Torres v. Bella Vista Hospital, Inc. , 914 F.3d 15 ( 2019 )

United States Court of Appeals
For the First Circuit
No. 16-2316
OLGA TORRES; PEDRO BONILLA,
Plaintiffs, Appellants,
v.
BELLA VISTA HOSPITAL, INC.; BANCO POPULAR DE PUERTO RICO;
THE WATSON WYATT COMPANY; RUBÉN PERÉZ; JOHANA DOE 1;
CONJUGAL PARTNERSHIP PERÉZ-DOE 1,
Defendants, Appellees,
THE ANTILLIAN UNION CONFERENCE OF THE SEVEN DAY ADVENTIST; THE
RETIREMENT COMMITTEE OF THE GENERAL CONFERENCE OF THE SEVENTH
DAY ADVENTISTS INTERAMERICAN DIVISION; THE GENERAL CONFERENCE OF
THE SEVENTH DAY ADVENTIST; BELLA VISTA PENSION PLAN AND TRUST;
THE ADVENTIST OF THE SEVENTH DAY INTERAMERICAN DIVISION
RETIREMENT PLAN; BELLA VISTA HOSPITAL, INC. 401K PLAN AND TRUST;
PANNELL KERR & FOSTER, L.L.P.; MIGUEL RAMOS; JOHANA DOE;
CONJUGAL PARTNERSHIP RAMOS-DOE,
Defendants.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. García-Gregory, U.S. District Judge]
Before
Howard, Chief Judge,
Boudin and Barron, Circuit Judges.
Luis A. Vivaldi Oliver on brief for appellants.
Carlos G. Martínez-Vivas on brief for appellees Bella Vista
Hospital, Inc.; Ruben Perez; Johana Doe 1; and Conjugal Partnership
Perez-Doe 1.
Cristina S. Belaval-Burger on brief for appellee Banco
Popular de Puerto Rico.
Juan A. Marqués-Díaz, Sonia M. López del Valle-Carrera, and
McConnell Valdés LLC, on brief for appellee Watson Wyatt Company.
January 25, 2019
BOUDIN, Circuit Judge. Olga Torres and Pedro Bonilla
are former employees of Bella Vista Hospital ("Bella Vista"), a
Mayaguez, Puerto Rico-based hospital operated by the General
Conference of Seventh Day Adventist Church. In 1982, the hospital
created a pension program, advising its employees that the plan
was subject to the Employee Retirement Income Security Act of 1974
("ERISA"), 29 U.S.C. §§ 1001-1461. ERISA is a federal statute
imposing obligations on private employers offering pension plans.
See Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652,
1656 (2017).
Certain types of plans are exempt from ERISA's
requirements, including plans which meet the statutory definition
of "church plan," 29 U.S.C. § 1003(b)(2). In 2000, the Internal
Revenue Service, which is empowered to issue rulings to parties as
to the status of their plans, advised Bella Vista that its pension
plan met the definition of "church plan" and so was exempt from
ERISA. In 2003, Bella Vista terminated the plan. Torres and
Bonilla had become disabled some years earlier, and certain
benefits they were receiving from the hospital ended. In November
2006, Torres and Bonilla sued in federal district court in Puerto
Rico to recover lost benefits.1
1 Torres and Bonilla had initially sued in a local Puerto Rico
court in 2004, naming not only the hospital but also others as
defendants. The local case was suspended to await the outcome of
the federal case. Defendants in addition to the hospital were
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Although the plaintiffs claimed federal subject matter
jurisdiction under ERISA, the district court found that the church
plan exception applied so ERISA did not govern the hospital's
pension regime. The court granted summary judgment in favor of
the defendants, dismissing the case on May 21, 2009, for lack of
subject matter jurisdiction--there being no federal claim in the
case outside of the purported ERISA count. Torres and Bonilla did
not appeal that decision and took no further action in court for
five years.
On November 24, 2014, Torres and Bonilla filed a motion
in the district court to set aside the 2009 judgment, invoking the
court's authority to vacate a judgment procured by "fraud on the
court." Although such an action is recognized in the rules, Fed.
R. Civ. P. 60(d)(3), the power of federal courts, both trial and
appellate, to set aside or alter prior judgments obtained by fraud
antedates the rules' adoption in 1938 and is a long-settled
equitable power of the federal courts not constrained by any
statute of limitations, Hazel-Atlas Glass Co. v. Hartford-Empire
Co., 322 U.S. 238, 244-45 (1944).
This drastic remedy is hedged with restrictions. Here,
plaintiffs claimed that in the original federal action they brought
also named in the federal case but were dismissed prior to this
appeal, with two exceptions: Banco Popular de Puerto Rico and
Watson Wyatt Company. Each has filed its own brief here.
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in 2006, various defendants made deliberate material misstatements
in their answers and various sworn statements. After referring
the reopening request to a magistrate judge, the district court in
September 2015, in agreement with the magistrate judge, rejected
the request as not coming even close to the level of "fraud on the
court."
The plaintiffs moved for reconsideration citing evidence
unearthed during the state-court proceeding, which had resumed
following the 2009 dismissal order in the federal case. The
district court denied the motion, and this appeal followed. The
appeal is hopeless on the merits; but the defendants raise
threshold objections that they argue divest this court of authority
over the appeal, namely (1) that the appeal is untimely, and (2)
that the notice of appeal is insufficient.
"'Jurisdiction' is a term used multiple ways," McKenna
v. Wells Fargo Bank, N.A., 693 F.3d 207, 213 (1st Cir. 2012); not
every rule governing the timing of appeals can be said to be
"jurisdictional," only those accorded that status by statute,
Hamer v. Neighborhood Housing Services of Chicago, 138 S. Ct. 13,
17 (2017), or where Congress has otherwise made a "clear
indication" of its desire to treat a particular rule as having
"jurisdictional attributes." Henderson ex rel. Henderson v.
Shinseki, 562 U.S. 428, 439 (2011).
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In all events, Supreme Court precedent generally
contemplates that a federal appeals court consider the timeliness
of the appeal before proceeding to the merits, Bowles v. Russell,
551 U.S. 205, 213-14 (2007), even where the merits issue is
straightforward and where the same party would lose under either
a jurisdictional or a merits ruling. Steel Co. v. Citizens for a
Better Env't, 523 U.S. 83, 94–95 (1998); see also McKenna, 693
F.3d at 213 ("[I]t is settled that a civil appeal filed out of
time is barred, that the error in timing cannot be waived, and
that circuit courts are expected to notice the error sua sponte
. . .").
In the nineteenth century and well into the twentieth,
some courts including this one (1) accepted that even
jurisdictional objections could be deemed waived if not raised
early in a lawsuit, and (2) often reached the merits of certain
disputes without deciding jurisdiction where the result would have
been unchanged. E.g., Carter v. Bennett, 56 U.S. 354, 357 (1853);
United States v. Parcel of Land With Bldg., Appurtenances &
Improvements, Known as Woburn City Athletic Club, Inc., 928 F.2d
1, 4 (1st Cir. 1991).
Steel Co. has ended this debate, see Hart & Wechsler,
The Federal Courts and the Federal System 1412 (6th ed. 2009), at
least with respect to Article III jurisdiction. But the timeliness
of an appeal or its scope do not turn on the "arising under"
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language of Article III or the scope of diversity jurisdiction.
It depends on whether the appeal was filed within the proper time
or encompasses the issue sought to be raised.
In our case the district judge dismissed the plaintiffs'
reopening motion on the merits on September 30, 2015, holding that
the allegations by plaintiffs even if factually supported did not
constitute fraud on the court. Plaintiffs then moved for
reconsideration on October 8, 2015, within the required time period
of twenty-eight days, see Fed. R. Civ. P. 59(e). The district
court denied the motion for reconsideration on September 19, 2016;
a notice of appeal from that order was then filed within the
required thirty-day period. Fed. R. App. P. 4(a)(1)(A).
Although a timely motion for reconsideration normally
tolls the running of the time to appeal, Fed. R. App. P.
4(a)(4)(A)(iv), various defendants argue here that this is not
true of where, without bringing anything new to the table, the
motion repeats claims already disposed of by the dismissal order,
Johnson v. Teamsters Local 559, 102 F.3d 21, 29–30 (1st Cir. 1996),
or is merely an eleventh-hour effort to undo the party's procedural
failures, Marks 3 Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc.,
455 F.3d 7, 15-16 (1st Cir. 2006). But here plaintiffs did offer
something not previously advanced, namely, evidence unearthed
during the state proceeding, so the present appeal is thus timely.
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Alternatively, defendants argue that the notice of
appeal identifies only the September 19, 2016, denial of the motion
for reconsideration and that this court therefore lacks authority
to consider the original September 30, 2015, dismissal of their
fraud claim. See Fed. R. App. P. 3(c)(1)(B) (requiring that the
notice of appeal "designate the judgment, order, or part thereof
being appealed"). But, as this court said in McKenna,
Technically, an appeal that attacks only an order
denying reconsideration can fairly be limited by
the court solely to issues raised in the
reconsideration motion; but so long as that order
is timely appealed, courts have some latitude to
consider other grounds originally urged against the
underlying dismissal, especially where the issues
on original dismissal and the reconsideration order
overlap or are intertwined.
693 F.3d at 213.
In this case the only substantive issue on which Torres
and Bonilla seek review is the district court's denial of their
effort to set aside the 2009 judgment based on alleged fraud on
the court; so we exercise our discretion to review that ruling
notwithstanding the lack of clarity in the notice of appeal,
Chamorro v. Puerto Rican Cars, Inc., 304 F.3d 1, 3 (1st Cir. 2002)
(explaining that notices of appeal should be "construe[d] . . .
liberally" and "examine[d] . . . in the context of the record as
a whole").
Turning to the merits, claims of false statements by
lawyers or parties are a serious matter and might meet some
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definitions of "fraud," but the phrase "fraud on the court" has a
special, well-understood and limited office. Inaccurate
assertions in lawsuits are commonplace and to allow all such claims
to be presented as "fraud on the court," with no time limit, would
undermine the finality of judgments and the need for all litigation
to come to an end, cf. Klimowicz v. Deutsche Bank Nat'l Trust Co.,
907 F.3d 61, 67 (1st Cir. 2018).
Thus "fraud on the court" is limited to fraud that
"'seriously' affects the integrity of the normal process of
adjudication," "defile[s] the court itself," and prevents "the
judicial machinery" from performing its usual function--for
example, bribery of a judge or jury tampering. 12 Moore's Federal
Practice § 60.21[4][a] (2018); see also George P. Reintjes Co. v.
Riley Stoker Corp., 71 F.3d 44, 48 n.5 (1st Cir. 1995). Nothing
of this severity is present in the plaintiffs' allegations.
Plaintiffs' mainly contend that Banco Popular de Puerto
Rico and Bella Vista and their agents committed perjury by denying
the existence of an ERISA-covered 401(k) plan and covered up the
transfer of funds between the liquidated employee benefits plan
and the 401(k) plan. Even assuming the truth of these allegations,
"perjury alone . . . has never been sufficient" to constitute
"fraud upon the court." George P. Reintjes Co., 71 F.3d at 49.
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Sorry though one may be about the plight of the
plaintiffs, the fraud on the court claim is hopeless. The 2006
litigation is at an end.
Affirmed.
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