Filed: Apr. 07, 2014
Latest Update: Mar. 02, 2020
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1402 ORLANDO RESIDENCE, LTD., Plaintiff – Appellee, and FIRST REAL ESTATE DEVELOPMENT CORPORATION; RESOLUTION TRUST CORPORATION, as Receiver for Citadel Federal Savings and Loan, Plaintiffs, v. KENNETH E. NELSON, Defendant – Appellant, and HILTON HEAD HOTEL INVESTORS; WALLACE H. HUSTAD; MITCHELL A. ANDERSON; ALBERICI/DENVER; CLELAND CONSTRUCTION COMPANY; PARRISH PLUMBING COMPANY; BAILEY SPECIALITIES; B&B CONTRACTING COMPANY
Summary: UNPUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 13-1402 ORLANDO RESIDENCE, LTD., Plaintiff – Appellee, and FIRST REAL ESTATE DEVELOPMENT CORPORATION; RESOLUTION TRUST CORPORATION, as Receiver for Citadel Federal Savings and Loan, Plaintiffs, v. KENNETH E. NELSON, Defendant – Appellant, and HILTON HEAD HOTEL INVESTORS; WALLACE H. HUSTAD; MITCHELL A. ANDERSON; ALBERICI/DENVER; CLELAND CONSTRUCTION COMPANY; PARRISH PLUMBING COMPANY; BAILEY SPECIALITIES; B&B CONTRACTING COMPANY;..
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UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-1402
ORLANDO RESIDENCE, LTD.,
Plaintiff – Appellee,
and
FIRST REAL ESTATE DEVELOPMENT CORPORATION; RESOLUTION TRUST
CORPORATION, as Receiver for Citadel Federal Savings and
Loan,
Plaintiffs,
v.
KENNETH E. NELSON,
Defendant – Appellant,
and
HILTON HEAD HOTEL INVESTORS; WALLACE H. HUSTAD; MITCHELL A.
ANDERSON; ALBERICI/DENVER; CLELAND CONSTRUCTION COMPANY;
PARRISH PLUMBING COMPANY; BAILEY SPECIALITIES; B&B
CONTRACTING COMPANY; CROSS COUNTRY CABINET & MILLWORK;
NOLAND COMPANY; GRINNELL CORPORATION; EASTERN TECHNOLOGIES;
GRAYBAR ELECTRIC COMPANY; HOWARD B. JONES & SONS; CAPITOL
MATERIALS; DOVER ELECTRIC COMPANY; MCCONNELL & ASSOCIATES;
CAMERON & BARKLEY COMPANY; SOUTH CAROLINA TAX COMMISSION,
Defendants,
and
SANWA BUSINESS CREDIT CORPORATION,
Defendant and Third−Party Plaintiff,
v.
RUTH HUSTAD,
Third Party Defendant.
Appeal from the United States District Court for the District of
South Carolina, at Beaufort. David C. Norton, District Judge.
(9:89-cv-00662-DCN)
Argued: January 28, 2014 Decided: April 7, 2014
Before DUNCAN and FLOYD, Circuit Judges, and DAVIS, Senior
Circuit Judge.
Affirmed by unpublished opinion. Senior Judge Davis wrote the
opinion, in which Judge Duncan joined. Judge Floyd wrote a
separate opinion dissenting in part.
ARGUED: Gary Andrew Ahrens, MICHAEL, BEST & FRIEDRICH LLP,
Milwaukee, Wisconsin, for Appellant. Eugene N. Bulso, Jr.,
LEADER, BULSO & NOLAN, PLC, Nashville, Tennessee, for Appellee.
ON BRIEF: Joseph Louis Olson, MICHAEL BEST & FRIEDRICH LLP,
Milwaukee, Wisconsin, for Appellant. Paul J. Krog, LEADER,
BULSO & NOLAN, PLC, Nashville, Tennessee, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
2
DAVIS, Senior Circuit Judge:
Appellant Kenneth Nelson appeals the district court’s entry
of a four million dollar judgment against him based on his
knowing, intelligent and voluntary execution of a confession of
judgment. The principal issue presented, among others, is
whether, under the circumstances shown in the record, the
district court’s 1993 order conditionally dismissing this action
effectively terminated the case such that the court lacked the
power to enter a judgment against Nelson nearly twenty years
later. The district court ruled that it had the power to
entertain the request for judgment and we discern no error of
law or abuse of discretion. Accordingly, we affirm.
I.
A.
In December 1986, Nelson guaranteed a real estate
construction loan for more than $7 million made to his limited
liability company, Hilton Head Hotel Investors (HHHI). 1 In August
1988, upon HHHI’s default, the lender, Independence Federal Bank
(“the Bank”) filed this suit in South Carolina state court
against HHHI and the guarantors; the defendants removed the case
1
Nelson jointly guaranteed the loan with his co-venturer,
Wallace H. Hustad, who is not a party to this appeal.
3
to federal court. The Bank’s appointed receiver, Resolution
Trust Corporation (RTC), was later substituted as plaintiff.
In due course, the district court entered summary judgment
allowing a foreclosure of the liens securing the indebtedness.
After an interlocutory appeal to this Court by defendants was
withdrawn, the claims against the guarantors was set for trial
in June 1993. On July 13, 1993, however, the parties having
notified the district court that a settlement had been achieved,
the court entered an order conditionally dismissing the case.
The order stated in part:
The court having been advised by counsel for the
parties that the above action has been settled:
IT IS ORDERED that this action is hereby dismissed
without costs and without prejudice to the right, upon
good cause shown within ninety (90) days, to reopen
the action if settlement is not consummated.
J.A. 49. A July 14, 1993 entry in the district court’s docket
states: “case closed.”
A few months later, at the parties’ request, the court re-
opened the case, although the docket contains no formal order
“re-opening” the case. Then, on October 14, 1993, the court
entered a second order conditionally dismissing the case,
stating in part:
On July 13, 1993, this Court entered an order
dismissing this case without costs after being advised
by counsel that this matter had been settled. The
court was also advised that one of the terms of the
settlement was the completion of the previously
4
ordered sale of the real and personal property which
is the subject of this action. The Court is now
advised that the parties have been unable to complete
the documentation of the settlement but that the
parties are endeavoring to do so as expeditiously as
possible.
IT IS THEREFORE ORDERED that this action is hereby
dismissed, upon good cause shown, and the right to
reopen the action if settlement is not consummated is
to be held open for an additional period of time not
to exceed December 31, 1993. It is the Court's
expectation that the settlement will be consummated
within this period and the property which is the
subject of this action will have been sold by that
time at public auction as previously ordered by the
Court.
J.A. 50-51.
On the basis of the above October 14, 1993 order, Nelson
contends that the case finally terminated as of the December 31,
1993 deadline set forth therein. Indeed, as Nelson contends, and
as the district court found, no party formally moved to re-open
the case before the December 31 deadline. Nevertheless, RTC did
file, on or about December 23, 1993, a so-called “Motion to
Clarify,” in which it sought certain rulings from the district
court related to the impending auction of the real and personal
property at issue in the case. Thereafter, over the course of
several months in 1994, the district court conducted at least
one hearing and it ruled on a number of issues regarding the
foreclosure sale. The sale of the subject property at the
foreclosure auction in mid-1994 garnered three million dollars
5
and the court confirmed the report of sale by order entered on
July 5, 1994.
In November 1994, well after confirmation of the
foreclosure auction, the parties finally executed a
comprehensive Settlement Agreement. The Settlement Agreement
stated, in part, that as of June 1, 1993, HHHI owed RTC
principal and interest on promissory notes in the amount of
$14,495,949.81. As a part of the settlement, Nelson and Hustad
(the sole members of HHHI) each agreed to make installment
payments to RTC totaling $80,000 over the course of two years.
To secure their performance, Nelson and Hustad each signed a
confession of judgment in the amount of $4 million.
Specifically, the parties agreed that if either Nelson or
Hustad, respectively, missed a payment, RTC could file the
relevant confession of judgment with the district court and
obtain judgments thereon. On the other hand, if Nelson and
Hustad made all of the promised payments, the confessions of
judgment would be delivered to their attorneys.
Thereafter, for the nearly seventeen years from November
1994 through September 2011, no activity of consequence occurred
before the district court. 2 The district court never entered a
2
Hustad’s confession of judgment was filed in the district
court on May 21, 1997, but there is no indication in the record
that judgment was ever sought or entered thereon.
6
final order or judgment as contemplated by Federal Rules of
Civil Procedure 54 and 58 after the foreclosure sale and the
parties’ execution of the Settlement Agreement. The Settlement
Agreement was never presented to the court or embodied in a
court order.
B.
The dormancy of the case ended on September 19, 2011,
during the pendency of other litigation in other courts between
the parties, as described infra n.3. Appellee Orlando Residence,
Ltd., asserting its status as a judgment creditor of Nelson and
identifying itself as the owner of Nelson’s confession of
judgment, filed a motion for substitution to replace RTC as
plaintiff, and for the entry of Nelson’s confession of judgment. 3
3
ORL attached several documents to support its motion for
substitution and for entry of the Nelson confession of judgment.
It provided an Assignment of Judgment executed by Asset Recovery
& Management Services, L.P. (ARMS). In the Assignment, dated
November 21, 1995, ARMS stated that it had became the successor-
in-interest to RTC on February 23, 1995 with regard to Nelson’s
confession of judgment, and that it was then assigning its
rights to GP Credit Company. Specifically, ARMS assigned “all
rights as Plaintiff and judgement [sic] creditor in the above-
captioned cause, along with any and all right to payment of the
debts which were the subject of said judgement [sic], and all
collateral securing repayment of said debts.” J.A. 98.
In addition, ORL provided an order from the Ozaukee County
Circuit Court in Wisconsin, stating that “Ownership of the South
Carolina judgment GP Credit holds against Kenneth E. Nelson
pursuant to the Assignment of Judgment attached hereto . . . is
hereby divested from GP Credit Co., LLC and is vested in Orlando
Residence, Ltd.” J.A. 100. Nelson had appealed the Ozaukee
(Continued)
7
Nelson did not oppose ORL’s motion for substitution, and
the district court granted the motion. The court also entered
the confession of judgment. The next day, on October 18, 2011,
Nelson filed a motion to strike the confession of judgment. A
few weeks later, ORL filed a motion to enter judgment, which
Nelson opposed. After full briefing on a host of issues, the
district court held a hearing on December 14, 2011.
On August 15, 2012, the district court entered an order
directing the clerk to enter judgment against Nelson in favor of
ORL for four million dollars and the clerk entered judgment on
that date. Nelson timely moved to alter, amend, vacate, and
dismiss pursuant to Federal Rules of Civil Procedure 59(e),
12(b)(1) and 12(h)(3), and in the alternative for relief from
judgment pursuant to Rule 60(b).
County Circuit Court order. During the pendency of the instant
appeal before this Court, the Supreme Court of Wisconsin
declined to disturb the order of the Ozaukee County Circuit
Court. See January 14, 2014 28(e) letter from E. Bulso, Jr.,
Esq., (attaching order in Orlando Residence, Ltd. v. Nelson,
Case No. 2012AP001528 (Wis. Ct. App. Nov. 26, 2013)). Relatedly,
an opinion from one of our sister circuits informs us that GP
Credit is a company that was under Nelson’s dominion and control
and, essentially, was his “alter ego.” Orlando Residence, Ltd.
v. GP Credit Co., LLC, 553 F.3d 550, 558 (7th Cir. 2009). This
finding came in the course of ORL’s attempt to enforce a
judgment obtained in a Tennessee state court against Nelson.
ORL’s showing satisfied the district court that it was the
rightful owner of the Nelson confession of judgment.
8
On March 15, 2013, the district court denied Nelson’s post-
judgment motions, finding, among other things, that its October
1993 dismissal order did not deprive the court of the power to
enter judgment on the confession of judgment that it found
Nelson had executed knowingly, intelligently and voluntarily.
Orlando Residence, Ltd. v. Hilton Head Hotel Investors, No.
9:89–cv–0662, 2013 WL 1103027 (D.S.C. Mar. 15, 2013). The court
also rejected Nelson’s numerous arguments for relief under Rule
60(b) regarding limitations, the amount of judgment, and
personal jurisdiction.
Id. Nelson timely appealed.
II.
As he did before the district court, Nelson advances a
myriad of arguments in support of his assertion that the
judgment entered against him must be vacated. His overarching
assertion is straightforward: the district court lacked the
power to enter judgment against him because, no party having
moved to reopen the case as of December 31, 1993, the court’s
October 14, 1993 conditional dismissal effectively terminated
the action on that date and thereby deprived the district court
of all power over the case, save the exercise of limited,
ancillary jurisdiction, such as supplementary proceedings under
Federal Rule of Civil Procedure 69. Nelson further avers that
although a rightful owner of the confession of judgment might be
able to institute a new action against him in a proper court,
9
his defenses to such an action foreclose relief and, in any
event, require a plenary proceeding consonant with due process
to adjudicate his liability.
Nelson’s specific contentions include the following: (1)
the court lacked subject matter jurisdiction both because (a)
the case fully ended as of December 31, 1993 without a
reservation of jurisdiction and (b) ORL lacked standing; (2) the
court lacked personal jurisdiction over Nelson; (3) ORL failed
to file and serve a summons to enforce the Settlement Agreement;
(4) the amount of the judgment was excessive under South
Carolina law; and (5) the statute of limitations barred entry of
judgment on the confession. The district court rejected all of
these arguments, as do we.
A.
Nelson first contends that the district court lacked
subject matter jurisdiction to enforce his confession of
judgment, and therefore the judgment is void under Federal Rule
of Civil Procedure 60(b)(4).
We review a district court’s findings of fact with respect
to subject matter jurisdiction under a clear error standard, so
long as the issues are not “intertwined with the facts central
to the merits of the plaintiff’s claims.” United States ex rel.
Vuyyuru v. Jaddhav, 555 F.3d 337, 348 (4th Cir. 2009) (citation
10
omitted). We review any legal conclusions drawn from the facts
de novo. Id.
1.
Nelson’s initial challenge is based on his assertion that
the district court lost jurisdiction over the case when it
entered a final order of dismissal in 1993. Like the district
court, we disagree with Nelson’s interpretation of the record.
To be sure, “[f]ederal courts are courts of limited
jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of Am., 511
U.S. 375, 377 (1994). We should presume that an action “lies
outside this limited jurisdiction” and therefore “the burden of
establishing the contrary rests upon the party asserting
jurisdiction.”
Id. In Kokkonen, which is the centerpiece of
Nelson’s jurisdictional challenge, the Supreme Court held that
where a party sought to enforce a settlement agreement after it
had filed a “Stipulation and Order of Dismissal with Prejudice”
executed by all the parties to the action pursuant to Fed. R.
Civ. P. 41(a)(1)(ii) and endorsed by the district court, it
could only do so if the court had incorporated the settlement
agreement into the final order, or otherwise expressly reserved
jurisdiction.
Id. at 381-82. Nelson argues that Kokkonen applies
here, that the conditional dismissal of the case on October 14,
1993 (effective, according to Nelson, on December 31, 1993) is
indistinguishable from the dismissal in Kokkonen, and as in that
11
case, the district court was divested of jurisdiction after the
December 31, 1993 deadline expired.
Nelson is mistaken. Unlike the circumstances in Kokkonen,
there was no “Stipulation and Order of Dismissal with Prejudice”
filed in this case or any other definitive order unambiguously
terminating this action. Nelson contends that we should treat
the district court’s October 14, 1993 order as a final judgment
dismissing the suit, but there is no warrant for us to do so. In
Kokkonen, the stipulation of dismissal was executed by the
parties, filed pursuant to Federal Rule of Civil Procedure
41(a)(1)(ii), and was independently “so ordered” by the district
court. Id. at 377. Here, the district court ordered that the
case would be conditionally dismissed, clearly on the assumption
that the settlement agreement and sale of the foreclosed
property were finalized by December 31, 1993. See supra p. 5
(“It is the Court's expectation that the settlement will be
consummated [by December 31, 1993] and the property which is the
subject of this action will have been sold by that time at
public auction as previously ordered by the Court.”). As the
record plainly indicates, and the district court explicitly
recognized, however, this did not happen.
Instead, the court continued to enter orders regarding the
parties’ claims through 1994, specifically orders respecting the
foreclosure sale of property at issue in the suit. Importantly,
12
this began with a “Motion to Clarify” filed on December 23,
1993, asking the district court to make procedural and
substantive changes to the provisions for the foreclosure sale
previously ordered; these matters were of sufficient substance
to necessitate the district court holding a hearing on the
issues.
Nelson argues that the district court’s 1994 orders did not
pertain to the claims governed by the Settlement Agreement, and
were solely designed to enforce an earlier judgment not
involving Nelson or Hustad as guarantors. Nelson’s arguments are
belied by the record: the Settlement Agreement expressly held
Nelson and Hustad accountable for assisting with the foreclosure
sale, i.e., the subject of the district court’s 1994 orders.
Moreover, although the “Motion to Clarify” was not labeled as a
motion to reopen the case, that is exactly how the district
court and the parties treated it, and with good reason.
Among other issues to be addressed, the creditors sought
(and obtained) a limitation on the commissions to be awarded to
the Office of the United States Marshal for its services related
to the management of the foreclosure auction. See S.A. 30-42.4 To
the extent that a reduction in commissions increased the yield
4
We shall grant ORL’s unopposed motion for leave to file
the Supplemental Appendix and deny leave to file a surreply.
13
from the foreclosure sale to the lenders, such a reduction could
only redound to the benefit of the guarantors, as well. Thus,
any suggestion by Nelson that he was uninterested in the court’s
consideration of the matters raised in the “Motion to Clarify”
rings hollow.
The procedural posture of the case after December 31, 1993
mirrors what happened earlier in the case. The district court
had entered a nearly identical order on July 13, 1993,
dismissing the case and allowing for re-opening within 90 days.
Despite the ostensible 90-day window for reopening, the district
court acknowledged that it nonetheless reopened the case 93 days
after the case was closed. See Home Port Rentals, Inc. v. Ruben,
957 F.2d 126, 131 (4th Cir. 1992) (“It is peculiarly within the
province of the district court . . . to determine the meaning of
its own order.”). Furthermore, unlike the clerk’s entry closing
the case when the July dismissal order was entered, no such
clerk’s entry is coupled with the October 14, 1993 order.
Notably, the Settlement Agreement was not executed until a
year after the entry of the October 14, 1993 order. After that,
the district court neither entered a final order of dismissal,
as mentioned above, nor did it treat the October 14, 1993 order
as final. See Anderson v. Stephens, 875 F.2d 76, 80 n.8 (4th
Cir. 1989) (“We are, of course, mindful of the inherent
deference due a district court when it construes its own
14
order.”). Thus, to hold on this record that the district court’s
October 14, 1993 order ripened into a final judgment on December
31, 1993 would be a fiction of our own creation and contrary to
the treatment by the district court of its own order.
In sum, before the entry of the judgment by confession (the
order before us for review), there had not been a final judgment
or final order of dismissal in this case. The district court had
neither relinquished nor otherwise lost jurisdiction. Unlike the
circumstances in Kokkonen, the district court in this case was
not asked to enforce a settlement agreement after the case had
been unambiguously and finally dismissed. From the perspective
of the district court, moreover, the coincidence that Nelson
executed his confession of judgment incident to a settlement of
litigation was just that: an irrelevant coincidence. The
district court was obliged under South Carolina law merely to
determine whether Nelson had executed the confession of judgment
knowingly, intelligently and voluntarily. See S.C. Code § 15-35-
350. He did. The court was justly unconcerned with the
background circumstances that prompted him to do so.
Accordingly, this case falls well outside the rule of Kokkonen,
and we reject Nelson’s contention to the contrary. 5
5
A brief word about the dissent is in order. One would have
thought that if it were true that this case requires “nothing
more than mechanical application of the Supreme Court’s decision
(Continued)
15
2.
With regard to the second subject matter jurisdiction
challenge, based on a lack of standing, Nelson contends that ORL
in Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S.
375 (1994),” post, at 29, the dissenting opinion would have been
no more than the page and one half it takes to say that. But the
dissent goes on for another fourteen pages excoriating the
majority’s reasoning. One is left to wonder, Why is that? What
is it that bothers the dissent so much? The answer is fairly
obvious: the district court treated the “Motion to Clarify” as a
motion to reopen the case, and, as the dissent acknowledges, we
do not apply a “magic words” rule in these circumstances. Post
at 34 (acknowledging that “papers filed with the court need not
contain any ‘magic words’ to effectuate their purposes”). We
further agree with the dissent that “RTC’s decision to caption
the Motion to Clarify as it did—rather than as a “Motion to
Reopen”—is not fatal to ORL’s current position.” Post, at 34.
We also agree with the dissent that this case is a “. . .
convoluted procedural and substantive morass[.]” Post, at 42. But
in addition to what the documents in the record tell about the
case, we have the benefit of knowing what the district court did
in its management of the case. Despite the dissent’s scolding,
we remain convinced that our interpretation of the record is the
correct one. The dissent is free, of course, even in this
“convoluted . . . morass” of a case, to apply its de novo
standard of review to the pure legal issue of whether, assuming
the “Motion to Clarify” could not plausibly be treated as a
motion to reopen, the district court lost jurisdiction on
January 1, 1994. We respectfully suggest, however, that the
dissent is not free (no matter the number of “telltale clues” it
can or cannot identify, see post, at 35) to apply a de novo
standard of review to the antecedent question: whether the
district court could plausibly treat the “Motion to Clarify” as
a motion to reopen. If an abuse of discretion standard of review
does not apply to that question, then it is difficult to imagine
where it would ever apply. There was no abuse of discretion
shown here, as the dissent, itself, concedes. Post, at 33
(“[T]he majority accords much due deference to the district
court’s province to interpret its own orders . . . ; that is the
law surely enough, and I take no issue with this approach.”).
16
has failed to provide sufficient evidence to establish the
transfer of an interest in the confessed judgment from RTC to
ORL (via ARMS and GP Credit). This argument also fails.
Article III standing requires a showing of three elements:
first, the plaintiff has “suffered an injury in fact”; second, a
“causal connection between the injury and the conduct complained
of”; and third, it is “likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.”
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)
(internal quotations marks and citations omitted). Nelson takes
issue with the first of these – that ORL has suffered an injury.
Nelson correctly states that “[w]ithout an assignment, a
nonparty to a contract does not have standing to sue on the
contract.” Egrets Pointe Townhouses Prop. Owners Ass’n, Inc. v.
Fairfield Communities, Inc., 870 F. Supp. 110, 117 (D.S.C. 1994)
(applying South Carolina law). But Nelson’s insistence that
there has not been a proper assignment does not make it so.
In addition to the documents establishing the conveyance of
the confessed judgment from RTC to ARMS to GP Credit, ORL
presents a state court judgment granting title to and possession
of the confession of judgment to ORL. See Orlando Residence,
Ltd. v. Nelson, 834 N.W.2d 416, 424 (Wis. Ct. App. 2013), appeal
denied Orlando Residence, Ltd. V. Nelson, Case No. 2012AP001528
17
(Wis. Nov. 26, 2013). The Wisconsin state courts have spoken
conclusively as to the ownership of the confessed judgment:
The Nelsons claim that the turnover motion is moot
because the underlying judgments have expired and are
unenforceable. Additionally, the Nelsons claim that
property already taken from them exceeds the amount of
Orlando's judgment.
In response to the Nelsons’ arguments, Orlando claims
that it is immaterial whether or not the judgments
have expired, that Orlando's Wisconsin judgment is
valid and enforceable, and that Orlando's judgment has
neither expired nor been satisfied.
Orlando is right. That is, there is nothing in
§816.08, Wis. Stats., limiting Orlando’s right to
obtain an order assigning ownership of the South
Carolina and Oklahoma judgments to it. As indicated in
part II A above, Orlando’s Wisconsin judgment is valid
and enforceable. The Nelsons’ claim that the value of
property already taken from them exceeds the amount of
the judgment is unsupported by any evidence and is
contrary to all available information.
***
For the above stated reasons, the court hereby orders
the following:
***
(4) Orlando’s Motion for a Turnover of the GP Credit
Co., LLC property is granted, and the court will sign
Orlando’s proposed Order forthwith.
J.A. 265.
Nelson’s contentions about the validity or applicability of
the Wisconsin state court judgment amount to no more than
splitting hairs. Nelson makes much of the fact that the
Wisconsin court referred to the confession of judgment as a
“judgment” rather than the “Settlement Agreement/Confession.”
18
App. Br. 36-37. There is no meaningful distinction in these
terms, and it is evident from the transfer paperwork provided by
ORL that the interest transferred was whatever the predecessor-
in-interest had – regardless of how it was described in court
papers. This is evident from the broad description in the
Wisconsin judgment (“the GP Credit Co., LLC property”). 6
The district court credited the evidence provided by ORL
that it was the successor-in-interest to the holder of the
confession of judgment in the original case. Here, ORL has met
its burden based on its pleadings and attached documentation.
Nelson has done nothing more than point to the evidence adduced
and stating that it is not enough. But it is enough. There is
nothing in the record which would lead this Court to think “with
[a] definite and firm conviction that a mistake has been
committed.” Simmons v. United Mortgage & Loan Inv., LLC, 634
F.3d 754, 762 (4th Cir. 2011) (quoting United States v. U.S.
Gypsum Co.,
333 U.S. 364, 395 (1948)), and we decline Nelson’s
invitation to do so.
6
Nelson also makes a host of arguments regarding the
admissibility of certain documents and the sufficiency of the
evidence as to the transfer of the confession of judgment
between RTC and ARMS. Nelson made none of these arguments to the
district court and has therefore waived them. See Robinson v.
Equifax Info. Servs., LLC, 560 F.3d 235, 242 (4th Cir. 2009).
19
B.
Nelson next contends that the district court erred by
failing to conduct a plenary proceeding and that it lacked
personal jurisdiction over him. Again, we disagree.
1.
Federal courts have the power to enter confession
judgments, as has been recognized by courts time and again. 28
U.S.C. § 1874; see D. H. Overmyer Co. Inc., of Ohio v. Frick
Co., 405 U.S. 174, 176 (1972) (“The cognovit is the ancient
legal device by which the debtor consents in advance to the
holder’s obtaining a judgment without notice or hearing, and
possibly even with the appearance, on the debtor’s behalf, of an
attorney designated by the holder.”); Millner v. Norfolk & W. R.
Co.,
643 F.2d 1005, 1009 (4th Cir. 1981). As we discussed
earlier, South Carolina law explicitly allows for the entry of
confession judgments. S.C. Code § 15-35-350.
Nelson insists that he should have received the benefit of
a plenary proceeding in order to present his defenses in a full
evidentiary hearing. But this argument ignores the law allowing
for this type of proceeding where authorized by state law in a
diversity action, and where the waiver of full service was
executed by the debtor. Where there is clear and convincing
evidence that the waiver was voluntary, knowing, and
intelligently made, then the confession of judgment will be
20
upheld. Overmyer, 405 U.S. at 185-87, F.D.I.C. v. Aaronian,
93
F.3d 636, 640 (9th Cir. 1996).
Millner is instructive on this point. There, Millner filed
suit against his employer, and his employer then pointed to a
negotiated settlement agreement as a bar to the action and a
finding of liability. 643 F.2d at 1006-07. The court held a
hearing on the settlement agreement, taking evidence from
several witnesses and examining many documents.
Id. at 1007-08.
The district court held that the settlement agreement was
binding, and entered an order of dismissal with prejudice.
Id.
at 1008. Unlike Nelson, however, Millner produced substantial
evidence that he had revoked his consent to the settlement
agreement, and that there was never a meeting of the minds
between his counsel and the employer.
Id. at 1009-10. Millner
also disputed the number of claims resolved in the settlement
agreement, and pointed out that he never signed the release.
Id.
at 1010.
Nelson does not, and cannot, generate a dispute that the
Settlement Agreement appropriately binds him. Nelson is a
sophisticated business person with multiple degrees in business
administration and finance. He is licensed as a certified public
accountant in Wisconsin, and has been a real estate broker for
over 30 years. Nelson initialed each page of the Settlement
Agreement, including the pages describing the confession of
21
judgment, and his counsel also signed an affidavit that he had
explained the terms of the Settlement Agreement to Nelson.
Nelson executed the Settlement Agreement nearly twenty
years ago with full knowledge of what he was signing, and
received a release of claims worth more than $14 million. Nelson
cannot take advantage of that benefit without also complying
with the terms to which he agreed, including his confession of
judgment. Accordingly, we reject, as did the district court, his
assertion that he was entitled on this record to an evidentiary
hearing.
2.
Nelson’s objection based on an alleged lack of personal
jurisdiction likewise fails. The district court found that
Nelson had submitted to the personal jurisdiction of the
district court based on the confession of judgment. South
Carolina law holds that consent to the confession of judgment
was equivalent to a voluntary appearance. A confession of
judgment “is essentially a voluntary act; it is a voluntary
submission to the jurisdiction of the court, giving by consent
and without the service of process what could otherwise be
obtained by summons and complaint, and other formal proceedings
. . . .” Triangle Auto Spring Co. v. Gromlovitz, 242 S.E.2d 430,
431 n.1 (S.C. 1978) (quoting 49 C.J.S. Judgments § 134 (1947)).
22
Nelson does not dispute that he signed the Settlement
Agreement which called for the filing of the confession of
judgment in the district court. J.A. 76 (the confession of
judgment will be “in a form suitable for recording with the
Clerk of Court for the United States District Court for the
District of South Carolina”). As ORL points out, the confession
itself is captioned with the name of the relevant district
court.
Nelson simply recycles his previous arguments regarding the
court’s lack of jurisdiction to continue to exercise
adjudicative authority over the case following the Settlement
Agreement. Nelson’s arguments lack merit for the reasons
discussed above. Nelson consented to the personal jurisdiction
of the court by way of the confessed judgment, and cannot deny
it now. The district court did not err or otherwise abuse its
discretion in finding that it had personal jurisdiction over
Nelson. 7
III.
Nelson’s alternative claims relate to the denial of his
Rule 60(b) motion for relief from the judgment. We review the
7
Indeed, as the case never came to an end by dismissal
order or otherwise, just as the district court retained subject
matter jurisdiction, it also retained personal jurisdiction over
the original defendants, including Nelson.
23
denial of a 60(b) motion for abuse of discretion. Aikens v.
Ingram, 652 F.3d 496, 501 (4th Cir. 2011) (en banc).
A.
Nelson’s next argument is that the amount due in the
confessed judgment ($4 million) impermissibly exceeds the amount
that was originally due under the Settlement Agreement
($80,000), in violation of South Carolina law. We disagree.
South Carolina law on confessed judgments requires that:
Before a judgment by confession shall be entered a
statement in writing must be made and signed by the
defendant and verified by his oath to the following
effect:
(1) It must state the amount for which judgment may be
entered and authorize the entry of judgment therefor;
(2) If it be for the money due or to become due, it
must state concisely the facts out of which it arose
and must show that the sum confessed therefor is
justly due or to become due; and
(3) If it be for the purpose of securing the plaintiff
against a contingent liability, it must state
concisely the facts constituting the liability and
must show that the sum confessed therefor does not
exceed the liability.
S.C. Code § 15-35-360. The district court compared the $4
million owed in the confession to the amount stipulated to by
Nelson and HHHI in the Settlement Agreement: $14,495,949.81.
Nelson takes issue with this comparison, maintaining that the
proper comparison is with the amount he owed under the
Settlement Agreement ($80,000). Nelson cites to South Carolina
law holding that liquidated damages provisions exceeding the sum
24
originally due on the contract are unenforceable. But, as with
his other arguments, Nelson fails to read the case law
carefully. South Carolina holds that where “the sum stipulated
is plainly disproportionate to any probable damage resulting
from breach of contract, the stipulation is an unenforceable
penalty.” Lewis v. Premium Inv. Corp., 568 S.E.2d 361, 363 (S.C.
2002) (emphasis added). Nelson cites no support for the
contention that the proper comparison is between the amount he
owed under the Settlement Agreement and the amount now owed
under the confession. Accordingly, the “probable damage
resulting from breach of contract,” is more appropriately the
$14 million figure, as it is what RTC was owed under the loan
agreements originally disputed in the lawsuit.
The district court did not err or otherwise abuse its
discretion in ruling that the confession damages were not an
impermissible penalty.
B.
Finally, Nelson contends that the district court erred by
applying the doctrine of equitable tolling as to limitations.
Nelson’s argument begins with the faulty premise that South
Carolina’s three year statute of limitations for breach of
contract claims, S.C. Code § 15-3-530, is applicable here.
Nelson again recycles his arguments that under the circumstances
of this case, the confession of judgment proceedings should be
25
deemed and treated as a new action. As discussed above, we
reject this theory of the case.
Nevertheless, Nelson correctly asserts that enforcement of
the judgment is time-limited. South Carolina law dictates that
executions of final judgments must issue within ten years. S.C.
Code § 15-3-530; see Linda Mc Co., Inc. v. Shore, 653 S.E.2d
279, 282-84 (S.C. Ct. App. 2007). The last payment under the
Agreement was due on November 1, 1996, which Nelson accepts as
the last date of a potential breach of the Settlement Agreement.
Applying the statute of limitations, the confession of judgment
should have been perfected by November 1, 2006.
South Carolina law allows for equitable tolling of the
limitations period, however, “where it is justified under all
the circumstances.” Hooper v. Ebenezer Sr. Servs. & Rehab. Ctr.,
687 S.E.2d 29, 33 (S.C. 2009). In Hooper, the Supreme Court of
South Carolina tolled the statute of limitations for a plaintiff
who was unable to serve the defendant until limitations had run,
due in large part to the defendant’s failure to properly list
its registered agent for service with the Secretary of State.
Id. at 33-34. The court held that “public policy and the
interests of justice” warranted equitable tolling.
Id. at 34.
The district court relied on Magnolia North Property
Owners’ Association, Inc. v. Heritage Communities, Inc., 725
S.E.2d 112 (S.C. Ct. App. 2012), to determine that equitable
26
tolling was appropriate in this case. There, a homeowners’
association in a condo development sued the developers for
various claims surrounding construction defects. Id. at 117. The
developer claimed that because the homeowners’ association did
not file suit until May 2003, limitations barred the claim,
which allegedly accrued in March 2000, when the association
commenced meetings and operations.
Id. at 125. However, the
facts revealed that the developers effectively controlled the
homeowners’ association until sometime in September 2002.
Id.
The court held that it found “unpersuasive Appellants’ claim
that an organization they controlled would have initiated an
action against itself during this period.”
Id. Nelson argues
that the reasoning of Magnolia North does not apply to this case
because he could not be “disloyal” to GP Credit as GP Credit is
his “alter ego.” App. Br. 64-65.
This logic is confounding at best. The exact point of the
court’s holding in Magnolia North was that the developers would
hardly file suit against themselves; here, it would be
preposterous to think that GP Credit would file a confessed
judgment against Nelson because that would amount to Nelson
obtaining a judgment against himself.
The district court did not abuse its discretion in holding
that the statute of limitations was tolled for the 18 years GP
Credit held the confessed judgment, thwarting all efforts by the
27
rightful judgment creditors to take possession. Therefore, ORL’s
filing of the confession of judgment was not time-barred.
IV.
We GRANT ORL’s unopposed motion for leave to file the
Supplemental Appendix and we DENY the motion for leave to file a
surreply. The judgment of the district court is
AFFIRMED.
28
FLOYD, Circuit Judge, dissenting in part:
I do not think that the district court maintained subject
matter jurisdiction over this case once the October 14, 1993
dismissal order became final on January 1, 1994. I therefore
would not reach the merits of ORL’s claim for $4 million based
on Nelson’s confession of judgment and very respectfully dissent
to Part II.A.1 of the majority’s opinion.
I.
This case requires nothing more than mechanical application
of the Supreme Court’s decision in Kokkonen v. Guardian Life
Insurance Co. of America, 511 U.S. 375 (1994), and any attempt
to meaningfully distinguish it falters under a more exacting
review. Although I recognize that the dismissal in Kokkonen was
pursuant to a stipulation by the parties under Federal Rule of
Civil Procedure 41(a)(1)(ii), the Supreme Court was clear that
district courts’ authority in such a situation is no different
than when dismissal is court-ordered pursuant to Rule 41(a)(2),
as it was in this case. In summarizing its holding, the Court
stated the following:
The short of the matter is this: . . . . When the
dismissal is pursuant to Federal Rule of Civil
Procedure 41(a)(2), which specifies that the action
“shall not be dismissed at the plaintiff’s instance
save upon order of the court and upon such terms and
conditions as the court deems proper,” the parties’
compliance with the terms of the settlement contract
(or the court’s “retention of jurisdiction” over the
settlement contract) may, in the court’s discretion,
29
be one of the terms set forth in the order. Even
when, as occurred here, the dismissal is pursuant to
Rule 41(a)(1)(ii) (which does not by its terms empower
a district court to attach conditions to the parties’
stipulation of dismissal) we think the court is
authorized to embody the settlement contract in its
dismissal order or, what has the same effect, retain
jurisdiction over the settlement contract[] if the
parties agree.
Id. at 381–82 (emphasis added).
Thus, that “[i]n Kokkonen, the stipulation of dismissal
was executed by the parties, filed pursuant to Federal Rule of
Civil Procedure 41(a)(1)(ii), and was independently ‘so ordered’
by the district court[,]” ante at 12, does not differentiate
Kokkonen from this case for any pertinent purpose. The district
court in this case maintained no greater authority than the
district court in Kokkonen, and insofar as both district courts
failed to exercise that authority, the result—a want of subject
matter jurisdiction—should be the same.
The majority’s couching of the district court’s October 14,
1993 order as having “conditionally dismissed” the case, ante
at 12 (emphasis deleted), results from picking language from
that order and imputing into it meaning where there is none.
Plainly and simply, the order dismissed the action—sans any
“if-then” Boolean-like operators and sans any conditions
precedent—and to characterize the district court’s “expectation
that the settlement will be consummated” either as a reservation
of subject matter jurisdiction or as a retention of the power to
30
enforce the settlement agreement has zero basis in the law and
runs smack into the Supreme Court’s central holding in Kokkonen
and this Court’s cases applying the same. Kokkonen, 511 U.S.
at 381 (“The judge’s mere awareness and approval of the terms of
the settlement agreement do not suffice to make them part of his
order.”); see Smyth ex rel. Smyth v. Rivero,
282 F.3d 268, 283
(4th Cir. 2002) (“Where a court merely recognizes the fact of
the parties’ agreement and dismisses the case because there is
no longer a dispute before it, the terms of the agreement are
not made part of the order and consequently will not serve as a
basis of jurisdiction. . . . This rule is interpreted to require
that the district court give a clear indication that it is
incorporating the terms of the agreement into that order or
retaining jurisdiction over the agreement.” (emphasis added)
(paragraph break omitted)).
To be sure, though, the October 14, 1993 order did provide
to RTC “the right to reopen” the lawsuit; but any reopening
required some triggering action (e.g., the filing of a motion).
Final dismissal, on the other hand, was to be the default
disposition of the case on January 1, 1994, absent that
triggering action (hence, the right to “reopen” the action and
not the right to “effectuate/finalize dismissal” if settlement
is consummated). Thus, to the extent that dismissal was at all
“conditional[],” it was so upon RTC not filing a motion to
31
reopen, which, as explained below in Part II, it did not do.
The district court therefore became divested of subject matter
jurisdiction on January 1, 1994.
The majority contends that the December 23, 1993 Motion to
Clarify was, in essence, a motion to reopen the case. Before
addressing the Motion to Clarify on the merits, however, I note
that the weakness in the majority’s “conditional dismissal”
theory is highlighted by the very presence of a second basis as
to why the district court retained subject matter jurisdiction.
In other words, if the dismissal was truly conditional upon the
parties consummating settlement, as the majority claims, it is
curious, then, that the majority would need to defend on
alternative footing its position that the district court had
subject matter jurisdiction based on a motion that purported to
reopen the case. It is undisputed that the parties did not
consummate settlement prior to the December 31, 1993 deadline,
and based on the majority’s view of the conditional effect of
the October 14, 1993 order, that solitary fact alone should end
the inquiry: no settlement, no dismissal, case continues.
Still, the majority endeavors to justify the existence of
subject matter jurisdiction on several alternative bases, each
of which becomes transparent when viewed under a more scrupulous
microscope.
32
II.
The Motion to Clarify could be more aptly described as an
ancillary and administrative “motion to follow the law” rather
than a seminal “motion to reopen,” as the majority views it. As
an initial matter, the majority accords much due deference to
the district court’s province to interpret its own orders,
see ante at 14; that is the law surely enough, and I take no
issue with this approach. But the majority is disloyal in its
adherence to that framework because the district court itself
stated plainly that nobody moved to reopen the case. In the
March 15, 2013 order (the order on appeal) regarding Nelson’s
motion pursuant to Rules 59(e), 12(b)(1), 12(h)(3), and 60(b),
the district court recited the relevant facts of the case as
follows: “The case was again dismissed [on October 14, 1993]
‘with right to reopen if settlement is not consumated [sic]
before 12/31/1993.’ Nobody moved to reopen the case before the
December 31, 1993 deadline.” (J.A. 417 ([sic] in original)
(emphasis added) (quoting entry 117 on the docket sheet).)
If the district court were truly “treat[ing]” the Motion to
Clarify as a motion to reopen, as the majority contends, ante
at 13, one can only assume that the district court would have
mentioned that motion at this factual juncture before jumping
right into the November 1994 settlement. Perhaps, even if the
district court were silent regarding the presence or absence of
33
a motion to reopen, there might be room to debate whether the
Motion to Clarify was, in effect, a motion to reopen; but not
only did the district court make no mention of the all-important
Motion to Clarify, the district court further affirmatively
stated that, “Nobody moved to reopen the case before the
December 31, 1993 deadline.” Thus, in claiming that the Motion
to Clarify was, in essence, really a motion to reopen, the
majority all but concludes that the district court committed
clear error in its recitation of the facts as stated in the
March 15, 2013 order.
Not surprisingly, there is a dearth of record support for
the notion that the district court and the parties (referring to
RTC, not ORL) treated the Motion to Clarify as a motion to
reopen due to failed settlement negotiations. Although I
recognize that RTC’s decision to caption the Motion to Clarify
as it did—rather than as a “Motion to Reopen”—is not fatal to
ORL’s current position, see Belk, Inc. v. Meyer Corp., U.S., 679
F.3d 146, 157 (4th Cir. 2012), nowhere in the Motion to Clarify
(or the subsequent Amended Order of Foreclosure) are the words
“settlement” or “reopen” ever mentioned. That being said, I
further recognize that papers filed with the court need not
contain any “magic words” to effectuate their purposes. See
Stevenson v. City of Seat Pleasant,
743 F.3d 411, 418 (4th Cir.
2014). But certainly, if RTC and the district court truly
34
viewed the Motion to Clarify as one to reopen, one would expect
that there would be some mention of—or at a bare minimum, a
fleeting reference to—the failed settlement negotiations, the
December 31, 1993 deadline to settle, or the October 14, 1993
dismissal order setting forth that deadline. 1 But each of these
telltale clues that the parties and the district court treated
the Motion to Clarify as one to reopen are apparitions.
Aside from RTC’s request to waive its claim for a
deficiency judgment (which I address in greater detail below),
the Motion to Clarify essentially asked the district court to
follow the proper procedure for foreclosing on a property
pursuant to a judicial sale where the Office of the U.S. Marshal
has not seized the property which is the subject of the action;
in short, the Motion to Clarify simply asked the district court
to follow the law. The majority elevates the district court’s
proper application of the rule of law as effecting “procedural
and substantive changes to the provisions for the foreclosure
sale,” ante at 13, but ignores the fact that the foreclosure
sale was a foregone conclusion, and the requested relief
regarding the legally proper procedure for executing the sale
1
By glaring contrast, in the October 14, 1993 order, the
district court refers expressly to (1) the July 13, 1993 order
of dismissal and (2) the fact that the parties were “unable to
complete the documentation of the settlement.” (J.A. 50.)
35
had no bearing on any pending settlement agreement. At the end
of the day, all RTC was doing was getting its ducks in a row to
prepare for what was inevitable.
The principal flaw of the majority’s view that the Motion
to Clarify somehow reopened the case is to read that motion in a
piecemeal fashion. The majority provides a lone purportedly
“good reason” for why the parties and the district court treated
the Motion to Clarify as a motion to reopen: Nelson supposedly
had an interest in the Motion to Clarify because “a reduction
[in commission awarded to the Office of the U.S. Marshal] could
only redound to the benefit of the guarantors.” Ante at 13–14.
But this rationale relies on an incomplete reading of the Motion
to Clarify and a fundamental misunderstanding of the nature of
the foreclosure proceedings. And just as with the majority’s
high-level comparison of the facts of Kokkonen with the facts of
this case, the Devil is in the details.
In addition to seeking to limit the commission to the
Office of the U.S. Marshal, the Motion to Clarify also sought to
waive RTC’s right to a deficiency judgment against Nelson on
both mortgages. A deficiency judgment is “[a] judgment against
a debtor for the unpaid balance of the debt if a foreclosure
sale . . . fails to yield the full amount of the debt due.”
Black’s Law Dictionary 918–19 (9th ed. 2009). Thus, when RTC
waived its right to a deficiency judgment, RTC essentially let
36
Nelson “off the hook” for any discrepancy between the amount
that RTC would obtain from the foreclosure sale and the
remaining balance owed on the loans. Nelson therefore had no
interest in whether the Office of the U.S. Marshal received a
commission because he was not required to make up the difference
to RTC, even if precluding the Office of the U.S. Marshal from
receiving a commission would benefit RTC directly.
Indeed, if Nelson was so interested in the Motion to
Clarify, as the majority claims, query then: why did he not file
any motions or other papers either supporting or opposing that
motion? Instead, rather than taking a position—any position—on
the Motion to Clarify, Nelson was an absolute ghost on the
docket sheet from at least as early as the October 14, 1993
dismissal order until 2011 after ORL entered the confession of
judgment. In fact, the only “parties” who appear to have
participated in the hearing regarding the issues raised in the
Motion to Clarify were RTC and the U.S. Attorney’s Office on
behalf of the Marshal’s Service—not Nelson. (See J.A. 56 ¶ 10;
id. at 57 ¶ 15.)
By reading in a silo-like fashion RTC’s separate prayers
for relief in the Motion to Clarify, the majority misses the big
picture, and its “good reason” for treating the Motion to
Clarify as a motion to reopen is gainsaid by the very document
that it relies upon.
37
III.
The majority makes two other arguments to support its
position; but like the arguments before them, these arguments
similarly fall short and incomplete of the jurisdictional goal
line.
1.
First is the notion that “[t]he procedural posture of the
case after December 31, 1993 mirrors what happened earlier in
the case,” ante at 14, specifically, what happened ninety-three
days after the district court entered its July 13, 1993
dismissal order. That order stated: “IT IS ORDERED that this
action is hereby dismissed without costs and without prejudice
to the right, upon good cause shown within ninety (90) days, to
reopen the action is settlement is not consummated.” Although
the district court did reopen the case after expiration of the
ninety-day period, a plain reading of that order reveals that it
was not the reopening of the case that must have occurred within
ninety days, but rather the showing of good cause to reopen. In
the March 15, 2013 order, the district court recounted the
relevant facts surrounding the reopening of the case after the
July 13, 1993 dismissal order as follows: “The case was closed
on that same day, but the parties later returned to court.
Although the docket does not reflect the date on which the
38
parties asked for the case to be reopened, the court reopened
the case 93 days after the July 13, 1993 Order.” 2 (J.A. 416.)
Accordingly, because we do not know when, exactly, the
parties came to the court to reopen the case, the majority’s
statement that the district court “nonetheless reopened the case
93 days after the case was closed,” ante at 14, is nothing but a
red herring—a straw-man that, even when set ablaze, sheds no
light on the relevant issue. At best for the majority, the
circumstances surrounding the district court’s handling of the
July 13, 1993 dismissal and reopening of the case are neutral. 3
2
I note that the March 15, 2013 order is the exact same
order wherein the district court stated that, subsequent to the
October 14, 1993 order, “Nobody moved to reopen the case before
the December 31, 1993 deadline.” (J.A. 417.) Thus, inasmuch as
the district court recited that “the parties asked for the case
to be reopened” after the July 13, 1993 order, but on the very
next page of that order recited that the parties did not “move[]
to reopen the case before the December 31, 1993 deadline,” the
court was perfectly capable of determining what constituted a
motion/request to reopen. This only further pulls the rug out
from under the majority’s supposition that the district court
somehow treated the Motion to Clarify as a motion to reopen.
3
But in reading Part II.A.1 of the majority opinion as a
whole, the notion that “[t]he procedural posture of the case
after December 31, 1993 mirrors what happened earlier in the
case” based on “nearly identical” language in the dismissal
orders, ante at 14, only further undermines the “conditional
dismissal” theory. If the language in the two dismissal orders
is “nearly identical,” one would expect that the effect of that
language would also be nearly identical. Under the “conditional
dismissal” theory, the case was at no point in time ever
actually closed/dismissed pursuant to the July 13, 1993 order
because dismissal was conditioned upon settlement and the
parties did not settle. Yet, the district court thought that it
needed to reopen the case and did so on October 14, 1993, due to
(Continued)
39
2.
Finally, the majority attempts to make hay by putting a
spin on the absence of a clerical order of dismissal following
the October 14, 1993 order (whereas the clerk entered such an
order subsequent to the July 13, 1993 dismissal order). This
argument invokes the classic tale of the dog that did not bark
in the night-time. See generally Arthur Conan Doyle, The Silver
Blaze, in The Memoirs of Sherlock Holmes (1892). To wit, the
conspicuous absence of any subsequent dismissal order indicates
that the October 14, 1993 order was intended to serve as such.
The order’s effect, therefore, is best understood by looking at
what order did not follow. (It is surprising that the majority
would even attempt to make this absent-order argument in view of
its due deference to the district court’s autonomy and handling
of its own docket. See ante at 14. For indeed, the district
court itself noted that when it reopened the case after the
July 13, 1993 dismissal order, the parties’ request that it do
so is “not reflect[ed]” on the docket sheet. (J.A. 416.))
Regardless, I agree with the majority that the October 14,
1993 order was not a “final” order at the time that it was
“the parties [being] unable to complete the documentation of the
settlement.” (See J.A. 50.) But if the case was never actually
closed/dismissed, why would the district court have thought that
the case needed to be “reopened”?
40
entered; but it became final on January 1, 1994, when the period
for reopening the case expired without settlement and without
either party moving to reopen. At this point, the district
court became divested of subject matter jurisdiction. The
majority’s contrary result above runs afoul of well-settled law
and, regrettably, all but creates an undesirable circuit split.
In Berke v. Bloch, a case with facts and dismissal language
very similar to the facts and dismissal language in this case,
the district court dismissed a lawsuit “‘without costs and
without prejudice to the right, upon good cause shown, within
60 days, to reopen the action if the settlement is not
consummated.’” 242 F.3d 131, 134 (3d Cir. 2001). “[T]he
[plaintiffs] undertook no action within the prescribed sixty
(60) day period following entry of the District Court’s order.”
Id. The Third Circuit, in concluding that the order dismissing
the case constituted a final order, stated the following:
When a District Court dismisses a case pending
settlement, and grants the [plaintiffs] leave to re-
file within a set period of time, the order cannot be
considered final for the purposes of appeal on the
date it was entered. Typically, conditional
dismissals based on imminent settlement include a
fixed period of time to reach settlement terms. While
these types of dismissals may keep the parties’ “feet
to the fire” by giving them a deadline to conclude
settlement, they cannot be considered final. Instead,
if terms are reached, and/or the plaintiff makes no
attempt to re-open the litigation, the order ripens
into a final, appealable order upon the expiration of
the fixed time period.
41
Id. at 135 (emphasis added); see Longo v. First Nat’l Mortg.
Sources, 523 F. App’x 875, 877–78 (3d Cir. 2013) (applying the
rule from Berke and stating the following: “In its May 9 Order,
the District Court dismissed the case ‘without prejudice to the
right, upon good cause shown within 60 days, to reopen the
action if the settlement is not consummated.’ Thus, the May 9
Order . . . bec[a]me final . . . 60 days after it was
entered[.]”).
The result is no different in this case. Jung v. K. & D.
Mining Co., 356 U.S. 335, 337 (1958) (per curiam) (holding that
a court order “dismissing ‘th[e] cause of action’”—not the
clerk’s subsequent entry of a judgment—is what “constituted the
‘final judgment’ in the case,” even though the Rule 58 clock to
appeal did not start to tick until separate entry of that
judgment (second internal quotation marks added)); see also
Morris v. City of Hobart,
39 F.3d 1105, 1110 (10th Cir. 1994)
(holding that an “Administrative Closing Order [giving] the
parties sixty days to reopen the proceedings . . . . mature[d]
into final judgment and, [because] no action [was] taken to
resolve the case, satisfie[d] the separate document requirement
of Rule 58” (citation omitted)).
IV.
In sum, Kokkonen controls: the convoluted procedural and
substantive morass that this twenty-year-old case became is
42
partly the product of the failure by the parties and the
district court to notice that, when all was said and done, what
the court was being asked to do in granting judgment on the
confession was simply enforcing the settlement agreement. The
dismissal order respecting that agreement did not “embody” the
agreement or “retain jurisdiction” over it. Kokkonen, 511 U.S.
at 381–82. Moreover, because the Motion to Clarify did not seek
to reopen the case, as a careful review of that motion and the
subsequent related order plainly reveals, the October 14, 1993
order matured into a final dismissal order on January 1, 1994.
With great condemnation for Nelson’s unlawful and evasive
behavior, and with sympathy for ORL’s struggles to obtain the
money that it appears to be rightfully owed, I simply do not
think that the district court had subject matter jurisdiction.
I therefore would not reach the merits of ORL’s claim and, very
respectfully, dissent to Part II.A.1 of the majority’s opinion.
43
