DLJ Mortgage Capital, Inc. v. Ana Sheridan

PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
___________

No. 18-3187
___________

DLJ MORTGAGE CAPITAL, INC.

v.

ANA SHERIDAN; ROY SHERIDAN; DEPARTMENT OF
TREASURY INTERNAL REVENUE SERVICE

ROY SHERIDAN,
Appellant
___________

On Appeal from the District Court
of the Virgin Islands
(D.C. Civil No. 3-16-cv-00085)
District Judge: Hon. Curtis V. Gomez
___________

Argued May 20, 2020
Before: GREENAWAY JR., PHIPPS, and FUENTES,
Circuit Judges.

(Filed: September 22, 2020)
Namosha Boykin, Esq. [ARGUED]
Suite 8-310
2369 Kronprindsens Gade
St. Thomas, VI 00802
Counsel for Appellant

Matthew R. Reinhardt, Esq.
Kyle R. Waldner, Esq. [ARGUED]
Quintairos Prieto Wood & Boyer
1000 Blackbeard’s Hill, Suite 10
St. Thomas, VI 00802
Counsel for Appellee
____________

OPINION OF THE COURT
____________

FUENTES, Circuit Judge.

Plaintiff DLJ Mortgage Capital, Inc. (“DLJ”) brought a
debt and foreclosure action against Roy Sheridan (“Sheridan”
or “Roy Sheridan”), Ana Sheridan, and the Internal Revenue
Service (“IRS” or the “Government”). The parties proceeded
to a bench trial. At the close of DLJ’s case-in-chief, the District
Court granted judgment in favor of DLJ under Rule 52(c) of
the Federal Rules of Civil Procedure, concluding that DLJ
satisfied all elements of its debt and foreclosure claim. On
appeal, Roy Sheridan, the only Appellant, complains that he
was not heard prior to judgment.

We must decide whether the District Court properly
granted judgment immediately after DLJ’s case-in-chief.

2
Because we find that, under the circumstances of this case, Roy
Sheridan was “fully heard” prior to judgment, and that his
remaining challenges are meritless, we will affirm the
Judgment of the District Court.

I

A.

In August 2007, Ana and Roy Sheridan executed a
promissory note in favor of FirstBank of Puerto Rico
(“FirstBank”) in the amount of $725,000 (the “Note”). The
Sheridans also executed a mortgage granting FirstBank a first
priority security interest in two real estate properties as security
for the Note (the “Mortgage”). Under the terms of the Note,
the Sheridans were jointly and severally liable for the full
amount of the loan. The Note further provided that FirstBank
“may transfer this Note” and “[FirstBank] or anyone who takes
this Note by transfer and who is entitled to receive payments
under this Note is called the ‘Note Holder.’”1

In 2009 and 2011, the Sheridans and FirstBank agreed
to modify the Note and Mortgage by, among other things,
increasing the principal sum and extending the maturity date of
the loan. Both modifications to the Mortgage stated that,
except as amended, the original terms of the Mortgage
remained in effect.2 The 2009 amendment to the Note also

1
App. 488.
2
The 2009 Mortgage Modification specifically states that “[i]n
all other respects, the mortgage shall remain unchanged and
shall remain in full force and effect.” App. 518 (emphasis
omitted). The 2011 Mortgage Modification similarly states

3
contained similar language reinforcing the unaffected terms of
the original Note.

In 2012, the Sheridans defaulted under the terms of
the Note by failing to make several monthly payments. A year
later, FirstBank assigned the Mortgage to DLJ (the
“Assignment”). FirstBank also transferred physical possession
of the Note to DLJ.

In 2015, DLJ, through its loan servicer, Select
Portfolio Servicing, Inc. (“SPS”), sent the Sheridans a Notice
of Default-Right to Cure. The Notice of Default provided the
Sheridans with the amount still owing under the Note and a
timeframe to cure the default. The Sheridans failed to cure the
default.

B.

In October 2016, DLJ commenced a debt and
foreclosure action against the Sheridans and the IRS. The IRS
was a named defendant to the action because of its federal tax
lien, in the amount of $18,924, against Roy Sheridan and
recorded against the properties used to secure the Note.3

that “[e]xcept as expressly set forth in and modified by this
Agreement, the terms and conditions of the Note, Mortgage,
Assignment of Leases and Rents and the Loan Documents, as
amended, remain unchanged and shall remain in full force and
effect according to the original terms and tenor thereof.” App.
521 (emphasis omitted).
3
Under Virgin Islands law, “[a]ny person having a lien
subsequent to the plaintiff upon the same property or any part
thereof, or who has given a promissory note or other personal

4
 The Sheridans and the IRS answered the complaint.
The Sheridans asserted ten affirmative defenses, which, as
relevant on appeal, did not include any allegation of fraud. The
parties then proceeded to discovery. Under the District Court’s
Trial Management Order, discovery requests and production
were to be completed by September 2017. Although DLJ
complied with its discovery obligations, the Sheridans failed to
participate in discovery.

Before trial, the parties attempted mediation. Over the
course of several months, the parties participated in at least
three mediation sessions presided over by the Magistrate
Judge. Unfortunately, the parties were unable to reach a
settlement. DLJ and the IRS did, however, execute a consent
to judgment of foreclosure where the IRS conceded that its tax
lien was subordinate to DLJ’s first priority security interest in
the properties.4
One week prior to trial, Roy Sheridan5 filed witness
and exhibit lists identifying a non-party witness from
FirstBank and documents that were not disclosed or provided
during discovery. Upon DLJ’s motion to exclude evidence not

obligation for the payment of the debt or any part thereof,
secured by the mortgage or other lien which is the subject of
the action, shall be made a defendant in the action. Any person
having a prior lien may be made defendant at the option of the
plaintiff, or by the order of the court when deemed necessary.”
28 V.I.C. § 532.
4
Although the IRS moved to be excluded from trial, the
Government was ultimately present at trial.
5
At trial, Roy and Ana Sheridan, then divorced, were
represented by separate counsel.

5
previously disclosed, the Magistrate Judge ordered that “the
documents and witnesses not previously disclosed, with the
exception of the Sheridans themselves, be excluded from
trial.”6 In addition, the night before trial, Roy Sheridan moved
for leave to file a “Joint First Amended Answer” to include
allegations of fraud and violations of the Truth in Lending
Act.7

The next day, the parties proceeded to a one-day
bench trial. The District Court heard from DLJ’s fact-witness,
Linda Holmes, who is an employee of SPS, and Roy Sheridan.
At the conclusion of its case-in-chief, DLJ moved for a
“directed verdict.”8 The District Court heard from all parties
as to the elements of the debt and foreclosure claims. In
response to DLJ’s request for a directed verdict, Roy Sheridan
argued that DLJ lacked standing to enforce the Note and
Mortgage and that, therefore, the District Court did not have
jurisdiction over the case. Ana Sheridan, who moved for
judgment as a matter of law, made similar arguments
contesting DLJ’s standing to enforce the Note and Mortgage.9

6
App. 417.
7
App. 466. The District Court did not explicitly rule on the
motion.
8
App. 272-73. Because the parties proceeded with a bench
trial, and consistent with DLJ’s arguments on appeal, we
construe DLJ’s motion as a Rule 52(c) motion for judgment on
partial findings, rather than as a motion for a directed verdict.
See Fed. R. Civ. P. 52(c).
9
Notably, though, Ana Sheridan conceded that there was
evidence that there was a mortgage and a note, and that there
was a breach of the mortgage and the note. App. 288-89.

6
 Upon hearing from the parties, the District Court
made several findings and concluded that DLJ’s evidence was
sufficient to prove the elements of its debt and foreclosure
claim, including that DLJ had standing to enforce the Note and
Mortgage. Although Roy Sheridan reminded the District Court
that it had not ruled on whether he would be “able to present
his affirmative defenses concerning fraud,” no party
challenged the judgment at that time as premature.10 On
August 10, 2018, the District Court filed its written Judgment,
providing its factual findings, conclusions of law, and several
orders granting relief.

Thirty-one days later, Roy Sheridan moved for a new
trial or for reconsideration of the judgment, arguing that the
District Court erred in entering judgment without the parties
attempting to mediate in good faith and that the Judgment was
void because it deprived him of property without the
opportunity to be heard.11

On October 1, 2018, Roy Sheridan filed a notice of
appeal.12
II13

DLJ contests our jurisdiction, arguing that Sheridan’s
notice of appeal was untimely. “We have jurisdiction to review

10
App. 314.
11
The District Court has not ruled on the post-trial motion.
12
Ana Sheridan and the IRS are not participating in this appeal.
13
The District Court had jurisdiction under 28 U.S.C. §
1332(a)(1) and 48 U.S.C. § 1612(a).

7
our own jurisdiction” and find that we can appropriately
exercise jurisdiction under 28 U.S.C. § 1291 and § 1294(3).14

DLJ argues that we lack jurisdiction over Sheridan’s
appeal because Sheridan did not file the appeal within thirty
days of the District Court’s written Judgment dated August 10,
2018. Sheridan responds that the appeal is timely because the
IRS’s involvement in the proceedings triggered the 60-day
period for filing a notice of appeal under Federal Rule of
Appellate Procedure (“FRAP”) 4(a)(1)(B)(ii). We need not
decide whether the IRS’s involvement in the proceedings
triggered application of the 60-day deadline, because the
District Court’s failure to comply with the separate-order
requirement of Federal Rule of Civil Procedure (“FRCP”) 58
renders this appeal timely.

“Under [FRAP] 4(a)(1)(A), notices of appeal must
generally be filed ‘within 30 days after the . . . order appealed
from is entered.’”15 However, where FRCP 58(a)(1) “‘requires
a separate document,’ the judgment is considered entered
‘when the judgment or order is entered in the civil docket under
[FRCP] 79(a) and when the earlier of these events occurs: [1]
the judgment or order is set forth on a separate document, or

14
LeBoon v. Lancaster Jewish Cmty. Ctr. Ass’n, 503 F.3d 217,
222 (3d Cir. 2007).
15
Id. at 223 (quoting Fed. R. App. P. 4(a)(1)(A)).

8
[2] 150 days have run from entry of the judgment or order in
the civil docket under [FRCP] 79(a).’”16

Under FRCP 58(a), “[e]very judgment and amended
judgment must be set out in a separate document.”17 If no
separate document exists, “an appellant has 180 days to file a
notice of appeal—150 days for the judgment to be considered
entered, plus the usual 30 days from the entry of judgment.”18
There are certain exceptions to FRCP 58, none of which are
relevant here.

To determine whether the District Court’s August 10
Judgment can be properly characterized as a separate
document, we must consider whether it meets the following
requirements: “(1) it must be self-contained and separate from
the opinion, (2) it must note the relief granted, and (3) it must
omit (or at least substantially omit) the trial court’s reasons for
disposing of the claims.”19

Here, the August 10 Judgment does not comply with
FRCP 58’s separate-document rule. It is neither “self-
contained and separate from the opinion,” nor does it omit its
reasoning in disposition of the claim.20 We have said that “[t]o
be independent of the court’s opinion, an order must be
separately titled and captioned, not paginated consecutively to
the opinion or memorandum, not stapled or otherwise attached

16
Id. (quoting Fed. R. App. P. 4(a)(7)(A)(ii)).
17
Fed. R. Civ. P. 58(a).
18
LeBoon, 503 F.3d at 223 (internal quotation marks omitted).
19
Id. at 224.
20
Id.

9
to the opinion, and must be docketed separately.”21 The
Judgment, which is ten pages, contains one case caption, the
trial judge’s signature on the last page of the document, and is
consecutively paginated. The judgment portion of the
document begins on page seven, where it notes the relief
granted and makes several orders. Further, although titled and
docketed as a “Judgment,” and noting the relief granted, the
document contains the District Court’s factual findings and
legal discussion disposing of DLJ’s claims. This precludes the
August 10 Judgment from complying with FRCP 58’s
separate-document rule.22

Accordingly, the August 10 Judgment should be
considered “entered” 150 days after August 10, 2018, on
January 7, 2019, under FRAP 4(a)(7)(A)(ii).23 Sheridan had
thirty days after that to file his notice of appeal.

Because Sheridan filed his notice of appeal in October
2018, well within the additional 180 days, we have jurisdiction
over this appeal.24

21
Id. at 224.
22
In re Cendant Corp. Sec. Litig., 454 F.3d 235, 245 (3d Cir.
2006) (holding that an order failed to comply with Rule 58’s
separate order requirement “because it contained an extended
discussion of facts and procedural history”).
23
Fed. R. App. P. 4(a)(7)(A)(ii).
24
Although Sheridan filed his notice of appeal before the
judgment was formally entered, “we are not prevented from
entertaining it.” LeBoon, 503 F.3d at 224 n.5 (“Filing Before
Entry of Judgment. A notice of appeal filed after the court
announces a decision or order — but before the entry of the

10
 III

Sheridan’s primary argument is that the District Court
erred in granting judgment at the close of DLJ’s case-in-chief
without allowing him to be heard on his evidence and defenses.
He also challenges (i) the District Court’s finding that DLJ had
standing to bring this action and enforce the Note and
Mortgage, (ii) the monetary award granted to DLJ, and argues
(iii) the judgment is void because the parties did not attempt to
mediate in good faith.

A.

At the close of its case-in-chief, DLJ moved for
judgment based on partial findings. Sheridan did not object to
the District Court’s consideration of the motion at that time.
Instead, the parties proceeded to make their respective
arguments as to whether DLJ met its burden of providing
evidence sufficient to establish its debt and foreclosure claims
and, more generally, whether DLJ had standing to bring this
action.25 Having failed to successfully challenge DLJ’s
evidence, Sheridan now claims that the District Court erred in
granting DLJ’s motion because it deprived him of the
opportunity to be heard.

judgment of order — is treated as filed on the date of and after
the entry” (quoting Fed. R. App. P. 4(a)(2))); see also Fed. R.
App. P. 4(a)(7)(B) (“A failure to set forth a judgment or order
on a separate document when required by [FRCP] 58(a)(1)
does not affect the validity of an appeal from that judgment or
order.”)
25
We note that Ana Sheridan also moved for “judgment as a
matter of law.” App. 288.

11
 It gives us pause that the District Court granted
judgment in favor of DLJ at the close of DLJ’s case-in-chief.
Indeed, while we have recognized that a district court has wide
latitude in the management of civil trials, we have also
observed that the Federal Rules of Civil Procedure “repeatedly
embody the principle that trials should be both fair and
efficient.”26 Nonetheless, under the circumstances of this case,
we find relief was appropriate under Rule 52(c).

Rule 52(c) states:

If a party has been fully heard on
an issue during a nonjury trial and
the court finds against the party on
that issue, the court may enter
judgment against the party on a
claim or defense that, under the
controlling law, can be maintained
or defeated only with a favorable
finding on that issue. The court
may, however, decline to render
any judgment until the close of the
evidence. A judgment on partial
findings must be supported by
findings of fact and conclusions of
law as required by Rule 52(a).27

We have explained that any party may make a Rule
52(c) motion, and the court may grant such motion, “at any

26
Duquesne Light Co. v. Westinghouse Elec. Corp., 66 F.3d
604, 609 (3d Cir. 1995).
27
Fed. R. Civ. P. 52(c).

12
time during a bench trial, so long as the party against whom
judgment is to be rendered has been ‘fully heard’ with respect
to an issue essential to that party’s case.”28 But that a party be
“fully heard” does not mean that a party must be allowed “to
introduce every shred of evidence that a party wishes, without
regard to the probative value of that evidence.”29 “As a result,
the court need not wait until that party rests its case-in-chief to
enter judgment pursuant to Rule 52(c).”30 “In this respect, it is
within the discretion of the trial court to enter a judgment on
partial findings even though a party has represented that it can
adduce further evidence, if under the circumstances, the court
determines that the evidence will have little or no probative
value.”31 In addition, even if the district court believes
judgment in favor of the moving party would be appropriate, it
remains within the district court’s discretion to wait until the

28
EBC, Inc. v. Clark Bldg. Systems, Inc., 618 F.3d 253, 272
(3d Cir. 2010).
29
Id. at 272 n.21 (quoting First Va. Banks, Inc. v. BP
Exploration & Oil, Inc., 206 F.3d 404, 407 (4th Cir. 2000)).
30
Id. at 272; see also N.Y. Susquehanna & W. Ry. Corp. v.
Jackson, 500 F.3d 238, 246 n.6 (3d Cir. 2007) (“[T]he Federal
Rules of Civil Procedure . . . allow judgment after partial
findings against a party that has been fully heard on the
relevant issue.”); Granite State Ins. Co. v. Smart Modular
Techs., Inc., 76 F.3d 1023, 1031 (9th Cir. 1996) (“[T]he rule
‘authorizes the court to enter judgment at any time that it can
appropriately make a dispositive finding of fact on the
evidence.’” (quoting Fed. R. Civ. P. 52(c) advisory
committee’s note)).
31
EBC, 618 F.3d at 272 n.21.

13
non-movant has presented her case or all probative evidence is
admitted before entering judgment.32

Further, although Rule 52(c) motions are most
commonly brought by defendants at the close of plaintiff’s
case-in-chief,33 judgments based on partial findings may be
entered against both plaintiffs and defendants.34 Indeed, the
history of Rule 52(c) informs our understanding of the rule.
Previously, FRCP 41(b) “permitted a court to enter judgment
against a plaintiff at the close of his or her case-in-chief if he
or she failed to meet the applicable burden of proof.”35 Rule
41(b), however, did not permit a district court to enter
judgment in favor of the plaintiff at the conclusion of its case-
in-chief. That was the law until 1991, when subdivision (c)
was added to Rule 52 and replaced some provisions of Rule
41(b). The Advisory Committee Notes state, in relevant part:
“Language is deleted that authorized the use of this rule as a
means of terminating a non-jury action on the merits when the
plaintiff has failed to carry a burden of proof in presenting the
plaintiff’s case. The device is replaced by the new provisions
of Rule 52(c), which authorize entry of judgment against the
defendant as well as the plaintiff, and earlier than the close of
the case of the party against whom judgment is rendered.”36
Subdivision (c) therefore “operates more broadly than did its

32
Id. at 272.
33
9C Charles Alan Wright & Arthur R. Miller, Fed. Prac. &
Proc. Civ. § 2573.1 (3d ed. Supp. 2020).
34
Fed. R. Civ. P. 52(c) advisory committee’s note.
35
EBC, 618 F.3d at 272 n.20 (citing Fed. R. Civ. P. 52(c)
advisory committee’s note).
36
Fed. R. Civ. P. 41(b) advisory committee’s note (1991
amendment).

14
predecessor, because courts may now make partial findings on
any claim or defense, of any party, at any time.”37 In short,
Rule 52(c) motions may be granted either for or against the
plaintiff at the conclusion of plaintiff’s case-in-chief.

What is important is that the trial court may make a
dispositive finding on an essential factual issue and judgment
may be entered when the parties have been provided with the
opportunity to submit relevant and probative evidence bearing
on that issue. Courts cannot deprive parties of the opportunity
to submit relevant and probative evidence on an issue essential
to a party’s case, unless the complaining party has forfeited the
right to present certain evidence by virtue of its conduct during
the litigation. For example, as relevant here, a party’s failure
to comply with disclosure obligations under FRCP 26 may
result in the trial court preventing that party from using certain
evidence or calling certain witnesses at trial.38 Under this
scenario, a party against whom judgment has been entered
under Rule 52(c) cannot complain that she was deprived of the
opportunity to be heard absent error in the trial court’s decision
to preclude the party from offering the excluded evidence. In
the usual scenario where both parties have properly brought the
case to trial, judgment based on partial findings may be
appropriate when both parties have been “fully heard” and the
court is able to make a dispositive finding based on the
evidence presented.

Here, in view of the particular circumstances of this
case, we find that Roy Sheridan was “fully heard” within the

37
EBC, 618 F.3d at 272 n.20.
38
Fed. R. Civ. P. 37(c)(1) (providing potential sanctions for a
party’s failure to abide by Rule 26(a) or (e)).

15
meaning of Rule 52(c). In order to succeed on its foreclosure
claim, DLJ was required to prove by a preponderance of the
evidence that “(1) the debtor executed a promissory note and
mortgage, (2) the debtor is in default under the terms of the
note and mortgage, and (3) the lender is authorized to foreclose
on the property mortgaged as security for the note.”39 On
appeal, Sheridan does not contest the first two elements.40
Rather, he argues that the District Court prevented him from
offering evidence to challenge DLJ’s standing and authority to
foreclose, and prevented him from presenting his affirmative
defenses, including fraud. For the reasons discussed below, we
disagree.

1.

As to DLJ’s standing to enforce the Note and foreclose,
DLJ presented the testimony of Linda Holmes, a case manager
with SPS. Holmes testified that DLJ is the current holder of
the Note and is in possession of the original Note. She also
testified that FirstBank transferred the Note to DLJ, and DLJ
introduced an “allonge document”41 at trial to show that it “has

39
Anthony v. FirstBank V.I., 58 V.I. 224, 232 (2013) (quoting
Thompson v. Fla. Wood Treaters, Inc., 52 V.I. 986, 995 (D.V.I.
2009)).
40
It is undisputed that Roy and Ana Sheridan signed the Note
and that they are in default under the terms of the Note.
41
An allonge is “[a] slip of paper sometimes attached to a
negotiable instrument for the purpose of receiving further
indorsements when the original paper is filled with
indorsements.” Black’s Law Dictionary 88 (9th ed. 2009).
Holmes explained in her testimony that an allonge “giv[es]
ownership to another party.” App. 203.

16
the original note.”42 Through Holmes’s testimony, DLJ also
introduced the Assignment, which assigned the Mortgage from
FirstBank to DLJ in 2013.

Sheridan was given the opportunity to contest the
evidence submitted in support of DLJ’s standing to enforce the
Note and foreclose on the properties mortgaged as security for
the Note. Although terse, his counsel cross-examined Holmes
on the relevant loan documents, including the Note, allonge,
and Assignment. Indeed, Sheridan’s argument that DLJ lacked
standing was premised on the face of the loan documents,
which Sheridan had an opportunity to inspect and challenge.43
Sheridan does not assert that a fuller examination of Holmes
would have revealed additional evidence and we will not
second-guess counsel’s tactical decision to limit her cross-
examination.

In addition, Sheridan also testified, and thus had an
opportunity to disclose evidence of which he had personal
knowledge. At oral argument, Sheridan suggested that because
he was called to testify during DLJ’s case-in-chief, his counsel
could not have cross-examined him beyond the scope of issues
raised during direct examination. However, to the extent his
testimony would have related to DLJ’s standing, or rebutted
Holmes’s testimony, those issues would properly have been
elicited during cross-examination. And, to the extent he sought
to testify as to matters beyond the scope of cross-examination,
he could have asked the District Court to exercise its discretion

42
App. 217.
43
Indeed, Sheridan conceded at oral argument that we can rule
on the issue concerning the allonge documents presented by
DLJ on the record before us.

17
to permit such testimony under Federal Rule of Evidence
611(b).44 Sheridan did neither. Further, although he was quite
possibly unaware that the District Court would render
judgment at the conclusion of DLJ’s case-in-chief, Sheridan
did not ask the District Court for permission to testify again at
any time prior to the District Court ruling in favor of DLJ.

Sheridan also engaged in an extensive colloquy with the
District Court as to DLJ’s standing to foreclose, including
whether the Assignment was defective and whether DLJ held
only a partial interest in the Assignment. The District Court
allowed all parties to present their arguments before deciding
the issue of DLJ’s standing and authority to foreclose.
Sheridan did not, at that time, indicate what further evidence,
including any rebuttal evidence, he had to contest DLJ’s
standing. Upon hearing that the parties had nothing further to
present on the issue of standing, the District Court properly
exercised its discretion in granting judgment in favor of DLJ.45

Critically, besides recalling Sheridan to the stand, there
appears to have been no evidence for Sheridan to present.
Because Sheridan failed to participate during discovery, the

44
Fed. R. Evid. 611(b) (“Cross-examination should not go
beyond the subject matter of the direct examination and matters
affecting the witness’s credibility. The court may allow
inquiry into additional matters as if on direct examination.”).
45
At the conclusion of the proceedings, the District Court
asked the parties whether there was “[a]nything else . . . to
address[.]” App. 313. Sheridan mentioned only his legal
challenge to the Assignment and ability to raise his defense of
fraud, which, as discussed infra, the District Court was within
its discretionary power to deny.

18
Magistrate Judge denied Sheridan’s untimely non-party
subpoena to compel testimony from a FirstBank employee and
ordered that “documents and witnesses not previously
disclosed [by the Sheridans], with the exception of the
Sheridans themselves, be excluded from trial.”46 Thus,
Sheridan could have only challenged the validity of the loan
documents, including the Note, allonges, and Assignment
through cross-examination of Holmes, which he was given the
opportunity to do, or through his own testimony, to the extent
he had any personal knowledge. To date, Sheridan has not
indicated what additional admissible evidence he intended to
present to contest DLJ’s standing.47

The District Court heard and considered Sheridan’s
arguments concerning the transfer of the Note from FirstBank
to DLJ and the validity of the Assignment. Accordingly, we
find that he was fully heard with regard to DLJ’s standing to
foreclose.

2.

Sheridan also argues he was not fully heard because the
District Court prevented him from presenting evidence
supporting his affirmative defenses of fraud and illegality
under the Truth in Lending Act. Again, we disagree.

Sheridan moved to amend his answer to assert defenses
of fraud and illegality the day before trial was scheduled to

46
App. 417. Sheridan does not challenge this ruling on appeal.
47
Indeed, at oral argument, Sheridan conceded that, at the time
of trial, there was no further witness he intended to call to
challenge DLJ’s standing to enforce the Note.

19
begin. The District Court did not explicitly rule on the motion
prior to judgment. However, in its written Judgment, the
District Court denied all pending motions as moot. We
construe the District Court’s decision to proceed to judgment
at the conclusion of the bench trial as an implicit denial of the
motion for leave to amend.48 Thus, Sheridan’s argument that
he was deprived of the opportunity to be heard with regard to
his affirmative defenses of fraud and illegality is viable only if
he can show that the District Court abused its discretion in
failing to grant his motion for leave to amend his answer.

Under Federal Rule of Civil Procedure 15(a), leave to
amend “shall be freely given when justice so requires,” and we
have consistently adopted a liberal approach to the allowance
of amendments.49 Even when a party is late in moving for
leave to amend, we have expressed a preference for allowance
of the amendment, so long as the opposing party is not

48
See United States v. Freeman, 763 F.3d 322, 711 n.10 (3d
Cir. 2014) (construing the court’s decision to proceed to final
judgment as an implicit denial of the defendant’s motion for a
new trial); see also United States v. Depew, 210 F.3d 1061,
1065 (9th Cir. 2000) (“We treat the district court’s failure to
rule on [the defendant’s] motion as a denial of it.”); Norman v.
Apache Corp., 19 F.3d 1017, 1021 (5th Cir. 1994) (“The denial
of a motion by the district court, although not formally
expressed, may be implied by the entry of a final judgment or
of an order inconsistent with the granting of the relief sought
by the motion.”).
49
Berkshire Fashions, Inc. v. M.V. Hakusan II, 954 F.2d 874,
886–87 (3d Cir. 1992) (quoting Fed. R. Civ. P. 15(a)).

20
prejudiced by the delay.50 “It is well-settled that prejudice to
the nonmoving party is the touchstone for the denial of an
amendment.”51 And we review the denial of leave to amend
for abuse of discretion.52

Here, Sheridan’s motion was untimely, and the late
assertion of fraud would have prejudiced DLJ. Sheridan’s
original answer asserted boilerplate affirmative defenses, none
of which contained any allegations of fraud or violations of the
Truth in Lending Act. Under the District Court’s Trial
Management Order, the parties were given until January 2017
to amend their pleadings. Of course, Sheridan failed to amend
by this date. And he does not explain his failure to do so.53
Instead, he waited over one year from when the complaint was
filed and several months after the completion of discovery to

50
See Charpentier v. Godsil, 937 F.2d 859, 864 (3d Cir. 1991)
(“Unless the opposing party will be prejudiced, leave to amend
should generally be allowed.”).
51
Cornell & Co. v. Occupational Safety & Health Review
Comm’n, 573 F.2d 820, 823 (3d Cir. 1978).
52
Berkshire Fashions, 954 F.2d at 886.
53
In addition to satisfying the Rule 15(a) standard, Sheridan
was also required to demonstrate good cause under Federal
Rule of Civil Procedure 16(b)(4) to amend his answer after the
deadline set in the Trial Management Order. See Premier
Comp Solutions, LLC v. UPMC, 970 F.3d 316, 317 (3d. Cir.
2020) (clarifying that “when a party moves to amend or add a
party after the deadline in a district court’s scheduling order
has passed, the ‘good cause’ standard of Rule 16(b)(4) . . .
applies” (quoting Fed. R. Civ. P. 16(b)(4)). Sheridan’s failure
to address the required showing of good cause further supports
the District Court’s denial of the motion for leave to amend.

21
move for leave to amend.54 Even if Sheridan could not have
asserted his defenses of fraud when he filed his original
answer, he could have exercised due diligence and moved for
leave to amend soon after discovery was complete. His
proposed amended answer was based on discovery DLJ
provided, which shows that Sheridan had knowledge of his
defenses months before trial.

Further, because DLJ did not have notice of Sheridan’s
defenses, the untimely defense would likely have required
additional discovery. Sheridan’s defense of fraud relates to the
conduct of FirstBank employees who were not a party to this
action, and the origination of the loan documents. DLJ’s
theory in this case presumed the validity of the original loan
documents; thus, amendment of the answer would have
required DLJ to engage in a last-minute change in strategy.55
Further, because Sheridan did not assert allegations of fraud in
his original answer, nor did he participate in discovery, no
discovery was exchanged with regard to the conduct of

54
Sheridan also argues that the District Court was on notice of
his defenses of fraud and violations of the Truth in Lending Act
because the defenses were raised in his opposition to DLJ’s
motion for summary judgment. However, even this opposition
was untimely as it was filed several months after DLJ’s motion
for summary judgment, which was filed in February 2018,
without leave from the District Court, and only ten days before
trial.
55
We also note that Sheridan’s proposed amended answer
contains no factual allegations as to the fraudulent conduct
FirstBank employees engaged in. See Fed. R. Civ. P. 9(b) (“In
alleging fraud . . . , a party must state with particularity the
circumstances constituting fraud or mistake.”).

22
FirstBank employees in issuing the original loan and
subsequent modifications. The lack of discovery as to the
conduct of FirstBank employees in issuing the original loan
documents is presumably why Sheridan served an untimely
subpoena on a FirstBank employee.56

And, as explained above, in view of the Magistrate
Judge’s order excluding witnesses and evidence not previously
disclosed, Sheridan had nothing to present besides his own
testimony to support his purported affirmative defenses.57 We
can hardly fault the District Court for implicitly denying the
motion, especially where Sheridan failed to participate in
discovery and only moved to amend his answer the night
before trial. On this record, we find no abuse of discretion.

3.

We would be remiss if we failed to caution against the
practice of granting judgment for the plaintiff before the

56
Notably, in May 2018, Ana Sheridan sought to reopen
discovery and obtain “a full copy of the entire loan file,
including, but not limited to, any document relating to First
Bank’s (Plaintiff’s predecessor in interest) evaluation,
approval, and administration of the loan.” App. 361. In June
2018, the District Court denied the motion.
57
Presumably in support of his defenses, on June 12, 2018,
Sheridan served Patrickson Thomas, a FirstBank employee,
with a non-party subpoena seeking to compel his testimony at
trial. Both non-party FirstBank and DLJ moved to quash the
subpoena. In view of the Magistrate Judge’s order excluding
evidence and witnesses not previously disclosed, Thomas was
not allowed to testify at trial.

23
defendant has presented a case. But such relief was appropriate
under the circumstances of this case. Sheridan’s inability to
present evidence, besides his own testimony, was of his own
making. He had full recourse to the federal rules of discovery,
but failed to comply with his discovery obligations. He also
had ample opportunity to seek leave to amend his answer, and
the District Court acted within its discretion in refusing to
allow the untimely amendment. Further, Sheridan was allowed
to testify, and the record suggests there was no further
admissible evidence he intended to present on the relevant and
essential issues.

Accordingly, we find that Sheridan was fully heard
within the meaning of Rule 52(c) and that this record is ripe for
clear error review.58

B.

Having determined that Sheridan was fully heard prior
to judgment, we proceed to the merits of his arguments.
Sheridan’s arguments amount to the following challenges: (1)

58
Sheridan raises a procedural due process claim under the
Fifth and Fourteenth Amendments to the United States
Constitution, as applied to the Virgin Islands by the Revised
Organic Act of 1954. He claims that he was deprived of
property without due process of law because he was denied the
right to be heard at trial. However, Sheridan concedes that
Rule 52(c)’s requirement that a party be “fully heard” is
consistent with the federal constitution’s due process
protections. Because we find that Sheridan was “fully heard”
within the meaning of Rule 52(c), we reject his due process
challenge.

24
the District Court erred in finding that DLJ had standing to
foreclose on the properties and that, because DLJ lacked
standing, the District Court did not have jurisdiction over this
action; (2) DLJ failed to join indispensable parties; (3) DLJ
was awarded more than it was due under the Note; and (4)
judgment was not proper because the parties did not attempt to
mediate in good faith. None of these arguments prevail.

“In considering whether to grant judgment under Rule
52(c), the district court applies the same standard of proof and
weighs the evidence as it would at the conclusion of the trial.”59
“[T]he [district] court does not view the evidence through a
particular lens or draw inferences favorable to either party,”
and can appropriately make credibility determinations when
necessary.60 The district court “must make findings of fact and
conclusions of law pursuant to Rule 52(a).”61 We review those
factual findings for clear error and legal conclusions de novo.62
We will find clear error if we are “left with the definite and
firm conviction that a mistake has been committed.”63 And
“[w]e will not reverse ‘[i]f the district court’s account of the
evidence is plausible in light of the record viewed in its
entirety’ even if we would have weighed that evidence
differently.”64

1.

59
EBC, 618 F.3d at 272.
60
Id. at 272-73.
61
Id. at 273.
62
Id.
63
Id.
64
Id. (quoting Anderson v. City of Bessemer City, N.C., 470
U.S. 564, 573-74 (1985)).

25
 Sheridan argues that DLJ lacks standing to enforce the
Note and Mortgage because (1) the Assignment transferred
only a partial interest in the Note and Mortgage to DLJ and (2)
the defective chain of Assignments makes it unclear what
interest DLJ possesses in the Note. We disagree.

Although we would nevertheless reject Sheridan’s
challenge to the Assignment,65 we note that because the Note

65
Sheridan primarily challenges the Assignment on the basis
that, because it omitted Ana Sheridan’s name, FirstBank must
have meant to transfer only a partial interest to DLJ. Sheridan
also implied that the Assignment was invalid because it failed
to acknowledge the mortgage modifications. Assuming
Sheridan has standing to challenge the Assignment, despite not
being a party to the Assignment, the District Court’s
interpretation of the Assignment, and its determination that
FirstBank transferred its entire interest in the Mortgage to DLJ,
was not clearly erroneous. A mortgage or an assignment of
mortgage is a contract, see Aviation Assocs. v. V.I. Port Auth.,
26 V.I. 24, 34-35 (1990) (providing that an assignment “is a
matter of contract”), and we “review a district court’s
interpretation of a contract for clear error,” In re Nat’l Football
League Players’ Concussion Injury Litig., 962 F.3d 94, 101 (3d
Cir. 2020). The language of the Assignment unambiguously
transfers FirstBank’s interests in the Mortgage to DLJ. See
White v. Spenceley Realty, LLC, 53 V.I. 666, 678 (2010)
(looking first at the contract’s language to determine the
existence of any ambiguity). The Assignment indicates Roy
Sheridan’s name as a borrower, the date the mortgage was
executed, that the mortgage was executed in favor of First
Bank, the two properties subject to foreclosure, the original

26
was transferred to DLJ, under the Restatement (Third) of
Property, and absent Virgin Islands law to the contrary, the
Mortgage in this case automatically followed the Note.66

In challenging DLJ’s standing to enforce the Note,
Sheridan does not contest DLJ’s possession of the Note, rather,
he argues that the evidence “reveals various unreconciled,
partial [a]ssignments” of the Note and Mortgage which make
it “unclear” what interest DLJ possesses.67

The debt in this action is evidenced by the Note. There
has been no suggestion that a note secured by a mortgage is not
a negotiable instrument under the Virgin Islands Uniform
Commercial Code.

Under Virgin Islands law, and in conformity with the
Uniform Commercial Code, persons entitled to enforce a
negotiable instrument are the “(i) the holder of the instrument,

principal amount of the loan, and the document number
assigned to the Mortgage when it was recorded. These
descriptions and recording information identified the mortgage
being assigned. Sheridan provides no legal authority for the
proposition that omitting a co-borrower’s name from an
assignment necessarily means that the assignor intends to
transfer only a partial interest.
66
See UMLIC VP LLC v. Matthias, 234 F. Supp. 2d 520, 523
(D.V.I. 2002) (“[I]n the Virgin Islands, no separate document
specifically assigning and transferring the mortgage which
secures a note is required to accompany the assignment of the
obligation, because the mortgage automatically follows the
note.”).
67
Sheridan Br. 26-27.

27
(ii) a non-holder in possession of the instrument who has the
rights of a holder; or (iii) a person not in possession of the
instrument who is entitled to enforce the instrument pursuant
to Section 3-309 or 3-418(d).”68

As relevant here, a “[h]older” is defined as “the person
in possession of a negotiable instrument that is payable either
to bearer or to an identified person that is the person in
possession[.]”69 “Negotiation” is required to make another
party a holder.70 “[I]f an instrument is payable to an identified
person, negotiation requires transfer of possession of the
instrument and its indorsement by the holder.”71

Here, the Note is payable to FirstBank. Therefore, to
show that it is a “holder” with standing to enforce the Note,
DLJ was required to prove that FirstBank transferred
possession of the Note and indorsed the Note to DLJ. Holmes,
whose testimony the District Court assigned “great weight,”72
testified that FirstBank indorsed the Note to DLJ and that DLJ
is in possession of the Note. Further, copies of the original
Note, the 2009 amendment to the Note, and allonge endorsing
the Note to DLJ were produced at trial. The allonge, dated June
20, 2013, includes the loan number, borrowers’ names, loan
amount, is signed by an employee of FirstBank, and states:
“Pay to the Order of: DLJ Mortgage Capital, Inc. Without
Recourse FirstBank of Puerto Rico.”73 Holmes testified that

68
See 11A V.I.C. § 3–301.
69
See id. § 1–201(b)(20)(A).
70
Id. § 3–201(a).
71
Id. § 3–201(b).
72
App. 313.
73
App. 498 (emphasis omitted).

28
this allonge was attached to the Note when DLJ received the
2009 amendment to the Note. Accordingly, as the District
Court found, this allonge and Holmes’s testimony evidences
DLJ’s indorsement of the Note to DLJ.74

From this evidence, the District Court properly found
that the Note was transferred to DLJ, that DLJ is in possession
of the Note, and that DLJ has standing and is authorized to
enforce the Note.

Sheridan attempts to cast doubt on DLJ’s interest in the
Note by pointing to a single page which contains only a stamp
stating “Pay to the order of: [Blank]. Without Recourse
Federal Home Loan Bank of N.Y.” and signed by “Paul D.
Gourleux, SVP.”75 There is no other writing on this page. This
single page is part of an exhibit introduced at trial which
contains the 2009 amendment to the Note, one allonge
indorsing the Note to blank, and the allonge described above,
which indorsed the Note to DLJ. Holmes testified that the
stamp was “on the back of the original copies” of the 2009
amendment to the Note when DLJ received the loan
documents.76 There was no further testimony or evidence
introduced as to the relevance of the stamp. Nor was there any
testimony or evidence suggesting that “Federal Home Loan
Bank of N.Y.” is an entity with interest in the Note and

74
The District Court stated: “And there has been some
suggestion that while the allonge itself isn’t an assignment, I
don’t believe there is any reasonable doubt or any doubt, really,
that the allonge is an endorsement of the thing that precedes it,
which is the note.” App. 312.
75
App. 496 (emphasis omitted).
76
App. 250.

29
Mortgage. DLJ’s possession of the Note and FirstBank’s
indorsement, notwithstanding the unsubstantiated challenge to
the chain of assignments, provided DLJ with standing to
enforce the Note.

In view of Holmes’s testimony, DLJ’s physical
possession of the Note, the allonge endorsing the Note to DLJ,
the Assignment, and the lack of evidence to the contrary, we
find no clear error in the District Court’s finding that the Note
and Mortgage were assigned to DLJ and that therefore DLJ is
entitled to collect all sums due under the Note and foreclose on
the properties mortgaged as security for the Note.77

We have carefully considered the remaining issues
presented by Sheridan and conclude they are without merit.

* * *

For the reasons stated, we will affirm the Judgment of
the District Court.

77
Because we agree that DLJ has standing to enforce the Note
and Mortgage, we reject Sheridan’s argument that DLJ is not
the “real party in interest” within the meaning of Federal Rule
of Civil Procedure 17(a) and that the District Court lacked
jurisdiction over this action.

30