Key Energy Resources Inc. v. Merrill (In Re Key Energy Resources Inc.)

                                                                       F I L E D
                                                                United States Court of Appeals
                                                                        Tenth Circuit
                                    PUBLISH
                                                                       OCT 25 2000
                   UNITED STATES COURT OF APPEALS
                                                                     PATRICK FISHER
                                                                            Clerk
                               TENTH CIRCUIT



 In Re:

 KEY ENERGY RESOURCES INC.,

             Debtor.
                                                       No. 99-5106

 KEY ENERGY RESOURCES INC.,

             Plaintiff-Appellant,

 v.

 LORI ANN MERRILL,

             Defendant-Appellee.


          APPEAL FROM THE UNITED STATES DISTRICT COURT
            FOR THE NORTHERN DISTRICT OF OKLAHOMA
                        (D.C. No. 98-CV-623)


Submitted on the briefs:

Stephen J. Merrill, Tulsa, Oklahoma, for Plaintiff-Appellant.

John B. Nicks, Tulsa, Oklahoma, for Defendant-Appellee.


Before BRORBY , ANDERSON , and MURPHY , Circuit Judges.


MURPHY , Circuit Judge.
       Key Energy Resources Inc. appeals from the       district court ’s rulings dated

January 6, 1999, and April 12, 1999.    1
                                            The first ruling denied Key Energy’s

appeal from the bankruptcy court’s decision for appellee in an adversary

proceeding initiated by Key Energy to quiet title on certain real property and for

damages. In that ruling, the   district court adopted the report and recommendation

of the magistrate judge, noting that no objections had been filed within the

allowed ten-day period pursuant to Fed. R. Civ. P. 72(b).       See Appellant’s App.

at 15. The second ruling denied Key Energy’s motion to reconsider, filed

together with proposed objections to the magistrate judge’s report and

recommendation.     See id. at 16-17.

       This court suspended briefing on the merits and ordered further briefs on

the issue whether consideration of Key Energy’s appellate arguments should be

barred due to its failure to timely object to the magistrate judge’s report and

recommendation, in light of this court’s waiver rule.       See Moore v. United States    ,

950 F.2d 656, 659 (10th Cir. 1991). The parties have submitted briefs on this

issue and, subsequently, on the merits. We have jurisdiction pursuant to



1
      After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.

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28 U.S.C. §§ 158(d) and 1291. We dismiss the appeal because we conclude Key

Energy has waived appellate review by its failure to object to the magistrate

judge’s report and recommendation within the required time period.

       The facts surrounding appellant’s failure to file timely objections are not

disputed.   2
                Appellant is a corporation and is represented by a solo practitioner

who is also president of the corporation. On December 14, 1998, the magistrate

judge filed his report, recommending that the bankruptcy court’s ruling adverse to

appellant be affirmed. The report was served by mail, and advised appellant that

it had ten days to file objections. On the following day, December 15, appellant’s

counsel entered a hospital for surgery; he was discharged on December 22, 1998.

In his motion for consideration before the       district court , he claimed that,

following the surgery, “he was in a great deal of pain, [] heavily medicated and []

unable to practice law.” Appellant’s Supp. App., at 1. He also admitted,

however, that “on or about” the day he was discharged, he directed his legal

assistant to ask the    district court how to file for an extension of time.   Id.

       Counsel suffered a relapse and was readmitted to the hospital on

December 29; he was discharged on January 1, 1999. On January 6, the                 district


2
       These facts are gleaned from appellant’s brief on the waiver issue and the
attached copy of the motion to reconsider filed with the  district court . Appellant
did not include the motion to reconsider in its appendix, but has moved to
supplement the appendix with a copy of the motion. The motion to supplement is
granted; the motion to reconsider will be referred to as “Appellant’s Supp. App.”

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court approved the magistrate judge’s report in light of appellant’s failure to file

objections. Appellant’s counsel was not released for work by his doctor until

January 12, at which time he began to work half days. Counsel filed appellant’s

proposed objections with the     district court as part of its motion to reconsider on

January 21, 1999. The district court denied the motion, but apparently reviewed

appellant’s objections in so ruling.

       “This court has adopted a ‘firm waiver rule’ which provides that a litigant’s

failure to file timely objections to a magistrate’s [report and recommendation]

waives appellate review of both the factual and legal determinations.”          Vega v.

Suthers , 195 F.3d 573, 579 (10th Cir. 1999). We have recognized two

circumstances under which the waiver rule will not be applied. The first,

involving the level of notice required for pro se litigants,      see Talley v. Hesse ,

91 F.3d 1411, 1412 (10th Cir. 1996), is not pertinent here because appellant is

a corporation and is represented by counsel. The second is that the waiver rule

“need not be applied when the interests of justice so dictate.”        Moore , 950 F.2d

at 659. This court has never defined the interests of justice exception in

counseled cases.    See Vega 195 F.3d at 580. Our cases addressing the waiver

issue, though largely unpublished, indicate that the court has considered various

factors in determining the applicability of the interests of justice exception in

counseled cases, including: 1) the factual circumstances purporting to excuse the


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failure to file timely objections; 2) whether the    district court examined untimely

filed objections ; and 3) the merits of a litigant’s underlying claims. We have

noted, however, that the interests of justice exception in counseled cases is

a narrow one, see id. (“[W]e have excused the failure to file timely objections

only in the rare circumstance in which a represented party did not receive a copy

of the magistrate’s [report and recommendation]”).

       Upon consideration of this “firm waiver rule” and the interests it was

designed to promote, see United States v. 2121 E. 30th St.     , 73 F.3d 1057, 1059

(10th Cir. 1996), we hold that, in counseled, civil, nonhabeas cases, the merits of

the underlying case should not be considered in determining whether the interests

of justice exception has been met.     Cf. Theede v. United States Dep’t of Labor   ,

172 F.3d 1262, 1268 (10th Cir. 1999) (concluding that the interests of justice

exception did not excuse a pro se litigant’s failure to timely file objections,

relying in part on a review of the merits). The waiver rule is meant to promote

the interests of the Magistrate’s Act, including the judicial efficiency served

thereby. See Pippinger v. Rubin , 129 F.3d 519, 533 (10th Cir. 1997). Reviewing

the merits to determine whether the waiver rule should be applied to preclude

consideration of those same merits does not serve judicial efficiency. We

conclude that, in counseled cases, determination of the interests of justice




                                             -5-
exception should focus instead on the facts that purport to excuse the lack or

untimeliness of the filing of objections.

       In its initial brief on the waiver issue, appellant contends that this court

should allow consideration of its appellate claims because 1) appellant did file

objections, albeit late, 2) appellant’s counsel suffered from a medical hardship

which excuses the untimely filing, and 3) the        district court did not apply the

waiver rule in its motion to reconsider and considered appellant’s objections on

their merits. We consider these points in reverse order.

       Appellant’s third reason urging application of the exception lacks merit.

Appellant contends that because the        district court considered the merits of its

objections in ruling on the motion to reconsider, the purposes behind the waiver

rule are outweighed by the judicial system’s interest in resolving cases on the

merits. We disagree with appellant’s initial premise. In ruling on appellant’s

motion for reconsideration, the   district court stated: “The Court has reviewed the

arguments presented and remains persuaded that the bankruptcy judge is properly

affirmed.” Appellant’s App. at 16. This statement does not suggest that the

district court performed a de novo review of the magistrate judge’s report and

recommendation in light of appellant’s objections,        cf. 2121 E. 30th St. , 73 F.3d

at 1059 (quoting Fed. R. Civ. P. 72(b));      Wildermuth v. Furlong , 147 F.3d 1234,

1236 (10th Cir. 1998) (stating that, upon objections to a magistrate judge’s report


                                               -6-
and recommendation, “the     district court must undertake a de novo review       of the

record ) (emphasis added).    Further, we will not infer that such review has

occurred upon a motion to reconsider.     Cf. Green v. Branson , 108 F.3d 1296,

1305 (10th Cir. 1997) (assuming that, absent evidence to the contrary, the district

court performed a de novo review upon the filing of timely objections).

Therefore, there is no basis for appellant’s argument that the purposes of the

waiver rule were weakened by the     district court ’s review in this case.   3



       Next, we consider appellant’s contention that counsel’s hospitalizations and

medical condition compel application of the interests of justice exception. We are

disinclined to excuse late filings of objections to a magistrate judge’s report and

recommendation based on reasons such as medical problems or inability to

prepare objections so long as counsel was able to file or have filed a timely

motion for extension of time. In light of the facts of this case, in which counsel

received a copy of the magistrate judge’s report before the ten-day period expired



3
       Further, even had the district court performed the de novo review normally
triggered only by timely and specific objections to the magistrate judge’s report
and recommendation, that fact would not preclude application of the waiver rule
or somehow “revive” appellant’s claims, as appellant argues.           See Vega , 195 F.3d
at 580 (“[A] district court ’s decision to review [a magistrate judge’s report and
recommendation] de novo , despite the lack of an appropriate objection, does not,
standing alone, preclude application of the waiver rule.”);       2121 E. 30th St. ,
73 F.3d at 1061 (declining to lift the bar of appellate review despite       the district
court ’s sua sponte decision to conduct a de novo review where objections were
not specific enough to preserve the issues for appellate review)        .

                                            -7-
and had a legal assistant who made an effort to contact the     district court seven

days before the deadline about filing an extension of time, we cannot say that

counsel was unable to timely file for an extension of time in which to prepare and

file his objections.

       Finally, the first reason appellant urges for application of the interests of

justice exception is not persuasive. The waiver rule requires the     timely filing of

specific objections.   See 2121 E. 30th St., 73 F.3d at 1060. In light of our

rejection of appellant’s other arguments, the single fact that it filed objections

does not compel application of the interests of justice exception.

       Accordingly, we reject appellant’s arguments that the interests of justice

exception to the waiver rule should be applied here. Appellant has waived

appellate review by failing to file timely objections to the magistrate judge’s

report and recommendation. The appeal is DISMISSED; appellant’s motion to

supplement the record is GRANTED.




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