Minor v. Herman, et al

Filing

OPINION issued by Michael Boudin, Appellate Judge; David H. Souter, Associate Supreme Court Justice and Norman H. Stahl, Appellate Judge. Published. [10-1397]

Case: 10-1397

Document: 00116236277

Page: 1

Date Filed: 07/22/2011

Entry ID: 5567107

United States Court of Appeals
For the First Circuit
No. 10-1397
QUINCY V, LLC; CAMBRIDGE V, LLC,
Plaintiffs.
__________
QUEENS SYNDICATE COMPANY; COMBO STORES COMPANY;
INITIAL REALTY COMPANY; SONS REALTY COMPANY;
P&S REALTY COMPANY; FLATLANDS MANAGEMENT COMPANY,
Plaintiffs, Appellees,
v.
SHELLY HERMAN, as temporary Executrix for the
Estate of STEPHEN COOPERMAN,
Defendant, Third-Party Plaintiff, Appellee.
__________
LISA MINOR,
Interested Party-Appellant.
__________
VICTOR VITLIN; ROBERT FEINERMAN; ZACHARY SCHEINBERG;
JANICE SCHEINBERG; JACK DAVIDOFF; ALAN SHRIRO;
MARTIN BRODY; MARTIN SCHNEIDER,
Third-Party Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor,

U.S. District Judge]

Case: 10-1397

Document: 00116236277

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Date Filed: 07/22/2011

Entry ID: 5567107

Before
Boudin, Circuit Judge,
Souter,* Associate Justice,
and Stahl, Circuit Judge.
Richard J. Montes with whom Matthew W. Naparty and Mauro
Goldberg & Lilling LLP were on brief for interested party,
appellant.
Mark H. Bluver with whom Law Office of Mark H. Bluver was on
brief for plaintiffs, appellees Queens Syndicate Company and Combo
Stores Company.
Katharine Pacella Costello with whom John J. Egan and Egan,
Flanagan & Cohen, P.C. were on brief for plaintiff, appellees
Initial Realty Company, Sons Realty Company, P&S Realty Company and
Flatlands Management Company.
Andrew M. Hochberg for defendant, third-party plaintiff,
appellee.

July 22, 2011

*

The Hon. David H. Souter, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.

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BOUDIN, Circuit Judge.

Date Filed: 07/22/2011

Entry ID: 5567107

Lisa Minor appeals from an order

to enforce a settlement agreement against her, which she signed
after mediation of several lawsuits concerning six family-run real
estate partnerships. The procedural history is complex but, in the
end, the

central

question is

whether

the

district

court

had

authority to enter the order in question, which helps bring to a
close at least four lawsuits in multiple courts.
The six partnerships own and manage commercial real
estate in and around New York City, and all are organized as
general partnerships under New York law.
(McKinney 2005).

N.Y. P'ship Law § 10

The partners in each entity largely though not

entirely overlap and comprise a group of natural persons, trusts,
and limited liability companies.

Lisa Minor is herself a partner

in all six ventures.
The

six

partnerships

had

been

managed

by

a

single

partner, Shirley Cooperman, until her death in 2000 and thereafter
by her son, Stephen Cooperman, almost until his own death in 2008.
Lisa Minor is Stephen Cooperman's sister and assisted him with the
financial affairs of the partnerships.

However, in January 2008,

the partnerships voted to appoint three-member committees to take
over the management, and Lisa Minor was a member of four of them.
In February 2008, Stephen Cooperman died and his estate
was probated in state court in Berkshire County, Massachusetts,
where he had resided.

Later that year the partnerships began the

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present federal district court lawsuits in Massachusetts against
Shelly Herman, the beneficiary and executrix of Cooperman's will,
seeking redress for alleged mismanagement of the partnerships by
Stephen Cooperman during his tenure.

One lawsuit was by two of the

partnerships, the second by the other four and the same district
judge handled both together.
Both

lawsuits

prompted

counterclaims

by

the

estate

against the plaintiff partnerships, a third party complaint against
the partners of all of the partnerships, and further attempted
claims by individual partners.

It also came to light that two of

the partners had separately sued Lisa Minor in the Surrogate's
Court of Nassau County, New York in her capacity as executrix of
the estate of Shirley Cooperman--a position that she acquired in
succession to Stephen Cooperman after his death.
After mediation in February 2009, a settlement agreement
was reached to dispose of the two federal district court actions
and related state court suits in Massachusetts, Minor being a party
to one of the latter.

In the mediation, Minor was represented by

the attorney, Paul Rothschild, who was handling her defense in the
latter case.
times--in

her

Lisa Minor signed the settlement agreement numerous
individual

capacity,

as

a

partner

in

all

six

partnerships, and as a trustee of one of the other partners.
On March 23, 2009, counsel for the partnerships notified
the district court that the two federal lawsuits had been settled,

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that final documents were being drafted, and that counsel expected
the process to take up to sixty days.

Acting without a motion to

dismiss, the district court (following a practice sometimes used to
clear dockets and spur a final disposition) dismissed both cases
the same day.

The orders of dismissal were identical and read in

full:
The court, having been advised on March
23, 2009 that the above-entitled action has
been settled;
IT IS ORDERED that this action is
hereby dismissed without costs and without
prejudice to the right of any party, upon good
cause shown, to reopen the action within sixty
(60) days if settlement is not consummated.
Settlement was not in fact consummated because Minor
refused to execute mutual releases called for by the settlement
agreement.

She was represented by another lawyer in the Nassau

Surrogate's Court action in New York and that lawyer apparently
wanted changes in the mutual release to clarify its relationship to
that action. The partnerships balked at accepting her suggestions,
and she refused to sign the release.
The sixty-day window following the orders of dismissal
ended on Friday, May 22, 2009, the following Monday being Memorial
Day. On Tuesday, May 26, counsel for the partnerships requested by
phone call to the court clerk a thirty-day extension of the sixtyday dismissal period. On Thursday, May 28, the same attorney filed

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a motion to enforce the settlement agreement against Minor on
behalf of all the partnerships and the estate.
Minor filed no objection within the fourteen-day period
required under the local rules, D. Mass. R. 7.1(b).
2009,

the

district

settlement.

Two

court
months

granted
later,

the
on

motion
August

On June 12,

to
7,

enforce
2009,

the

Minor,

represented by Rothschild, filed a motion to vacate the district
court's enforcement order, claiming a lack of jurisdiction over
both the settlement agreement and over Minor herself.

Following a

November 2009 hearing, the district court ordered that a new motion
to enforce be filed, giving Minor a fresh opportunity to object.
Thereafter, the partnerships and Cooperman estate filed
a new motion to enforce the settlement against Minor, and
responded.

Minor

In March 2010 the district court rejected Minor's

motion to vacate and ordered Minor to execute the release.

Queens

Syndicate Co. v. Herman, 691 F. Supp. 2d 283, 290 (D. Mass. 2010).
The court found that it had properly reinstated the litigation and
that Minor was present in the cases as a plaintiff by virtue of her
status as partner in all six partnerships.

Id. at 286-87.

Minor then filed a motion to dismiss the case claiming
that the court never had subject-matter jurisdiction because the
parties in the case were not completely diverse.

The district

court denied Minor's motion in an unpublished order entered in both
cases. Minor then filed the present appeal, raising the objections

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already noted along with a separate attack on the validity and the
interpretation of the original mediated settlement agreement that
she had signed in her various capacities.
Minor's first subject matter claim is that the parties
in the district court were not of diverse citizenship.

The

defendant in the district court throughout has been Shelley Herman
as executrix of Stephen Cooperman's estate. Because at the time of
his death Stephen Cooperman was domiciled in Massachusetts, by
statute his executrix was similarly designated.
1332(c)(2).
realignment

28 U.S.C. §

Diversity jurisdiction thus depends, absent some
of

parties,

on

no

plaintiff

being

domiciled

in

Massachusetts.
The six plaintiff partnerships were organized under New
York law,

N.Y. P'ship Law § 10 (McKinney 2005),

but for diversity

purposes, a partnership has attributed to it the citizenship of all
its members, Carden v. Arkoma Assocs., 494 U.S. 185, 188-90 (1990).
Minor's claim is that Stephen Cooperman was also a partner in each
of the six plaintiff partnerships, thereby destroying diversity,
even though neither Lisa Minor nor any other partner is domiciled
in Massachusetts.

The district court held that Cooperman's estate

was not a member of the partnerships and we agree.
Under New York law, a general partnership dissolves upon
the death of a partner absent specific agreement to the contrary,
N.Y. P'ship Law § 62(4), and if the survivors continue to operate

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the business as a partnership, they create a new partnership at
will, see, e.g., Burger, Kurzman, Kaplan & Stuchin v. Kurzman, 527
N.Y.S.2d 15, 16-17 (App. Div. 1988).

Minor says that Stephen

Cooperman's estate did continue to receive payments from the
partnerships and was listed as a partner on state and federal tax
forms filed by the partnerships.

This is an incomplete picture.

Following Stephen Cooperman's death, the estate never
exercised any joint control over the partnerships, nor contributed
to the ventures, see Kyle v. Brenton, 584 N.Y.S.2d 698, 699 (App.
Div. 1992), and Herman expressly disclaimed "an intent to become a
partner in the partnerships."

The payments to the estate--however

labeled in tax forms--appear to be the distributions that the
estate is entitled to recover as a sort of creditor, N.Y. P'ship
Law §§ 72(3), 73; see also Birnbaum v. Birnbaum, 555 N.Y.S.2d 982,
987-88 (App. Div. 1990), and not as a current partner.
Minor's second subject matter objection is that the
district court relinquished its jurisdiction when it dismissed the
complaint sua sponte and could not thereafter reclaim it.

Under

Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994), a federal
court may enforce a settlement if it maintains jurisdiction or
embeds the settlement in a judgment, but otherwise a suit to
enforce a settlement is a contract dispute which requires a new
jurisdictional basis to be heard in federal court.
294 F.3d 17, 21 (1st Cir. 2002).

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Lipman v. Dye,

Case: 10-1397

Document: 00116236277

The

March

2009

Page: 9

Date Filed: 07/22/2011

dismissal

was

premised

Entry ID: 5567107

on

the

representation that a settlement had been reached; and when Minor
declined to sign the releases, the other parties sought relief in
late May 2009 and received it in early June.

The request occurred

only a few days after the sixty-day period had expired; and the
grant of relief was within ninety days of the original dismissal-well within the one year period for a motion to reopen a judgment
for excusable neglect.

Fed. R. Civ. P. 60(b)(1).

This court has held the use of a Rule 60(b)(1) motion to
be compatible with Kokkonen.

Pratt v. Philbrook, 109 F.3d 18, 22

& n.7 (1st Cir. 1997); F.A.C., Inc. v. Cooperativa de Seguros de
Vida de Puerto Rico (COSVI), 449 F.3d 185, 190-191 (1st Cir. 2006).
Minor does not complain of an abuse of discretion but rather that
the district court lacked power to act sua sponte under Rule
60(b). This issue has divided other circuits, Dr. José S. Belaval,
Inc. v. Peréz-Perdomo, 465 F.3d 33, 37 (1st Cir. 2006), but we need
not take a position because the district court reasonably construed
the motion to enforce as an implicit Rule 60(b) motion to reopen.
Minor further objects that the district court failed to
afford her notice and an opportunity to respond to the motion.

The

motion to enforce had been sent to Rothschild who had represented
Minor in the Massachusetts state court suit and in the mediation.
At the time, he denied that he could accept service on Minor's
behalf in the federal actions.

Any lack of notice was cured when

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the district court, in the November 2009 hearing on Minor's motion
to reconsider, ordered plaintiffs to file a proposed order and
afforded Minor two weeks to respond to it.
Separately, Minor argues that the district court lacked
authority to enforce the settlement because its original sua sponte
dismissal of the case was necessarily predicated on the parties'
imputed consent, Fed. R. Civ. P. 41(a)(1)(A)(ii); by implication,
she

argues,

the

court

also

lacked

authority

settlement absent consent of all parties.

to

enforce

the

The dismissal here is

better viewed as falling instead under Fed. R. Civ. P. 41(a)(2)
because there was no stipulation to dismissal from the defendants.
In any event, the dismissal is not the source of the
court's power to enforce the settlement.

Rather, the dismissal--

whatever its character--was withdrawn pursuant to Rule 60(b)(1).
And, once the district court re-established jurisdiction, it had
ancillary jurisdiction to enforce the settlement agreement by the
parties.

See Baella-Silva v. Hulsey, 454 F.3d 5, 10-11 (1st Cir.

2006), COSVI, 449 F.3d at 189-190.

Thus, the court's order to

Minor to sign the release was within its power.
Minor next attacks the court's authority over her person
which, for defendants, requires both personal jurisdiction and
service of process.

In rejecting this challenge, the district

court relied on Minor's status as a partner in each of the six
plaintiff partnerships.

Queens Syndicate, 691 F. Supp. 2d at 286-

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New York law provides that personal jurisdiction over the

partnership also confers personal jurisdiction over the general
partners, U.S. Bank Nat'l Ass'n v. Ables & Hall Builders, 582 F.
Supp. 2d 605, 616 (S.D.N.Y. 2008).
Minor claims that New York law would distinguish between
her presence as a partner and her presence in an individual
capacity, Ruzicka v. Rager, 111 N.E.2d 878, 879-81 (N.Y. 1953),
and that she was a plaintiff only in her capacity as a partner and
was never served in her individual capacity in either federal
lawsuit.

We need not pursue the interesting choice of law issues

implicated by this dual capacity argument.

See Roberts-Haverhill

Assocs. v. City Council, 319 N.E.2d 916, 920 (Mass. App. Ct. 1974.)
While the present lawsuits were pending in the district
court, Minor--both as an individual and as a partner--entered into
a single settlement agreement covering both federal lawsuits (as
well as other lawsuits); and this constituted a waiver--in both
capacities--of objections to personal jurisdiction.

Cf. Meetings

& Expositions, Inc. v. Tandy Corp., 490 F.2d 714 (2d Cir. 1974)
(per curiam).
the November

Any claim by Minor of lack of notice was cured by
2010

hearing

and

opportunity

to

respond

to

the

proposed order.
Minor now argues to us that the settlement agreement was
ambiguous and so unenforceable, and that the releases go beyond
what the settlement agreement contemplated. The record contains

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only brief references to such substantive objections in Minor's
written submissions to the district court (in August and December
2009) and her attorney's oral argument (in November 2009).
now, these objections are summarily presented.
come too late.

Even

These arguments

Tasker v. DHL Ret. Sav. Plan, 621 F.3d 34, 40 (1st

Cir. 2010).
Affirmed.

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