the clerk to notify parties of the entry of an appealable
order or judgment, standing alone, does not affect the
time for filing the notice of appeal.
28 USCA, § 2107, similarly to Rule 4(a), F.R.A.P.,
provides that a court may extend the initial time for
filing a notice of appeal for an additional thirty day
period.
None of these provisions deal with the question of
what the district court may or may not do under the
authority of Rule 60(b)(6), F.R.Civ.P. Each of these
provisions refers to the running of time from the entry
of a judgment or order. It cannot be disputed that a
district court has the authority, under some circum-
stances, to set aside a judgment based upon an appli-
cation of Rule 60(b)(6) F.R.Civ.P. To contend other-
wise is to contend that there is no sphere of applica-
tion for that rule. When the court sets aside a judg-
ment, that judgment becomes a nullity, to which the
provisions of the rules and statute cited by Petitioner
can have no application. If the district court prop-
erly uses its authority under Rule 60(b)(6) to set aside
a judgment, and subsequently enters a new judgment,
the provisions cited by Petitioner then have application
only to the new judgment, the previous judgment then
being void.
There can be no question that Respondents properly
perfected their appeal from the re-entered judgment of
the District Court dated January 14, 1974. The ques-
tion remaining is whether or not the District Court
properly used the provisions of Rule 60(b)(6) to set
aside its initial judgment. While the authority of the
district court under Rule 60(b)(6) should not be such
4
that it renders the rules and statutory provision cited
by Petitioner inoperative, those rules and provision
contain no express or implicit prohibition against the
action taken by the District Court in this proceeding.
Petitioner has chosen to ignore most of the grounds
asserted by the Court of Appeals in support of its hold-
ing that it had jurisdiction of this cause, choosing in-
stead to represent the holding as being based upon the
mere failure of the Clerk to notify counsel of the entry
of the judgment. Respondents respectfully request this
Court to note the carefully reasoned opinion of the
Court of Appeals and consider the reasons given there
for its holding. Fidelity and Deposit Company v.
Usaform Hail Pool, Inc., 523 F. 2d 744, 747-51 (5th
Cir. 1975) (Pet.’s App. A., p. A-7 thru A-15). The
holding is clearly based upon a finding of unique cir-
cumstances including:
1) diligent inquiry by counsel for Respondents
until they were induced to cease by assurances of
the Court that further inquiry was unnecessary;
2) failure of both sides to learn of the entry of
the judgment;
3) the lack of prejudice to Petitioner;
4) the inevitability of appeal from any judgment
the District Court could possibly have rendered.
Contrary to Petitioner's inference that this Court
has not considered whether a district court in the exer-
cise of its equity jurisdiction may restore an otherwise
lost right to appeal, the ‘‘unique circumstayices’”’ doctrine
has its origin in prior decisions of this Court. Harris
Truck Lines, Inc. v. Cherry Meat Packers, Inc., 1962,
371 U.S. 125, 83 S. Ct. 283, 9 L. Ed. 2d 261. Wolfsohn
rmt ree Fs ee eee 2 ree
ae
feixt 3
5
v. Hankin, 1964, 376 U.S. 203, 84 S. Ct. 699, 11
L. Ed. 2d 636, reh. den. 376 U.S. 973, 84 S. Ct. 1133,
12 L. Ed. 2d 87. Thompson v. Immigration and
Naturalization Service, 1964, 375 U.S. 384, 84 S. Ct.
397, 11 L. Ed. 2d 404.
The Thompson case involved the same element of
reliance on actions of the district court that was present
in this case. In that case, the district court assured
counsel that his post-judgment motions were timely and
therefore tolled the running of the time for filing the
notice of appeal. Counsel did not file a notice of ap-
peal in reliance on this assurance until the court dis-
posed of these motions. This Court concluded that
counsel's reliance on the district court’s statement that
his motions were timely was reasonable, and that this
constituted ‘‘unique circumstances” justifying the ac-—
ceptance of jurisdiction.
While the Thompson case was not a Rule 60(b)(6),
F.R.Civ.P., case, its rationale is identical to that ap-
plied by the Court below in holding that the District
Court properly exercised its broad discretion under
Rule 60(b)(6).
B.
Petitioner claims that conflict exists among the
Courts of Appeal on this question. When the decisions
cited by Petitioner as being in conflict witn the deci-
sion of the Court below are closely analyzed, no con-
flict is found among the circuits on the narrow ground
upon which the Court below held that it had juris-
diction.
Petitioner places primary reliance on Hodgson v.
United Mine Workers of America, 433 F. 2d 118 (D.C.
6
Cir. 1972), and also cites the decision of the same Cir-
cuit in Lord v. Helmandollar, 384 F, 2d 780 (D.C, Cir.
1965), cert. den, 383 U.S, 928, 86 S, Ct, 929, 15 L.
Ed, 2d 874, as being in conflict with the decision below,
However, Petitioner has ignored the later decision of
that Court in Expeditions Unlimited Aquatic Enter:
prises, Ine, ¥, Smithsonian Institute, 500 F, 2d 808
(D.C, Cir, 1074), whieh was elted by the Court below
as being in accord with ite decision in this ease, 42h
VY Bd at TAO (Pet.'s App, Ay p Ada) The eourt in
Kvpeditions Untimited distinguished both the Hodgaen
and the Lord eases an the grounds that 1) in eaeh of
(hase eases, counsel knew af the entey of the judgment
in the time to perfect thelr appeals, and 8) there was
Ho relianee of any aetion by the clerk or the distriet
wourt in these eases whieh caused the problem, These
elements are clearly present in this ease, making it
accord with the most recent holding of the Court of
Appeals for the Distriet of Columbia, and distinguish:
able from the prior decisions of that Court relied upon
by Petitioner for conflict.
The decision cited by Petitioner from the Court
of Appeals for the 2nd Circuit, Radack v. Norwegian
American Line Agency, Inc., 318 F. 2d 538 (2nd Cir.
1963), not only fails to conflict with the decision below,
but in fact supports Respondents’ position. Petitioner's
one sentence description of Radack is extremely mis-
leading, to the extent that it does not accurately
portray the meaning of the paragraph from which it
was taken, not to mention the holding of the case.
The rest of the paragraph is crucial to the court's
decision:
“The rule [Rule 60(6)(6)) cannot be uaed te ep
Cumvent the 1047 Amendment to Rule 7d) dealing
BLEED THROUGH
7
with the effect of lack of notice on the running
of time for appeal [cite omitted] nor is 60(b)(6)
relief available for an unlimited time. The rule is
still subject to both the reasonable time limitation
and to the proper exercise of discretion by the dia:
trict court considering all the circumstances present
in a given case, The granting of such motion
should be considered only when lack of notice has
operated to prejudice a substantial right ar remedy
that would otherwise have been available,’ aia
W, Bd at babedd,
The next to the last sentenee of the opinion ia alse
vital)
‘Hut if netics of the judgment was fot sent, the
judge has the power, in the exercise of a sound
discretion, to grant relief under GO(B)(6) FIA FP,
Yd at 645,
This case is one of the few cases cited by the Peti-
tioner which involves the precise issue presented here,
and actually supports the decision below.
The second case cited from the Second Circuit,
Nichols-Morris Corp. v. Morris, 279 F. 2d 81 (2nd Cir.
1960), involved a denial of a motion to extend the time
for appeal which was filed after the expiration of the
initial 30 day period, and which stated no reasons which
justified a finding of excusable neglect. In that case,
counsel had notice of the judgment two days after it
was entered but simply did nothing. This case has no
bearing on the issue involved in the decision below
and therefore cannot be in confliet with it,
From the Third Cireuit, Petitioner has cited the
case of Sonnenblick Goldman Corp, ¥. Nowalk, 480° F.
8
2d 860 (3rd Cir. 1970). In that case, counsel filed an
untimely motion which would have tolled the time for
filing the notice of appeal had it been timely made.
Unlike the Thompson case, supra, counsel relied on no
action of the district court in failing to file the notice
of appeal, and did not even bother to file a motion to
extend the time for filing the notice based upon ex:
cusable neglect, although he had ample time to do ao,
This case did not invelve an application af Rule 60(b)(4)
hCIV.P., and has no factual resemblance to the ease
al bar,
Petitioner cites fram the Mixth Clreuit Anew Mutual
/nauranee Company ¥, Kallen, G76 W. Ba AAO (BW Clr,
\007), Ih that ease, the Court dismissed a erase appeal
as untinely filed, ‘The initial appeal wae timely only
by reason of an extension of time granted by the dis:
trict court for excusable negleet, Without securing a
similar extension, eross-appellant merely filed his eross
appeal assuming that he was entitled to the benefit of
the extension given to the appellant. This case does
not involve failure to receive notice of a judgment, or
reliance upon any action of the clerk or court, and does
not involve an application of Rule 60(b)(6). In fact,
it does not even involve a review of a denial for an
extension of time based upon excusable neglect, since
no such extension was requested by the cross-appellant.
As the court there pointed out, there was no issue
involved regarding whether the appellant had notice of
the order, since the appellant had prepared the order he
sought to appeal, and had submitted it to the court for
signature, 376 F. Qd at 364,
Two cases are cited for confliet from the 7th Cir:
cuit, Piles ¥. Clty of Roekford, 440 F. Bad ALL (7th Cle
1071), and Mrainerd vo Meal, 408 F, Ba BOL (THA Clr,
' BLEED THROUGH
9
1974). It takes but a brief quotation to show the jae
of conflict between the Files case and the dagiginn
below:
“The order dismissing the complaint in this gauge
was entered October 6, 1969 in open court, Ajj
parties were present in court by counsel, ‘fore
ia no contention that the clerk failed to give notice
of the entry of said order to attorneys for ail
parties, See Nule 77d) PRC” 440 B94 at
ALM,
The eourt further noted that the lower eOUrt had
merely purported to extend the time for fillig the
appeal and neither the motion requesting the exten-
sion, HOF the order granting it, recited any gPOhds for
finding: excusable negleet, The court alse independently
reviewed the record and determined that he sueh grounds
were present even if appellant had sought the extension
on this basis, The court acknowledged the ‘unique
circumstances” exception, but held that none were present
in that case,
In Brainerd, supra, the notice of appeal was filed
more than thirty days beyond the entering of the judg:
ment, and no request for extension based upon 6x:
cusable neglect was made. There was no contention
that counsel did not have notice of the entry of the
judgment, and the court in independently reviewifiz the
record, found no facts to support a finding of excusable
neglect had counsel sought an extension on that ground,
Although this case does not present conflict, it is in
teresting to note that the court cited its previoud opin:
ion in Harris Truck Lines, Ine, v. Cherry Meat Packers,
ine, GOO FB. Bd GOO (7th Cle, 1062) in support of its
ruling, ‘This ie the eaae, whieh on appeal to thie Court,
10)
was reversed resulling in the ereation of the “unique
clreummatances’ doctrine, Harrie Truck Lines, Ine ¥,
Cherry Meat Packers, Ine, 1968, B71 ULB, 1b,
8. Ob, YA4, OL, Wa, Yd BO),
Vinally, from the 10th Cireuit, Petitioner has cited
the ease of Lathrop ¥, Oklahoma City Housing Author
ity, 498 FF, 2d O14 (10th Cir, 1971), eort, den, 404 US,
940, 92 8, Ct. 192, 90 L, Bd, 2d 73, In Lathrop,
there was a simple failure to file the notice of appeal
on time, which appellant tried to overcome by the sole
allegation that notice of the judgment had not been
received. Nothing was cited in the opinion regarding
whether or not counsel had attempted to learn of the
judgment prior to the running of the appeal time, and
no reliance on any action taken by the clerk or the
court was cited. While Petitioner would like this Court
to believe that this is the factual setting of the present
case, both the order of the District Court setting aside
its first judgment (Pet.’s App. C, p. C-1 thru C-5) and
the decision of the Court below demonstrate that it is
not.
Further evidence of the lack of conflict of the
decision below with Lathrop, supra, is found in the
Fifth Cireuit's analysis of ite own prior decisions in
Smith v, Jaekaon Tool and Die, Ine., 426 F. 2d 6 (bth
Cir, 1970), and Jn He Morrow, 602 F, 8d 620 (Bth Cir,
1974), In Smith, counsel for appellant had requested
the court to delay entering ite judgment, and opposing
counsel agreed to the delay, Without notifying counsel
for appellant, the eourt entered judgment, and neither
side was informed of ite action, In that case, the
Fifth Cireuit held that there were unique circumstances
in addition to the failure of the elerk to notify the
parties of the judgment which justified setting aside
the judgment under 60(b)(6),
, BLEED THROUGH
In Morrow, supra, there was nothing in addition to
the failure of the clerk to notify the parties, In that
dase, just as the Tenth Civeuit did in Lathrop, supra,
the Fifth Cireuit refused to uphold the setting aside of
the judgement to preserve the right of appeal, A read:
ing of the decision of the Court of Appeale in thie ease
will show that the Court carefully considered ite prior
decisions in Smith and Morrow, and found that in the
case at bar, just as in Smith, there were additional
unique circumstances over and above the failure of the
clerk to give notice. Accordingly, the Lathrop case
does not present a conflict with the decision of the
Court below, and is in accord with the similar decision
of the Fifth Circuit in Morrow.
Respondents regret that Petitioner's mere listing of
cases claimed to be in conflict with the decision below
necessitated this lengthy analysis of largely inap-
posite cases, but the analysis demonstrates that there
is no conflict among the circuits on the narrow
issue raised by the Fifth Circuit's holding that it had
jurisdiction of this cause,
C.
Petitioner's contention that the jurisdictional issue
involved here is of equal importance to those instances
where this Court has granted certiorari to determine
the question of when 4 judgment becomes final is a
ross exaggeration, Hesolution of the jurisdictional
issue invelved in this appeal by this Court would only
affect those extremely rare instances in which the clerk
of the district court fails to discharge his simplest and
most clearly mandated duty under Rule 77(d), and in
which there are additional unique circumstances justi
fying the exercise of the court's discretion under Rule
60(b) (6),
\Y
The resolution of the true issue invelved in the
Court of Appeals’ holding relating to jurisdiction would
not have any effeet whatsoever on the decisions cited
hy Petitioner for conflict, except Hadaek, supra, sinee
all of them are distinguishable on their facta, The only
decisions whieh could possibly be affected by a review
by this Court are the decisions in Hapeditiona Un
limited, Hadaeh, and Smith, supra, all of whieh support
the Fifth Cireuit’s decision, These cases represent an
infinitesimal percentage of the cases reaching the ap-
pellate level of the Federal court system.
Surely this Court need not spend its valuable time
ruling on a question which only arises as a result of
a rare failure on the part of both a District Court and
its Clerk, and which has as its basic premise the prop-
osition that the district courts cannot fairly discharge
their duty under Rule 60(b)(6) in these very limited in-
stances, and that the courts of appeal cannot fairly
review such decisions.
RESPONSE TO PETITIONER'S REASON II:
Petitioner Is Complaining of an Irregularity Which
Caused No Prejudice to Petitioner, Was Treated As
Frivolous by the Court of Appeals, and Deserves the
Same Treatment Here,
Petitioner's reason Il also grossly overstates the
import of the Court of Appeals’ decision, Heason II
claima that the Court of Appeals has attempted to
revolutionize appellate procedure by dispensing with
the requirement of filing a notice of appeal,
The minor irregularity that gives rise to Petitoner's
complaint is not fatal to the claims of Usaform Pan
American Limited (Pan Am''), and can be easily ex:
plained,
, BLEED THROUGH
13
Petitioner's complaint is that Pan Am did not file
2 notice of appeal from the judgment of the District
Court. In truth, what happened is that Pan Am’s
name did not appear in the listing of appellants con-
tained in the notice of appeal. When one examines
the first page of the District Court’s ‘‘Findings of Fact
and Conclusions of Law” and ‘‘Final Judgment’’, both
as entered on August 2, 1973 (Pet.’s App. D, p. D-1
and D-26) and as re-entered on January 14, 1974 (Pet.’s
App. B, p. B-1 and B-26), the source of the irregularity
is easily seen. The listing of the parties defendant in
the style of those documents lists all of the Respondents
except Pan Am, although Pan Am’s claims are adjudi-
cated therein. Respondents were understandably hasty
in filing their notice of appeal from the re-entered judg-
ment of the District Court, and the error is easily ex-
plained as resulting from taking the listing of appellants
from the District Court’s listing in the judgment being
appealed. The error is obviously clerical and one of
mere oversight.
It should be noted that this point was raised in
the court below, albeit half-heartedly, and the Court of
Appeals apparently thought it frivolous to the point of
not deserving mention, there being not one sentence on
this point in the Court of Appeals’ lengthy opinion.
It is the filing of a notice of appeal which rea-
sonably apprises the opposing party that an appeal is
being taken that is required by the rules. It has been
held on numerous occasions that irregularities in the
notice will not be considered fatal where no prejudice
to the opposing party occurs. Jones v. Chaney and
Janes, 399 F. 2d 84 (5th Cir. 1968), Wright v. Ameri-
can Home Assurance Company, 488 F. 2d (10th Cir.
1974).
14
In Brubaker v. Board of Education, School District
149, 502 F. 2d 973 (7th Cir. 1973), cert. den. 419 U.S.
1039, 95 S. Ct. 1953, the court found no trouble in
overlooking the absence of a party’s name in the notice
of appeal, where the intent of the notice was apparent
and no prejudice could have occurred to the opposing
party.
It is not surprising that Petitioner has not at-
tempted to allege that it was prejudiced by the irregu-
larity. It had been engaged in litigation with Pan Am
along with the other Respondents for eleven years when
the notice of appeal was filed (including two previous
appeals to the Fifth Circuit); the last proceeding before
the District Court had involved no new facts and in-
volved an application of the same legal principles be-
tween Petitioner and all Respondents including Pan Am;
the notice of appeal accurately referred to the findings,
conclusions and final judgment which were entered
against all Respondents including Pan Am in the same
documents and on the same legal grounds. In fact,
Petitioner could have made no other conclusion on re-
ceipt of the notice of appeal than that Pan Am’s name
did not appear due to a clerical error. This was the
case beyond question.
RESPONSE TO PETITIONER’S REASON III:
Petitioner's Complaints Are Predicated Upon a Mis-
interpretation of the Decision Below, and Are There-
fore Fallacious.
Petitioner's reason III is predicated upon a serious
misinterpretation of the decision of the Court of Ap-
peals.
Petitioner seeks to attribute to the decision of the
Court of Appeals an intention to ignore or misapply
4
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15
state law in a diversity suit, to create new presump-
tions never before known, and to place a burden of
proof on Petitioner that it should not be required to
bear.
Petitioner gets off on the wrong foot immediately
by attributing to the Court of Appeals a quotation
which was in fact the language of the District Court
in its first opinion (Pet., p. 28). It is true that the
Court of Appeals adopted as controlling the quoted
language to the effect that Petitioner, in issuing the
bond, walked into the loss with its eyes wide open.
However, the reason that the Court of Appeals adopted
this language as controlling was that the Court’s 1972
opinion in this case specifically affirmed that District
Court finding, and not because of any preconceived in-
tention of the Court of Appeals to ignore the language
of the bond, nor because of any prejudice against Peti-
tioner by the author of the opinion. (Petitioner insists
on insinuating the existence of such prejudice through-
out the Petition, without foundation.)
Unfortunately, the extent of the confusion generated
by Petitioner in its reason III requires going back to
the previous decision of the Court of Appeals (referred
to as the 1972 opinion) for clarification. Fidelity and
Deposit Company of Maryland v. Usaform Hail Pool,
Inc., 463 F. 2d 4 (5th Cir. 1972) (Pet.’s App. E). That
decision, while not carefully defining the sole legal prin-
ciple to be applied on remand in the District Court,
nevertheless limited remand to one narrow issue—
whether or not monies diverted from premium accounts
of an insured corporation were used for legitimate cor-
porate obligations of that corporation. With respect
to the remaining issues, the Court stated:
16
“We have carefully reviewed all other grounds as-
serted by appellant and affirm the District Court
in all other respects.”” 463 F. 2d at 7 (Pet.’s App.
E, p. E-6),
thereby eliminating these issues on remand.
The District Court’s decision following remand
sought to go back and alter many of the findings and
conclusions which had been foreclosed by the above-
quoted language of the 1972 decision of the Court of
Appeals. The action of the Court of Appeals in dis-
regarding the findings and conclusions of the District
Court on issues which were not open to it on remand
therefore does not constitute a violation of the doctrine
of Erie Railroad Company v. Tompkins, 1938, 304 U.S.
64, 58 S. Ct. 817, 82 L. Ed. 1188, as Petitioner would
have this Court believe. It is a simple application of
the doctrine of the law of the case and the superiority
of the Court of Appeals over the District Court. Once
the Court of Appeals had previously considered, and
specifically affirmed, the findings of the District Court,
they were no longer open for further consideration by
the District Court.
The fact that this was the rationale of the decision
of the Court of Appeals in this case is easily illustrated
by reference to the opinion. Citing the first decision
of the District Court, the Court below stated:
“The trial court rendered a carefully considered
opinion and made findings of facts, many of which
govern the present appeal.’’ (Emphasis supplied)
523 F. 2d at 751 (Pet.’s App. A, p. A-16).
Later, again referring to the first District Court
decision, the Court said:
eS — slr
ed
17
“The [District] Court did not address the issue of
whether the uses to which the wrongfully trans-
ferred funds were put were ‘legitimate’ or ‘proper’
corporate purposes. This turned out to be the
only issue upon which we remanded the case to
the District Court in our 1972 opinion.’’ 523 F. 2d
at 754 (Pet’s. App. A, p. A-21).
Further along, the Court said:
“The District Court in its first opinion had care-
fully analyzed the claimants’ position on a com-
pany-by-company basis. 318 F. Supp. 1301. That
approach was in no way challenged by this Court;
rather, we took care to state that the District
Court’s determination was affirmed in all other
respects. 463 F. 2d at 7." 523 F. 2d at 756
(Pet’s. App. A, p. A-26).
Additional examples are:
“The findings of fraud and dishonesty were clear
and pervasive in the District Court’s first opinion,
and they were affirmed in our 1972 opinion. The
issue on remand was loss—whether the wrongfully
appropriated monies went to pay legitimate corpo-
rate obligations (in which case there would be no
‘loss’) or whether they were made for any other
purpose (in which case there would be a ‘loss’).”
523 F. 2d at 757 (Pet.’s App. A, p. A-26).
* * *
“The District Court in its earlier opinion found
that ‘the named insureds were al! insolvent at all
times when the . . . illegal transfers were being
made. . .. 318 F. Supp. at 1308 (emphasis added).
Because the only issue on remand from our 1972
18
decision was whether the wrongfully appropriated
funds were used to pay legitimate corporate obliga-
tions, this finding—indeed, all findings and con-
clusions of the District Court in its first opinion not
germane to the issue on remand—were binding upon
the District Court.’’ [Cites omitted] 523 F. 2d
at 759 (Pet’s. App. A, p. A-30, 31).
“We repeat that the Court's earlier findings of
fraud and dishonesty were affirmed by this Court
in its 1972 opinion and were not open to recon-
sideration on remand.’ 523 F. 2d at 762 (Pet's.
App. A, p. A-38).
*+*_ * *
“The District Court has acted conscientiously and
has taken great pains throughout the course of this
litigation. Our examination of record leaves us to
conclude, however, that the Court misapprehended
the mandate of the 1972 opinion of this Court.”
523 F. 2d at 767 (Pet’s. App. A, p. A-48, 49).
With this analysis of the decision of the Court of
Appeals in mind, Petitioner’s contentions fall like a
house of cards.
Petitioner contends that the Court of Appeals elimi-
nated the requirement of showing that loss under the
bond was caused by fraud and dishonesty. What the
Court said was that the requirement of proving fraud
and dishonesty to the extent necessary for recovery
under the bond had already been proven by Respon-
dents, and was no longer an issue in the case. The
status of the case following the prior appeal was that
fraud and dishonesty as a causative element had been
oe
19
proven, and the sole and critical question remaining was
where the fraudulently diverted money went. The en-
tire meaning of the 1972 opinion was that it is possible
to have fraud and dishonesty on creditors of the insured
corporation without a loss to the insured corporation,
but where the fraud and dishonesty in a continuous
sequence of events results in an expenditure for non-
legitimate reasons, viewed from the perspective of the
insured corporation, a loss occurs as defined in the
bond. Accordingly, while the issue on remand was
broadly referred to as ‘“‘loss’’, it was really whether or
not only one of the many elements of loss was present,
all of the other necessary elements for proving loss
having already been proven.
Petitioner's argument that the Court of Appeals
shifted the burden of proof of loss also collapses under
analysis. The Court of Appeals first noted that the
vast bulk of the burden to be carried by Respondents
has been carried. The one issue remaining to be de-
cided on remand affects the whole question of whether
there will be any recovery and was thus broadly referred
to by the Court as the question of whether there was
a ‘loss’. The real issue is whether the diverted funds
were expended for “legitimate’’ corporate purposes,
which constitutes but one small part of the many-
faceted issue of “‘loss’’. The vast majority of the ex-
penditures claimed by Respondents not to be legitimate
expenditures were intercorporate transfers among cor-
porations with common ownership, directors and offi-
cers, and transfers between these corporations and their
officers and employees. Where such transfers occur, the
general rule of law in America is that the burden of
showing legitimacy of such transfers is on the parties
intending to uphold them (or on the parties relying
0 RG VY mee, CORN OE wm Gy"
20
upon the legitimacy of such transfers, such as Peti-
tioner), The burden of proving all of the other elements
of loss has always been rightfully placed upon lespon:
dents, a6 claimants under the bond, and has heen
carried by them, ‘The single remaining element in
volved being ‘legitimacy’, and lespondents having
carried the burden of showing the necessary interlocking
and fiduciary relationships of the transferors and trans
ferees, the burden of proving legitimacy under these un
disputed factual circumstances shifts to Petitioner,
Petitioner complains that the Court of Appeals did
not apply state law and relied upon a pre-Mrie case in
placing the burden of proof of legitimacy of the inter-
corporate transfers on Petitioners. However, Petitioners
cite no authority for the proposition that this is not the
law of the respective states whose law controls under
the circumstances. The Court of Appeals chided Peti-
tioner for this same failure. The Court below, in re-
ferring to the pre-Erie case of Geddes v. Anaconda
Copper Mining Company, 1920, 254 U.S. 590, 41 S. Ct.
209, 65 L. Ed. 425 stated:
“. . . Fidelity [Petitioner] has not countered the
claimants’ assertion that the Anaconda principles
apply to the corporations involved in this case.
The full implications of applying those principles
to the present case may be further developed on
remand."’ 523 F. 2d at 760 (Pet's. App. A, p.
A-31).
Therefore, while the Court assumed that Respon-
dents were correct in claiming that Anaconda and the
case of Pepper v, Litton, 1939, 308 U.S, 295, 60 S, Ct,
238, 84 L, Ed, 281 control the burden of proof issue,
it left room for the District Court on remand to further
explore that issue,
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AES OLIN TERT RT IE TE ORS CRETE TT Why Te SINGIN" ot f
21
Petitioner also paints with a broad brush in claim:
ing that the Court has ignored state law in this diver
sity sult on the issue of construing an unambiguous
contract, tlowever, Petitioner cites only vague and
general Vlorida law that courte cannot ignore the lan
guage of unambiguous contracta, The question of am
higuity is one of fact, depending upon the eireumstances
of the transaction, ‘The Court of Appeals agreed with
the Petitioner that the contract was not ambiguous un
der the circumstances <it simply did not agree with
Petitioner's view of what the contract clearly says, If
the Court had found that there was ambiguity, it would
have resolved it against Petitioner, the bond having
been drafted and issued by Petitioner with full knowl-
edge of the factual context existing with respect to the
insureds. 523 F. 2d at 755 (Pet's. App. A, p. A-22),
Careful analysis of the Court of Appeals’ decision
shows that it is guilty of none of the offenses charged
in Petitioner's reason III, and further affirmatively
shows that it followed the essential requirements of law
in holding the District Court to the mandate of the
1972 opinion.
RESPONSE TO PETITIONER'S REASON IV:
The Court of Appeals Did Not Alter Its 1972 Decision,
but Merely Clarified It, Although It Had the Power to
Alter It Through the Use of Its Sound Discretion.
Petitioner's contention that the Court of Appeals
altered its 1972 decision in the 1975 decision, which the
Petition seeks to have reviewed, is afflicted with the
same misapprehension of the decision below that per-
vades the other points Petitioner attempts to raise,
22
Petitioner's argument begins;
In violation of both the contract and that opinion
{1072 opinion], the Court relied solely on the dis:
viet court's earlier vacated findings of fraud and
dishonesty a6 Wo the invasion of the so-called trust
funds, , ."' (Pet,, p, 94),
The excerpts cited above under HMespondents’ re
sponse to reason IIT catalogue the Court of Appeals’ re
peated statements that the previous findings relating to
fraud and dishonesty were not vacated, but rather were
specifically affirmed by the 1972 opinion.
The Court of Appeals did not undertake to modify
the 1972 opinion, but simply sought to clarify it for the
benefit of the District Court, whose decision had shown
that it was obviously confused by the 1972 decision.
All of the Court's references to its 1972 decision are
stated in terms of clarification of points on which con-
fusion may have arisen. Not once did the Court of Ap-
peals indicate an intention to deviate from its prior
opinion, and it cannot be said that the decision below
is clearly inconsistent with the 1972 decision.
Petitioner contends that there was some support in
the 1972 opinion for its lately contrived theory that any
legitimate corporate purpose of any of the joint insureds
is necessarily a legitimate purpose of the others. The
Court of Appeals took pains in its recent decision to
point out the clear and simple language of the 1972
opinion which should have laid this phony argument to
rest, to wit:
The reference to ‘wash transactions’ . . . might be
taken to imply that in a case involving a group of
corporations related by common ownerships, trans-
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23
actions among corporations are not protected by the
bond unless the net financial condition of all of the
corporations considered together as one Were im-
paired, Our holding in the earlier appeal . . . dis-
pele any such notion when carefully read, It fairly
indi¢ates that each corporate tub must stand upon
its own bottom, This follawa from the reference to
‘the taking of money from the premium ageounts of
an insured company to pay other legitimate obliga-
tions of that company,’ 468 F. Yd at 7." (Em-
phasis is the Court's) 6245 BF. Yd at 766 (Pet's.
App. A, p. A«25).
While vigorously opposing any contention that the
Court of Appeals, with or without intending to do so,
altered its 1972 opinion in the decision below, Respon-
dents ask the Court to note that if this were the case,
the Court of Appeals had complete power to do so, in
the exercise of its discretion, if it determined that its
prior decision was erroneous.
It is not surprising that the only case cited by Pe-
titioner for the proposition that the Court acted out-
side its authority is weak, inapposite, and is probably
erroneous in its holding. In that case, Knapp v. North
American Rockwell Corp., 506 F. 2d 361 (3rd Cir. 1974),
the Court made the observation in a footnote that since
a different panel of the same Court had previously
denied a motion to dismiss for lack of jurisidiction, the
panel hearing the merits of the case had no power to
reconsider that issue, The first distinction to be made
is that the Court there was referring to a ruling on an
issue which had already been decided by another panel
on the same appeal, whereas the present case involves a
consideration of a prior decision of the Court in the
same case rendered three years earlier, in light of an in-
24
tervening decision of the District Court on remand.
Accordingly, the vision that Petitioner seeks to impart
of panels of the same Court of Appeals endlessly feud-
ing over an issue is a mirage.
Secondly, it is generally held that the issue of ju-
risdiction, which was involved in the Knapp case, is
always open to reconsideration. Brainerd v. Beal, 498
F. 2d 901 (7th Cir. 1974) (footnote 2, at 902), and thus,
Knapp was probably erroneous.
Petitioner's argument appears to be that the ‘‘law
of the case’’ doctrine prevents the Court below from al-
tering its 1972 opinion. While the “law of the case”
doctrine and the superiority of courts of appeals over
district courts required the District Court below to ad-
here to the portions of its first decision affirmed by the
1972 opinion of the Court of Appeals, that doctrine does
not prohibit the Court of Appeals from reconsidering its
own decisions, even those rendered on prior appeals in
the same case. This Court has held that the ‘law of
the case” doctrine is a rule of general application, but
does not constitute a limitation on the power of an ap-
pellate court, acting within its sound discretion, to re-
consider its prior rulings in a case. Messinger v.
Anderson, 1912, 225 U.S. 436, 32 S. Ct. 739, 56 L.
Ed. 1152.
Consider also the following excerpt from Moore’s
Federal Practice:
‘While there is considerable authority in federal
cases, usually the older ones, to the effect that the
law of the case has the effect of res judicata, the
present federal view is contra and the doctrine of
the law of the case does not carry the same conse-
quences as the rule of res judicata.”” Moore’s Fed-
eral Practice (2d Ed. 1974), ¢ 0.404(1), p. 405-406.
TD Dad Te LIEU GA MID alu, byw aha “
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bai:
25
See also Greater Boston Television Corporation v.
FCC, 463 F. 2d 268 (D.C. Cir. 1971).
This Court has also held that due process does not
compel an appellate court to follow its previous ruling
in the same case on subsequent appeals to the same
court. Moss v. Ramey, 1920, 239 U.S. 538, 546-47,
36 S. Ct. 183, 60 L. Ed. 425.
Petitioner has failed to demonstrate any reason why
the Court of Appeals abused its discretion, even if it
could be demonstrated that any alteration of the 1972
opinion occurred in the recent opinion. No such altera-
tion occurred, and Petitioner has not shown any valid
reason why the decision of the Court of Appeals should’
be reviewed on this issue.
RESPONSE TO PETITIONER’S REASON V:
The Court of Appeals Found That Most of the District
Court’s Findings Violated the Court’s Prior Mandate,
Constituting Clear Error.
Petitioner’s reliance on the ‘“‘clearly erroneous’’ doc-
trine of Rule 52(a), F.R.Civ.P., contains the same basic
fallacy as Petitioner’s other contentions.
Petitioner begins its attack by stating that the
opinion of the Court of Appeals is “wholly devoid of
any finding of evidentiary inadequacy of the elaborate
findings prepared and filed by the District Court’’ (Pet.,
p. 35).
Petitioner fails to give any weight to the basic
premise of the Court of Appeal’s decision that the Dis-
trict Court was not authorized to make most of the
findings of fact that it purported to make. What could
be more clearly erroneous in the actions of a district
court than entering findings which it is not allowed to
make? The unauthorized findings pervaded the Dis-
26
trict Court's decision (constituting more than half of the
total findings), which would have merited reversal
standing alone. Nevertheless, the Court of Appeals, in
the hope of providing guidance for subsequent proceed-
ings, went ahead and examined additional findings
which the District Court was arguably authorized to
make, pointing out in each instance why these findings
were irrelevant to the issue before the Court, and why
others were clearly erroneous in light of the evidence.
There is no Rule 52(a) issue present here, and
therefore no need for Respondents to discuss the cases
Petitioner contends are in conflict with the decision of
‘ the Court of Appeals.
RESPONSE TO PETITIONER'S REASON VI:
The Court of Appeals Did Not Change the Law to Be
Applied and Therefore No New Trial Is Required.
Petitioner again raises an issue which would be ap-
pealing but for the lack of a predicate in the previous
proceedings to support its contentions.
Petitioner's reason III had contended that the Court
of Appeals changed the law applicable to this case, or
ignored the applicable law, contrary to the Erie doc-
trine. Petitioner now claims in its reason IV that if
the change in the law was properly made, Petitioner
should be allowed to retry this cause under the ‘“‘new”’
principles. Perhaps Petitioner’s ulterior motive is to try
to wriggle out of what now appear to have been inad-
visable stipulations and to send Respondents back to
prove events which happened more than thirteen years
ago, prior to commencement of this litigation.
It would probably come as a surprise to the Court
of Appeals to learn that it broke new ground in its de-
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27
cision regarding the issue of burden of proof. The
Court of Appeals merely applied the general American
rule regarding transactions between closely related cor-
porations which was urged by Respondents to be the
applicable law in this case, and the Court further noted
the absence of any showing by Petitioner that such was
not the law to be applied. In addition, the Court left
the District Court to explore the full implications of
applying these principles on remand.
It remains the duty of the District Court on re-
mand to apply the applicable law in effect at the per-
tinent times to determine the legitimacy of the corpo-
rate transfers. The decision of the Court of Appeals
recognizes that the full factual context of these transfers
is covered by the record of the trial, primarily by stip-
ulations as to indisputable facts. 523 F. 2d at 751-
52 (Pet.’s App. A, p. A-16).
Petitioner, a professional surety which received a
premium for the protection it has doggedly fought to
avoid for thirteen years, now claims at this late date
the right to re-try this case, underscoring its determina-
tion to avoid to the bitter end the payment of just
claims of Respondents which are amply supported in the
trial record.
CONCLUSION
Respondents have demonstrated that Petitioner’s rea-
sons for requesting review by this Court are based on
erroneous predicates not supported by the prior pro-
ceedings in this cause nor by the authorities it cites,
and it is respectfully requested that the Court deny the
28
Petition in order that this cause, which has been too
long pending, may reach its just resolution.
Respectfully submitted,
Tuomas T. Cops
Coss, Core, Sicerson, McCoy,
Bett & Bonp
P. O. Box 191
Daytona Beach, Florida 32015
Counsel for Respondents
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This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.