Opposition Brief — Cortez v. First City National Bank of Houston

S> Vas “* ea 2 wt ee

Eat -

we

No. 91-1702 Hin o § 1

~e- a a he mr

mr ke:

In the Supreme Court of the United States rage

OCTOBER TERM, 1991

CARL W. CORTEZ, PETITIONER

Vv.

First City NATIONAL BANK OF HOUSTON, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR

THE FEDERAL DEPOSIT INSURANCE CORPORATION

IN OPPOSITION

KENNETH W. STARR

Solicitor General

Department of Justice

Washington, D.C. 20530

(202) 514-2217

ALFRED J.T. BYRNE

General Counsel

_ JACK D. SMITH

Deputy General Counsel

DOROTHY L. NICHOLS

Associate General Counsel

ANN S. DuROSS

Assistant General Counsel

RICHARD J. OSTERMAN, JR.

Senior Counsel

J. SCOTT WATSON

Senior Attorney

Federal Deposit Insurance Corporation

Washington, D.C. 20429

ERA

QUESTION PRESENTED

Whether the court of appeals properly dismissed peti-

tioner’s appeal for lack of jurisdiction when the notice of

appeal was filed 102 days after the final order dismissing

petitioner’s action, and no timely motion for reconsidera-

tion had tolled the period for filing a notice of appeal.

(I)

TABLE OF CONTENTS

IID scicniccahsnnsbaninunensnsnnasenuncasoncnsasounsantannsecsncescesons

ES SEAR

Oe os celis pubs eandenbasaabanenseceonnsen

Ti cad cance in cuahphbecnaecehaaensuhediaseasionasinensacensssaseess

a ss sa cepestsleusacenenenendenaenes

TABLE OF AUTHORITIES

Cases:

Bankers Mortgage Co. v. United States, 423 F.2d 73

(5th Cir.), cert. denied, 399 U.S. 927 (1970) ..................

Browder v. Director, Department of Corrections, 434

oa eicseavblivesenddnenasnbhhunn

Cortez v. Price, cert. denied, 489 U.S. 1024, rehearing

A ER OU CBUEEED csncnsnasagsncncnnscsnsnencesssevensenses

Enterprise International, Inc. v. Corporacion Estatal

Petrolera Ecuatoriana, 762 F.2d 464 (5th Cir. 1985)..

Farguson v. MBank Houston, N.A., 808 F.2d 358 (5th

san scnpepedninbonenattngensacsenntens

High v. Zant, 916 F.2d 1507 (11th Cir. 1990), cert.

EE CRUE <onnanennsnncsinecsenanensnnnnesivencen

Martin-Trigona, In re, 737 F.2d 1254 (2d Cir. 1984) ....

National Surety Co. v. State Bank, 120 F. 593 (8th

rs cs saasabubeneousbannensvennsensieean

Smith v. Barry, 112 S. Ct. 678 (1992) ............ccseeeeseeeeeeeees

United States v. Robinson, 361 U.S. 220 (1960) ...............

Constitution, statute and rules:

oc cca eA bbbenhacabicanenuedewnseen

a csinghdensbninnatsbbbacsesetebene

I I ERIEED s.caucecssovannsnsarnsunsnssosanssaneetesstecsarecss

Fed. R. Civ. P.:

Ne a sen uaiansknuanensanen sibsneen

no saan aiennbunenanbseneeienanene

a a chicdanaudauabainnsncake

Page

Se eS ell oe

In the Supreme Court of the Giuted States

OCTOBER TERM, 1991

No. 91-1702

CARL W. CORTEZ, PETITIONER

Vv.

First City NATIONAL BANK OF HOUSTON, ET AL.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR

THE FEDERAL DEPOSIT INSURANCE CORPORATION

IN OPPOSITION

OPINIONS BELOW

The order of the court of appeals (Pet. App. Al) dis-

missing the appeal is unreported. The opinion of the

district court (Pet. App. A3-A6) is unreported.

JURISDICTION

The judgment of the court of appeals was entered on

October 30, 1991. A petition for rehearing was denied on

December 2, 1991. The petition for a writ of certiorari

was filed on February 27, 1992. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

(1)

STATEMENT

1. In 1985, petitioner filed an action against five banks

in the United States District Court for the Southern

District of Texas, Houston Division. The action alleged

fraud, constructive fraud, breach of warranty, violations

of the Racketeer Influenced and Corrupt Organizations

Act, violations of the federal Electronic Fund Transfer

Act, conversion, and negligence. In 1987, the district

court dismissed the case with prejudice, noting that

petitioner had demonstrated “among the worst examples

of bad faith in litigation that [the judge had] seen.” The

district court entered judgment on behalf of the banks

and imposed sanctions against petitioner. Pet. App. A4.!

Petitioner filed a motion for reconsideration, alleging

a fraud on the court. The motion for reconsideration was

denied. Petitioner then sought to appeal the judgment to

the Fifth Circuit in forma pauperis, but leave to appeal

without paying the docketing fee was denied. When peti-

tioner failed to pay the appropriate fee, the case was dis-

missed. Pet. App. A4. Petitioner filed a petition for a

writ of certiorari, which this Court denied, and a petition

for rehearing, which was also denied. Cortez v. Price, 489

U.S. 1024, rehearing denied, 489 U.S. 1100 (1989).

2. Petitioner then filed a complaint in the United

States District Court for the Middle District of Florida

styled as an “Independent Action for Relief from Judg-

ment—Fraud” pursuant to Federal Rule of Civil Proce-

dure 60(b). The complaint challenged a judgment impos-

ing sanctions against petitioner for filing “frivolous liti-

gation.” Pet. App. A4-A5. The action named as

defendants the same five banks, or their successors-in-

interest, that had been defendants in the 1985 Texas

! Those banks were First City National Bank of Houston,

MBank Houston, MBank Memorial, Peoples Bank, and Petrobank.

3

lawsuit. One of the banks filed a motion to have the case

transferred to the United States District Court for the

Southern District of Texas. The Federal Deposit

Insurance Corporation, as receiver for MBank Houston

(FDIC-Receiver), also moved the district court to dis-

miss the complaint, or in the alternative, to transfer the

] case to the district court in Texas.?

On April 11, 1990, the district court in Florida trans-

ferred the case to the district court in Texas pursuant to

28 U.S.C. 1404(a). Petitioner filed a motion for reconsid-

eration of that order, which was denied. On July 5, 1990,

petitioner filed a petition for writ of mandamus in the

Eleventh Circuit. On July 13, 1990, petitioner also ap-

pealed the district court’s denial of his motion for recon-

sideration to the Eleventh Circuit. On November 9, 1990,

the court of appeals denied the petition for writ of man-

damus. On December 12, 1990, the court of appeals dis-

missed the appeal for lack of jurisdiction, holding that

the order transferring the case was not a final appealable

order.*

3. On April 4, 1991, the district court in Texas en-

tered a final order of dismissal and an injunction. The

district court’s memorandum opinion noted that, in the

original 1985 lawsuit, after exhibiting “among the worst

examples of bad faith in litigation that this Court has

seen” and after failing to pay the sanctions imposed

against him, petitioner then waited over two years to

seek relief under Rule 60(b). Pet. App. A5. The district

court dismissed the action, finding that petitioner failed

2 See Appellees’ Mem. Regarding Jurisdiction, Cortez v. First

¢ City National Bank, No. 90-3718 (11th Cir. filed Sept. 1990); Def.

FDIC’s Mot. to Dismiss Compl., Cortez v. First City National

Bank, No. 90-12-Civ-T-17-B (M.D. Fla. filed Apr. 11, 1990).

3 The court of appeals’ rulings were made in unpublished or-

ders in In re Cortez, No. 90-3636 (11th Cir. Nov. 9, 1990); Cortez v.

First City National Bank, No. 90-3718 (11th Cir. Dec. 12, 1990).

ial

4

to satisfy the elements that must be met before an inde-

pendent action can be used to challenge a prior judgment.

Pet. App. A4-A5. In so doing, the district court found

that petitioner’s claims were frivolous, and that prior

monetary sanctions remained unpaid and had proved un-

successful in deterring petitioner from filing such fri-

volous litigation. Relying on Farguson v. MBank Hou-

ston, N.A., 808 F.2d 358, 360 (5th Cir. 1986), and other

authority, the district court enjoined petitioner from fil-

ing “any similar litigation against these defendants,

their agents, successors or attorneys” until petitioner

paid the prior sanctions and obtained leave of the court.

_ Pet. App. A5.

On April 23, 1991, petitioner filed a petition under Fed-

eral Rule of Civil Procedure 55(e) requesting the dis-

trict court to set aside its order of April 4, 1991. On May

17, 1991, the district court denied that petition. Pet. App.

A2.

4. On July 15, 1991, petitioner filed an appeal in the

Fifth Circuit. Appellee FDIC-Receiver filed a motion to

dismiss the appeal for lack of jurisdiction as untimely,

because it was filed 102 days after the April 4, 1991, final

order dismissing the case. On October 30, 1991, the

court of appeais dismissed the appeal for iack of

jurisdiction, and denied a petition for rehearing on

December 2, 1991. Pet. App. Al.

ARGUMENT

The court of appeals correctly dismissed petitioner’s

untimely appeal for lack of jurisdiction. The court’s deci-

sion does not conflict with any decision of this Court or

of any other court. Accordingly, review by this Court is

not warranted.

1. Petitioner contends (Pet. 6-12) that the court of ap-

peals violated his right to equal protection by failing to

reverse the district court order denying him relief from

5

an entry of sanctions in an earlier lawsuit. Petitioner

fails to address the lack of jurisdiction in the court of ap-

peals, which required dismissal of the appeal.

The time period for filing an appeal is mandatory and

Jurisdictional. Smith v. Barry, 112 S. Ct. 678, 680 (1992)

(“Rule 3 of the Federal Rules of Appellate Procedure

conditions federal appellate jurisdiction on the filing of a

timely notice of appeal.”); Browder v. Director, Depart-

ment of Corrections, 434 U.S. 257, 264 (1978); United

States v. Robinson, 361 U.S. 220, 229 (1960). The purpose

of the rule is clear: it sets a definite point in time when

litigation shall end. Browder, 434 U.S. at 264. Pursuant

to Fed. R. App. P. 4(a)(1), the notice of appeal in a civil

case must be filed “within 30 days after the date of entry

of the judgment or order appealed from.”

Petitioner’s notice of appeal was filed 102 days after

the district court’s final order of April 4, 1991. The court

of appeals therefore lacked jurisdiction to hear the ap-

peal. His petition for reconsideration in district court

did not toll the period for filing a notice of appeal. It was

filed April 23, 1991, more than ten days after the final

order of April 4, 1991. A motion under Rule 59 must be

filed within ten days of judgment in order to toll the time

for filing an appeal. An untimely motion under the rules

of civil procedure “could not toll the running of time to

appeal under Rule 4(a).” Browder, 434 U.S. at 265. Thus,

petitioner’s notice of appeal was untimely, and the court

of appeals properly dismissed the appeal for lack of juris-

diction.

2. In any event, the district court properly dismissed

petitioner’s independent action for relief from the 1987

sanctions judgment. The essential elements to maintain

an independent action for relief from judgment are: (1)

that equity and good conscience preclude enforcement of

the prior judgment; (2) there exists a good defense to the

cause of action upon which the judgment is founded; (3)

6

fraud, accident, or mistake prevented the defense from

being asserted; (4) the party challenging the judgment is

free from fault or neglect; and (5) there is no adequate

remedy at law. Bankers Mortgage Co. v. United States,

423 F.2d 73, 79 (5th Cir.), cert. denied, 399 U.S. 927 (1970);

National Surety Co. v. State Bank, 120 F. 593, 599 (8th

Cir. 1903). Here, the district court determined that peti-

tioner failed to demonstrate that the prior judgment,

which imposed sanctions for filing frivolous litigation

and for exemplifying bad faith in litigation, should not be

enforced. Pet. App. A5. Petitioner also failed to allege a

good defense to the sanctions which he was prevented

from asserting by reason of fraud, and failed to demon-

strate that he was free from fault or neglect. /bid. These

findings are within the sound discretion of the district

court, and are reviewable on appeal only for abuse of dis-

cretion. High v. Zant, 916 F.2d 1507 (11th Cir. 1990),

cert. denied, 111 S. Ct. 1482 (1991). It was not an abuse of

discretion to conclude that petitioner had not been

prevented from asserting his defense where petitioner

had alleged fraud in a motion to reconsider the original

sanction judgment, that defense was rejected in a denial

of the motion, Pet. App. A4, and an appeal of the denial of

the motion was dismissed.

3. Even if petitioner had filed a timely appeal before

the court of appeals, petitioner would not have been enti-

tled to relief from the injunction. Petitioner argues

(Pet. 12) that the court of appeals’ order was “unlimited

and unspecific” and that it therefore violated his First

Amendment right to petition the government in that it

precludes him from instituting further lawsuits against

these defendants. That contention is in error. First, the

district court’s injunction only prohibits petitioner from

filing an action relating to the subject matter of this

lawsuit against these five particular defendants. The in-

junction is specific and limited, and serves to effectuate

7

the district court’s judgment and protect these defen-

dants from further litigation on claims which twice were

found to be frivolous. Such an injunction is a proper ex-

ercise of the district court’s authority. Farguson v.

MBank Houston, N.A., 808 F.2d 358, 360 (5th Cir. 1986).

Second, where monetary sanctions are ineffective in de-

terring vexatious filings, enjoining such filings is appro-

priate. Farguson, 808 F.2d at 360; In re Martin-Trigona,

737 F.2d 1254 (2d Cir. 1984).4

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

KENNETH W. STARR

Solicitor Gereral

ALFRED J.T. BYRNE

General Counsel

JACK D. SMITH

Deputy General Counsel

DOROTHY L. NICHOLS

Associate General Counsel

ANN S. DuRoss

Assistant General Counsel

RICHARD J. OSTERMAN, JR.

Senior Counsel

J. SCOTT WATSON

Senior Attorney

Federal Deposit Insurance Corporation

JUNE 1992

4 Petitioner’s reliance on Enterprise International, Inc. v. Cor-

poracion Estatal Petrolera Ecuatoriana, 762 F.2d 464 (5th Cir.

1985) is misplaced. The court there examined the elements for

granting a preliminary injunction sought by a party; it did not ad-

dress the court’s ability to effectuate its judgment by injunction.