Oakville Development v. FDIC ( 1993 )

March 4, 1993
UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 92-1976
OAKVILLE DEVELOPMENT CORPORATION,
TRUSTEE OF THE 10-12 LOPEZ ST. TRUST,
Plaintiff, Appellant,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Walter Jay Skinner, U.S. District Judge]
[Hon. Mark L. Wolf, U.S. District Judge]
Before
Selya, Circuit Judge,
Bownes, Senior Circuit Judge,
and Cyr, Circuit Judge.
David Hoicka, with whom Hoicka & Associates, P.C. was on
brief, for appellant.
Edward J. O'Meara, Staff Counsel, FDIC, with whom Ann S.
DuRoss, Assistant General Counsel, Richard J. Osterman, Jr.,
Senior Counsel, John Houlihan, Sarianna T. Honkola, and Edwards &
Angell were on brief, for appellee.
March 4, 1993
SELYA, Circuit Judge. Plaintiff-appellant Oakville
SELYA, Circuit Judge.
Development Corporation (Oakville) challenges orders issued by
two different district judges which had the combined effect of
allowing a foreclosure sale to proceed. For the reasons that
follow, we dismiss Oakville's appeal as moot.
I
Oakville borrowed $78,000 from First American Bank.
The loan was evidenced by a promissory note and secured by a
second mortgage on a parcel of real property located at 10-12
Lopez Street, Cambridge, Massachusetts. On October 19, 1990, the
bank was declared insolvent and the Federal Deposit Insurance
Corporation (FDIC) was appointed as receiver. Oakville's loan
appeared on the bank's books as an asset.
The FDIC published notice to First American's
creditors, setting a 90-day deadline for the filing of claims.
Because Oakville was mired in a dispute with First American
regarding the aforementioned loan, it filed a proof of claim.
The FDIC rejected Oakville's claim as untimely and refused to
entertain administrative appeals. Oakville did not seek judicial
review within the time allotted. See 12 U.S.C. 1821(d)(6)(A)
(1988). Some months later, however, Oakville sued in state court
based on First American's alleged failure to accept and credit
payments on the loan. The FDIC removed the case to federal court
and moved for dismissal. The FDIC's motion remains undecided.
Because Oakville's payments were substantially in
arrears, the FDIC also embarked on foreclosure proceedings. It
2
scheduled a foreclosure sale for May 20, 1992. On May 15,
Oakville moved to enjoin the proposed sale. On May 19, the
district court (Skinner, U.S.D.J.) issued a temporary restraining
order (TRO) stalling the sale. Oakville subsequently failed to
submit documents and appear at a hearing. Accordingly, Judge
Skinner dissolved the TRO on July 13, 1992.
The FDIC readvertised the foreclosure sale, this time
stipulating a date of August 12, 1992. Oakville filed an
emergency motion to reinstate the TRO.1 The district court
(Wolf, U.S.D.J.) denied the motion, determining that the court
lacked statutory authority to grant an injunction against the
FDIC qua receiver. See 18 U.S.C. 1821(j) (1988). Oakville
took an appeal but did not request a stay of the impending sale
(although counsel claims that he circulated notices at the
auction, warning prospective bidders that an appeal was pending).
The property was sold to a third party and has since changed
hands.
II
It is important to stress that Oakville takes this
appeal strictly and solely from two interlocutory orders of the
district court: Judge Skinner's order dissolving the TRO and
Judge Wolf's order refusing to reinstate the injunction (and,
thus, allowing the foreclosure sale to proceed). Hence, the
merits are not before us and Oakville's action remains pending
1The motion was filed on August 11, 1992. Judge Skinner was
on vacation. In his absence, Judge Wolf presided.
3
below. Seen in this light, it is readily apparent that, since
the foreclosure sale has now taken place and title to the
property rests with a third party, reversing the orders in
question would give Oakville no more than a moral victory. Ergo,
its appeal is moot.
Article III of the Constitution confines the federal
courts' jurisdiction to those claims which embody an actual
"case" or "controversy." U.S. Const. art. III, 2, cl. 1. It
is well established that, in circumstances where a court cannot
provide effectual relief, no justiciable case remains and the
court must dismiss the appeal as moot. See Mills v. Green, 159
U.S. 651, 653 (1895). This doctrine applies with full force and
effect where, as here, a plaintiff appeals from the dissolution
of an injunction or the denial of injunctive relief, but neglects
to obtain a stay. When, as will often happen, the act sought to
be enjoined actually transpires, the court may thereafter be
unable to fashion a meaningful anodyne. In such straitened
circumstances, the appeal becomes moot. See, e.g., In re Stadium
Management Corp., 895 F.2d 845, 847 (1st Cir. 1990) (holding, in
analogous circumstances, that "[a]bsent a stay, the court must
dismiss a pending appeal as moot because the court has no
remedy"); In re Continental Mortgage Investors, 578 F.2d 872, 877
(1st Cir. 1978) (explaining that "[a]n appeal is considered moot
if it cannot affect the matter in issue or cannot grant effectual
relief"); see also Railway Labor Executives Ass'n v. Chesapeake
W. Ry., 915 F.2d 116, 118 (4th Cir. 1990), cert. denied, 111 S.
4
Ct. 1312 (1991); In re Kahihikolo, 807 F.2d 1540, 1542 (11th Cir.
1987) (per curiam); Holloway v. United States, 789 F.2d 1372,
1374 (9th Cir. 1986); In re Combined Metals Reduction Co., 557
F.2d 179, 189 (9th Cir. 1977); In re Information Dialogues, Inc.,
662 F.2d 475, 476 (8th Cir. 1981); In re Cantwell, 639 F.2d 1050,
1053-54 (3d Cir. 1981).
III
Appellant offers three counter arguments in an effort
to ward off the inevitable. We consider them seriatim.
A
Oakville contends that we can grant effective relief
even at this late date. Its contention assumes that the sale can
be voided because prospective purchasers were notified of
Oakville's pending appeal.2 Oakville's premise is wrong.
Oakville furnishes no authority to contradict the black
letter law that a sale to a good faith purchaser cannot be
rescinded in these circumstances. See, e.g., Mass. Gen. L. Ann.
ch. 106, 2-702 (West 1990) (explaining that a seller's right to
reclaim goods is subject to the rights of a good faith
purchaser). Generally speaking, a good faith purchaser is one
who purchases assets for value, without fraud, misconduct, or
knowledge of adverse claims. In re Bel Air Assocs., Ltd., 706
F.2d 301, 304-05 (10th Cir. 1983); Greylock Glen Corp. v.
2We address this argument even though the record does not
contain a copy of the supposed notice or any other specific
information as to its contents or as to the manner in which it
was distributed.
5
Community Sav. Bank, 656 F.2d 1, 3-4 (1st Cir. 1981). Knowledge
of a pending appeal, without more, does not deprive a purchaser
of good faith status. Put another way, claims asserted in such
an appeal are not "adverse claims" within the meaning of the
rule. See Greylock Glen, 656 F.2d at 4 (holding that a bank,
although a party to a pending appeal, was nonetheless a good
faith purchaser); In re Dutch Inn of Orlando, Ltd., 614 F.2d 504,
506 (5th Cir. 1980) (holding that a third-party purchaser's
knowledge of claims asserted in a pending appeal did not deprive
the purchaser of good faith protection); see also Stadium
Management, 895 F.2d at 848 n. 4; cf. 11 U.S.C. 363(m) (an
appeal of the authorization to hold a bankruptcy sale does not
affect the good faith status of an ensuing transaction). Thus,
Oakville takes nothing simply by reason of having told likely
bidders about its pending appeal.
B
Oakville's second basis for claiming that we could
still grant effective relief is predicated on the notion that,
under Massachusetts law, it has a right to redeem the foreclosed
property.3 Thus, its thesis runs, the appeal is alive because an
affirmative exercise of redemptive rights will unravel the sale.
The infertility of this theory is starkly apparent.
As previously remarked, Oakville appeals only the
3Whether Oakville has such a right is far from pellucid. In
general, Massachusetts law does not provide a right of redemption
where the "land has been sold pursuant to a power of sale
contained in the mortgage deed," Mass. Gen. L. Ann. ch. 244,
18 (West 1988), as would appear to be the case here.
6
dissolution of the TRO and the district court's subsequent
refusal to reinstate it. But, redemption assumes a completed
foreclosure not a stalled sale. Thus, whatever state-law right
of redemption Oakville might have is independent of the merits of
the challenged orders. Indeed, it is the lifting of the TRO and
the consequent happening of the foreclosure that allows Oakville
to pursue its claimed redemptive remedies. What is more, our
contemplation of whatever as-yet-unexercised redemptive right
Oakville may enjoy would contravene Article III's prohibition
against advisory opinions. See Holloway, 789 F.2d at 1374(refusing to reach merits of redemption argument where purchaser
of property was not a party because to do so would be "an
advisory opinion upon a moot question") (citations omitted).
C
Appellant also argues that its appeal skirts the
jurisdictional bar because the question presented is "capable of
repetition, yet evading review." Southern Pac. Terminal Co. v.
ICC, 219 U.S. 498, 515 (1911). Although this asseveration
fastens upon a recognized exception to general principles of
mootness, see, e.g., Caroline T. v. Hudson Sch. Dist., 915 F.2d
752, 757 (1st Cir. 1990); In re Grand Jury Proceedings, 814 F.2d
61, 68 (1st Cir. 1987); Anderson v. Cryovac, Inc., 805 F.2d 1, 4-
5 (1st Cir. 1986), the exception is not a juju, capable of
dispelling mootness by mere invocation. Rather, the exception
applies only if there is "a 'reasonable expectation' or a
'demonstrated probability' that the same controversy will recur
7
involving the same complaining party." Murphy v. Hunt, 455 U.S.
478, 482 (1982) (quoting Weinstein v. Bradford, 423 U.S. 147, 149
(1975)).
Appellant's case does not come within the margins of
this definition. Unlike pregnant women, who are likely to
conceive again, see Roe v. Wade, 410 U.S. 113, 125 (1973), or
handicapped children, who are likely to require placement in
subsequent school years, see Honig v. Doe, 484 U.S. 305, 317-23
(1988), it is highly unlikely that appellant will again secure a
mortgage with a federally insured bank that then fails, prompting
FDIC involvement and ensuing foreclosure.4 Appellant has not
shown, or even alleged, that it has the slightest prospect of
suffering this fate anew. Instead, appellant contends that the
FDIC's arbitrariness will imperil other property owners. But,
even if this contention is true, it is irrelevant: the
possibility or even the probability that others may be called
upon to litigate similar claims does not save a particular
plaintiff's case from mootness. See Lane v. Williams, 455 U.S.
624, 634 (1982); Pallazola v. Rucker, 797 F.2d 1116, 1129 (1st
Cir. 1986). Thus, appellant cannot bring its case within the
narrow confines of the "capable of repetition, yet evading
review" exception.
IV
While most of appellant's claims against the FDIC
4The record in this case does not show that appellant owns
any other property, has any other mortgage loans, or retains any
borrowing power.
8
remain to be litigated below, its claims pertinent to injunctive
relief became moot when the property was sold at auction.
Although the transgressions of the FDIC may be a tempting subject
for soliloquy, for us to pronounce judgment in the absence of any
effective remedy would be to wander impermissibly into the realm
of the advisory and
the hypothetical. Because jurisdictional concerns prevent this
court from rendering judgment where no relief is legally
possible, we must go no further.5
The appeal is dismissed as moot. Costs to appellee.
The appeal is dismissed as moot Costs to appellee
5The FDIC has asked that we order appellant to pay
attorneys' fees and double costs. While the question is not free
from doubt, we decline, on balance, to impose sanctions. We do,
however, award the FDIC its ordinary costs.
9