Ritchie Capital Management, L.L.C. et al v. Coventry First LLC, et al
Filing
102
OPINION & ORDER.......The plaintiffs have failed to demonstrate that they are entitled to relief under any provision of Rule 60(b). For that reason, the plaintiffs August 2, 2016 Rule 60(b) motion to vacate their voluntary dismissal is denied, and their motion for Rule 54(b) certification is denied for mootness. (Signed by Judge Denise L. Cote on 11/28/2016) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
----------------------------------------X
:
RITCHIE CAPITAL MANAGEMENT, L.L.C.,
:
RITCHIE RISK-LINKED STRATEGIES TRADING :
(IRELAND), LIMITED, RITCHIE RISK-LINKED :
STRATEGIES TRADING (IRELAND) II,
:
LIMITED, WALKERS SPV LIMITED, as
:
trustee for Ritchie Risk-Linked Life
:
Strategies Trust I and Ritchie Life
:
Strategies Master Trust, and RITCHIE
:
RISK-LINKED STRATEGIES TRADING, LTD.,
:
Plaintiffs,
:
:
-v:
:
COVENTRY FIRST LLC, THE COVENTRY GROUP, :
INC., MONTGOMERY CAPITAL, INC., LST I
:
LLC, ALAN BUERGER, CONSTANCE BUERGER,
:
REID S. BUERGER, ANTONIO MUNIZ, ALEX
:
SELDIN, NEAL JACOBS, EILEEN SHOVLIN,
:
and JIM DODARO,
:
Defendants.
:
:
----------------------------------------X
APPEARANCES:
For Plaintiffs:
Alexandra A.E. Shapiro
Eric S. Olney
Fabien Thayamballi
Shapiro Arato LLP
500 Fifth Avenue, 40th Floor
New York, NY 10110
For Defendants:
Kenneth J. Brown
David A. Forkner
Williams & Connolly, LLP
725 Twelfth Street, N.W.
Washington, D.C. 20005
07cv3494 (DLC)
OPINION & ORDER
DENISE COTE, District Judge:
The plaintiffs filed a motion under Fed. R. Civ. P.
60(b)(6) to vacate their own Rule 41(a)(1)(A)(i) voluntary
dismissal of an action without prejudice, and for a Fed. R. Civ.
P. 54(b) certification of a partial final judgment for the
claims the Court dismissed prior to the plaintiffs’ voluntary
dismissal of the action.
Because the plaintiffs fail to meet
the rigorous standards for relief under Rule 60(b), their motion
is denied.
Accordingly, their motion for a Rule 54(b)
certification is denied for mootness.
BACKGROUND
General familiarity with the facts of this case is
presumed, and are therefore summarized here only briefly.
This
action arises out of a contract dispute between two
sophisticated players in the life settlements industry, a
secondary market for life insurance policies.
The four
corporate defendants (referred to collectively as “Coventry”)
purchase life insurance policies and either hold them, paying
the applicable premiums and eventually collecting the death
benefits, or sell them to third parties.
Plaintiff Ritchie
Capital Management, L.L.C., through its special purpose
vehicles, purchased some of these policies from Coventry.
The
plaintiffs allege that the defendants conspired with each other
to defraud the insureds through acquiring policies in a rigged
2
bidding process, and to induce institutional investors like
Ritchie Capital to acquire the policies.
The plaintiffs further
allege that the defendants concealed fraudulent conduct, as well
as an investigation into that conduct by the Attorney General of
the State of New York.
The original complaint, filed on May 7, 2007, contained
seven causes of action: three RICO claims pleaded against all of
the defendants; a fraud claim and a fraudulent inducement claim
pleaded against Coventry and certain individual defendants; and
breach of fiduciary duty and breach of contract claims pleaded
against Coventry (the “RICO Action”).
By Opinion dated July 17,
2007, the Court dismissed all of the plaintiffs’ claims without
prejudice and sua sponte granted leave to amend the breach of
contract claim and certain of the RICO claims.
See Ritchie
Capital Mgmt., L.L.C. v. Coventry First LLC, No. 07cv3494 (DLC),
2007 WL 2044656 (S.D.N.Y. July 17, 2007) (the “2007 Opinion”).
The plaintiffs thereafter amended their complaint and
simultaneously moved for reconsideration of the Court’s 2007
Opinion.
By Opinion dated February 29, 2008, the Court denied
the plaintiffs’ motion for reconsideration, and granted the
defendants’ motion to dismiss the RICO claims.
See Ritchie
Capital Mgmt., L.L.C. v. Coventry First LLC, No. 07cv3494 (DLC),
2008 WL 542596 (S.D.N.Y. Feb. 29, 2008) (the “2008 Opinion”).
3
The only claim to survive the successive motions to dismiss was
the breach of contract claim.
On March 17, 2008, the plaintiffs voluntarily dismissed the
entire RICO Action without prejudice pursuant to Rule
41(a)(1)(A)(i), Fed. R. Civ. P.
On April 1, 2008, the
plaintiffs filed notices of appeal, seeking review of the 2007
and 2008 Opinions.
On May 20, 2008, staff counsel for the
Second Circuit advised the plaintiffs via electronic mail that
their appeal presented a “serious question of finality/appellate
jurisdiction.”
Specifically, the email explained that (emphasis
supplied):
[u]nder the District Court’s July 17, 2007 decision,
plaintiffs’ claims were dismissed, with leave to amend
as to breach of contract claim and RICO. On March 17,
2008, certain plaintiffs filed Notice of Dismissal of
their remaining claims without prejudice. Under
Second Circuit precedent, Chappelle v. Beacon, 84 F.3d
652 (2d Cir. 1996), it appears that those plaintiffs
need a FRCP 54(b) certification in order to appeal
from the [March] 17, 2008 dismissal ruling. . . . Read
literally, FCRP [sic] 54(b) provides, in effect, that
nothing in a multi-party, multi-claim case is final
until everything is final, absent certification.
Accordingly, the plaintiffs were informed as early as May
2008 that their dismissal without prejudice was not a final
judgment for purposes of appeal.
In response to staff counsel’s email, the plaintiffs
requested a conference with the Court to “obtain its
guidance as to potential alternatives that would enable
4
this case to proceed to final judgment . . . .”
The Court
denied the plaintiffs’ request on June 2, 2008.
Citing
Citizens Accord, Inc. v. Town of Rochester, 235 F.3d 126
(2d Cir. 2000) (per curiam),1 the Court explained that a
conference was unnecessary as it was unlikely to find that
a Rule 54(b) certification should issue.
Thereafter, on
July 10, 2008, two stipulations executed by the parties
withdrawing the plaintiffs’ “apparently premature appeal”
were filed in the Court of Appeals.
In so doing, the
plaintiffs explicitly acknowledged that the appeal was
“premature because appellants’ claim for breach of contract
is still pending in District Court, i.e., said claim was
non-suited without prejudice . . .
was granted under FRCP 54(b).”
and no certification
The stipulations further
provided that the plaintiffs retain the “right to raise, in
such subsequent appeal from a final judgment, the issues
sought to be raised in this appeal.”
Roughly six months later, on February 6, 2009, two of
the five plaintiffs filed a new action against four of the
twelve defendants, alleging only a breach-of-contract claim
Citizens Accord holds in relevant part: “The power [to grant a
Rule 54(b) certification] should be used only in the infrequent
harsh case, where there exists some danger of hardship or
injustice through delay which would be alleviated by immediate
appeal.” Citizens Accord, 235 F.3d at 129 (citation omitted).
1
5
(the “Contract Action”).2
The new complaint did not
reassert the RICO or tort claims brought in the RICO
Action.
Following a bench trial, the district court
rejected the breach-of-contract claim in its entirety and
dismissed the complaint on the merits with prejudice.
Ritchie Risk-Linked Strategies Trading (Ireland), Ltd. v.
Coventry First LLC, No. 09cv1086 (JSR), 2014 WL 5420926
(S.D.N.Y. Oct. 20, 2014).
September 2015.
Reconsideration was denied in
Ritchie Risk-Linked Strategies Trading
(Ireland), Ltd. v. Coventry First LLC, No. 09cv1086 (JSR),
2015 WL 5581817 (S.D.N.Y. Sept. 10, 2015).
On October 9, 2015, the plaintiffs from the 2007 RICO
Action and the 2009 Contract Action filed separate notices
of appeal.
The plaintiffs in both cases moved to
consolidate the appeals.
The defendants moved to dismiss
the appeal from the 2007 RICO Action for lack of appellate
jurisdiction.
On December 4, 2015, the Second Circuit
denied the plaintiffs’ motion to consolidate and dismissed
The Contract Action was assigned to this Court. Following the
close of fact discovery, on April 2, 2010, the plaintiffs moved
to disqualify this Court on the ground that they wanted to
obtain testimony from two attorneys at the law firm of O’Melveny
& Myers LLP. This Court recused itself from the Contract Action
pursuant to 28 U.S.C. § 455 on April 8, 2010. The case was then
reassigned to the Honorable Victor Marrero on April 9, 2010, and
reassigned once again to the Honorable Jed S. Rakoff on August
6, 2013. The ground for recusal asserted in the Contract Action
in 2010 no longer exists.
2
6
the appeal in the 2007 RICO Action for lack of appellate
jurisdiction.
Citing Chappelle v. Beacon Communications
Corp., 84 F.3d 652, 654 (2d Cir. 1996), for a second time,
the Second Circuit explained that “[o]ur precedent
generally ‘preclude[s] an appeal from a dismissal of some
of a plaintiff’s claims when the balance of his claims have
been dismissed without prejudice pursuant to a Rule 41(a)
dismissal of the action.’”
The plaintiffs’ motion for
reconsideration of the December 2015 Order was denied on
July 8, 2016, and the mandate issued on July 15, 2016.
The
Court of Appeals permitted the appeal in the Contract
Action to “proceed in due course.”
On August 2, 2016, the plaintiffs filed the present
motion within the RICO Action to vacate their voluntary
dismissal in 2008 under Rule 60(b) and for entry of partial
judgment under Rule 54(b).
The plaintiffs’ motion became
fully submitted on September 1.
DISCUSSION
The plaintiffs’ motion to vacate their 2008 voluntary
dismissal of the RICO Action is brought pursuant to Rule
60(b)(6).
Under Fed. R. Civ. P. 60(b), a court:
may relieve a party or its legal representative from a
final judgment, order, or proceeding for the following
reasons:
(1)
mistake, inadvertence, surprise, or excusable neglect;
7
(2) newly discovered evidence . . .
(3) fraud . . . , misrepresentation, or misconduct by an
opposing party;
(4) the judgment is void;
(5) the judgment has been satisfied, released or
discharged; it is based on an earlier judgment
that has been reversed or vacated; or applying it
prospectively is no longer equitable; or
(6) any other reason that justifies relief.
Rule 60(b) motions must generally be made “within a reasonable
time,” but motions made under paragraphs (1), (2), and (3) must
be made within one year after the entry of the judgment, order,
or date of the proceeding.
See Fed. R. Civ. P. 60(c).
Rule 60(b) is “generally not favored and is properly
granted only upon a showing of exceptional circumstances.”
Ins.
Co. of N. Am. v. Pub. Serv. Mut. Ins. Co., 609 F.3d 122, 131 (2d
Cir. 2010) (citation omitted).
It is intended to “strike[] a
balance between serving the ends of justice and preserving the
finality of judgments.”
Cir. 1986).
Nemaizer v. Baker, 793 F.2d 58, 61 (2d
Accordingly, while it should be “broadly construed
to do substantial justice, . . . final judgments should not be
lightly reopened.”
Id. (citation omitted).
Courts generally require that the evidence in support of
the Rule 60(b) motion be “highly convincing, that a party show
good cause for the failure to act sooner, and that no undue
8
hardship be imposed on other parties.”
Kotlicky v. U.S. Fid. &
Guar. Co., 817 F.2d 6, 9 (2d Cir. 1987) (citation omitted).
“The burden of proof is on the party seeking relief from
judgment.”
United States v. Int’l Bhd. of Teamsters, 247 F.3d
370, 391 (2d Cir. 2001).
I. Rule 60(b)(1)
The plaintiffs claim that none of the grounds enumerated in
Rules 60(b)(1)-(5) apply to this case.
The defendants contend,
however, and this Court agrees, that the plaintiffs’ motion may
properly be construed as a Rule 60(b)(1) motion, since the
plaintiffs erred repeatedly.
First, the plaintiffs erred by
filing an appeal after dismissing the entire RICO Action without
prejudice.
If they had wanted to appeal the dismissal of their
RICO claims, they should have either dismissed the breach of
contract claim with prejudice and then filed an appeal, or
litigated to judgment their breach of contract claim before
filing an appeal.
Second, having had their premature appeal
rejected by the Court of Appeals, the plaintiffs erred by not
seeking to file this Rule 60(b) motion to vacate within a year
of their voluntary dismissal of the RICO Action.
As discussed
previously, the RICO Action was voluntarily dismissed in March
2008, and the plaintiffs were advised in May 2008 that their
appeal presented serious questions of finality.
At that point,
the plaintiffs had ten months to file a Rule 60(b) motion to
9
correct their procedural error.
never filed.
A timely Rule 60(b) motion was
Finally, the plaintiffs erred by filing a new
action with just the breach-of-contract claim.3
Accordingly, the
plaintiffs’ motion is first analyzed under Rule 60(b)(1), and is
denied as untimely.
“Relief from counsel’s error is normally sought pursuant to
60(b)(1) on the theory that such error constitutes mistake,
inadvertence or excusable neglect.”
Nemaizer, 793 F.2d at 62.
It is well-settled, however, that a client will not be relieved
of the burdens of a final judgment entered against him “due to
the mistake or omission of his attorney by reason of the
latter’s ignorance of the law or other rules of the court . . .
.”
Id.
Moreover, “an attorney’s failure to evaluate carefully
The plaintiffs argue that it was not a “mistake” to omit the
non-contract claims from the 2009 Contract Action. Instead, the
plaintiffs argue that they were “prohibited from reasserting the
tort claims in the 2009 action” because a voluntary dismissal
does not nullify the preclusive effect of the Court’s dismissal
with prejudice of the tort claims in the RICO Action. The
plaintiffs are incorrect about the effect of a voluntary
dismissal, though. “A voluntary dismissal without prejudice
vitiates and annuls all prior proceedings and orders in the
case, and terminates jurisdiction over it for the reason that
the case has become moot.” U.S. D.I.D. Corp. v. Windstream
Commc’ns, Inc., 775 F.3d 128, 134 (2d Cir. 2014) (citation
omitted); see also PRC Harris, Inc. v. Boeing Co., 700 F.2d 894,
897 (2d Cir. 1983) (noting that had a judgment been denominated
“without prejudice” rather than “with prejudice,” the plaintiff
could legitimately have reasserted its allegations in another
jurisdiction); Rinieri v. News Syndicate Co., 385 F.2d 818, 821
(2d Cir. 1967) (“[A] dismissal without prejudice permits a new
action (assuming the statute of limitations has not run) without
regard to res judicata principles . . . .”).
3
10
the legal consequences of a chosen course of action provides no
basis for relief from a judgment.”
Id.
This is because “an
attorney’s actions, whether arising from neglect, carelessness
or inexperience, are attributable to the client, who has a duty
to protect his own interests by taking such legal steps as are
necessary.”
Id. at 62-63 (citing Ackermann v. United States,
340 U.S. 193, 197-98 (1950)).
Put simply, “a person who selects
counsel cannot thereafter avoid the consequences of the agent’s
acts or omissions.”
Id. at 62.
“To rule otherwise would empty
the finality of judgments rule of meaning.”
Id. at 63.
Ritchie’s motion, analyzed under Rule 60(b)(1), is timebarred.
See Fed. R. Civ. P. 60(c)(1) (providing that a motion
under Rule 60(b)(1) must be made “no more than a year after the
entry of the judgment or order or the date of the proceeding”).
This one-year limitations period is “absolute.”
Warren v.
Garvin, 219 F.3d 111, 114 (2d Cir. 2000) (citation omitted).
The plaintiffs filed their notice of voluntary dismissal
pursuant to Rule 41(a)(1)(A)(i) on March 17, 2008, and the Court
so ordered the dismissal the same day.
elapsed since the order was entered.
Over eight years have
As such, the plaintiffs’
Rule 60(b)(1) motion is denied as untimely.
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II. Rule 60(b)(6)
In an attempt to circumvent the one-year bar, Ritchie casts
its Rule 60(b)(1) as a motion under Rule 60(b)(6), which need
only be filed “within a reasonable time.”
60(c).
See Fed. R. Civ. P.
But even if it was not a “mistake” within the scope of
Rule 60(b)(1) to dismiss the RICO Action without prejudice and
omit the non-contract claims from the Contract Action, the
plaintiffs’ motion would still be denied under the exacting
standards of Rule 60(b)(6).
Moreover, the plaintiffs’ Rule
60(b)(6) motion was not filed “within a reasonable time” as
required by Rule 60(c)(1).
Rule 60(b)(6) states that relief may be granted for “any
other reason justifying relief from the operation of the
judgment.”
Fed. R. Civ. P. 60(b)(6).
While it represents a
“grand reservoir of equitable power to do justice in a
particular case . . . that reservoir is not bottomless.”
Stevens v. Miller, 676 F.3d 62, 67 (2d Cir. 2012) (citation
omitted).
Accordingly, it is “properly invoked only when there
are extraordinary circumstances justifying relief, when the
judgment may work an extreme and undue hardship, and when the
asserted grounds for relief are not recognized in clauses (1)(5) of the Rule.”
Nemaizer, 793 F.2d at 63 (citation omitted);
see also Rinieri v. News Syndicate Co., 385 F.2d 818, 822 (2d
Cir. 1967) (referring to the scope of Rule 60(b)(6) as
12
“extremely meagre”).
Moreover, to demonstrate extraordinary
circumstances, the moving party must show that it was “faultless
in the delay.”
Pioneer Inv. Servs. Co. v. Brunswick Assocs.
Ltd. P’ship, 507 U.S. 380, 393 (1993).
Rule 60(b)(1) and Rule 60(b)(6) are “mutually exclusive,
such that any conduct which generally falls under the former
cannot stand as a ground for relief under the latter.”
676 F.3d at 67 (citation omitted).
Stevens,
Thus, “[w]here a party’s
Rule 60(b) motion is premised on grounds fairly classified as
mistake, inadvertence, or neglect, relief under Rule 60(b)(6) is
foreclosed.”
Id.
Ignorance of the law or the failure to appreciate the
consequences of the rules governing dismissals is “an
insufficient basis for relief from a judgment pursuant to Rule
60[(b)(6)].”
PRC Harris, 700 F.2d at 897 (denying Rule 60(b)(6)
relief where a party failed to understand that, unless
specifically stated otherwise, a dismissal for failure to comply
with the statute of limitations operates as an adjudication on
the merits under Rule 41(b)).
Indeed, “to be extraordinary
circumstances for purposes of Rule 60(b)(6), a lawyer’s failures
must be so egregious and profound that they amount to the
abandonment of the client’s case altogether, either through
physical disappearance . . . or constructive disappearance.”
Harris v. United States, 367 F.3d 74, 81 (2d Cir. 2004)
13
(citation omitted); cf. United States v. Erdoss, 440 F.2d 1221,
1223 (2d Cir. 1971) (“Generally a party who makes an informed
choice will not be relieved of the consequences when it
subsequently develops that the choice was unfortunate.”
(citation omitted)).
Here, the plaintiffs voluntarily dismissed the entire RICO
Action before appealing the Court’s 2007 and 2008 Opinions.
Once this Court expressed its reluctance to grant Rule 54(b)
certification, the plaintiffs had two options to obtain a final
judgment on the non-contract claims.
First, they could have
refiled all of their claims in a new action.
See Fed. R. Civ.
P. 41(a)(1)(B); see also Rinieri, 385 F.2d at 821 (“[A]
dismissal without prejudice permits a new action (assuming the
statute of limitations has not run) without regard to res
judicata principles . . . .”).
Alternatively, they could have
filed a motion under Rule 60(b)(1) to vacate their voluntary
dismissal, thereby enabling the plaintiffs to conclude their
prosecution of the contract claim and the Court to enter a final
judgment on all claims.
That the plaintiffs did not choose
either of these two options, thereby forfeiting an appeal of the
decisions dismissing the non-contract claims, does not rise to
the level of “extraordinary circumstances” or “extreme and undue
hardship” justifying relief under Rule 60(b)(6).
Just as
“ignorance of the law or other rules of the court” does not
14
constitute a basis for relief under Rule 60(b)(1), see Nemaizer,
793 F.2d at 62, failure to understand the consequences of a
voluntary dismissal without prejudice does not justify relief
under the more rigorous standards of Rule 60(b)(6).
Even if the plaintiffs’ procedural missteps -- which
resulted in a loss of the opportunity to appeal the dismissal of
the non-contract claims -- constituted an “extraordinary
circumstance” for purposes of Rule 60(b)(6), the plaintiffs’
motion would nevertheless be denied as untimely.
In considering
whether a Rule 60(b)(6) motion is timely, courts “must
scrutinize the particular circumstances of the case, and balance
the interest in finality with the reasons for delay.”
Harris, 700 F.2d at 897.
PRC
Here, the plaintiffs were advised as
early as May 2008 that an appeal cannot lie “from a dismissal of
some of a plaintiff’s claims when the balance of his claims have
been dismissed without prejudice pursuant to a Rule 41(a)
dismissal of the action.”
Chappelle, 84 F.3d at 654.
They
acknowledged as much in their July 2008 stipulation withdrawing
their appeals.
The plaintiffs contend that they were not aware that a
judgment resolving the contract claims was insufficient to
conclude the litigation until the Second Circuit’s dismissal of
its most recent appeals.
But it has long been the case that a
voluntary dismissal without prejudice “leaves the situation so
15
far as procedures therein are concerned the same as though the
suit had never been brought, thus vitiating and annulling all
prior proceedings and orders in the case.”
Oneida Indian Nation
of N.Y. State v. Oneida Cnty., 622 F.2d 624, 629 n.7 (2d Cir.
1980) (citing A.B. Dick Co. v. Marr, 197 F.2d 498, 502 (2d Cir.
1952)).
The plaintiffs have failed to demonstrate that they
were “faultless in the delay,” Pioneer Inv. Servs. Co., 507 U.S.
at 393, and therefore their motion under Rule 60(b)(6) is denied
as both meritless and untimely.
III. Rule 54(b)
Because the plaintiffs’ Rule 60(b) motion to vacate the
voluntary dismissal is denied, this Court does not have
jurisdiction over the action and therefore cannot grant a Rule
54(b) certification for the previously dismissed non-contract
claims.
See U.S. D.I.D. Corp., 775 F.3d at 134 (“A voluntary
dismissal without prejudice . . . terminates jurisdiction over
[the case] for the reason that the case has become moot.”
(citation omitted)).
16
CONCLUSION
The plaintiffs have failed to demonstrate that they are
entitled to relief under any provision of Rule 60(b).
For that
reason, the plaintiffs’ August 2, 2016 Rule 60(b) motion to
vacate their voluntary dismissal is denied, and their motion for
Rule 54(b) certification is denied for mootness.
Dated:
New York, New York
November 28, 2016
__________________________________
DENISE COTE
United States District Judge
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