USCA1 Opinion
September 6, 1994 UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
[NOT FOR PUBLICATION]
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No. 94-1377
JOSE M. TOUS, INC., ET AL.,
Plaintiffs, Appellants,
v.
CONTINENTAL SUPPLIES, INC., ET AL.,
Defendants, Appellees.
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APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge]
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Before
Torruella, Chief Judge,
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Cyr and Boudin, Circuit Judges.
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Jose M. Tous-Rodriquez on brief pro se.
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Agusto A. Cirino Gerena on brief for appellees Continental
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Supplies, Inc., Efrain Ortiz, and his wife Maria Guzman and their
Conjugal Partnership.
P. Casto Amy, Rafael F. Castro Lang, and Alfonso Rivera
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Valdivieso on brief for appellees Cuevas and Family Restaurant, Inc.
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Per Curiam. Appellants, Jose M. Tous, Inc., and
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Jose M. Tous (referred to as "Tous") appeal from the judgment
of the Puerto Rico district court dismissing the second
amended complaint filed by Tous for failure to comply with
Fed. R. Civ. P. 9(b). Tous and Hermanos Ramon, Inc.,
Reynaldo Luis Ramon, Iris Delia Rodriguez Rivera (Ramon's
spouse) and their conjugal partnership (referred to as
"Ramon") also appeal from the denial of the motion to file a
third amended complaint and to add the Ramon parties as
plaintiffs to that complaint. Both pleadings allege
violations of the Racketeer Influenced and Corrupt
Organizations Act, 18 U.S.C. 1961 et seq. ("RICO"). Named
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as defendants in the second and third amended complaints are
(1) Continental Supplies Corp.; (2) Efrain Ortiz, his wife
and their conjugal partnership; (3) Hector Cuevas Cuevas, his
wife and their conjugal partnership; (4) Hector Cuevas Ramos,
his wife and their conjugal partnership; (5) Miguel Elias
Boneta, his wife and their conjugal partnership; and (6)
Family Restaurants, Inc.
I. APPELLATE JURISDICTION
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Before addressing the merits of the appeal, we must
dispose of two jurisdictional issues. The first, raised by
Family Restaurants, Cuevas Cuevas and Cuevas Ramos, concerns
Fed. R. App. P. 3(c). Appellees point out that the notice of
appeal refers only to the judgment dismissing the second
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amended complaint. Rule 3(c) requires that "[a] notice of
appeal must . . . designate the judgment, order, or part
thereof appealed from . . . ." By failing to specifically
refer to the order denying the motion to add the Ramon
parties as plaintiffs, appellees argue, this court cannot
review the order.
Appellees are mistaken. The general rule is that
interlocutory orders, such as the one to which appellees
refer, are subject to appeal once the district court enters a
final judgment. See Mangual v. Gen. Battery Corp., 710 F.2d
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15, 17 n.2 (1st Cir. 1983) (interlocutory order dismissing
complaint as to some, but not all, defendants appealable when
final judgment entered); 9 James W. Moore, Bernard J. Ward &
Jo Desha Lucas, Moore's Federal Practice 110.08[1], at 47-
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54 (2d ed. 1994) (interlocutory orders that leave the cause
of action pending are "reviewable on appeal from final
judgment"). Thus, we have jurisdiction to review the order
denying the motion to file the third amended complaint and
the request to add parties.1
Also unavailing is appellees' argument that the
Ramon parties cannot be appellants because the notice of
appeal is defective. First, they argue, it does not
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1. This renders moot appellees' further contention that the
appeal should be dismissed because the Ramon appellants were
not parties to the second amended complaint and, therefore,
had no right to complain about the judgment dismissing it.
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specifically refer to them as "appellants" and, second, the
body of the notice only states that "plaintiff above-named"
is appealing. Under Rule 3(c), a notice of appeal is
effective if it names each appellant in the caption of the
notice of appeal. The Ramon parties are, in fact, listed in
the caption. The fact that the caption refers to them as
"plaintiff" does not invalidate the propriety of the notice.
"An appeal will not be dismissed for informality of form or
title of the notice of appeal, or for failure to name a party
whose intent to appeal is otherwise clear from the notice."
Fed. R. App. P. 3(c). This is such a case.
The second issue we raise sua sponte. In their
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answer to the complaint, Continental Supplies and Ortiz
asserted a counterclaim for abuse of the legal process by
Tous and for attorney's fees. They also cross-claimed
against Cuevas Cuevas and Cuevas Ramos for recompense should
Tous prevail. The district court never disposed of these
claims. Under Fed. R. Civ. P. 54(b), an order "which
adjudicates fewer than all the claims or the rights and
liabilities of fewer than all the parties shall not terminate
the action as to any of the claims or parties . . . ." Such
an order is not generally appealable. See Rule 54(b)
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(requiring certification of such interlocutory orders for
purposes of appeal).
There are exceptions to this rule, however, which
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we believe control this appeal. First, an order which
"necessarily resolve[s]" an outstanding counterclaim or
cross-claim is final despite the lack of reference to the
claim in the final judgment. See Boston Car Co. v. Acura
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Auto. Div., 971 F.2d 811, 814 (1st Cir. 1992). Here the
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cross-claim for recompense was resolved when the complaint
was dismissed. That is, once appellants lost, this claim
became moot.
The counterclaim, however, was not decided by the
dismissal of the action and still is pending. Nonetheless,
the nature of this claim does not preclude a determination
that the judgment appealed from is final. Under Budinich v.
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Becton Dickinson & Co., 486 U.S. 196 (1988), the Supreme
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Court held that an outstanding request or motion for
attorney's fees does not prevent finality because "its
resolution will not alter the order [on the merits] or moot
or revise decisions embodied in the order." See id. at 199-
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200.
As for the claim for abuse of the legal process,
appellees do not press it on appeal. In any event, it
necessarily could not arise until the action was concluded
and the appellants had lost. Cf. In re Sweet Transfer &
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Storage, Inc., 896 F.2d 1189, 1191 (9th Cir. 1990) (an order
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dismissing an involuntary bankruptcy petition is final and
appealable despite pending counterclaim by debtor for damages
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for bad faith in filing the petition; "[a]ny actual claim
brought for damages is premature prior to dismissal of the
petition"). Finally, the resolution of the abuse of process
claim does not affect the merits of the final judgment. See
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Budinich, 486 U.S. at 199. We therefore have jurisdiction
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over this appeal.
II. THE MERITS
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A. The Motion to Amend.
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A decision of the district court denying leave to
amend under Fed. R. Civ. P. 15(a) is reviewed for abuse of
discretion.2 See Colmenares Vivas v. Sun Alliance Ins. Co.,
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807 F.2d 1102, 1108 (1st Cir. 1986); Isaac v. Harvard Univ.,
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769 F.2d 817, 829 (1st Cir. 1985); Carter v. Supermarkets
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Gen. Corp., 684 F.2d 187, 192 (1st Cir. 1982). Rule 15(a)
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provides that leave to amend "shall be freely given when
justice so requires." Thus, if a court decides not to permit
amendment, "it must do so for a valid reason such as bad
faith by the moving party, unwarranted delay, or undue
prejudice to the opposing party." Colmenares Vivas, 807 F.2d
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at 1108 (citing Foman v. Davis, 371 U.S. 178, 182 (1962)).
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Because there were essentially two separate requests in the
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2. Appellants mistakenly refer to Rule 15(d) in their brief.
This rule, by its language, only applies to supplemental
pleadings which contain averments of "events which have
happened since the date of the pleading sought to be
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supplemented." (emphasis added). The new averments in the
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third amended complaint refer to events which occurred prior
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to the filing of the complaint.
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motion under review, we will address them separately.
1. Motion to add the Ramon parties as new
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plaintiffs. In 1991, Ramon had filed a separate RICO action
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in the district court. However, it was dismissed in 1992 for
failure to comply with Fed. R. Civ. P. 9(b). The court held
that the complaint did not identify any letters, or their
senders, dates or contents. In support of the request to add
the Ramon parties as plaintiffs in the Tous action,
appellants point out that the order dismissing the Ramon
complaint did not state whether it was with or without
prejudice. From this, they argue that the dismissal must be
construed as having been without prejudice to amend the
complaint's "facial" deficiencies. As a result, they
conclude that the district court erred in applying the
doctrine of res judicata to bar the addition of the Ramon
parties to the Tous action.
We begin with Fed. R. Civ. P. 41(b):
(b) Involuntary Dismissal:
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Effect Thereof. For failure of
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the plaintiff to prosecute or
to comply with these rules or
any order of court, a defendant
may move for dismissal of an
action or of any claim against
the defendant. Unless the
court in its order for
dismissal otherwise specifies,
a dismissal under this
subdivision and any dismissal
not provided for in this rule,
other than a dismissal for lack
of jurisdiction, for improper
venue, or for failure to join a
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party under Rule 19, operates
as an adjudication upon the
merits.
A dismissal under Rule 41(b) for a plaintiff's failure to
comply with the rules, unless the court otherwise provides,
is with prejudice and on the merits. See LeBeau v. Taco
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Bell, Inc., 892 F.2d 605, 607 (7th Cir. 1989) (dismissal for
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want of prosecution was on the merits and "with prejudice"
where judgment did not "otherwise state"); Nagle v. Lee, 807
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F.2d 435, 442-43 (5th Cir. 1987) (where judgment did not
state whether it was without prejudice, Rule 41(b) requires
court to treat dismissal as being with prejudice and on the
merits).
In Ramon's case the dismissal was for failure to
comply with one of the Rules of Civil Procedure and not, as
appellants argue, for lack of jurisdiction. Dismissals for
violations of other rules in similar situations have been
treated as being with prejudice and on the merits. See In re
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Reed, 861 F.2d 1381, 1382 (5th Cir. 1988) (dismissal under
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Fed. R. Civ. P. 37(b)(2)(C) for failure to comply with
discovery orders was with prejudice and, therefore, on the
merits); Nevijel v. North Coast Life Ins. Co., 651 F.2d 671,
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673 (9th Cir. 1981) (complaint which fails to comply with
Fed. R. Civ. P. 8(a) and (e) may be dismissed with prejudice
under Rule 41(b)).
In this situation, "Rule 41(b) puts the burden on
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the plaintiff to take action -- to persuade the district
court either to specify that a dismissal is without
prejudice, or to vacate the dismissal. Failing that,
plaintiff's recourse is to appeal." LeBeau, 892 F.2d at 608;
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see also In re Reed, 861 F.2d at 1383 (if a dismissal is
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inequitable, recourse is to appeal or file a motion under
Fed. R. Civ. P. 60(b)); 1B James W. Moore, Jo Desha Lucas &
Thomas S. Currier, Moore's Federal Practice 0.409[1.-2], at
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III-137, III-139 (2d ed. 1993) (plaintiff cannot ignore
court's dismissal for failure to comply with Rules and just
file a new action; plaintiff must make a timely motion to
amend the judgment to state that it is without prejudice).
As for the failure of the Ramon parties to file a
motion to amend their complaint or a Fed. R. Civ. P. 60
motion for clarification concerning whether the judgment, in
fact, was with or without prejudice, appellants assert that
they chose not to act for "economic and time-saving" reasons.
That is, because both complaints concerned the same pattern
of racketeering by defendants, the two cases, they believed,
should be filed jointly. This is not a valid excuse.
Similarly unavailing is their assertion that the letters upon
which Ramon's RICO claim was based were not found until after
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the dismissal of the complaint. This statement is conclusory
in nature and is not accompanied by supporting documents or
affidavits.
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Based on the foregoing, we conclude that the
judgment dismissing the Ramon complaint was with prejudice
and on the merits. Under federal law, which governs federal
actions, res judicata bars a second action if (1) there was a
final judgment on the merits in the earlier action, (2) there
exists sufficient identity between the causes of action
asserted in each suit, and (3) there is sufficient identity
between the parties in the two actions. Gonzalez v. Banco
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Central Corp., No. 93-2021, slip op. at 6 (1st Cir. June 30,
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1994).3
Plainly, the first requirement has been met as
discussed, supra. Second, a comparison between the complaint
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filed in the first action and the third amended complaint in
the case at hand reveals that the RICO claims in both suits
are identical. Indeed, appellants do not dispute this.
Finally, the parties to the two actions also are identical.
That is, the plaintiffs in both actions are Reynaldo Ramon,
his wife, their conjugal partnership and Hermanos Ramon, Inc.
and the defendants they are suing are Family Restaurant,
Cuevas Cuevas, Cuevas Ramos, Elias Boneta and Jose Nazario
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3. Appellants attempt to argue that collateral estoppel
rather than res judicata applies to their case. They cite
Guzowski v. Hartman, 969 F.2d 211 (6th Cir. 1992), cert.
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denied, 113 S. Ct. 978 (1993), in support of this contention.
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In Guzowski, however, the order dismissing the first
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complaint was without prejudice. Guzowski, therefore, is not
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applicable to this case.
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(and their spouses and conjugal partnerships).4
We therefore conclude that the Ramon parties were
barred from relitigating their RICO claim. As a result,
permitting them to join as plaintiffs in the third amended
complaint ultimately would have led to their dismissal.
"Where an amendment would be futile or would serve no
legitimate purpose, the district court should not needlessly
prolong matters." Correa-Martinez v. Arrillaga-Belendez, 903
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F.2d 49, 59 (1st Cir. 1990). In such a situation, the denial
of leave to amend is not an abuse of discretion. See id.
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2. Motion to file the third amended complaint. In
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certain circumstances, undue delay in filing a motion to
amend can provide a basis for the denial of a proposed
amendment.5 See Quaker State Oil Refining Corp. v. Garrity
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Oil Co., 884 F.2d 1510, 1517 (1st Cir. 1989) (two-year period
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elapsed between filing of counterclaims and motion to add a
fifth); Hayes v. New England Millwork Distributors, Inc., 602
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4. The third amended complaint also lists as defendants
Continental Supplies and Ortiz. Although they were not
defendants in the Ramon case, a reading of the third amended
complaint reveals that the Ramon plaintiffs are not asserting
a claim against them. See Third Amended Complaint, 48-68
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(only referring to Fidelity National Leasing, Inc., Banco
National and Family Restaurants as RICO "enterprises" whose
affairs were conducted through a pattern of racketeering
activity).
5. The position taken by Tous on appeal that the denial of
leave to file the third amended complaint was based on Fed.
R. Civ. P. 21 (misjoinder of parties) is not supported by the
record.
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F.2d 15, 19 (1st Cir. 1979) (two years between filing of
complaint and motion to amend). In such cases, "courts have
placed the burden upon the movant to show some `valid reason
for his neglect and delay.'" Hayes, 602 F.2d at 19-20
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(citing Freeman v. Continental Gin Co., 381 F.2d 459, 469
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(5th Cir. 1967)); see also Stepanischen v. Merchants Despatch
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Transp. Corp., 722 F.2d 922, 933 (1st Cir. 1983).
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Here, Tous does not provide any reasons for his
delay in requesting leave to file the third amended
complaint. Indeed, it was not until some of the appellees
filed a motion to dismiss in August 1992 -- almost two years
after the filing of the initial complaint -- that Tous was
prompted to request discovery on the Rule 9(b) issue.
Further, the motion to amend was not filed until May 1993 --
almost nine months after the motion to dismiss was filed and
over two years since Tous initiated the action. "We have
held . . . that a late motion for summary judgment or
dismissal may not in itself justify an excessive delay in
moving to amend." Andrews v. Bechtel Power Corp., 780 F.2d
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124, 139 (1st Cir. 1985), cert. denied, 476 U.S. 1172 (1986).
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Finally, although Tous proposed an interrogatory to
Continental and Ortiz, there is no indication that the data
he received from them, if any, could not have been discovered
earlier. See First Nat'l Bank of Lousville v. Master Auto
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Serv. Corp., 693 F.2d 308, 314 (4th Cir. 1982) (district
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court's denial of motion to amend upheld where movant's
amended claim was not premised on new information to which it
previously had not had access). We therefore find that the
district court did not abuse its discretion in denying the
motion to amend.
B. Dismissal of the Second Amended Complaint.
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As the district court held, Rule 9(b) requires that
a RICO plaintiff "must go beyond a showing of fraud and state
the time, place and content of the alleged mail and wire
communications perpetrating that fraud." New England Data
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Services, Inc. v. Becher, 829 F.2d 286, 291 (1st Cir. 1987).
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On appeal Tous only argues that the third amended complaint
satisfies this standard; indeed, Tous concedes that the
second amended complaint is defective under Becher. Thus,
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for essentially the reasons stated in the district court's
Opinion and Order, dated February 23, 1994, we agree with its
decision that the second amended complaint did not comply
with Rule 9(b).
III. CONCLUSION
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The judgment of the district court is affirmed.
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