Resolution Trust Corp. v. Gold

                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                           
No. 94-1080

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

                       Plaintiff, Appellee,

                                v.

             HAROLD GOLD AND GRAPHICS LEASING CORP.,

                     Defendants, Appellants.

                                           

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

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

                                           

                      Breyer,* Chief Judge,
                                          

                 Campbell, Senior Circuit Judge,
                                               

                     and Cyr, Circuit Judge.
                                           

                                           

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

                                           

                          July 27, 1994

                                          

                  

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

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

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

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

due  from  defendants-appellants  Harold  M.  Gold  and  Graphics

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

guaranty of  loans ComFed made  to First Equity  Funding Corpora-

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

of  default.  The  late answer admitted  the guaranty, contesting

only  the  amount claimed  by RTC.    It asserted  no affirmative
                 

defenses.  

          On September 20, RTC moved for summary judgment.  After

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

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

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

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

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

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

amend its  answer, without ruling  on the request  for additional

discovery, and Gold appealed.  We affirm. 

                                I

                            DISCUSSION
                                      

Leave to Amend
              

                                2

          We review denials of  leave to amend under Rule  15 for

abuse  of discretion,  deferring to  the  district court  for any

adequate  reason apparent  from the  record.   Demars v.  General
                                                                 

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

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

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

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

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

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

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

present  case was  not filed  until after  RTC moved  for summary

judgment, Gold was required to  demonstrate to the district court

that the  proposed amendments were supported  by "substantial and

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

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

There was no such showing.

          The  first claim Gold  advances on  appeal is  that RTC

waived its  contractual right to immediate payment on default, an

affirmative defense Gold sought to interpose  in its tardy motion

to amend.  The proffered defense is frivolous.  

          The ComFed demand note provides that, upon default, the
                                                            

entire loan balance becomes  "immediately due and payable without

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

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

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

                                3

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

waiver claim is based  on the belated affidavit of  Jeffery Stitt

   a Gold consultant    submitted with Gold's untimely motion for

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

terizations  of  alleged  parol  discussions with  anonymous  RTC

employees  at unidentified  times  fall far  short of  "clear and

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

indicating  that  [RTC] would  not  insist  that the  contractual

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

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

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

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

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

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

tion to summary judgment be based on competent evidence).  

          As  its  "Second  Affirmative  Defense,"  the  proposed

amended  answer simply alleged  that "The Complaint  is barred by

the doctrine  of estoppel."   Gold presented  neither explication

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

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

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

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

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

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

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

                                4

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

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

1992).  

          The  third  affirmative defense,  predicated  on Gold's

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

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

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

See supra pp. 3-4.
         

          Finally, the proposed amended  answer asserts     based

exclusively on "information and belief"     that ComFed failed to

require the borrower to  submit appraisals substantiating the 75%

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

allegedly placed Gold at undue risk under its unconditional  loan

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

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

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

inevitable adverse judgment would have failed for  lack of compe-

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

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

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

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

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

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

"convincing  evidence"  required  to  establish  a  "substantial"

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

                                5

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

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

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

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

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

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

ly futile affirmative defenses fully meriting summary  rejection.

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

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

empty formalities to reach foreordained results.").

Summary Judgment
                

          Gold failed to oppose RTC's motion for summary judgment

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

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

opposition did  not necessarily entitle RTC  to summary judgment.

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

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

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

revealed no  trialworthy  issue  of  material fact  and  RTC  was
                                                                 

entitled to judgment as a matter of law.  Velez-Gomez v. SMA Life
                                                                 

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

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

have been considered  by the  district court  in determining  the

                                6

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

(citing cases).

          RTC proffered  competent evidence that Gold  was liable

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

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

untimely     has not disclosed  a trialworthy  issue of  material

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

affirmative defense  belatedly asserted  in  the district  court.

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

stances.1

"Just Damages" Under Rule 38
                            

                    

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

                                7

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

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

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

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

late claims  at undeserved length  in order to  demonstrate their

dilatory aim  and amenability to  sanction.   Moreover, Gold  has

offered no  other plausible  explanation, let alone  a justifica-

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

Accordingly,  a reasonable  attorney fee  award and  double costs

shall  be  imposed  against  Gold for  this  frivolous,  dilatory

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

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

double  costs  and attorney  fee  as just  damages  for frivolous

appeal). 

          The district court judgment  is affirmed.  Double costs
                                                                 

and  a reasonable attorney fee  are awarded to appellee, pursuant
                                                                 

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

court.   Appellee is allowed  twenty days within  which to submit
                                                                 

its  bill of costs and  an application for  a reasonable attorney
                                                                 

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

served  upon appellant's  counsel.   Appellant  shall be  allowed
                                                                 

twenty days within which to file written objection to the amounts
                                                                 

requested by appellee.  SO ORDERED.
                                  

                                8