United States Court of Appeals,
Eleventh Circuit.
Nos. 94-4611, 94-5027.
In re SOUTHEAST BANKING CORPORATION, Debtor.
William A. BRANDT, Jr., as Trustee of Southeast Banking
Corporation, Plaintiff-Appellant,
v.
Florence S. BASSETT, as Personal Representative of the Estate of
Harry Hood Bassett, Donald N. Boyce, Joseph A. Boyd, M. Anthony
Burns, Edward D. Duda, et al., Defendants-Appellees.
FEDERAL DEPOSIT INSURANCE CORPORATION, as Receiver for Southeast
Bank, N.A., Intervenor-Plaintiff,
v.
William A. BRANT, Jr., as Trustee of Southeast Banking
Corporation, Florence S. Bassett, as Personal Representative of the
Estate of Harry Hood Bassett, et al., Intervenors-Defendants.
William A. BRANDT, Jr., as Trustee of Southeast Banking
Corporation, derivatively and on behalf of the Federal Deposit
Insurance Corporation as receiver of Southeast Bank, N.A. and
Southeast Bank, West Florida, Plaintiff-Appellant,
v.
Florence S. BASSETT, as Personal Representative of the Estate of
Harry Hood Bassett, Donald N. Boyce, Joseph A. Boyd, et al.,
Defendants-Appellees.
Nov. 30, 1995.
Appeals from the United States District Court for the Southern
District of Florida. Nos. 93-1829-CIV-EBD, 92-1600-CIV-EBD(SMA),
Sidney M. Aronovitz, Judge.
Before HATCHETT and CARNES, Circuit Judges, and OWENS*, District
Judge.
CARNES, Circuit Judge:
This is a consolidated appeal from two district court orders
*
Honorable Wilbur D. Owens, U.S. District Judge for the
Middle District of Georgia, sitting by designation.
dismissing certain averments brought by a Chapter 7 bankruptcy
trustee on behalf of a bank holding company against former
directors and officers of the holding company and its subsidiary
bank.
In the first case, No. 94-4611, the district court dismissed
some averments in the complaint on the ground that they constitute
a derivative action which can be asserted only by the Federal
Deposit Insurance Corporation, as receiver and successor in
interest to the holding company's subsidiary bank. The district
court dismissed other averments as barred by the statute of
limitations, and dismissed the complaint in its entirety insofar as
it concerns two of the defendants. The district court directed
entry of final judgment on the dismissed averments pursuant to
Fed.R.Civ.P. 54(b). As to that case, we hold that we lack
jurisdiction to review the statute of limitations ruling because it
was not a final judgment properly subject to Rule 54(b)
certification. For the same reason, we do not have jurisdiction to
review the district court's dismissal of the averments that it held
constitute a derivative action. We do, however, have jurisdiction
over the final judgment dismissing the entire complaint insofar as
it concerns two of the defendants, and we reverse that judgment.
In the second case, No. 94-5027, a forthright derivative
action, the district court dismissed the trustee's entire
complaint, holding that it is collaterally estopped by a holding in
the first case. We have jurisdiction to review the judgment in the
second case, and we affirm it.
I. BACKGROUND
A. The Bankruptcy Proceedings
Southeast Banking Corporation ("the holding company") is a
bank holding company incorporated under the laws of the State of
Florida. It is the holding company for Southeast Bank, N.A. ("the
subsidiary bank"), which was placed in receivership by the FDIC in
September of 1991. Two days after that happened, the holding
company filed a voluntary petition for relief under Chapter 7 of
the Bankruptcy Code, 11 U.S.C. § 101, et seq., in the United States
Bankruptcy Court for the Southern District of Florida. William J.
Brandt, Jr., is the trustee in bankruptcy of the holding company.
B. The Direct Action Litigation—Case No. 94-4611
In June of 1992 the trustee filed, on behalf of the holding
company, a complaint in the district court against eighteen former
directors and officers of the holding company, claiming that they
had consciously disregarded their duties to the holding company and
that they had acted contrary to the holding company's best interest
in order to entrench themselves as directors and officers. With
one exception, the defendants also were directors and officers of
the subsidiary bank. In July of 1993, the district court held that
the complaint alleged primarily derivative claims arising out of
the defendants' conduct in managing the subsidiary bank, instead of
direct claims arising out of the defendants' conduct as directors
and officers of the holding company. In re Southeast Banking
Corp., 827 F.Supp. 742 (S.D.Fla.1993). The court further held
that, pursuant to the Financial Institutions Reform, Recovery and
Enforcement Act ("FIRREA"), 12 U.S.C. § 1821(d)(2)(A)(i) (1988) all
such derivative claims belong exclusively to the FDIC as receiver
and successor in interest to the shareholders of the subsidiary
bank, and therefore dismissed the complaint. Id. The trustee
filed a first amended complaint, which the district court again
dismissed, this time on the ground that it did not contain
sufficient specific factual allegations to comply with Fed.R.Civ.P.
8.
The trustee then filed a second amended complaint alleging the
following: (1) the defendants refused to consider in good faith
any merger involving the holding company that would jeopardize
their positions as directors and officers; (2) the defendants
directed the holding company to acquire several Florida banks
without regard to whether such acquisitions were in its best
interest, in order to make it too large for a hostile takeover;
(3) the defendants distributed dividends on the holding company's
common stock against the best interest of the holding company and
its shareholders, in order to cover up the defendants'
mismanagement of the holding company; and (4) the defendants
directed and caused a precipitous increase in lending by the
subsidiary banks in order to make the holding company too large for
a hostile takeover. The defendants moved, under Fed.R.Civ.P.
12(b)(6), to dismiss the second amended complaint on a number of
grounds, including their contentions that the statute of
limitations bars many of the averments, and that any action related
to the lending practices of the subsidiary bank can be asserted
only by the FDIC as receiver and successor in interest to the
shareholders. In re Southeast Banking, Corp., 855 F.Supp. 353, 356
(S.D.Fla.1994).
In May of 1994, the district court denied the motion to
dismiss as to most of the second amended complaint. However, it
did dismiss the averments that the defendants improperly directed
the subsidiary bank's lending practices and all of the averments
relating to conduct that occurred before September 20, 1987, the
date beyond which the action is barred by the statute of
limitations, according to the district court. Id. at 358. The
court also dismissed the entire complaint insofar as it concerns
two of the defendants, James J. Forese and Charles D. Towers, Jr.,
who had been on the holding company Board of Directors only a short
period of time. Id. The district court directed entry of a final
judgment on the dismissed claims pursuant to Fed.R.Civ.P. 54(b),
expressly determining that there is no just reason for delay. Id.
at 361. The trustee has appealed the district court's judgments,
and that appeal is our case No. 94-4611.
C. The Derivative Action Litigation—Case No. 94-5027
In September of 1993, the trustee filed a "First Amended
Verified Derivative Complaint" against virtually the same
defendants,1 alleging that they had consciously disregarded their
duties as directors and officers of the subsidiary bank and of
another of the holding company's subsidiary banks. The district
court dismissed the derivative complaint on grounds that it is
collaterally estopped by the prior holding in the direct action
that such derivative claims can only be asserted by the FDIC. The
trustee's appeal of that judgment is our case No. 94-5027.
1
Appellee Alfonso Fanjul, Jr., is a defendant in the direct
action and not in the derivative action. With that one
exception, the defendants are the same in both cases.
II. THE DIRECT ACTION LITIGATION, No. 94-4611
A. Appellate Jurisdiction
Initially, we must determine if we have jurisdiction to hear
the appeal in case No. 94-4611, the direct action litigation. None
of the district court's decisions that the trustee appeals are
orders relating to injunctions, see 28 U.S.C. § 1292(a), or orders
as to which permission to appeal has been granted pursuant to 28
U.S.C. § 1292(b), nor is there any contention that we have
jurisdiction on any basis other than Rule 54(b). The trustee
contends that we have appellate jurisdiction because of the
district court's certification under Federal Rule of Civil
Procedure 54(b), which provides, in pertinent part:
When more than one claim for relief is presented in an action,
whether as a claim, counterclaim, cross-claim, or third-party
claim, or when multiple parties are involved, the court may
direct the entry of final judgment as to one or more but fewer
than all of the claims or parties only upon an express
determination that there is no just reason for delay and upon
an express direction for the entry of judgment.
A district court's Rule 54(b) determinations, which directly
affect the scope of our appellate jurisdiction, are not conclusive
on us. Pitney Bowes, Inc. v. Mestre, 701 F.2d 1365, 1369 (11th
Cir.), cert. denied, 464 U.S. 893, 104 S.Ct. 239, 78 L.Ed.2d 230
(1983). Instead, we review such determinations to see if they fit
within the scope of the rule. Id.; Braswell Shipyards, Inc. v.
Beazer East, Inc., 2 F.3d 1331, 1336 (4th Cir.1993).
1. The Standard of Review
We apply a two-pronged test to review a district court's Rule
54(b) certification. Curtiss-Wright Corp. v. General Electric Co.,
446 U.S. 1, 10, 100 S.Ct. 1460, 1466, 64 L.Ed.2d 1 (1980). First,
we scrutinize the district court's evaluation of the
interrelationship of the claims, in order to decide whether the
district court completely disposed of one or more claims, which is
a prerequisite for an appeal under the rule. Id.; see also Howard
v. Parisian, Inc., 807 F.2d 1560, 1566 (11th Cir.1987); Pitney
Bowes, 701 F.2d at 1369. Our scrutiny under this first prong
approaches de novo review, because we have a duty to "scrutinize"
the district court's determination in order to ensure that limits
on our jurisdiction are observed; however, there is some room for
deference particularly where the district court has made its
reasoning clear. See Curtiss-Wright, 466 U.S. at 10, 100 S.Ct. at
1466 (proper role of court of appeals is to ensure that the
district court's Rule 54(b) related conclusions and assessments are
juridically sound and supported by the record).
When a district court is persuaded that Rule 54(b)
certification is appropriate, the district court should support its
conclusion by clearly and cogently expressing its reasoning and the
factual and legal determinations supporting that reasoning. Cf.
Explosives Supply Co. v. Columbia Nitrogen Corp., 691 F.2d 486, 486
(11th Cir.1982) (observing that the district court is not required,
in every case, to express its reasoning, although "the desirability
of such a statement of reasons is obvious since an explanation
would assist appellate courts in reviewing district court
decisions."); Braswell, 2 F.3d at 1336 ("The expression of clear
and cogent findings of fact is crucial."). As other courts have
recognized, being explicit about its reasoning not only assists the
district court itself in analyzing the interrelatedness of the
claims and the equities of the situation, but also facilitates
appellate review of a Rule 54(b) certification. Id.; Allis-
Chalmers Corp. v. Philadelphia Elec. Co., 521 F.2d 360, 364 (3d
Cir.1975). Curtiss-Wright directs us to "scrutinize" the district
court's reasoning about the interrelationship of the claims, 466
U.S. at 10, 100 S.Ct. at 1466, and in doing that it certainly helps
if we know what that reasoning is.
We are sensitive to the burdens placed on district courts,
but they have an experiential advantage over this Court in parsing
out claims at the pretrial stage. If the district court does not
explain itself, as is the case here, we do not get the benefit of
its experience and its reasoning. In such a case, we do the best
we can without that assistance, but any deference we might
otherwise afford such a ruling will be nullified by the absence of
a meaningful explanation. Braswell, 2 F.3d at 1336 ("[N]umerous
courts have held that where the district court's Rule 54(b)
certification is devoid of findings or reasoning in support
thereof, the deference normally accorded such a certification is
nullified.").
As to the second prong of the inquiry under the rule—whether
there is any just reason for delay—we accord the district court's
determination considerably more deference than we do its first
prong determination. Curtiss-Wright, 466 U.S. at 10, 100 S.Ct. at
1466. We will not disturb the district court's assessment that
there is "no just reason for delay" unless the court's conclusion
was "clearly unreasonable," id., because "the task of weighing and
balancing the contending factors is peculiarly one for the trial
judge, who can explore all the facets of a case," id. at 12, 100
S.Ct. at 1467.
2. The Requirement of Separability for Rule 54(b) Certification
A judgment properly may be certified under the terms of Rule
54(b) only if it possesses the requisite degree of finality. That
is, the judgment must completely dispose of at least one
substantive claim. Howard, 807 F.2d at 1566. A partial or
interlocutory adjudication of a claim cannot be certified merely
because it is labelled a "partial summary judgment" or labelled a
12(b)(6) dismissal, even if the requisite "express determination"
has been made. Cf. id. ("Because an order denying a jury demand
does not dispose entirely of a claim but leaves the claim pending
for a bench trial, it is an interlocutory order. Therefore, the
order was not subject to certification under Rule 54(b)."
(citation omitted)).
The purpose of Rule 54(b) is to codify the historic practice
of "prohibit[ing] piecemeal disposition of litigation and
permitting appeals only from final judgments," except in the
"infrequent harsh case" in which the district court properly makes
the determinations contemplated by the Rule. Fed.R.Civ.P. 54(b)
advisory committee's note to 1946 amendment; Vann v. Citicorp Sav.
of Ill., 891 F.2d 1507, 1509-10 (11th Cir.1990). A district court
has the discretion to certify a judgment for immediate appeal only
when it is "final" within the meaning of Rule 54(b), which means
that the judgment disposes entirely of a separable claim or
dismisses a party entirely. Pitney Bowes, 701 F.2d at 1369 n. 8.2
Here, we are concerned with whether the district court
disposed entirely of one or more separable claims. To determine
this, we must delineate the point at which one claim parts company
with another, which often is a difficult task. As one authority
has noted, courts have frequently observed that the line between
deciding one of several claims and deciding only part of a single
claim is very obscure, and have on too few occasions articulated
the basis for their decisions in this area. 10 Charles A. Wright,
Arthur R. Miller & Mary Kay Kane, Federal Practice & Procedure §
2657, at 67 (2d ed. 1983) (hereinafter Wright); see also James Wm.
Moore, et al., Moore's Federal Practice ¶ 54.33[2], at 54-197 (2d
ed. 1995) (hereinafter Moore) ("With the doctrine thus in ferment
it is difficult to state any reliable limits for identifying a
distinct "claim for relief.' "). This Court has cautioned against
an inflexible approach to jurisdictional questions. Vann, 891 F.2d
at 509; see also Curtiss-Wright, 446 U.S. at 10-11, 100 S.Ct. at
1466-67 ("[B]ecause the number of possible situations is large, we
are reluctant either to fix or sanction narrow guidelines for the
district courts to follow."); In re Martin Bros. Toolmaker, Inc.,
796 F.2d 1435, 1437 (11th Cir.1986). Nevertheless, there are
certain guidelines that we apply.
2
Certification should not, however, be routinely granted in
any event. See Curtiss-Wright, 466 U.S. at 8, 100 S.Ct. at 1465
("Not all final judgments on individual claims should be
immediately appealable, even if they are in some sense separable
from the remaining unresolved claims."). It should be granted
only if there exists some danger of hardship or injustice through
delay, that would be alleviated by immediate appeal. See Vann,
891 F.2d at 1509-10.
Claims are separable when there is more than one possible
recovery, 10 Wright, § 2657, at 67, or if "different sorts of
relief" are sought, see Seatrain Shipbuilding Corp. v. Shell Oil
Co., 444 U.S. 572, 580-81 & n. 18, 100 S.Ct. 800, 805-06 & n. 18,
63 L.Ed.2d 36 (1980). When either of these circumstances exists,
claims are "separately enforceable" and subject to Rule 54(b)
certification even if they arise out of a single transaction or
occurrence. See Cold Metal Process Co. v. United Engineering &
Foundry Co., 351 U.S. 445, 452, 76 S.Ct. 904, 908, 100 L.Ed. 1311
(1956); Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436-37 & n.
9, 76 S.Ct. 895, 900-01 & n. 9, 100 L.Ed. 1297 (1956). However,
the same is not true if the claims for relief would not permit more
than one possible recovery; if the possible recoveries under
various portions of the complaint are mutually exclusive, or
substantially overlap, then they are not separable claims. 10
Wright, § 2657, at 67. That situation exists when the plaintiff
presents more than one legal theory, but will be permitted to
recover on only one of them. In such a case, there is only a
single inseparable claim for relief for purposes of Rule 54(b).
Id. at 69.
These limits on Rule 54(b) certifications are jurisdictional
and they are informed by the practical implications of reading the
rule broadly. See Curtiss-Wright, 466 U.S. at 8-10, 100 S.Ct. at
1464-66; Minority Police Officers Ass'n of South Bend v. City of
South Bend, Ind., 721 F.2d 197, 200 (7th Cir.1983) ("[W]e must
delve deeper before deciding that this is a case of genuinely
separate claims under Rule 54(b).... [because] [t]here are grave
practical objections to reading the rule broadly."). The caseload
of the federal courts of appeals has grown faster than that of any
other component of the federal judiciary. Minority Police
Officers, 721 F.2d at 200. A liberal construction of Rule 54(b)
has a tremendous potential to increase our caseload still more
rapidly, because of the rule's natural tendency to multiply appeals
in a single case. Id. This case is a good example: even if we
were to decide each of the issues raised in the present appeals, we
are quite likely to have to decide one or more additional appeals
in these cases in the future. Although "each appeal in a series of
multiple appeals in the same case should be easier to decide than
would be an appeal from a final judgment disposing of the entire
lawsuit, the greater simplicity will usually be outweighed by the
burden on this court of having to reacquaint itself again and again
with at least the basic facts of the case." Id. Thus, when we
consider whether claims are separate, we will keep in mind the
purpose and practical implications of Rule 54(b).
B. The District Court's Rulings
The district court dismissed portions of the complaint in the
direct action as to all the defendants for two reasons: (1) some
of the allegations are barred by the statute of limitations; and
(2) some of the allegations are derivative in nature and can be
asserted only by the FDIC as statutory receiver and successor in
interest to the shareholders of the subsidiary bank. The court
also dismissed the complaint in its entirety as to two of the
defendants, Forese and Towers. We address each of the court's
rulings in turn to decide whether they were properly certified
under Rule 54(b).
1. The Statute of Limitations Ruling
We begin with the district court's action certifying its
statute of limitations ruling as a final judgment. The trustee's
complaint presented four categories of averments:
(1) the defendants refused to consider in good faith any
merger that would jeopardize their positions as directors and
officers;
(2) the defendants directed the holding company to acquire
several Florida banks without regard to whether such acquisitions
were in its best interest, in order to make it too large for a
hostile takeover;
(3) the defendants distributed dividends on the holding
company's common stock against the best interest of the holding
company and its shareholders, in order to cover up the defendants'
mismanagement of the holding company; and
(4) the defendants directed and caused a precipitous increase
in lending by the holding company's subsidiary banks, in order to
make it too large for a hostile takeover.
Even if we assume—contrary to reality—that the four categories
of averments in the complaint are separable claims for Rule 54(b)
purposes, although the statute of limitations ruling cuts across
two of them it did not dispose entirely of any one of the four
categories of averments. Minority Police Officers, 721 F.2d at 201
(holding that district court's ruling that statute of limitations
barred liability for acts of discrimination committed more than two
years before the complaint was filed was not a final judgment under
Rule 54(b), because claims within the limitations period remained
for trial). None of the four categories of averments can be split
into separable claims by dividing the averments into time periods.
For example, as to the first category of averments, the relief the
complaint seeks for wrongful failure to consider a merger can be
recovered only once. Relief cannot be recovered for the wrongful
failure to consider merger in 1986, and again for 1987, and so
forth. Cf. Schexnaydre v. Travelers Ins. Co., 527 F.2d 855, 856
(5th Cir.1976) (using the term "multiplicity" instead of
"separability," and holding that, "[t]rue multiplicity is not
present where, as here, the plaintiff merely presents alternative
theories, drawn from the law of the same sovereign, by which the
same set of facts might give rise to a single liability.").
The same is true of the only other category of averments
affected by the statute of limitations ruling. The second category
addresses a continuing course of improper conduct in the adoption
and maintenance of "a policy of acquiring additional banks and
thrifts for the purpose of making [the holding company] too large
for any other bank holding company to acquire." The trustee can
not recover repeatedly for the defendants' adoption or maintenance
of a single improper policy.
Because the district court's statute of limitations ruling did
not dispose of separable claims, it was not a final judgment within
the meaning of Rule 54(b). Instead, the ruling was merely an
interlocutory order, which cannot be transformed under Rule 54(b)
into a final order for purposes of expediting an appeal. Howard,
807 F.2d at 1566; see also Wheeler v. American Home Products
Corp., 582 F.2d 891, 896 (5th Cir.1977). Accordingly, we lack
jurisdiction to review it. We turn now to the district court's
ruling about the portion of the complaint concerning the subsidiary
bank's lending practices.
2. The Subsidiary Bank Lending Practices Ruling
The trustee alleged that the defendants caused the subsidiary
bank to increase its lending, against the best interest of the
subsidiary bank, and thus against the best interest of the holding
company. The district court determined that these allegations
stated a derivative action on behalf of the subsidiary bank and
that, under FIRREA, any such derivative action belonged exclusively
to the FDIC as successor in interest to the shareholders of the
subsidiary bank. The court therefore dismissed the portions of the
complaint that concerned the subsidiary bank's lending practices.
Although the portion of the complaint concerning the
subsidiary bank's lending practices may appear at first glance to
be distinct from other portions of the complaint, it is actually
substantially interrelated with the averments about the wrongful
failure to consider a merger. The point of the subsidiary bank
lending practices averments is that the defendants specifically
directed the subsidiary bank to make "bad loans," which cost the
subsidiary bank money, and in turn, by way of pass-through, hurt
the holding company. The relief sought is intertwined with and
inseparable from the relief sought for the failure to consider
merger with another holding company, because the failure to
consider merger averments, if successful, will foreclose at least
some—if not all—of the relief sought for the improper lending
practices. If that were not true, there would be double recovery
for some of the same injury. The holding company would recover
twice because its relief on the failure to consider merger
averments would compensate it for all proximately caused damage
arising after the failure to merge, which would include at least
some of the relief sought on the subsidiary bank lending practices
averments. Stated differently, the relief for failure to consider
merger would presumably compensate the holding company for all
damages from the continued service of the directors beyond the date
on which a merger should have occurred, and those damages would
include any damages flowing from all the defendants' improper
conduct that took place after their failure to merge the holding
company. Thus, the lending practices damages would overlap to some
extent with the damages on the failure to consider merger
averments.3 This being so, these two categories of averments are
not separable in the Rule 54(b) sense. See 10 Wright, § 2657, at
67 (observing that claims are separable when there is more than one
possible recovery and the recoveries are not mutually exclusive);
General Acc. Ins. Co. v. J.K. Chrysler Plymouth Corp., 139 F.R.D.
585, 587 (E.D.N.Y.1991) (same).
Even if recovery on the failure to consider merger averments
3
The district court's statute of limitations ruling
truncated, or eliminated some of, both the failure to consider
merger averments and the subsidiary bank lending practices
averments. Thus, to the extent each category of averments is not
time-barred, they may well accrue on the same date, September 20,
1987. If so, and the trustee is successful on the failure to
consider merger claim, all of the relief sought on the subsidiary
bank lending practices averments will become a component of the
relief on the failure to consider merger averments. In fact, the
failure to consider merger averments would swallow (or foreclose)
all the others in the complaint.
would not preclude, in whole or in part, a separate recovery on the
lending claim, we might well reach the same result we reach here.
The strong policy against piecemeal litigation, which informs the
determination of separability and "requisite finality" for Rule
54(b) purposes, supports our result. See Curtiss-Wright, 466 U.S.
at 8-10, 100 S.Ct. at 1464-66; Minority Police Officers, 721 F.2d
at 200 (recognizing the practical affect of piecemeal appeals on
appellate court caseloads). An underlying theme of managerial
entrenchment runs through the entirety of the trustee's complaint,
and ties the averments together. The facts and any evidence in
terms of intent, as well as the law relating to breach of fiduciary
duty, overlap considerably between the failure to consider merger
averments and the subsidiary bank lending practices averments. If
we were now to review the district court's ruling on the subsidiary
bank lending practices, we would undoubtedly find ourselves dealing
with much of the same issues, facts, and law again in a subsequent
appeal after the final disposition of the case in the district
court. See, e.g., Curtiss-Wright, 466 U.S. at 6-7, 100 S.Ct. at
1463-64 (affirming district court's Rule 54(b) certification in
which the district court "found that certification would not result
in unnecessary appellate review; that the claims finally
adjudicated were separate, distinct, and independent of any of the
other claims or counterclaims involved; that review of these
adjudicated claims would not be mooted by any future developments
in the case; and that the nature of the claims was such that no
appellate court would have to decide the same issues more than once
even if there were subsequent appeals."); Explosives Supply, 691
F.2d at 486-87 (affirming district court's certification of
judgment when "the opinion of the lower court clearly shows the
separability of the claims such that neither the same issues nor
facts would be before the reviewing court more than once.").
District courts should be conservative in exercising their Rule
54(b) discretion.
3. The Ruling Dismissing the Entire Complaint Insofar As It
Concerned Defendants Forese and Towers
Certification of the district court's ruling dismissing the
entire complaint insofar as it concerned Defendants Forese and
Towers was within the district court's discretion because, without
question, it was a "final judgment as to one or more but fewer than
all ... the parties." Fed.R.Civ.P. 54(b). The district court
directed the entry of final judgment and made an express
determination that there is no just reason for delay. The language
of the rule itself makes clear that certification was allowable
under the first prong. As to the second prong, we can not say that
the district court abused its discretion in determining that there
is no just reason for delay. Curtiss-Wright, 446 U.S. at 10, 100
S.Ct. at 1466 (under the second prong of certification, "the
decision to certify ... [is] left to the sound judicial discretion
of the district court...., [which we review in] the interest of
sound judicial administration." (quotation marks omitted)). We
have jurisdiction to review the judgment, and we turn now to the
merits.
The district court dismissed the complaint entirely insofar
as it concerned Defendants Forese and Towers for two reasons.
First, the district court determined that the two defendants served
relatively short tenures as directors of the holding company, and
thus could not have been responsible for the activity alleged in
the complaint. However, the complaint does allege a continuing
pattern of improper conduct, spanning a time period which includes
the period Forese and Towers served as directors of the holding
company. At this stage of the litigation, on a motion to dismiss,
it was inappropriate for the court to go beyond determining whether
a claim has been pleaded against the defendants and speculate about
what the evidence might show. Scheuer v. Rhodes, 416 U.S. 232,
236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974) ("The issue is not
whether the plaintiff will ultimately prevail but whether a
claimant is entitled to offer evidence to support the claims.");
Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d
80 (1957) ("In appraising the sufficiency of the complaint we
follow, of course, the accepted rule that a complaint should not be
dismissed for failure to state a claim unless it appears beyond
doubt that the plaintiff can prove no set of facts in support of
his claim which would entitle him to relief.") (footnote omitted).
The district court's apparent conclusion that Forese and Towers
were not responsible for the policies of the Board, because of
their short tenures, was premature. The defendants will have an
opportunity to move for summary judgment, which is the appropriate
stage for the district court to make such a determination.
The district court's second reason for dismissing the
complaint as against Forese and Towers was that the court had
earlier ordered that when the trustee filed his second amended
complaint, he "allege with the greatest specificity those acts of
defendants Forese and Towers for which Plaintiff claims said
defendants are liable." In re Southeast, 855 F.Supp. at 358. The
trustee responded by simply attaching to the second amended
complaint four charts showing the terms of service of each
defendant. The court held that the charts "hardly suffice to
allege with any specificity, much less with "greatest specificity,'
those acts for which defendants Forese and Towers are allegedly
liable." Id. That is an accurate answer, but it is to the wrong
question; the court applied the wrong standard.
The standard for notice pleading set forth in Fed.R.Civ.P.
8(a)(2) requires "a short and plain statement of the claim showing
that the pleader is entitled to relief." We have held that:
Before a court may dismiss a claim under Rule 12(b)(6), it
must appear "beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to
relief." Neither "notice pleading' requirements (Fed.R.Civ.P.
8(a)(2)) nor the standards which govern dismissals under Rule
12(b)(6) require a claimant to set out in detail the facts
upon which he bases his claim. Pretrial procedures such as
summary judgment (Fed.R.Civ.P. 56) and the motion for a more
definite statement (Fed.R.Civ.P. 12(a)) are the appropriate
devices to narrow the issues and disclose the boundaries of
the claim or defense.
Williams v. United Credit Plan of Chalmette, Inc., 526 F.2d 713,
714 (5th Cir.1976) (quoting Conley v. Gibson, 355 U.S. 41, 45-46,
78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957)). In ordering the trustee to
plead his claims against Forese and Towers "with the greatest
specificity," the district court imposed a higher pleading standard
upon the trustee than Rule 8(a)(2) allows. See Fed.R.Civ.P. 83
(requiring courts to reach decisions that are consistent with the
rules).
Forese and Towers contend that the district court did not
require the trustee to plead his allegations with more specificity
than required by Rule 8(a)(2). They argue that the court only
required that the trustee allege with the greatest specificity he
could. The problem with their contention is that, for better or
for worse, the Federal Rules of Civil Procedure do not permit
district courts to impose upon plaintiffs the burden to plead with
the greatest specificity they can. E.g., Quality Foods de Centro
America v. Latin American Agribusiness Dev. Corp., 711 F.2d 989,
995 (11th Cir.1983) ("[T]he alleged facts need not be spelled out
with exactitude, nor must recovery appear imminent."). The
trustee's complaint alleges Forese and Towers engaged in three of
the four categories of improper conduct specified in the complaint
during their tenures with the holding company.4 Because the
complaint satisfies the low pleading burden imposed by Rule
8(a)(2), the district court's dismissal was improper. Id. ("[T]he
threshold of sufficiency that a complaint must meet to survive a
motion to dismiss for failure to state a claim is exceedingly
low."). Forese and Towers will have an opportunity to move for
summary judgment at the appropriate time.5
4
The trustee does not seek to recover from Defendants Forese
and Towers on the category of averments related to the holding
company's acquisition of several Florida banks, against the best
interest of the holding company, because that occurred before
they joined the Board of Directors.
5
Rule 8(a)(2) must be read in the context of Rule 11's
prohibition on pleadings formed without reasonable inquiry under
the circumstances. By filing the complaint in the first
instance, the trustee has certified that his claims are warranted
by existing law, or by a nonfrivolous argument for modification
of existing law, and that his allegations and factual contentions
have evidentiary support, or are likely to have evidentiary
III. THE DERIVATIVE ACTION LITIGATION, No. 94-5027
After the district court held in the direct action
litigation, discussed above, that the subsidiary bank lending
practices action belongs exclusively to the FDIC, the trustee filed
a "Verified Derivative Complaint" seeking to reassert on behalf of
the holding company essentially the same action in another form.
Following amendment of this derivative complaint, the defendants
moved to dismiss, relying on several alternative grounds including
the collateral estoppel effect of the prior order with respect to
the subsidiary bank lending practices. The district court
dismissed the derivative complaint in its entirety, under
Fed.R.Civ.P. 12(b)(6), based upon collateral estoppel.
Specifically, the district court found that: (1) the district
court in the direct action litigation had determined that the FDIC
had exclusive ownership of the subsidiary bank-related claims; (2)
the issue of subsidiary bank-related claim ownership was actually
litigated in the prior proceeding; (3) the ownership of those
claims was critical to the determination in that proceeding; and
(4) the trustee had had a full and fair opportunity to litigate the
issue previously, having submitted numerous memoranda of law and
support after further investigation or discovery.
If, after remand, the trustee persists in pursuing
claims against Forese and Towers, and the district court
ultimately determines he did so in bad faith, Rule 11
sanctions may be appropriate. If Rule 11 sanctions are
levied, the district court will have discretion to levy them
against the trustee and his counsel individually, rather
than against the holding company. Fed.R.Civ.P. 11(c)
("[T]he court may ... impose an appropriate sanction upon
the attorneys, law firms, or parties that have violated
subdivision (b) or are responsible for the violation.").
having made two oral arguments on the issue in the direct action
litigation.
Collateral estoppel bars relitigation of a previously decided
issue when the parties are the same (or in privity) if the party
against whom the issue was decided had a full and fair opportunity
to litigate the issue in the earlier proceeding. Allen v. McCurry,
449 U.S. 90, 95, 101 S.Ct. 411, 415, 66 L.Ed.2d 308 (1980); In re
St. Laurent, 991 F.2d 672, 675 (11th Cir.1993). The following
elements must be established before collateral estoppel applies:
(1) the issue at stake must be identical to the one decided in the
prior litigation; (2) the issue must have been actually litigated
in the prior proceeding; (3) the prior determination of the issue
must have been a critical and necessary part of the judgment in
that earlier decision; and (4) the standard of proof in the prior
action must have been at least as stringent as the standard of
proof in the later case. St. Laurent, 991 F.2d at 676; Citibank
v. Data Lease Financial Corp., 904 F.2d 1498, 1501 n. 6 (11th
Cir.1990); S.E.L. Maduro, Inc. v. M/V Antonio De Gastaneta, 833
F.2d 1477, 1483 (11th Cir.1987).
The trustee argues that collateral estoppel is inapplicable
because the issue of whether he could maintain a derivative action
on behalf of the subsidiary bank was not previously decided in the
direct action litigation. He contends that the only issue before
the district court in the direct action litigation was whether the
claims set forth in the trustee's complaint were direct claims or
derivative claims. We disagree. The district court decided in the
direct action that the complaint in that action stated a derivative
claim, and that for that reason it was barred by FIRREA. In re
Southeast, 827 F.Supp. at 746 ("These allegations plead classic
derivative claims which can only be asserted by the successor in
interest to the Bank, the FDIC.").6 In addition, the district
court's conclusion that derivative actions can not be brought
except by the FDIC was a critical part of the judgment in the prior
litigation, satisfying the third element of the collateral estoppel
test. Moreover, both the prior decision and this second one
granted motions to dismiss the complaint—placing identical burdens
on the trustee—and thus the fourth element was satisfied.
The remaining question involves the second element: whether
the issue was "actually litigated." In the direct action
litigation the trustee apparently chose to focus on whether the
action was direct or derivative, and not on whether derivative
actions belong exclusively to the FDIC. However, the defendants
argued that the complaint asserted derivative claims, and that
under FIRREA such derivative claims could be raised only by the
FDIC. The trustee responded that he was asserting direct claims
6
Although the district courts judgment in the prior case is
not yet "final" in the sense that it is appealable, the trustee
did not object in the district court, or in this Court, to the
application of collateral estoppel on that ground. We therefore
do not address that possible argument. See, e.g., United States
v. Hidalgo, 7 F.3d 1566, 1569 n. 2 (11th Cir.1993) ("[T]his
argument was not raised ... in the district court, was not
addressed by the magistrate judge or ruled on by the district
court, and was not raised in the statement of the issues or the
argument sections of [his] brief to this Court. Therefore it is
not properly before us."); Hicks v. Harris, 606 F.2d 65, 67 n. 3
(5th Cir.1979) ("Since this ground of attack on the trial court's
order was not raised below, it cannot be considered on appeal.");
Prymer v. Ogden, 29 F.3d 1208, 1213-14 (7th Cir.1994) (holding
counsel's failure to object on the grounds that the elements of
collateral estoppel were not met amounted to waiver of that
argument).
belonging to the holding company and not to the shareholders of the
subsidiary bank generally, or the FDIC. In re Southeast Banking
Corp., 827 F.Supp. at 745. Against that backdrop, the district
court determined in the direct action litigation that that portion
of the trustee's complaint pleaded "classic derivative claims which
can only be asserted by the successor in interest to the Bank, the
FDIC." Id. at 746. The court then dismissed the averments in
question, stating, "By statute, the derivative claims are declared
to be the claims belonging to the FDIC...." Id. at 749. Thus, the
court squarely addressed the issue.
It appears the trustee may have, in the prior litigation,
selected a litigation strategy he now regrets, placing all his eggs
in the "direct, not derivative" basket. But his choice of that
strategy will not prevent the application of collateral estoppel.
See Moore, ¶ 0.441[2], at 523 ("If it has been determined in the
former action, it is binding notwithstanding the parties litigant
may have omitted to urge for or against it matters which, if urged,
would have produced an opposite result.").
We affirm the district court's order dismissing the derivative
action.
IV. CONCLUSION
We DISMISS, for lack of jurisdiction, the appeals in case No.
94-4611 from the district court's ruling on the statute of
limitations and its ruling that the averments related to the
subsidiary bank's lending practices may be asserted only by the
FDIC. We have jurisdiction over the district court's order in that
same case dismissing the complaint entirely as against Defendants
Forese and Towers, and we REVERSE that decision and REMAND the case
to the district court for further proceedings. Additionally, we
have jurisdiction over the appeal in case No. 94-5027, and we
AFFIRM the judgment in that case.