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In U.S. Bank, N.A. v. Milburn, 352 Ark. 144, 100 S.W.3d 674 (2003), this court indicated that a notice of appeal should be filed in order to appeal from the denial of a posttrial motion for reconsideration.
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01-1318/01-1008
Opinion delivered February 28, 2003
1. APPEAL ERROR — PARTIAL SUMMARY-JUDGMENT ORDER NOT FINAL ORDER — ARK. R. APP. P. — CIV. 2(b) NOT APPLICABLE. — Where appellant bank conceded that the partial summary-judgment order at issue was not a final order, Ark. R. App. P. — Civ. 2(b) (2002) was not applicable.
2. APPEAL ERROR — TIME FOR FILING NOTICE OF APPEAL FROM CLASS-CERTIFICATION ORDER NOT EXTENDED — DEEMED-DENIED RULE NOT APPLICABLE. — Where appellant bank's motion for reconsideration was not filed within ten days of the class-certification order as required by Ark. R. App. P. — Civ. 4(b), the supreme court concluded that, as to any appeal from the class-certification order, the time for filing a notice of appeal was not extended by the timely filing of any of the motions listed in Ark. R. App. P. — Civ. 4(b)(1), and the deemed-denied rule was not applicable.
3. APPEAL ERROR — NOTICE OF APPEAL — SUPREME COURT LACKED JURISDICTION TO ADDRESS ISSUE CONCERNING CLASS-CERTIFICATION ORDER. — The timely filing of a notice of appeal is jurisdictional; thus, the supreme court lacked jurisdiction to address appellant bank's point on appeal challenging the class-certification order.
4. APPEAL ERROR — ORDER PRESCRIBING NOTICE TO CLASS MEMBERS IS IMMEDIATELY APPEALABLE — MUST BE FILED WITHIN THIRTY DAYS FROM ENTRY OF ORDER. — An order prescribing notice to class members is fundamental to the further conduct of the action and, thus, is immediately appealable as a matter of right; such an interlocutory appeal must be filed within thirty days from entry of the order [Ark. R. App. P. — Civ. 4(a) (2002)].
5. APPEAL ERROR — APPEAL FROM ORDER APPROVING CLASS-ACTION NOTICE — NOT PROPERLY BEFORE SUPREME COURT. — Where the notice of appeal was filed outside the prescribed thirty-day deadline, appellant bank's appeal from the order approving the class-action notice was not properly before the supreme court.
6. APPEAL ERROR — UNTIMELY FILING OF RECORD — PROCEDURAL BAR TO APPEAL. — The untimely filing of the record procedurally bars the appellant from pursuing an appeal.
7. APPEAL ERROR — UNTIMELY FILING OF RECORD — APPELLANT BANK BARRED FROM PURSUING ISSUE REGARDING APPOINTMENT OF RECEIVER. — Where appellant bank failed to timely file the record, it was barred from pursuing the issue regarding the circuit court's appointment of a receiver.
8. APPEAL ERROR — FRIVOLOUS APPEAL — SANCTIONS. — If the supreme court on its own initiative determines that a sanction may be appropriate for violation of Ark. R. App. P. — Civ. 11, a show-cause order may be issued.
9. JUDGMENT — FINALITY — REQUIREMENTS. — For a judgment to be final, it must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject matter in controversy; a judgment or order is not final and appealable if the issue of damages remains to be decided.
10. APPEAL ERROR — FRIVOLOUS APPEAL — SHOW-CAUSE ORDER ISSUED. — Where it appeared from the record that appellant bank was arguing on appeal that the partial summary-judgment order was final, while at the same time arguing in the circuit court that no final order had been entered; where appellee, through her motion to dismiss the appeal, notified appellant bank that the appeal was not properly before the supreme court; and where appellant bank continued to prosecute the appeal, the supreme court concluded that sanctions might be appropriate; pursuant to Ark. R. App. P. — Civ. 11(d), the supreme court ordered appellant bank and its counsel to show cause in writing why a sanction should not be imposed against them.
Appeal from Greene Circuit Court; David Burnett, Judge; dismissed.
Rose Law Firm, by: Herbert C. Rule III, Garland J. Garrett, and Stephen N. Joiner, for appellant.
Joe Holifield; and McMath, Vehik, Drummond, Harrison Ledbetter, P.A., by: Mart Vehik, for appellee.
The instant matter comes to us as a set of interlocutory appeals by Appellant U.S. Bank, N.A., stemming from a Rule 23 class-action proceeding. In conjunction with this matter, a motion to dismiss U.S. Bank's appeal was filed in this court by Appellee Wilma Milburn. Because no appeal is properly before us, we must dismiss this set of interlocutory appeals, thereby rendering Milburn's motion to dismiss appeal moot.
Rosslare Funding, Inc., made loans to several individuals. Empire Funding Corporation bought the loans from Rosslare and pooled them together. Empire then transferred the pooled loans into trusts with U.S. Bank named as trustee. Empire sold interests in the pooled loan trusts to investors. U.S. Bank as trustee received and distributed the loan collections to the investors.
The loans Rosslare sold to Empire became the subject of a class-action lawsuit filed by Wilma Milburn in Greene County Circuit Court on August 20, 1998. The original complaint alleged usury, Truth in Lending Act (TILA)/Home Ownership and Equity Protection Act (HOEPA), and common-law fraud claims against several defendants including Rosslare and Empire. On September 21, 1998, the case was removed to federal court where it remained until April 2, 1999, when the case was remanded to state court. In late 1999 and early 2000, Milburn filed motions for class certification on the usury and fraud claims pursuant to Arkansas Rule of Civil Procedure 23. She also filed a motion for partial summary judgment on the usury claims contending that Arkansas law should apply to the loans. Empire responded with its own motion for summary judgment on the choice-of-law issue.
The other defendants are not pertinent to this appeal.
The federal court granted Milburn's motion to dismiss the TILA/HOEPA claims without prejudice.
On April 20, 2000, Milburn filed a third amended complaint that named additional defendants, including U.S. Bank, N.A., individually and as trustee for certain loan trusts created by Empire. Shortly thereafter, Empire filed for bankruptcy under Chapter 11 of the U.S. Bankruptcy Code. A hearing on the motions for class certification and summary judgment originally set for June 12, 2000, was postponed until June 8, 2001. In the interim, U.S. Bank filed responses to Milburn's class-certification and summary-judgment motions. At the June 8, 2001 hearing, U.S. Bank objected to the court hearing arguments on Milburn's summary-judgment motion because her motion was not filed against U.S. Bank. Both parties agreed that the summary-judgment motion regarding the choice of law was the "core issue" in the case and that it would be generally dispositive of the merits. The court proceeded to hear the arguments on the issues of class certification and summary judgment. Milburn argued that Arkansas law should apply and thus the loans originating with Rosslare were usurious, while U.S. Bank argued that California law should apply, thereby rendering the interest on the loans below the legal maximum. After the hearing, in an order entered on June 11, 2001, the circuit court certified the class pursuant to Rule 23 of the Arkansas Rules of Civil Procedure. Milburn then filed a motion for approval of the class-action notice on July 17, 2001.
Milburn's fourth amended complaint filed on February 27, 2001, identified one additional loan trust as a defendant.
Meanwhile, the circuit court had deferred ruling on Milburn's summary-judgment motion and allowed the parties to file additional briefs on the choice-of-law issue. After U.S. Bank and Milburn filed their respective briefs, the circuit judge sent a letter to counsel on July 30, 2001, advising them that "the court . . . hereby finds for the plaintiff in its Motion for Summary Judgment. It is the court's belief that Arkansas law should be applied in this case." Counsel for Milburn was directed to prepare the precedent for an order.
In opposing Milburn's motion, U.S. Bank requested the court to find that California law applies to the loans and U.S. Bank adopted all factual allegations and legal analysis set forth in Empire's earlier responses.
On that same day, the circuit judge signed an order approving the class-action notice, which order was filed on August 1, 2001. The notice advised each class member that the court would exclude the member from the class only if the member so requested within 20 days of the date of the notice. Subsequently, the notice was sent to each class member at his or her last known address in successive mailings on August 3, 2001, and August 9, 2001.
U.S. Bank had filed no response to Milburn's motion for approval of the class-action notice.
On August 23, 2001, which was twenty days after the first mailing of the class-action notice, the circuit court entered partial summary judgment in favor of Milburn. In its order, the court ruled that Arkansas law applied; and, thus, the mortgage loans were usurious. U.S. Bank's local counsel then filed a motion to be relieved as counsel, which the court granted on September 6, 2001. In the meantime, U.S. Bank had hired new counsel who filed a notice of appeal on September 4, 2001, designating an appeal from three separate orders: (1) the class-certification order; (2) the order approving the class-action notice; and (3) the order granting partial summary judgment. Also, on September 4, U.S. Bank filed a motion requesting reconsideration of the class-certification and partial summary-judgment orders. The motion asked the court to decertify the class, or in the alternative, to set aside the summary judgment, because Milburn obtained partial summary judgment on the merits of the issues in the case prior to completion of notice to the class.
On September 7, 2001, an order was entered appointing the Circuit Clerk of Greene County to act as a receiver, and directing U.S. Bank to pay all principal and interest received from the members of the class into the registry of the court during the pendency of this action. Milburn objected to U.S. Bank's September 4 notice of appeal and on September 17, 2001, filed a motion to dismiss the appeal for lack of jurisdiction. We deferred ruling on the motion until the submission of this appeal. U.S. Bank filed another notice of appeal on October 9, 2001, designating an appeal from the order appointing a receiver. See Ark. R. App. P. — Civ. 2(a)(7) (2002). The record was subsequently filed in this court on December 3, 2001.
In its original brief filed on January 22, 2002, U.S. Bank raised four separate points on appeal and requested oral argument. However, the fourth point, which challenged the circuit court's entry of partial summary judgment, was abandoned in the reply brief filed by U.S. Bank on April 16, 2002. U.S. Bank has therefore recognized that the partial-summary-judgment order is not a final order, and, thus, not properly appealable.
At oral argument, U.S. Bank's counsel conceded that the notice of appeal was untimely with respect to the class-certification order and the order approving class notice. Moreover, counsel for the bank admitted that at the time the orders were entered, there was no fundamental error. Nonetheless, while recognizing in its reply brief and at oral argument that the partial summary-judgment order was not a final appealable order, U.S. Bank contends that the entry of partial summary judgment on August 23 "impacted" the prior orders, thereby subsuming or bootstrapping those orders into the partial summary-judgment order. Under the so-called "impact theory" proposed by U.S. Bank, an order may become appealable at a later time when subsequent facts develop relating to that order. Thus, U.S. Bank suggests that the class-certification and class-action notice orders became appealable on August 23 when Milburn's motion for partial summary judgment was granted and entered of record. In other words, August 23 became the date from which to calculate the deadline for filing a timely notice of appeal with respect to the earlier class-certification and class-action notice orders. We decline to adopt the "impact theory" suggested by U.S. Bank.
The jurisdiction of this court depends upon the calculation of filing deadlines pursuant to the Arkansas Rules of Appellate Procedure-Civil. The relevant dates in this case are as follows:
June 11, 2001 Class-certification order entered
August 1, 2001 Order approving class-action notice entered
August 23, 2001 Partial-summary-judgment order entered
September 4, 2001 U.S. Bank filed its notice of appeal from the following orders: (1) class-certification order; (2) order approving class-action notice; and (3) order granting partial summary judgment.
September 4, 2001 U.S. Bank filed its motion for reconsideration of class certification and partial summary judgment
September 7, 2001 Order appointing receivership entered
October 9, 2001 U.S. Bank filed its notice of appeal from the order appointing receiver
October 9, 2001 U.S. Bank filed its motion to reconsider order appointing receiver
December 3, 2001 Record filed with the Supreme Court Clerk
Class-Certification Order
U.S. Bank's notice of appeal filed on September 4, 2001, designated the original class-certification order as an appealable order. That order was entered on June 4, 2001. Pursuant to Rule 2(a)(9) of the Arkansas Rule of Appellate Procedure — Civil, the class-certification order was immediately appealable. U.S. Bank therefore had thirty days from the entry of the order on June 11, 2001, to file a timely notice of appeal. See Ark. R. App. P. — Civ. 4(a) (2002). The notice of appeal filed on September 4, 2001, or almost three months after entry of the order, was clearly outside the prescribed thirty-day period. [1] Initially, in response to Milburn's motion to dismiss appeal, U.S. Bank argued that the class-certification order was an intermediate order to the August 23 partial summary-judgment order. Rule 2(b) of the Arkansas Rules of Appellate Procedure — Civil provides that "[a]n appeal from any final order also brings up for review any intermediate order involving the merits and necessarily affecting the judgment." See Ark. R. App. P. — Civ. 2(b) (2002). That argument, however, has been abandoned. As we have already stated, U.S. Bank concedes that the partial summary-judgment order is not a final order. Appellate Rule 2(b) is therefore not applicable.
The deadline for filing a notice of appeal that is set forth in Ark. R. App. P. — Civ. 4(a) — thirty days from the entry of the order appealed from — may be extended under the provisions of Ark. R. App. P. — Civ. 4(b):
(b) Extension of time for filing notice of appeal.
(1) Upon timely filing in the circuit court of . . . any . . . motion to vacate, alter or amend the judgment made no later than 10 days after entry of judgment, the time for filing a notice of appeal shall be extended for all parties. The notice of appeal shall be filed within thirty (30) days from entry of the order disposing of the last motion outstanding. However, if the circuit court neither grants nor denies the motion within thirty (30) days of its filing, the motion shall be deemed denied by operation of law as of the thirtieth day, and the notice of appeal shall be filed within thirty (30) days from that date.
Ark. R. App. P. — Civ. 4(b)(1) (2002). Additionally, if a notice of appeal is filed prior to the disposition of the motion, a party who seeks to appeal from the denial of the motion shall within thirty days amend the previously filed notice of appeal. Ark. R. App. P. — Civ. 4(b)(2) (2002).
[2] First we must point out that U.S. Bank's motion for reconsideration was not filed within ten days of the class-certification order as required by appellate Rule 4(b). Thus, as to any appeal from the June 11 class-certification order, the time for filing a notice of appeal was not extended by the timely filing of any of the motions listed in Ark. R. App. P. — Civ. 4(b)(1), and the deemed-denied rule is not applicable.
While the notice of appeal filed on September 4 was untimely with respect to the class-certification order, U.S. Bank could have appealed the denial of its motion for reconsideration by filing a notice of appeal within thirty days from the entry of such an order. Yet, the record does not reflect any such ruling by the court, or the filing of a notice of appeal that designated the order appealed from as the denial of U.S. Bank's motion for reconsideration. See Ark. R. App. P. — Civ. 3(e) (2002). In any event, U.S. Bank admits that no appeal was taken from any ruling by the circuit court on its motion for reconsideration.
We note that a copy of an order entered by the circuit court on December 28, 2001, is attached as Exhibit A to U.S. Bank's response to Milburn's supplement to its motion to dismiss appeal. In that order, the circuit court denied U.S. Bank's motions for reconsideration of the class-certification and partial summary-judgment orders and the order appointing a receiver.
Even under Ark. R. App. P. — Civ. 4(b)(2), if a notice of appeal is filed prior to the disposition of the motion, a party who seeks to appeal from the denial of the motion must amend the previously filed notice so as to comply with Ark. R. App. P. — Civ. 3(e).
[3] The timely filing of a notice of appeal is jurisdictional. Rossi v. Rossi, 319 Ark. 373, 892 S.W.2d 246 (1995). Thus, this court lacks jurisdiction to address U.S. Bank's point on appeal challenging the class-certification order.
Approval of Class-Action Notice
[4] Our rules of appellate procedure allow an interlocutory appeal from "[a]n order granting or denying a motion to certify a case as a class action in accordance with Rule 23 of the Arkansas Rules of Civil Procedure." Ark. R. App. P. — Civ. 2(a)(9) (2002). We have held that an order prescribing notice to class members is fundamental to the further conduct of the action and, thus, immediately appealable as a matter of right. See Union Nat'l Bank v. Barnhart, 308 Ark. 190, 823 S.W.2d 878 (1992). Such an interlocutory appeal must be filed within thirty days from entry of the order. Ark. R. App. P. — Civ. 4(a) (2002).
[5] In this case, the order approving class-action notice was entered on August 1, 2001, so the deadline for filing a notice of appeal was Friday, August 31, 2001. Once again, the notice of appeal filed on September 4, 2001, was clearly outside the prescribed thirty-day deadline. For the reasons previously stated in connection with U.S. Bank's attempted appeal of the class-certification order, we conclude that the bank's appeal from the order approving the class-action notice is not properly before this court.
Order Appointing Receiver
[6] For its third point on appeal, U.S. Bank argues that the circuit court erred in appointing a receiver pursuant to Ark. R. Civ. P. 66(a) (2002). We start by noting that an interlocutory order appointing a receiver is immediately appealable. See Ark. R. App. P. — Civ. 2(a)(7) (2002). However, U.S. Bank failed to timely file its record with our clerk. The untimely filing of the record procedurally bars the appellant from pursuing an appeal. See Mitchell v. City of Mountain View, 304 Ark. 585, 803 S.W.2d 556 (1991) (per curiam). On September 7, 2001, the circuit court entered an order directing the circuit clerk to act as a receiver in this case. U.S. Bank filed a timely notice of appeal on October 9, 2001. Appellate Rule 5(a) provides that when "an appeal is taken from an interlocutory order under Rule 2(a)(6) or (7), the record must be filed with the clerk of the Supreme Court within thirty (30) days from the entry of such order." Ark. R. App. P. — Civ. 5(a) (2002) (emphasis added).
[7] The instant interlocutory order appointing a receiver was entered on September 7, 2001. Thus, the deadline for filing the record was October 9, 2001, which happened to be the same day that U.S. Bank filed its notice of appeal. U.S. Bank did not file the record with this court until December 3, 2001. By failing to timely file the record, U.S. Bank is barred from pursuing this point on appeal.
Request for Sanctions Under Appellate Rule 11
At oral argument, Milburn's counsel asked this court to sanction U.S. Bank pursuant to Rule 11 of the Arkansas Rules of Appellate Procedure — Civil:
I think the act of claiming this to be a final judgment has caused me and my client considerable harm in this case . . . [T]he final order never was a final order and they knew it. Everybody knew it, and they admitted it. They admitted it as soon as they filed the notice of appeal. They were back before the trial court contending it was not a final order because it did not determine damages. Of course, it never determined them. It was not certified as a final order. . . . I ask this court not to permit these defendants, because of the manner in which they brought this appeal up, to raise . . . any issue in the future litigation that they didn't raise in this litigation. I ask the court to award costs for having to respond to an argument. . . .
U.S. Bank's counsel responded by suggesting that such a request would require that a motion be filed in order for there to be an opportunity for presentation of a full explanation by both sides.
[8] Appellate Rule 11 provides in relevant part:
(b) The Supreme Court or the Court of Appeals shall impose a sanction upon a party or attorney or both for (1) taking or continuing a frivolous appeal or initiating a frivolous proceeding, (2) filing a brief, motion, or other paper in violation of subdivision (a) of this rule, (3) prosecuting an appeal for purposes of delay in violation of Rule 6-2 of the Rules of the Supreme Court and Court of Appeals, and (4) any act of commission or omission that has an improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation. For purposes of this rule, a frivolous appeal or proceeding is one that has no reasonable legal or factual basis.
Ark. R. App. P. — Civ. 11(b) (2002). Sanctions that may be imposed for violation of this rule are identified in Ark. R. App. P. — Civ. 11(c):
(c) Sanctions that may be imposed for violations of this rule include, but are not limited to, dismissal of the appeal; striking a brief, motion, or other paper; awarding actual costs and expenses, including reasonable attorneys' fees; imposing a penalty payable to the court; awarding damages attributable to the delay or misconduct; and, where there has been delay, advancing the case on the docket and affirming.
Ark. R. App. P. — Civ. 11(c) (2002). If this court on its own initiative determines that a sanction may be appropriate, a show-cause order may be issued. Ark. R. App. P. — Civ. 11(d) (2002).
In the instant matter, as already noted, U.S. Bank filed its notice of appeal on September 4, 2001 from (1) the class-certification order; (2) the order approving the class-action notice; and (3) the order granting partial summary judgment. Then, in a pleading filed with the circuit court on September 6, 2001, U.S. Bank states, "[t]here has been no proof of fraud or insolvency on the part of U.S. Bank that would endanger its capacity to respond to any final judgment which may be entered in this case." In that same pleading opposing the appointment of a receiver, U.S. Bank states, "[t]he holders of beneficial interests in the trusts, of which US Bank is trustee, will be damaged if a receiver is appointed, since they will not receive the payments they contracted for, even though monetary judgment on each claim has not been entered." In a memorandum filed on the same day, U.S. Bank asserts that "[t]here is no danger that it is going to hide its assets to put them beyond reach of a final judgment" and that "the Plaintiffs will not be losing anything by continuing their payments as before, but that the trust beneficiaries would be; all this before a final determination of the amounts that might be due."
On September 27, 2001, Milburn filed a motion to dismiss the appeal in this court. In that motion, Milburn alleges that the notice of appeal is untimely with respect to the class-certification order and the order approving the class-action notice. Milburn also asserts in her motion that the appeal from the partial summary-judgment order should be dismissed, as that ruling by the circuit court is not a final order, and it was not certified as final pursuant to Rule 54(b) of the Arkansas Rules of Civil Procedure. U.S. Bank responded to the motion, contending first that the partial summary-judgment order was final because the only remaining issues were "collateral and ministerial." Moreover, U.S. Bank suggested that both the class-certification order and the order approving the class-action notice were appealable as intermediate orders. Finally, in its reply brief filed on April 26, 2002, U.S. Bank conceded that the partial summary-judgment order is not a final appealable order. However, U.S. Bank continued to assert its "impact theory" as a basis for the appeal.
[9] In order for a judgment to be final, it must dismiss the parties from the court, discharge them from the action, or conclude their rights to the subject matter in controversy. Kelly v. Kelly, 310 Ark. 244, 835 S.W.2d 869 (1992). We have on numerous occasions held that a judgment or order is not final and appealable if the issue of damages remains to be decided. Sevenprop Assoc. v. Harrison, 295 Ark. 35, 746 S.W.2d 51 (1998); John Cheeseman Trucking, Inc. v. Dougan, 305 Ark. 49, 805 S.W.2d 69 (1991); Mueller v. Killam, 295 Ark. 270, 748 S.W.2d 338 (1998); Kilgore v. Viner, 293 Ark. 187, 735 S.W.2d 1 (1987).
[10] From the record before this court, it appears that U.S. Bank was arguing on appeal that the partial summary-judgment order was final, while at the same time arguing in the circuit court that no final order had been entered. Additionally, Milburn, through her motion to dismiss the appeal, notified U.S. Bank as early as September 17, 2001, that the appeal was not properly before this court. Because U.S. Bank continued to prosecute the instant appeal, we conclude that sanctions may be appropriate. Pursuant to Ark. R. App. P. — Civ. 11(d), we order U.S. Bank and its counsel to show cause in writing why a sanction should not be imposed against them. Such writing shall be filed no later than seven days after the date of this opinion. If U.S. Bank files a writing, Milburn shall have four days to respond.
Appeal dismissed; motion to dismiss appeal moot.