Resolution v. Gold

• Court: Court of Appeals for the First Circuit
• Decided: July 28, 1994
• Docket: 94-1080
• Status: Published

Opinion

USCA1 Opinion

UNITED STATES COURT OF APPEALS
                                FOR THE FIRST CIRCUIT
                                                     
                                 ____________________
        No. 94-1080

                    RESOLUTION TRUST CORPORATION, AS RECEIVER FOR
                              COMFED SAVINGS BANK, F.A.,

                                 Plaintiff, Appellee,

                                          v.

                       HAROLD GOLD AND GRAPHICS LEASING CORP.,

                               Defendants, Appellants.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

                          FOR THE DISTRICT OF MASSACHUSETTS

                   [Hon. Edward F. Harrington, U.S. District Judge]
                                               ___________________

____________________

                                Breyer,* Chief Judge,
                                         ___________

                           Campbell, Senior Circuit Judge,
                                     ____________________

                               and Cyr, Circuit Judge.
                                        _____________

____________________

Leonard M. Singer, with whom Heidlage  & Reece, P.C. was on brief
             _________________            _______________________
        for appellants.
             Michael  J. Engelberg,  with whom  Ronald M.  Jacobs and  Nutter,
             _____________________              _________________      _______
        McClennen & Fish were on brief for appellee.
        ________________

____________________

                                    July 27, 1994
                                                     
                                ____________________

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             *Chief Judge Stephen  Breyer heard oral argument in  this matter,
        but  did not participate in the drafting  or the issuance of the panel
        opinion.   The remaining  two panelists  therefore issue  this opinion
        pursuant to 28 U.S.C.   46(d).

CYR, Circuit  Judge.  Resolution Trust  Company (RTC or
                    CYR, Circuit  Judge
                         ______________

          appellee), as receiver for  ComFed Savings Bank (ComFed), brought

          the  present action on July 13, 1993, to recover monies allegedly

          due  from  defendants-appellants  Harold  M.  Gold  and  Graphics

          Leasing  Corporation  (collectively,  "Gold")  under  their joint

          guaranty of  loans ComFed made  to First Equity  Funding Corpora-

          tion.   Gold did not answer until  RTC filed its motion for entry

          of  default.  The  late answer admitted  the guaranty, contesting

          only  the  amount claimed  by RTC.    It asserted  no affirmative
                     ______

          defenses.  

                    On September 20, RTC moved for summary judgment.  After

          failing  to  file  timely  opposition,   see  D.  Mass.  Loc.  R.
                                                   ___

          7.1(b)(2), Gold requested  more time for  discovery, see Fed.  R.
                                                               ___

          Civ.  P. 56(f),  and, on  October 22,  sought leave to  amend its

          answer  to interpose four affirmative defenses,  see Fed. R. Civ.
                                                           ___

          P. 15(a).  The district court thereafter entered summary judgment

          for  RTC and summarily denied Gold's belated request for leave to

          amend its  answer, without ruling  on the request  for additional

          discovery, and Gold appealed.  We affirm. 

I
                                          I

                                      DISCUSSION
                                      DISCUSSION
                                      __________

Leave to Amend
          Leave to Amend
          ______________

2

We review denials of  leave to amend under Rule  15 for

          abuse  of discretion,  deferring to  the  district court  for any

          adequate  reason apparent  from the  record.   Demars v.  General
                                                         ______     _______

          Dynamics Corp., 779 F.2d 95, 99 (1st  Cir. 1985); Farkas v. Texas
          ______________                                    ______    _____

          Instruments,  Inc., 429  F.2d  849, 851  (1st  Cir. 1970),  cert.
          __________________                                          ____

          denied, 401  U.S. 974 (1971).   Leave to  amend is to  be "freely
          ______

          given," Fed. R. Civ. P. 15(a), unless it  would be futile, North-
                                                                     ______

          east  Fed. Credit  Union v.  Neves, 837 F.2d  531, 536  (1st Cir.
          ________________________     _____

          1988),  or reward, inter alia, undue or intended delay, see Foman
                             _____ ____                           ___ _____

          v. Davis, 371 U.S. 178, 182 (1962).  As the Rule 15 motion in the
             _____

          present  case was  not filed  until after  RTC moved  for summary

          judgment, Gold was required to  demonstrate to the district court

          that the  proposed amendments were supported  by "substantial and

          convincing evidence."  Torres-Matos  v. St. Lawrence Garment Co.,
                                 ____________     _________________________

          Inc., 901  F.2d 1144, 1146  (1st Cir. 1990)  (citations omitted).
          ____

          There was no such showing.

                    The  first claim Gold  advances on  appeal is  that RTC

          waived its  contractual right to immediate payment on default, an

          affirmative defense Gold sought to interpose  in its tardy motion

          to amend.  The proffered defense is frivolous.  

                    The ComFed demand note provides that, upon default, the
                                                          ____ _______

          entire loan balance becomes  "immediately due and payable without

          notice or demand  of any kind."  Gold concedes  that no principal

          or interest  payments were ever  made after  September 15,  1991.

          The  note further provides that failure to pay any amount, within

                                          3

ten  days after it is due, constitutes  an event of default.  The

          waiver claim is based  on the belated affidavit of  Jeffery Stitt

             a Gold consultant    submitted with Gold's untimely motion for

          further discovery  under Rule 56(f).   Stitt's conclusory charac-

          terizations  of  alleged  parol  discussions with  anonymous  RTC

          employees  at unidentified  times  fall far  short of  "clear and

          convincing evidence,"  id., of "decisive  and unequivocal conduct
                                 ___

          indicating  that  [RTC] would  not  insist  that the  contractual

          provision at  issue be performed,"  Brennan v. Carvel  Corp., 929
                                              _______    _____________

          F.2d 801, 810 (1st Cir. 1991) (citations omitted) (applying Mass.

          law).   Indeed, the Stitt affidavit does not constitute competent

          evidence as  required by  Fed. R.  Civ. P. 56(e).   See  Lopez v.
                                                              ___  _____

          Corporacion Azucarera de Puerto Rico, 938 F.2d 1510, 1515-16 (1st
          ____________________________________

          Cir. 1991) (Rule 56(e) requires  that affidavits filed in opposi-

          tion to summary judgment be based on competent evidence).  

                    As  its  "Second  Affirmative  Defense,"  the  proposed

          amended  answer simply alleged  that "The Complaint  is barred by

          the doctrine  of estoppel."   Gold presented  neither explication

          nor  argumentation in support of  the estoppel claim  in the dis-

          trict court.  McCoy v. Massachusetts Inst. of Tech., 950 F.2d 13,
                        _____    ____________________________

          22 (1st Cir. 1991) ("theories not raised squarely in the district

          court cannot be surfaced  for the first time on  appeal."), cert.
                                                                      ____

          denied,  112 S.  Ct.  1939 (1992).   Nor  does  Gold discuss  the
          ______

          estoppel claim  on appeal.  Thus, even  if the estoppel claim had

          been pleaded and preserved below, it would be deemed to have been

                                          4

waived on appeal.  See, e.g., Rhode Island Hosp. Trust Nat'l Bank
                             ___  ____  ___________________________________

          v. Howard Communications Corp.,  980 F.2d 823, 828 n.8  (1st Cir.
             ___________________________

          1992).  

                    The  third  affirmative defense,  predicated  on Gold's

          alleged  entitlement  to a  one-year  grace  period to  cure  the

          default, fails due  to the  absence of competent  evidence of  an

          enforceable waiver and the fact that the default was never cured.

          See supra pp. 3-4.
          ___ _____

                    Finally, the proposed amended  answer asserts     based

          exclusively on "information and belief"     that ComFed failed to

          require the borrower to  submit appraisals substantiating the 75%

          loan-to-collateral-value  ratio required  under  the note,  which

          allegedly placed Gold at undue risk under its unconditional  loan

          guaranty.   Not only does  Gold point to no evidentiary basis for

          its "information and belief," it fails even to intimate that such

          evidence  exists.    Moreover,  Gold's attempt  at  delaying  the

          inevitable adverse judgment would have failed for  lack of compe-

          tent evidence even if interposed in a timely manner.  See Fed. R.
                                                                ___

          Civ.  P. 56(e); Mesnick v.  General Elec. Co.,  950 F.2d 816, 822
                          _______     _________________

          (1st  Cir. 1991) (where nonmovant has ultimate burden of proof on

          matter  at issue, summary judgment  motion must be  met by "defi-

          nite, competent evidence"), cert. denied, 112 S. Ct. 2965 (1992).
                                      ____  ______

          Similarly, Gold's  perfunctory assertion  falls far short  of the

          "convincing  evidence"  required  to  establish  a  "substantial"

          defense.    See Torres-Matos,  901 F.2d  at  1146.   Lastly, this
                      ___ ____________

                                          5

"defense" is precluded by the express terms of the loan guaranty:

          "[Gold]  hereby  waives any  other act  or  omission of  the Bank

          (except acts or omissions  in bad faith) which changes  the scope

          of [Gold's] risk."  Gold has not alleged bad faith.  

                    In sum, the motion for leave to amend, proffered at the

          eleventh hour to fend off summary judgment, proposed four patent-

          ly futile affirmative defenses fully meriting summary  rejection.

          Jackson v.  Salon, 614  F.2d 15,  17  (1st Cir.  1980); see  also
          _______     _____                                       ___  ____

          Neves, 837 F.2d at  536 ("Federal courts need not  tiptoe through
          _____

          empty formalities to reach foreordained results.").

Summary Judgment
          Summary Judgment
          ________________

                    Gold failed to oppose RTC's motion for summary judgment

          within  the fourteen-day period prescribed by local rule.  See D.
                                                                     ___

          Mass. Loc. R.  7.1(b)(2).  Of course, the failure  to file timely

          opposition did  not necessarily entitle RTC  to summary judgment.

          Lopez, 938  F.2d at 1517; Mendez v. Banco Popular de Puerto Rico,
          _____                     ______    ____________________________

          900 F.2d 4, 7 (1st Cir. 1990).  Summary judgment  was proper only

          if  the record,  viewed  in the  light  most favorable  to  Gold,

          revealed no  trialworthy  issue  of  material fact  and  RTC  was
                                                              ___  ___  ___

          entitled to judgment as a matter of law.  Velez-Gomez v. SMA Life
          ________ __ ________ __ _ ______ __ ___   ___________    ________

          Assur. Co., 8 F.3d 873,  875 (1st Cir. 1993); Lopez, 938  F.2d at
          __________                                    _____

          1517.   On the other  hand, Gold's untimely  submissions need not

          have been considered  by the  district court  in determining  the

6

appropriateness of summary judgment.  See Mendez, 900 F.2d at 7-8
                                                ___ ______

          (citing cases).

                    RTC proffered  competent evidence that Gold  was liable

          in  the amount  claimed under  its loan  guaranty.   Moreover, an

          examination of all  of Gold's  submissions    timely  as well  as

          untimely     has not disclosed  a trialworthy  issue of  material

          fact relating either to the amount of the  indebtedness or to any

          affirmative defense  belatedly asserted  in  the district  court.

          There  is no basis for vacating summary judgment in these circum-

          stances.1

"Just Damages" Under Rule 38
          "Just Damages" Under Rule 38
           ___________________________

____________________

               1Nevertheless, Gold frivolously contends  on appeal that the
          district  court committed  reversible  error in  granting summary
          judgment  without  first ruling  on  Gold's  late and  groundless
          request for further discovery  time, pursuant to Fed. R.  Civ. P.
          56(f).   The request was predicated on the unsubstantiated specu-
          lation that it is  logically possible that the amount  owed under
                                       ________
          the loan  guaranty is  different than  the amount  established by
                                                             ___________
          RTC.  Since Gold  does not even hint at any discoverable evidence
                                                      ____________ ________
          to substantiate this speculation,  it has presented "no plausible
          basis for asserting a  belief that 'specified' discoverable facts
          probably existed."  Mattoon v. City of Pittsfield, 980 F.2d  1, 8
                              _______    __________________
          (1st  Cir.  1992) (citing  Paterson-Leitch  Co.  v. Massachusetts
                                     ____________________     _____________
          Munic. Wholesale Elec. Co.,  840 F.2d 985, 988 (1st  Cir. 1988)).
          __________________________
          Further,  Gold made no attempt whatever to demonstrate the requi-
          site good  cause for  failing to  conduct the discovery  earlier.
          Id.  It is all too clear, given Gold's  dilatory tactics through-
          ___
          out  this litigation, that the Rule 56(f) initiative was simply a
          frivolous,  last-ditch effort  to stave off  final judgment.   We
          find no  abuse of  discretion in  the  district court's  implicit
          denial of the Rule 56(f) motion  in these circumstances.  See id.
                                                                    ___ ___
          (finding  insufficient  a  Rule  56(f)  affidavit  which  "merely
          conjecture[d] that  something might be discovered  but provide[d]
          no  realistic basis  for believing  that further  discovery would
          disclose evidence" of material facts).

                                          7

Finally, RTC  requests  an  award  of  "just  damages,"

          including attorney  fees and  double costs, pursuant  to Fed.  R.

          App. P. 38.  Even though  Gold failed to interpose opposition  to

          an  award of just damages, we have discussed its frivolous appel-

          late claims  at undeserved length  in order to  demonstrate their

          dilatory aim  and amenability to  sanction.   Moreover, Gold  has

          offered no  other plausible  explanation, let alone  a justifica-

          tion,  for its dilatory  litigation tactics  below or  on appeal.

          Accordingly,  a reasonable  attorney fee  award and  double costs

          shall  be  imposed  against  Gold for  this  frivolous,  dilatory

          appeal.   See Cowdell v. Cambridge  Mut. Ins. Co.,  808 F.2d 160,
                    ___ _______    ________________________

          163 (1st  Cir. 1986) (pursuant  to Fed.  R. App. P.  38, awarding

          double  costs  and attorney  fee  as just  damages  for frivolous

          appeal). 

                    The district court judgment  is affirmed.  Double costs
                    The district court judgment  is affirmed.  Double costs
                    ________________________________________   ____________

          and  a reasonable attorney fee  are awarded to appellee, pursuant
          and  a reasonable attorney fee  are awarded to appellee, pursuant
          _________________________________________________________________

          to Fed.  R. App. P.  38, in  an amount  to be  determined by  the
          to Fed.  R. App. P.  38, in  an amount  to be  determined by  the
          _________________________________________________________________

          court.   Appellee is allowed  twenty days within  which to submit
          court.   Appellee is allowed  twenty days within  which to submit
          _____    ________________________________________________________

          its  bill of costs and  an application for  a reasonable attorney
          its  bill of costs and  an application for  a reasonable attorney
          _________________________________________________________________

          fee  award relating  to this  appeal.   A copy  thereof is  to be
          fee  award relating  to this  appeal.   A copy  thereof is  to be
          ____________________________________    _________________________

          served  upon appellant's  counsel.   Appellant  shall be  allowed
          served  upon appellant's  counsel.   Appellant  shall be  allowed
          _________________________________    ____________________________

          twenty days within which to file written objection to the amounts
          twenty days within which to file written objection to the amounts
          _________________________________________________________________

          requested by appellee.  SO ORDERED.
          requested by appellee.  SO ORDERED.
          _____________________   __________

8