McMenemy v. Flagship Financial Group, LLC et al

Filing 88

ORDER GRANTING PLAINTIFFS' MOTION 69 FOR CERTIFICATION OF RULING UNDER FRCP 54(b) signed by Judge John A. Mendez on March 12, 2015. This action will be stayed during the pendency of Plaintiffs appeal in the Ninth Circuit, but the stay will not take effect until Plaintiffs file a notice of appeal with this Court. Within 30 days of the Ninth Circuits decision on Plaintiffs likely appeal, the parties are ordered to file a joint status report in this matter. (Rivas, A)

1
2
3
4
5
6
7
8

UNITED STATES DISTRICT COURT

9

EASTERN DISTRICT OF CALIFORNIA

10
11
12

DIANA McMENEMY, an
individual, and MICHAEL
McMENEMY, an individual,

13

Plaintiffs,

14
15
16
17
18
19

No.

2:14-cv-001482 JAM AC

ORDER GRANTING PLAINTIFFS’
MOTION FOR CERTIFICATION OF
RULING UNDER FRCP 54(b)

v.
COLONIAL FIRST LENDING GROUP,
INC., a Utah corporation,
COLONIAL FIRST BUSINESS
DEVELOPMENT, LLC, a Utah
limited liability company,
DEVIN JONES, an individual,
FLAGSHIP FINANCIAL GROUP,
LLC, and DOES 1 through 10,
Defendants.

20
21
22

This matter is before the Court on Plaintiffs Diana McMenemy

23

and Michael McMenemy’s (“Plaintiffs”) motion to certify (Doc.

24

#69) the Court’s October 9, 2014 order (Doc. #50) as a final

25

judgment under Rule 54(b) of the Federal Rules of Civil Procedure

26

(“FRCP”).

27

(“Defendant CFLG”) opposes (Doc. #80) the motion and Plaintiffs

28

filed a reply (Doc. #82).

Defendant Colonial First Lending Group, Inc.
For the following reasons, Plaintiffs’
1

1

motion is granted. 1

2
3

I.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

4

Defendants provided mortgage brokerage services to

5

Plaintiffs – who are husband and wife – for the purposes of

6

obtaining for Plaintiffs a purchase money home loan.

7

Plaintiffs allege that Defendants committed fraud by failing to

8

disclose that they were unlicensed to perform broker services and

9

by diverting money out of escrow to themselves.

10

FAC ¶ 9.

FAC ¶ 18.

On July 3, 2014, Plaintiffs moved for a new summons (Doc.

11

#29) to be issued by the Court, so that they could properly serve

12

Defendant Colonial First Business Development, LLC (“Defendant

13

CFBD”).

14

arguing that Defendant CFBD no longer existed.

15

not file a reply, and Plaintiffs’ counsel did not appear at the

16

August 20, 2014 hearing on their motion.

17

arguments before the Court at the time of the hearing,

18

Plaintiffs’ motion was denied (Doc. #37).

19

Defendant CFLG opposed Plaintiffs’ motion (Doc. #34),
Plaintiffs did

Based on the facts and

On August 28, 2014, Plaintiffs moved for relief from the

20

Court’s denial of their motion, under Rule 60(b)(1) of the FRCP.

21

Plaintiffs’ counsel argued that his failure to file a reply and

22

his failure to appear at the hearing constituted “excusable

23

neglect” and that the Court should consider his untimely reply

24

brief.

25

had prevented him from learning that the motion for a new summons

He argued that an issue with his email service provider

26
27
28

1

This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for March 11, 2015.
2

1

was opposed.

2

directly address his failure to appear at the hearing, but he has

3

explained that he missed the hearing “due to a court appearance

4

in another court that took longer than expected.”

5

On October 9, 2014, the Court denied Plaintiffs’ motion for

6

relief, applying the four Ahanchian factors and concluding that

7

the failures of Plaintiffs’ counsel did not constitute “excusable

8

neglect.”

9

624 F.3d 1253 (9th Cir. 2010)).

His motion for relief under Rule 60(b)(1) did not

Mot. at 2-3.

Doc. #50 (citing Ahanchian v. Xenon Pictures, Inc.,

10
11

II.

OPINION

12

Pursuant to Rule 54(b) of the FRCP, Plaintiffs now ask the

13

Court to certify its October 9, 2014 order, denying Plaintiffs’

14

Motion for Relief under Rule 60(b)(1).

15

argue that such certification is appropriate because the Court’s

16

order was a final judgment as to Defendant CFBD, and because

17

there is no reason to delay the appeal.

18

CFLG urges the Court to deny Plaintiffs’ motion, due to the

19

futility of the remedy ultimately sought by Plaintiffs.

20

3.

Mot. at 1.

Mot. at 3.

Plaintiffs

Defendant
Opp. at

21

Rule 54(b) provides that, “when multiple parties are

22

involved [in an action], the court may direct entry of a final

23

judgment as to one or more . . . parties only if the court

24

expressly determines that there is no just reason for delay.”

25

The practical effect of an entry of a final judgment under Rule

26

54(b) is that the judgment may be immediately appealed.

27

Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir.

28

1981).

3

1

In evaluating a Rule 54(b) motion, the Court must first

2

determine whether a “final judgment” has been rendered as to a

3

particular claim or party.

4

878 (9th Cir. 2005).

5

October 9, 2014 order is a final judgment, because “the Court’s

6

decision prevents the Court from even obtaining jurisdiction”

7

over Defendant CFBD.

8

this argument.

9

motion for Rule 60(b)(1) relief is an “ultimate disposition” of

Wood v. GCC Bend, LLC, 422 F.3d 873,

Here, Plaintiffs argue that the Court’s

Mot. at 4.

Opp. at 2-3.

Defendant CFLG does not oppose

This Court’s denial of Plaintiffs’

10

Plaintiffs’ rights as to Defendant CFBD.

11

Without obtaining the relief sought in their motion, Plaintiffs

12

are unable to properly serve Defendant CFBD and none of

13

Plaintiffs’ claims against Defendant CFBD are properly before the

14

Court.

15

of Plaintiffs’ motion for relief under Rule 60(b)(1) is a final

16

judgment for purposes of Rule 54(b) certification.

17

Wood, 422 F.3d at 878.

The Court therefore finds that its October 9, 2014 denial

The Court must next determine whether “there is any just

18

reason for delay” of an appeal.

Wood, 422 F.3d at 878.

The

19

Ninth Circuit has noted that “[i]t is left to the sound judicial

20

discretion of the district court to determine the appropriate

21

time when each final decision . . . is ready for appeal.”

22

878.

23

making this determination is that of “sound judicial

24

administration.”

25

appeal is only appropriate if the Court finds that both (1) “the

26

costs and risks of multiplying the number of proceedings and of

27

overcrowding the appellate docket are outbalanced by pressing

28

needs of the litigants for an early and separate judgment as to

Id. at

The primary interest to be considered by the Court in
Id. at 878.

Certification for an immediate

4

1

some . . . parties;” and (2) “upon any review of the judgment

2

entered under the rule, the appellate court will [not] be

3

required to address legal or factual issues that are similar to

4

those contained in the claims still pending before the trial

5

court.”

6

Cir. 1981).

7

Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th

In this case, there is no “just reason for delay” of

8

Plaintiffs’ appeal.

Wood, 422 F.3d at 878.

As required by

9

Morrison-Knudsen, the Court specifically finds that the “costs

10

and risks of multiplying the number of proceedings and of

11

overcrowding the appellate docket are outbalanced by pressing

12

needs of the litigants for an early and separate judgment” as to

13

Defendant CFBD.

14

Court’s October 9, 2014 order essentially results in the

15

exclusion of Defendant CFBD from this case – assuming arguendo

16

that it exists or may otherwise be properly served – the interest

17

of judicial economy would not be served by delaying Plaintiffs’

18

contemplated appeal.

19

remaining Defendants, only to be followed by Plaintiffs’ appeal

20

of the order concerning the service of Defendant CFBD, would

21

create a substantial risk of duplication of proceedings and waste

22

of judicial resources.

23

this time, the Court ensures that the proper scope of Plaintiffs’

24

suit will be known in advance of the deadlines for completion of

25

discovery and the filing of dispositive motions.

26

Morrison-Knudsen, 655 F.2d at 965.

As the

The completion of proceedings against

By certifying the issue for appeal at

Similarly, the Court finds that, in deciding Plaintiffs’

27

appeal, the Ninth Circuit will not “be required to address legal

28

or factual issues that are similar to those contained in the
5

1

claims still pending” before this Court.

2

F.2d at 965.

3

narrow and distinct: the Ninth Circuit will only be asked to

4

decide whether the Court abused its discretion in finding that

5

Plaintiffs’ failure to file a reply brief and failure to appear

6

at the August 20, 2014 hearing constituted “excusable neglect”

7

under Ahanchian.

8

pending before this Court are related to that narrow issue.

9

There is little risk that certifying the issue for immediate

10

appeal will create duplicative work for the appellate court.

11

Morrison-Knudsen, 655

As noted by Plaintiffs, the issue on appeal will be

Mot. at 5.

None of the claims currently

Defendant CFLG’s reliance on the fact that Defendant CFBD no

12

longer exists is misplaced.

13

ultimate remedy sought by Plaintiffs – a Court-issued, new

14

summons for Defendant CFBD – is futile because the corporation in

15

question no longer exists and cannot be properly served.

16

doing so, Defendant CFLG merely re-argues its opposition to

17

Plaintiffs’ motion for a new summons, and does not address the

18

issue presently before the Court: whether the October 9, 2014

19

order should be certified for immediate appeal.

20

Defendant CFLG argues that the

In

For all of these reasons, the Court GRANTS Plaintiffs’

21

motion for certification of its October 9, 2014 ruling, under

22

Rule 54(b).

23

Plaintiffs’ motion for relief under Rule 60(b)(1) is a final

24

judgment and is immediately appealable to the Ninth Circuit.

25

Although Plaintiffs argue that there is “no need to stay the

26

action” while the appeal is pending (and that the Court should

27

permit “discovery into the relevant conduct of [Defendant CFBD]”

28

during the appeal), the Court concludes that this would not serve

The Court’s October 9, 2014 order denying

6

1

the interests of judicial economy and would be potentially unfair

2

to Defendants.

3

stay the action until the Ninth Circuit has ruled on Plaintiffs’

4

likely appeal.

5

file a notice of appeal with this Court.

Mot. at 5.

Rather, it is more appropriate to

Such a stay will not take effect until Plaintiffs

6
7
8
9

III.

ORDER

For the reasons set forth above, the Court GRANTS
Plaintiffs’ motion to certify the October 9, 2014 order under

10

Rule 54(b).

11

Plaintiffs’ appeal in the Ninth Circuit, but the stay will not

12

take effect until Plaintiffs file a notice of appeal with this

13

Court.

14

Plaintiffs’ likely appeal, the parties are ordered to file a

15

joint status report in this matter.

16
17

This action will be stayed during the pendency of

Within 30 days of the Ninth Circuit’s decision on

IT IS SO ORDERED.
Dated: March 12, 2015

18
19
20
21
22
23
24
25
26
27
28

7