Opinion
IP 01-0414 M/L
March 28, 2003
ORDER ON PLAINTIFFS' PENDING MOTIONS
This matter is before the Court on the plaintiffs', VirtualNet, Inc., by and for the Bankruptcy Estate, HCN Resources, Inc., and Theresa A. Hellman, by and on behalf of herself and her Bankruptcy Estate (collectively "Plaintiffs"), (1) motion for relief from the final judgment in this case, pursuant to Rule 60(b) of the Federal Rules of Civil Procedure; (2) motion for leave to file first amended complaint; and (3) motion to stay the pending appeal pending a ruling on the motion for relief from final judgment or, in the alternative, to withdraw or dismiss the appeal. For the reasons set forth herein, Plaintiffs' motions for relief from final judgment and for a stay of the appeal are DENIED. Plaintiffs' motion for leave to amend the complaint is GRANTED.
I. BACKGROUND
On October 3, 2001, the Court, by Judge Dillin, granted the motion of defendants Michael I. Arnolt, Charles Paul III, M.I. Arnolt, Inc., and Arnolt Partners, LLC (the "Arnolt Defendants") for dismissal pursuant to Rule 12(b)(6). Specifically, the Court found that Plaintiffs' complaint did not allege the necessary elements to establish the predicate acts necessary for a RICO violation. Entry of October 3, 2001, at 11-12. The Court also found that the enterprise element of a RICO claim was not sufficiently plead. Id. at 12-13. Accordingly, the Court declined to exercise supplemental jurisdiction over Plaintiffs' state law claims against the Arnolt Defendants.
At the same time, the Court denied a motion to dismiss by defendants Madlon Drayer and Micheal Drayer (the "Drayers") on the basis that the Drayers lacked standing to make the motion. Id. at 2 n. 1. The Court also specifically found that because the Drayers did not join in the Arnolt Defendants' motion, the order dismissing Plaintiffs' claims was as to the Arnolt Defendants only. Id. at 14 n. 7.
Thereafter, Plaintiffs did not amend their complaint or seek leave to amend their complaint. On October 25, 2001, the Arnolt Defendants requested an entry of final judgment. Plaintiffs did not respond to the Arnolt Defendants' request, nor did Plaintiffs move for additional time to respond. Accordingly, this Court ordered the Entry of Final Judgment as to the Arnolt Defendants on November 14, 2001.
On December 12, 2001, Plaintiffs filed a motion for an enlargement of time to file a notice of appeal, which this Court granted. On December 17, 2001, Plaintiffs filed their motion for relief from the final judgment, as well as a motion for leave to amend their complaint. The Arnolt Defendants have opposed both motions. Plaintiffs filed a notice of appeal on January 14, 2002. Plaintiffs also filed a motion to stay or dismiss their appeal pending ruling on the motion for relief from judgment, which the Arnolt Defendants have opposed.
In their motion for relief from the final judgment, Plaintiffs claim their failure to oppose the Arnolt Defendants' motion for final judgment was inadvertent and that Plaintiffs' counsel was involved in a trial from October 29 to November 7, 2001. Plaintiffs also claim that they had not yet moved for leave to amend their complaint because they were gathering information needed to adequately plead the predicate offenses to their RICO claims. Plaintiffs state their reason for not requesting an enlargement of time to move for leave to amend was also inadvertent.
Plaintiffs request this Court grant relief pursuant to Rule 60(b)(3) and Rule 60(b)(6). Plaintiffs also note that they believe the Court's Entry of October 3, 2001 was in error.
II. DISCUSSION A. MOTION FOR RELIEF FROM FINAL JUDGMENT
Although Plaintiffs move for relief pursuant to Rule 60(b)(3), the appropriate rule is Rule 60(b)(1), which allows a court to grant relief from a judgment due to "mistake, inadvertence, surprise, or excusable neglect." Fed.R.Civ.P. 60(b)(1). The Court will not grant Plaintiffs the requested relief because their inadvertence, or that of their attorney, was not reasonable or excusable and it crosses the line into negligence. "[I]nexcusable attorney negligence does not constitute proper grounds for relief under Rule 60(b)(1)." Helm v. Resolution Trust Corp., 84 F.3d 874, 877 (7th Cir. 1996).
Most notably, even if Plaintiffs had inadvertently forgotten to seek leave to amend their complaint, or to request additional time to amend, the Arnolt Defendants' motion for an entry of final judgment certainly should have brought the issue to Plaintiffs' attention. Yet, even then Plaintiffs failed to oppose the request for final judgment, or even to seek additional time to do so. Local Rule 7.1 allows a party 15 days to respond to a motion such as that. Quite reasonably, when the Court had heard no response of any kind from Plaintiffs after 19 days, it ordered entry of final judgment.
It was not until December 12, almost a full month after the entry of final judgment and close to the very end of the 30 day window to file a notice of appeal, that Plaintiffs became active in this case again. Plaintiffs' inaction appears much more like inattention than inadvertence. "`Litigants whose lawyers fall asleep at critical moments may seek relief from the somnolent agents; inexcusable inattention to the case . . . does not justify putting the adversary to the continued expense and uncertainty of litigation.'" Helm, 84 F.3d at 878 (quoting United States v. Golden Elevator, Inc., 27 F.3d 301, 303 (7th Cir. 1994)). Certainly the dismissal of Plaintiffs' case against the Arnolt Defendants, followed by a motion for entry of final judgment, was a critical time for Plaintiffs. They have missed their ample opportunity to cure the defects in their case.
Rule 60(b)(6) also will not provide Plaintiffs with their requested relief. That rule is available in "exceptional circumstances," for reasons other than those stated in Rule 60(b)(1)-(5). See Williams v. Hatcher, 890 F.2d 993, 995 (7th Cir. 1989). Attorney inattention is not an exceptional circumstance warranting relief under Rule 60(b). See Helm, 84 F.3d at 879.
As for Plaintiffs' belief that the Court's October 3, 2001, entry of dismissal was inappropriate, that is appropriate for Plaintiffs' argument on appeal. The Court need not address it here.
B. MOTION FOR LEAVE TO AMEND COMPLAINT
This Court's entries of dismissal and of final judgment were as to the Arnolt Defendants only. Thus, Plaintiffs' claim against the Drayers are pending. While amending their complaint will not save Plaintiffs' claims against the Arnolt Defendants, the Drayers did not oppose Plaintiffs' motion for leave to amend their complaint. The Court's October 3, 2001, entry sets forth the defects in Plaintiffs' original pleading. In the interest of judicial efficiency, the Court GRANTS Plaintiffs' motion for leave to amend their complaint and the First Amended Complaint For Damages is deemed filed as of the date of this Order.
C. MOTION TO STAY OR WITHDRAW APPEAL
Plaintiffs' motion to stay the appeal pending ruling on their motion for relief from final judgment, or to withdraw or dismiss the appeal without prejudice, is denied for two reasons: (1) the motion is moot because the Court has denied relief from the final judgment, and (2) this Court does not have jurisdiction to stay or permit dismissal of an appeal. While it appears Plaintiffs' appeal of the entry of final judgment no longer is pending, Plaintiffs did file a notice of appeal. The filing of an appeal deprives this Court of jurisdiction over the case. Boyko v. Anderson, 185 F.3d 672, 674 (7th Cir. 1999). "`The filing of a notice of appeal is an event of jurisdictional significance — onfers jurisdiction on the court of appeals and divests the district court of its control over those aspects of the case involved in the appeal.'" Kusay v. United States, 62 F.3d 192, 193 (7th Cir. 1995) (quoting Griggs v. Provident Consumer Disc. Co., 459 U.S. 56, 58 (1982)). Plaintiffs' motion to stay the appeal or, alternatively, to dismiss the appeal, is DENIED as MOOT.
IV. CONCLUSION
For the reasons discussed herein, Plaintiffs' motion for relief from final judgment is DENIED. Plaintiffs' motion for leave to amend their complaint is GRANTED. The First Amended Complaint For Damages is deemed filed as of the date of this Order. Plaintiffs' motion to stay or withdraw their appeal is DENIED as MOOT. Finally, the parties are reminded that this Court's order of January 25, 2002, granting a stay of the proceedings against the Drayers is lifted automatically with the ruling on Plaintiffs' motion for leave to amend their complaint.