Federal Land Bank of St. Louis v. Cupples Bros.

889 F.2d 764, 1989 WL 133640

• Court: Court of Appeals for the Eighth Circuit
• Decided: November 8, 1989
• Docket: No. 89-1491
• Status: Published

Opinions

MAGILL, Circuit Judge.

The Cupples Brothers (Cupples), an Arkansas farming partnership, appeals from the district court’s¹ order denying its motion to restrain the sale of farmland under a foreclosure judgment entered in favor of the Federal Land Bank of St. Louis (FLB). The motion alleged that injunctive relief was needed to protect Cupples’ rights under the Agricultural Credit Act of 1987 (the Act).² The district court denied the motion, holding that (1) the Act is inapplicable to a loan that merged into a foreclosure judgment prior to the Act’s effective date, and (2) the motion was untimely under Fed.R. Civ.P. 60(b). We affirm.

I.

Cupples executed promissory notes in favor of FLB in 1974. Two mortgages secured the notes. After Cupples defaulted, FLB brought a foreclosure action on February 4, 1986. The case was set for trial on two different occasions. The district court continued the first trial date to permit further motions to be filed. On the morning of the second scheduled trial, Cup-ples filed another motion, in which it took issue with previous orders of the district court. Although distressed by this late filing, the district court again continued the trial. The district court entered summary judgment for FLB on October 21,1987, and a judgment and decree of foreclosure on December 29, 1987. The Act became effective on January 6, 1988. On January 28, 1988, Cupples filed a notice of appeal from the judgment, and a motion to stay the scheduled foreclosure sale was granted by the district court on April 25, 1988. This court affirmed the foreclosure judgment on January 3, 1989. Federal Land Bank of St. Louis v. Cupples Bros., 871 F.2d 1092 (8th Cir.1989) (per curiam). On February 6, 1989, FLB filed a second notice of marshal’s sale, and a foreclosure sale was scheduled for March 28, 1989.

On March 16, 1989, Cupples filed a motion in the district court entitled “Motion for Temporary Restraining Order for Failure to Follow Statutory Requirements.” The motion sought injunctive relief to prevent the foreclosure sale on the ground that Cupples has restructuring rights under the Act because its indebtedness to FLB is a “distressed loan.” The district court denied the motion, holding that the Act is inapplicable because the loan merged into the foreclosure judgment under Arkansas law and therefore ceased to exist prior to the Act’s effective date. The district court further held that Cupples’ motion was untimely under Rule 60(b) because it was not made within a reasonable time. The appeal to this court followed.³

II.

The district court found that Rule 60(b) was the only conceivable jurisdictional basis for Cupples’ motion.⁴ On appeal, Cupples states that its motion was made pursuant to subdivisions (b)(5)-(6) of Rule 60. As with all Rule 60(b) motions, motions under either of these subdivisions must be made within a reasonable time after entry of the judgment from which relief is sought, but they are not subject to the additional one-year time limit placed on motions under subdivisions (b)(l)-(3).

The district court included the time during which Cupples’ appeal from the foreclosure judgment was pending in calculating how long the motion was delayed. Cupples argues that this time cannot be counted against it because the district court had no jurisdiction to entertain a Rule 60(b) motion while the appeal was pending. This is clearly incorrect.

[I]n such a situation the district court has jurisdiction to consider the motion and if it finds the motion to be without merit to enter an order denying the motion, from which order an appeal may be taken.... If, on the other hand, the district court decides that the motion should be granted, counsel for the movant should request the court of appeals to remand the case so that a proper order can be entered.

Pioneer Ins. Co. v. Gelt, 558 F.2d 1303, 1312 (8th Cir.1977). It is well established that the pendency of an appeal does not toll the one-year maximum period for filing motions under Rule 60(b)(1)-(3). See, e.g., Hancock Indus. v. Schaeffer, 811 F.2d 225, 239 (3d Cir.1987); Egger v. Phillips, 710 F.2d 292, 329 (7th Cir.), cert. denied, 464 U.S. 918, 104 S.Ct. 284, 78 L.Ed.2d 262 (1983); Carr v. District of Columbia, 543 F.2d 917, 925-26 (D.C.Cir.1976); Transit Casualty Co. v. Security Trust Co., 441 F.2d 788, 791 (5th Cir.), cert. denied, 404 U.S. 883, 92 S.Ct. 211, 30 L.Ed.2d 164 (1971); Corn v. Guam Coral Co., 318 F.2d , 629 n. 13 (9th Cir.1963). The reason behind this principle is that such motions “can be made even though an appeal has been taken and is pending.” Transit Casualty, 441 F.2d at 791. This reasoning applies with equal force to motions under Rule 60(b)(5) — (6), and nothing in the case law suggests otherwise. See Harris v. Union Elec. Co., 846 F.2d 482, 484-85 (8th Cir.1988) (including time during which appeal pending in calculating delay in filing of Rule 60(b)(5)-(6) motion). Accordingly, the question in this case is whether the year and eleven weeks from entry of judgment to the filing of the Cupples’ motion was a reasonable time for purposes of Rule 60(b).

What constitutes a reasonable time under Rule 60(b) depends on the particular facts of the case in question. Harris, 846 F.2d at 484. Because it involves an assessment of all the attendant facts and circumstances, the district court’s determination as to whether a motion was made within a reasonable time is reviewed only for abuse of discretion. Id. at 485; 7 J. Moore & J. Lucas, Moore’s Federal Practice 11 60.19, 148-49 (2d ed. 1987). In Harris, we declined to find that the district court abused its discretion in entertaining a Rule 60(b)(5)-(6) motion made after exhaustion of the appeals process and almost-twenty-three months after judgment was entered.⁵ Harris, however, differs from the instant case in one critical respect. There was no indication in Harris that the motion was filed for the purpose of delaying implementation of the underlying judgment. The motion sought credit for partial satisfaction of the judgment and was made “[sjimultaneously” with full payment of the judgment after the close of the appeals process. Harris, 846 F.2d at 484. By contrast, Cupples waited an additional ten weeks after the foreclosure judgment was affirmed and filed its motion only twelve days before the scheduled sale date. Cupples has not provided an adequate explanation for this delay. Moreover, other than its incorrect view of the district court’s jurisdiction, Cupples has not explained its failure to bring the motion in the twelve months between the Act’s effective date, when the basis for the motion arose, and affirmance of the foreclosure judgment. In finding the motion untimely, the district court concluded that Cupples “continues to file motions for the purpose of delay.” The record supports this appraisal of the situation. Under these circumstances, we are not prepared to say that the district court abused its discretion in finding Cupples’ Rule 60(b) motion was not made within a reasonable time.

III.

Even if Cupples’ motion were deemed timely, it provides no basis for disturbing the foreclosure judgment or preventing the sale. An appeal from an order denying a Rule 60(b) motion raises for review only the propriety of the denial, not the merits of the underlying judgment. See, e.g., Mohammed v. Sullivan, 866 F.2d 258, 260 (8th Cir.1989). The denial here was proper. Under Arkansas law, the promissory notes and mortgages in favor of FLB merged into the foreclosure judgment and ceased to exist. See Steelman v. Planters Prod. Credit Ass’n, 285 Ark. 217, 685 S.W.2d 800 (1985). Because only the judgment and no loan existed as of the Act’s effective date, the district court was correct in holding that Cupples has no loan restructuring rights under the Act.

The district court relied on Griffin v. Federal Land Bank of Wichita, 708 F.Supp. 313 (D.Kan.1989), in reaching this conclusion. In Griffin, a foreclosure sale took place after the Act’s effective date on a judgment entered before the effective date. The court determined that “because of the merger doctrine in Kansas, once the judgment of foreclosure was entered there was no longer a distressed loan under the terms of [12 U.S.C.] § 2202a(b)(3).”⁶ Id. at 317. After a lengthy analysis of the Act’s provisions and legislative history, the court held that the borrowers had no restructuring rights which were denied by the foreclosure sale. Id. at 319.

We adopt Griffin’s thorough and well-reasoned analysis. The Act entitles borrowers to restructure “distressed loans” if the cost of restructuring is less than or equal to the potential cost of foreclosure. 12 U.S.C. § 2202a(e). As used in the Act, the term “loan” refers to “the contractual credit arrangement between the borrower and lender,” not to “a general indebtedness embodied in a judgment.” Griffin, 708 F.Supp. at 317. The Act’s provisions and legislative history do not demonstrate a congressional intent to impose a moratorium on all foreclosure sales where the underlying judgment was entered prior to the Act’s effective date. See id. at 318-19. Cupples relies on Harper v. Federal Land Bank of Spokane, 692 F.Supp. 1244, 1249 (D.Or.1988), rev’d on other grounds, 878 F.2d 1172 (9th Cir.1989), which found that “Congress intended a complete moratorium on all foreclosure proceedings.”⁷ The perfunctory and incomplete analysis employed in that case is unpersuasive.⁸ We conclude that the Act does not operate to prohibit a foreclosure sale under the circumstances of this case.

IV.

In sum, the district court did not abuse its discretion in finding Cupples’ Rule 60(b) motion untimely. Even if the motion were considered timely, the district court properly denied it on the ground that Cupples has no restructuring rights under the Agricultural Credit Act of 1987. Accordingly, the order of the district court is affirmed.

1 . The Honorable Elsijane T. Roy, United States District Judge for the Eastern District of Arkansas.

2 . 12 U.S.C. §§ 2001 to 2279aa-14 (1988).

3 . We granted Cupples’ motion for a stay of the foreclosure sale pending appeal and Cupples posted the required bond. Although Cupples’ motion was styled a "Motion for Temporary Restraining Order,” we concluded that we have jurisdiction over this appeal because (1) the motion in reality was a request for a preliminary injunction, and (2) the district court’s denial of the motion was the functional equivalent of a final judgment. Federal Land Bank of St. Louis v. Cupples Bros., No. 89-1491 (8th Cir. May 24, 1989).

4 . Rule 60(b) provides in relevant part as follows:

On motion and upon such terms as are just, the court may relieve a party or a party’s legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time, and for reasons (1), (2), and (3) not more than one year after the judgment, order, or proceeding was entered or taken. A motion under this subdivision (b) does not affect the finality of a judgment or suspend its operation.

5 . We noted, though, that "a better approach” may have been for the movant to file the motion prior to appealing the judgment. Harris, 846 F.2d at 484.

6 . Section 2202a(b)(3) reads as follows:

Limitation on Foreclosure. — No qualified lender may foreclose or continue any foreclosure proceeding with respect to any distressed loan before the lender has completed any pending consideration of the loan for restructuring under this section.

7 . The Ninth Circuit reversed the district court’s decision in Harper on the ground that the Act does not contain an implied private right of action to enforce its provisions. Harper v. Federal Land Bank of Spokane, 878 F.2d 1172, 1174-77 (9th Cir.1989). It did not reach the question of the Act's applicability where a foreclosure judgment has been entered before its effective date. Id. at 1174. An Eighth Circuit panel recently rejected the Ninth Circuit’s decision in Harper, holding instead that "farmer-borrowers have a private right of action to enforce the borrowers’ rights provisions of the Act.” Zajac v. Federal Land Bank of St. Paul, 887 F.2d 844, 856 (8th Cir.1989) (over dissent by Judge Fagg who would follow Harper). Zajac is not otherwise relevant here because it does not address the Act’s applicability under the circumstances of this case. See id. at 846 (state court issued decision in favor of bank three weeks before Act’s effective date, but bank “delayed entry of its state court foreclosure judgment to afford the Zajacs an opportunity to restructure their loan” under the Act; foreclosure judgment then entered in May 1988 after bank denied application for restructuring).

8 . Cupples also cites In re Dilsaver, 86 B.R. 1010 (Bankr.D.Neb.1988), aff’d, 101 B.R. 604 (D.Neb.1989). Dilsaver simply held that "the protections afforded by the Act are ... available to borrowers who filed bankruptcy petitions prior to the effective date of the Act.” Id. at 1012. The case did not involve a foreclosure judgment entered prior to the Act’s effective date and therefore is of little relevance here.