Penn West Associates, Inc. v. Cohen

Opinions of the United 2004 Decisions States Court of Appeals for the Third Circuit

6-9-2004

Penn West Assoc v. Litman Precedential or Non-Precedential: Precedential

Docket No. 02-4344

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Recommended Citation "Penn West Assoc v. Litman" (2004). 2004 Decisions. Paper 564. http://digitalcommons.law.villanova.edu/thirdcircuit_2004/564

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova University School of Law Digital Repository. It has been accepted for inclusion in 2004 Decisions by an authorized administrator of Villanova University School of Law Digital Repository. For more information, please contact [email protected]. PRECEDENTIAL On Appeal from the United States District Court for the UNITED STATES Western District of Pennsylvania COURT OF APPEALS D.C. Civil Action No. 97-cv-01678 FOR THE THIRD CIRCUIT (Honorable Alan N. Bloch)

No. 02-4344 Argued September 15, 2003 Before: ALITO, AMBRO and PENN WEST ASSOCIATES, INC., a CHERTOFF, Circuit Judges Corporation t/d/b/a THE WILKINS HOUSE, (Opinion filed June 9, 2004)

Appellant Bela A. Karlowitz, Esquire (Argued) Daniel M. Flynn, Esquire v. Karlowitz & Cromer 429 Forbes Avenue KATHERINE COHEN, Co-Executrix of 1201 Allegheny Building the Estate of Eugene M. Litman*; Pittsburgh, PA 15219 MICHAEL LITMAN, Co-Executor of the Estate of Eugene M. Litman*; Attorneys for Appellant JAMES W. MCCARTHY; PENN WEST ASSOCIATES, also known as PENN Robert L. Potter, Esquire (Argued) WEST OFFICE BUILDING, a David A. Strassburger, Esquire limited partnership; BRANDYWINE Strassburger, McKenna, Gutnick AGENCY; ALPINE & Potter CONSTRUCTION CO., a Corporation; 444 Liberty Avenue PROPERTY DEVELOPMENT Four Gateway Center, Suite 2200 ASSOCATES, INC., a Corporation; Pittsburgh, PA 15222 PITTSBURGH INVESTMENT COMPANY, a Partnership; James A. Ashton, Esquire PATRICIA KATZ, general partner; Suite 227 ABLE HOME CENTER, INC.; 500 Lewis Run Road DIANNA Pittsburgh, PA 15122 BOBACK, an individual; MARGARET MULL, an individual Attorneys for Appellees *(Amended pursuant to Court Order of May 21, 2004) OPINION OF THE COURT AM BRO, Circuit Judge: cause of action under the Racketeer Influenced and Corrupt Organizations Act We review the District Court’s (“RICO”), 18 U.S.C. §§ 1961-1968 . November 5, 2002 order denying the According to the complaint, the defendants motion of Penn West Associates, Inc. had purportedly looted, and aided in the (“Penn West”) to re-open its civil RICO looting of, Penn West’s assets between case. That case was administratively February 1988 and late 1993, when closed by order of the District Court on Eugene M. Litman, H. Raymond Litman, August 19, 1999, after both parties and McCarthy owned the company. informed the Court that they tentatively Levine was never a named party to the settled their dispute. In fact, the civil action. RICO case was not concluded. The District Court mistook its administrative On September 17, 1997, the action closure of the case as a final decision, was removed to the United States District which mistakenly led it to treat Penn Court for the Western District of West’s motion to re-open the case and list Pennsylvania. Prior to trial, all counts of it for trial as one under Federal Rule of the complaint were dismissed except for Civil Procedure 60(b). Thus it erred in the civil RICO claim against the Litman denying Penn West’s motion to re-open. Group. For trial purposes, the case was also joined with a related qui tam action I. Background under the False Claims Act, 31 U.S.C. §§ On September 11, 1997, Penn West 3729-3731, captioned United States ex rel. filed suit in the Court of Common Pleas of Weinstein v. Litman, No. 96-1860. Robert Allegheny County, Pennsylvania against Potter, Esq. was lead counsel for the Eugene M. Litman (individually and in his Litman Group in both actions. Robert capacity as Executor of the Estate of H. Ridge, Esq. was lead counsel for the Raymond Litman); James W. McCarthy; private plaintiff in the False Claims Act Penn West Associates, a partnership case. While the RICO case was pending comprised of Eugene M. Litman, Michael trial, Penn West and Levine both filed A. Litman, and James W. McCarthy bankruptcy petitions in the United States (Eugene M. Litman, James W. McCarthy, Bankruptcy Court for the Western District and Penn W est Associates being of Pennsylvania. Mary Reitmeyer, Esq., hereinafter collectively referred to as the was appointed as Trustee for Penn W est in “Litman Group”); and numerous other its case, and thereafter obtained an order defendants. The suit arose from Lawrence appointing John Orie, Esq. as special A. Levine’s purchase in 1993 of all of the counsel for Penn West for purposes of capital stock of Penn West from Eugene pursuing the RICO action. M. Litman, James W. McCarthy, and the On July 1, 1999, after six days of Estate of H. Raymond Litman. Penn trial in the RICO case, counsel for the West’s complaint contained, inter alia, a parties informed the District Judge that 2 they had reached a settlement. During a sealed. The District Judge ended the telephone conference on the record that conference by stating: “We’ll advise the day among, inter alia, the District Judge, jury that they are discharged, and we’ll Potter and Orie, Potter informed the wait to receive from you the settlement District Court that his clients (the Litman papers that I have to approve.” Group) had agreed to pay $25,000 to the Seven weeks later, the Court, United States Department of Justice to having heard nothing further from the settle the False Claims Act case and that parties and making no inquiry of them, the Department of Justice had approved issued the following order: the settlement. Furthermore, the Litman Group had agreed to pay $75,000 to Penn AND NOW , this 19th day of West to settle the RICO case. Potter August, 1999, having been informed the District Court that “[m]utual advised by the parties of the releases will be exchanged with everybody full and final settlement of in the RICO case[,] including attorneys.” the above captioned matter Potter also stated that, as part of the and there are no further settlement, the Litman Group would be matters pending before the dropping its claims against Levine Court, individually in his bankruptcy proceeding and would assert no further claims in IT IS HEREBY ORDERED either Levine’s or Penn W est’s bankruptcy that the Clerk of the Court proceedings. Moreover, the Litman Group mark the above captioned would be marking as satisfied any state matter closed. court judgments it had obtained against Levine personally. 1 The triggering premise of the order (final settlement) proved, however, to be Although Orie did not speak at the premature. No settlement agreement was conference, at no time did he object to the ever drafted and settlement papers had description of the terms of the settlement. never been sent to, nor approved by, the The parties then agreed that they would District Court. Nevertheless, the order not file the settlement agreement of record was entered by the Clerk and counsel were in the District Court because of concern notified accordingly.2 that, if filed, the agreement could not be As a result of the August 19, 1999 order, the parties and the District Court 1 The District Court’s opinion notes that this reference to judgments against Levine 2 relates to a “long history of a The release to settle the False Claims contemptuous and litigious relationship” Act case was nonetheless executed and the between Levine and one or more members Litman Group paid the $25,000 settlement of the Litman Group. amount to the Department of Justice.

3 appear to have operated under the personally represented by Orie and that he assumption that the litigation was had never authorized Orie to include him terminated. Approximately three months in the settlement. As later recounted in its later, Reitmeyer, the bankruptcy Trustee opinion, the District Court found it for Penn West, filed a motion with the “incredulous that the defendants would District Court to compel enforcement of pay money to [Penn West], solely owned the purported settlement terms of the by Lawrence Levine, and yet leave RICO case. The motion stated that the themselves open to lawsuits filed by settlement had not been finalized because Levine.” Penn West Associates, Inc. v. the Litman Group had insisted that Levine Litman, No. 97-1678, slip op. at 6 (W.D. personally join in the “mutual release” Pa. Nov. 5, 2002). Nevertheless, the referred to during the July 1, 1999 District Court stated that the case was teleconference. The Litman Group’s “settled and closed.” The Court further response to Penn West’s motion stated that stated that the settlement agreement, which the settlement had not been completed for had not been made a part of the record, the sole reason that Levine “consistently was a contract between the parties whose refused to execute a general release in terms would have to be litigated in another favor of the Litman Group Defendants, forum. It therefore denied Penn West’s notwithstanding that he expects the Litman motion to enforce the settlement. 4 Group Defendants to release all of their claims against him individually.” 3 4 A conference with the parties The District Court, in its November 5, (including Levine) was convened by the 2002 opinion, subsequently noted that its District Court on November 18, 1999 to refusal to enforce the purported settlement discuss the motion. During this was based on Kokkonen v. Guardian Life conference, Levine stated that he was not Ins. Co. of Amer., 511 U.S. 375, 380-81 (1994) (holding that a district court lacks jurisdiction to enforce a settlement 3 The Litman Group’s response agreement unless the court retains concerned the substance of the settlement jurisdiction over the agreement or negotiations, indicating that it was Orie, incorporates the terms of the agreement special counsel for Penn West, who into its dismissal order), and Sawka v. intended any settlement to encompass “all Healtheast, Inc., 989 F.2d 138, 141 (3d matters.” During the negotiations, Potter, Cir. 1993) (holding that a district court counsel for the Litman Group, apparently does not have the power to exercise informed Orie that the Litman Group was jurisdiction over a petition to enforce a willing to release its claims against Levine settlement “unless ... [it] is part of the individually, but only in return for a record, incorporated into an order of the general release from, among others, district court, or the district court has Levine personally. m a n i f e s te d a n inte nt to r e t a in 4 Penn West’s Trustee (Reitmeyer) until March 15, 2002, w hen a plan of did not seek immediately to re-open Penn reorganization was approved by the West’s civil RICO case. Instead, she filed Bankruptcy Court. Under the plan, Levine an adversary proceeding in Penn W est’s regained control of Penn West. ongoing bankruptcy case to enforce the Subsequently, on May 10, 2002, purported settlement against the Litman Penn West filed with the District Court a Group. On September 11, 2000, the Motion to List the Case for Trial and Other Bankruptcy Court issued an opinion Relief. The motion related the foregoing stating that facts and that the Litman Group had filed [t]here existed a mistake in a substantial claim against Levine in his the understanding of the ongoing individual bankruptcy case. Penn parties as to the terms of West argued that the resolution of its civil settlement. The mistake RICO case would affect substantially the was basic and central to any claims of the Litman Group and others in settlement. Defendants Levine’s individual bankruptcy case. were not going to settle on Finally, the motion requested that “(i) the the terms offered without docket entry in this Civil Action showing the release from Mr. Levine that the case is settled be stricken and (ii) and Mr. Levine, believing the case be scheduled for trial forthwith . . he had no control over . .” No legal authority for this request was matters having to do with cited. the corporation, was willing The Litman Group’s memorandum to let the Trustee settle for in opposition to Penn West’s motion the corporation, but he argued that “[t]o declare a ‘closed’ case individually was not going ‘open’ for reasons other than clerical to release the defendants. mistake, it is necessary to file a motion for relief from the final order under Federal The Bankruptcy Court concluded that, due Rule of Civil Procedure 60(b).” Agreeing to the mistake, no settlement agreement with the Litman Group, the District Court existed and therefore denied Penn West’s analyzed Penn West’s motion under Rule motion to enforce the settlement. The Trustee again did not return to the District Court to seek re-opening the closed RICO civil case. Rather, Penn West proceeded through its bankruptcy

jurisdiction”). See Penn West Associates, Inc., No. 97-1678, slip op. at 6-7.

5 60(b). 5 On November 5, 2002, the Court denied the motion, holding that Penn West could not satisfy the requirements of Rule 60(b)(1), (2), (3) or (6). Penn West filed a 5 timely notice of appeal from the District Rule 60(b) states in pertinent part: Court’s order. On motion and upon such terms as are just, the court II. Jurisdiction may relieve a party or a The District Court had jurisdiction party’s legal representative over Penn West’s civil RICO action from a final judgment, pursuant to 28 U.S.C. § 1331 , which order, or proceeding for the provides for federal question jurisdiction, following reasons: (1) and removal was proper under 28 U.S.C. § m i s t a k e , i n a d ve r t e n c e , 1441. With respect to our appellate surprise, or excusable jurisdiction, we have noted previously that, negle ct; ( 2) ne w ly while “it would appear that an order discovered evidence which denying a Rule 60(b) motion is appealable by due diligence could not under 28 U.S.C. § 1291 ,” this may not have been discovered in always be the case. See Torres v. Chater, time to move for a new trial 125 F.3d 166, 167-68 (3d Cir. 1997). In under Rule 59(b); (3) fraud Torres, we stated: ( w h e ther her e t o f o re denominated intrinsic or There is an interdependence e x t r i n s i c ) , between the “f inality” misrepresentation, or other required for Rule 60(b) and misconduct of an adverse section 1291. In some party; (4) the judgment is instances, the Court of void; (5) the judgment has Appeals may not entertain been satisfied, released, or an appeal [from a denial of a discharged, or a prior Rule 60(b) motion] under judgment upon which it is section 1291 because the based has been reversed or underlying order in the otherwise vacated, or it is no district court is purely longer equitable that the interlocutory and, thus, not judgment should have within the scope of Rule prospective application; or 60(b), which applies only to (6) any other reason justifying relief from the operation of the judgment. (3) not more than one year The motion shall be made after the judgment, order, or within a reasonable time, proceeding was entered or and for reasons (1), (2), and taken.

6 “final” judgments and effect of that denial was to dismiss Penn orders. West’s action. Thus we hold that the District Court’s November 5, 2002 order Id. at 168 (citing Kapco M fg. Co. v. C & O was a final decision under 28 U.S.C. § Enters., 773 F.2d 151, 153 (7th Cir. 1291. See Brown Shoe Co. v. United 1985)). Thus, if the denial of the Rule States, 370 U.S. 294, 306 (1962) (noting 60(b) motion is itself interlocutory, we that the Supreme Court has adopted a normally do not have appellate jurisdiction “pragmatic approach to the question of to review that denial. Torres recognized, finality”); cf. In re Grand Jury however, that even where an underlying Proceedings (U.S. Steel-Clairton Works), order is purely interlocutory, we may 525 F.2d 151 , 155 (3d Cir. 1975) (holding nonetheless review a district court’s denial that a district court’s indefinite stay of of a Rule 60(b) motion if the denial has the federal grand jury proceedings pending a effect of “‘wrap[ping] up all matters state civil contempt action had “the pending on the docket,’ thus making the practical effect of a dismissal of the decision final.” Id. (quoting Kapco Mfg. proceedings” and hence was a final order). Co., 773 F.2d at 153 ). An example is a We therefore have jurisdiction over this district court’s interlocutory order appeal. remanding a case to an administrative agency for reconsideration. See id. If, III. Standard of Review while the case was pending before the A District Court’s denial of a Rule agency, a party filed a Rule 60(b) motion 60(b) motion generally is reviewed for arguing that the remand had been procured abuse of discretion. Montgomery County by fraud on the court, a denial of that v. Microvote Corp., 320 F.3d 440 , 445 (3d motion would be dispositive of the charge Cir. 2003). The District Court’s decision of fraud. Id. Given those circumstances, to treat Penn West’s motion as a Rule we held that the underlying remand order 60(b) motion, however, is purely a may be considered final for purposes of question of law, which we review de novo. Rule 60(b) and the denial of a Rule 60(b) See United States v. Small, 333 F.3d 425 , motion would be a final decision, 427 (3d Cir. 2003) (citing United States v. reviewable under 28 U.S.C. § 1291 . Id.

Singletary, 268 F.3d 196, 198 (3d Cir. We are, however, not presented 2001)). with the difficulties addressed in Torres IV. Discussion because this case does not require us to review the merits of the denial of a Rule On appeal, Penn West argues that 60(b) motion, for we conclude below that the District Court erred in denying its it was error to apply Rule 60(b) in this motion to re-open the civil RICO case and case. The decision before us is the District list it for trial, as its case did not settle and Court’s denial of a motion to re-open an the District Court’s August 19, 1999 order administratively closed case. The practical marking the case closed was void. Penn 7 West concludes that the District Court “applies only to ‘final’ judgments and should have reviewed the motion under orders.” Torres, 125 F.3d at 168 ; see also Rule 60(b)(4), which allows relief from a Kapco Mfg. Co., 773 F.2d at 154 (holding “void judgment,” rather than conducting that “Rule 60(b) must be limited to review an analysis under Rule 60(b)(1), (2), (3), of orders that are independently ‘final and (6). We agree that the District Court decisions’ under 28 U.S.C. § 1291”). 6 erred, albeit for different reasons than The concept of “finality” is well- those articulated by Penn West. We first settled. In Catlin v. United States, 324 address whether Rule 60(b) is the correct U.S. 229, 233 (1945), the Supreme Court rule governing Penn West’s motion. We defined a “final decision” for purposes of next address the significance of the appeal “generally [as] one which ends the District Court’s August 19, 1999 order. litigation on the merits and leaves nothing Finally, we respond briefly to the concerns for the court to do but execute the raised by our dissenting colleague. judgment.” Interpreting Catlin, we have A. Application of Rule 60(b) described a final decision as “‘one which disposes of the whole subject, gives all the Our analysis of Rule 60(b) begins, relief that was contemplated, provides with as it must, with its text (see supra note 5). reasonable completeness for giving effect It allows a party to seek relief only from a to the judgment and leaves nothing to be “final judgment, order, or proceeding . . . done in the cause save to superintend, .” The application of the word “final” is ministerially, the execution of the clarified by the Advisory Committee decree.’” Isidor Paiewonsky Assocs., Inc. Notes, which explain that v. Sharp Props., Inc., 998 F.2d 145 , 150 the qualifying word “final” (3d Cir. 1993) (quoting In re Moody, 825 emphasizes the character of F.2d 81, 85 n.5 (5th Cir. 1987)) (emphasis the judgments, orders or in original). Accordingly, “there is no proceedings from which final order if claims remain unresolved and Rule 60(b) affords relief; their resolution is to occur in the district and hence interlocutory court.” Aluminum Co. of Amer. v. Beazer judgments are not brought East, Inc., 124 F.3d 551 , 557 (3d Cir. within the restrictions of the rule, but rather they are left 6 subject to the complete In Kapco, the Court reasoned that Rule power of the court rendering 60(b) must be so limited because “[a] party them to afford such relief should not get immediate review of an from them a s justice order for discovery, or one denying requires. summary judgment and setting the case for trial, just by filing a Rule 60(b) motion to Accordingly, we have held that Rule 60(b) set aside the order and then appealing the denial of this motion.” 773 F.2d at 154 .

8 1997) (“Ordinarily, a final decision will importantly, there was more for the have two effects. First, the decision will District Court to do. The parties had to fully resolve all claims presented to the continue their litigation in both the District district court. Second, after the decision Court and the Bankruptcy Court to has been issued, there will be nothing determine: (1) whether they had indeed further for the district court to do.”). This “settled” their case in July 1999, and (2) description accords with several other (a) if so, the terms of that settlement and courts of appeals. See Moody, 825 F.2d at whether to approve it, or (b) if not, how to 85 n.5; Youghiogheny & Ohio Coal Co. v. achieve a resolution of their ongoing Baker, 815 F.2d 422 , 424 (6th Cir. 1987); dispute. Accordingly, the District Court’s United States v. Western Elec. Co., 777 order does not satisfy our definition of a F.2d 23, 26 (D.C. Cir. 1985); see also Otis final decision. v. City of Chicago, 29 F.3d 1159 , 1163 Our conclusion is not altered by the (7th Cir. 1994) (“[A final judgment] parties’ mistaken assumption that their should be a self-contained document, litigation was terminated by the District saying who has won and what relief has Court’s August 19, 1999 order. The Court been awarded . . . .”). itself contributed to this misunderstanding Is the District Court’s August 19, with its November 18, 1999 statement on 1999 order a final decision? If not, relief the record that “our cases are settled and is unavailable under Rule 60(b). At the closed, and that’s the way they are going to outset, we note that the order did not stay, and if you have a dispute over the resolve, or even purport to resolve, any of terms of the settlement, that’s a contract the claims that Penn West presented to the dispute, and you go ahead and litigate that District Court. Rather, its purpose was contract dispute wherever you please.” solely to direct the Clerk of the Court to This mistaken assumption on the part of mark Penn West’s case as closed.7 More the District Court does not end the case. See Bensalem Township. v. American Fidelity Fire Ins. Co., 644 F.2d 990 , 994 7 We also note that the factual basis (3d Cir. 1981) (“[T]he boundaries of given for the order is incorrect. It stated section 1291 jurisdiction do not depend on that the District Court had been “advised the trial court’s belief that a particular by the parties of the full and final settlement” of Penn West’s case. That event, however, never occurred. All from the record any substantive reason for parties agree that counsel and the District the issuance of the District Court’s order, Court did not communicate between the especially after telling the parties on July July 1, 1999 teleconference and the August 1, 1999 that “[w]e’ll advise the jury that 19, 1999 order. The parties also agree that they are discharged, and we’ll wait to no final settlement papers were sent to the receive from you the settlement papers that District Court. We thus cannot discern I have to approve.”

9 decision is or is not ‘final’ . . . .”). That Lehman v. Revolution Portfolio L.L.C., the parties followed suit in the belief that 166 F.3d 389, 392 (1st Cir. 1999). There, the District Court’s order terminated their the plaintiff in a civil action requested the litigation does not make it so. Cf. Brown District Court to stay its proceedings Shoe Co. v. United States, 370 U.S. 294 , because he had entered bankruptcy. Id. at 305 (1962) (holding that “the mere consent 391. The District Court, responding to this of the parties to the Court’s consideration request, issued what it termed a and decision of the case cannot, by itself, “Procedural Order of Dismissal.” Id. It confer jurisdiction on the Court” in the stated: absence of a final judgment); Gerardi v. Pelullo, 16 F.3d 1363, 1368 (3d Cir. 1994) In order to avoid the (“[W]e directed the parties to brief the necessity for the counsel to finality issue, notwithstanding their appear at periodic status agreement that the certification was conferences, it is hereby proper, for we consider the validity of a ORDERED that the above- Rule 54(b) certification ourselves.”). entitled action be and hereby i s d i s m i s se d w i t h o u t Because the District Court’s August prejudice to either party 19, 1999 order was not a final judgment or moving to restore it to the order, we hold that it erred in analyzing docket if any further action Penn West’s motion under Rule 60(b). is required upon completion How then should the District Court have and termination of all analyzed Penn West’s motion? To that we bankruptcy or arbitration now turn. proceedings. B. Administrative Closings Id. Upon receiving the order, “the clerk of To determine the nature of the relief court closed the file, but did not enter a requested in Penn West’s motion to re- final judgment.” Id. At the request of one open, we need to clarify the legal of the parties, the District Court re-opened significance of the District Court’s August the case three years later and heard its 19, 1999 order directing the Clerk to mark merits. Id. One of the appellant’s Penn West’s civil RICO case closed. We arguments on appeal was that the Court conclude that the sole legal consequence had improperly re-opened the case. Id.

of this order was to remove Penn West’s The appellant argued that the case had case from the District Court’s active been dismissed and to re-open it three docket. Several courts refer to such an years after dismissal violated the order as an “administrative closing.” timeliness requirements of Rule 60(b). Id.

The Court of Appeals for the First The First Circuit clarified that the District Circuit has addressed the purpose and Court’s order, while labeled a “dismissal,” significance of administrative closings in was not a final judgment that could be 10 corrected under Rule 60. Id. Rather, the (W.D. Pa. 1990),8 aff'd, 931 order did no more than administratively close the case. Id. at 391-92. The fact that the order had a misleading label “cannot 8 We think it telling the manner in which alter the character of its action.” Id. at 392 the District Court in Mercer explained the n.2. Western District of Pennsylvania’s The Lehman Court explained the practice of issuing orders directing the nature of an administrative closing as Clerk of Court to mark a case “closed.” follows: It is the practice of this Court to administratively Administrative closings close those cases where comprise a familiar, albeit representations are made essentially ad hoc, way in that settlement is imminent which courts remove cases or some other disposition of from their active files the case is contemplated by without making any final the parties other than adjudication. See Corion a d j u d i ca t i o n . The Corp. v. Chen, 964 F.2d 55 , administrative closing Order 56-57 (1st Cir. 1992) reads, in part, “[N]othing (holding that an order contained in this Order shall deeming a case be considered a dismissal or “administratively closed” disposition of this matter, was not a final, appealable and shou ld further order absent a separate proceedings in it become document to signal the necessary or desirable, court’s “view that the case either party may initiate it in had concluded”). The the same manner as if this method is used in various O rd e r h a d n o t b e en districts throughout the entered.” nation in order to shelve 132 F.R.D. at 39 n.1. In this case, the pending, but dormant, cases. District Court’s August 19, 1999 order See, e.g., id.; In re appears not to conform to the Western Arbitration Between Phila. District’s practice described above. If the Elec. Co. v. Nuclear Elec. order had contained the language recited Ins. Ltd., 845 F. Supp. 1026 , by the Mercer Court, Penn West and the 1028 (S.D .N.Y . 1994); Litman Group likely would have better Mercer v. Allegheny Ludlum understood its nature and effect. The Corp., 132 F.R.D. 38 , 38-39 failure to include such language, however, did not render the District Court’s August 19, 1999 order any less an administrative 11 F.2d 50 (3d Cir. 1991). We Id. at 392 (emphasis added). 9 Lehman endorse the judicious use of therefore ruled that the District Court’s administrative closings by “Procedural Order of Dismissal” “did not district courts in terminate the underlying case, but, rather, circumstances in which a placed it in an inactive status until such case, though not dead, is time as the judge, in his discretion or at the likely to remain moribund request of a party, chose either to for an appreciable period of reactivate it or to dispose of it with time. finality.” Id. Lehman’s view of administrative Properly understood, an closings has been followed by the Courts administrative closing has of Appeals for the Tenth and Eleventh no effect other than to Circuits. See, e.g., Florida Ass’n for remove a case from the Retarded Citizens v. Bush, 246 F.3d 1296 , court’s active docket and 1298 (11th Cir. 2001) (“Designating a case permit the transfer of “closed” does not prevent the court from records associated with the reactivating a case either of its own accord case to an appropriate or at the request of the parties.”); Cantrell storage repository. “In no v. International Broth. of Elec. Workers, event does such an order AFL-CIO, Local 2021, 69 F.3d 456 , 457 bar a party from restoring (10th Cir. 1995); see also American the action to the Court's Heritage Life Ins. Co. v. Orr, 294 F.3d active calendar upon an 702, 715 (5th Cir. 2002) (Dennis, J., appropriate application.” concurring) (“[T]he administrative closure In re Arbitration, 845 F. reflects nothing more than the federal Supp. at 1028 (S.D.N.Y. courts’ overarching concern with tidy 1994). Nor is the power to dockets; it has no jurisdic tional resurrect reserved to the significance.”); cf. Mickeviciute v. I.N.S., parties. The court, too, 327 F.3d 1159 , 1161 n.1 (10th Cir. 2003) retains the authority to (noting that an “[a]dministrative closure of reinstate a case if it concludes that th e administrative closing was 9 The Lehman Court also noted that improvident or if the administrative closings “may permissibly circumstances that sparked contain a built-in timetable under which it the closing abate. automatically will expire, effectively reinstating the case . . ., or, conversely, mature into a final judgment if no action inures within a specified period . . . .” 166 closing. F.3d at 392 n.4 (citations omitted).

12 [an immigration] case temporarily removes request of a party, chose either to the case from an immigration judge’s reactivate it or to dispose of it with calendar . . . . The administrative closing finality.” Id. at 392. of a case does not result in a final order. It We also recognize the possibility is merely an administrative convenience that there are cases in our Circuit in which which allows the removal of cases from the last order docketed is an administrative the calendar in appropriate situations”). closing order. If those administrative Lehman presents a reasoned closings comport with the practice explication of a device that, when used in described in Mercer, 132 F.R.D. at 39 n.1 correct context, enhances a district court’s (i.e., clearly indicating the status of the ability to manage its docket. We adopt litigation), there is little possibility that the that rationale and hold that an order merely parties mistake the order as a final directing that a case be marked closed decision. Here, however, it is easy to constitutes an administrative closing that understand why counsel believed their has no legal consequence other than to case over. As noted already, that belief remove that case from the district court’s does not a final decision make, for an active docket. administrative closing order is not sanctioned by the Federal Rules and does We recognize that, in our case, not dispense with the technical nearly three years have passed between the requirements of finality. These District Court’s August 19, 1999 order to requirements include not only a resolution mark the case closed and Penn West’s May of the parties’ claims before the District 10, 2002 motion to re-open the case and Court, but also compliance with Rules 54 list it for trial. Yet we know of no and 58 of the Federal Rules of Civil provision in the Federal Rules of Civil Procedure.10 It is indeed possible that, as Procedure by which the mere passage of time can mature an administrative closing into a dismissal or a final judgment or 10 Fed. R. Civ. P. 54(a) provides, in part: order. As the Lehman Court noted, a “‘Judgment’ as used in these rules includes district court can provide, in the text of its a decree and any order from which an order, a built-in timetable under which the appeal lies.” Fed. R. Civ. P. 58 (as in administrative closing may automatically effect when the District Court issued its expire, or, alternatively, mature into a final August 19, 1999 order; the rule was decision. See 166 F.3d at 392 n.4. In this rewritten, in April 2002, in a manner that case, however, the District Court’s August does not affect our analysis) required that 19, 1999 order provided no such feature. “[e]very judgment shall be set forth on a We can only conclude that the Court’s separate document.” The separate order merely placed Penn West’s civil document requirement must be applied RICO case in an “inactive status until such “mechanically.” United States v. time as the judge, in his discretion or at the Indrelunas, 411 U.S. 216, 221-22 (1973);

13 a consequence of our holding that the C. The Dissent administrative closing order in our case As a final matter, a brief response has no legal significance beyond removing to the dissenting opinion is in order. We the case from the District Court’s docket, note that our dissenting colleague does not litigants will return to the courts to re-open challenge our application of well- their administratively closed cases. Our established principles of finality or the fidelity to uniform and consistent conclusion that an administrative closing application of the Federal Rules, however, order does not constitute a final decision. does not permit us to hold otherwise. Instead, the dissent’s objection is to our We endeavor today only to correct construction of the District Court’s August a misapplication of Fed. R. Civ. P. 60(b), 19, 1999 order as an administrative closing and to clarify the legal significance of the order rather than a dismissal. This District Court’s August 19, 1999 order objection, however, is based solely on the administratively closing Penn West’s civil proposition that the District Court’s order RICO case, so that the motion before the was “ambiguously worded.” 11 Relying on District Court may be properly analyzed. this supposed ambiguity, the dissent We decline to address whether Penn proposes that we use extrinsic evidence in West’s case may be equitably barred from order to conclude that the District Court restoration to the District Court’s active and the parties actually understood the docket or whether the case may be August 19th order to constitute a dismissed for failure to prosecute under dismissal, and that, ergo, it was a Fed. R. Civ. P. 41(b). The District Court dismissal. may consider these issues on remand. We do not agree. The August 19th order is plain that the case be marked closed. This was predicated on the District Court’s statement that it had been “advised by the parties of the full and final see also Gregson & Assoc. Architects v. settlement” of the case and that “there Government of the Virgin Islands, 675 F.2d 589, 591-92 (3d Cir. 1982) (mandating a “mechanical” application of 11 Rule 58’s separate document requirement, The dissent does not explain whether even where the appellant had mistakenly its finding of ambiguity is premised upon believed that the district court had issued a an ambiguity on the face of the order or, final judgment); United States v. Fiorelli, alternatively, an ambiguity that is only 337 F.3d 282, 286 (3d Cir. 2003) (applying apparent after considering extrinsic Rule 58’s separate document requirement statements made by the District Court. As to determine the timeliness of motions for we describe below, however, we do not post-judgment relief under Rules 59 and consider extrinsic evidence unless the 60). order is ambiguous on its face.

14 [were] no further matters pending before order.” (citing Adams, 874 F.2d at 395)); the Court.” As we have noted above, this In re UNR Industries, Inc., 143 B.R. 506 , factual predicate was certainly erroneous 516 (Bankr. N.D. Ill. 1992) (“If an order is because the District Court had yet to clear and unambiguous on its face, there is receive and approve the final settlement no need to look beyond the face of the papers from the parties. But nothing in the order to determine its meaning.”). order mentions dismissal. With no patent Applying this rule of construction, we ambiguity in the August 19th order, no reject our dissenting colleague’s need exists for parol or extrinsic evidence. proposition that we may look past the clear and unambiguous words used in the District Court’s August 19th order for The judicial process works what the Court and the parties intended or best when orders mean what understood the order to mean. they say. Surp rising interpretations of simple Reminiscent of the emperor’s new language – perhaps on the clothes, the dissent has us, in effect, basis of a judicial intent not pretending to see something that does not revealed in the words – exist. Per the dissent, we should simply u n n e cessa rily c r e a te pretend that Penn West’s case was complex questions and can dismissed, even though (1) no language in cause persons to forfeit their the August 19th order mentioned a rights unintentionally. Parol dismissal, (2) the District Court ignored evidence about the judge’s the fact that it was not to act absent i n t e n t io n s s h o u l d b e receiving and approving settlement papers irrelevant, just as parol from the parties, and (3) treating the case evidence is excluded in as dismissed might unknowingly subject contract cases when the Penn West to a refiling obligation that language is clear. would trigger a statute of limitations defense. The upshot: the dissent finds that our decision is unfair to Penn W est’s Adams v. Lever Bros. Co., 874 F.2d 393 , adversaries; we find unfair the dissent’s 395 (7th Cir. 1989); see also Berke v. treatment of Penn West. Penn West Bloch, 242 F.3d 131, 136 (3d Cir. 2001) should not be penalized when it was the (“The judicial process works best when District Judge who failed to terminate orders mean what they say. . . . Just as properly the case before him. parol evidence is excluded in contracts V. Conclusion cases when the plain language is clear, so too this type of [extrinsic] evidence about The District Court misunderstood a party’s intentions must be considered Penn West’s May 10, 2002 motion as one irrelevant to an unequivocal and final for relief under Fed. R. Civ. P. 60(b). Rule 15 60(b) did not govern Penn West’s motion the order that is at issue here. The order because the District Court’s August 19, noted that the Court had been informed by 1999 order directing that Penn West’s case the parties “of the full and final be marked closed was not a final judgment settlement” of the case and that “there or order. That order accomplished no [were] no further matters pending before more than an administrative closing of the Court.” The Order then provided that Penn West’s case. Thus we vacate the “the Clerk of the Court mark the above District Court’s November 5, 2002 order captioned matter closed.” denying the motion to re-open and remand this matter for further consideration consistent with this opinion. Unfortunately, the order did not state expressly that the case was dismissed, but it is clear that the Court and the parties viewed the order as one that ended the litigation in the District Court. Indeed, the Penn West Associates v. Litman majority notes that “the parties and the No. 02-4344 District Court appear to have operated under the assumption that the litigation was terminated.” Maj. Op. at 3-4. ALITO, Circuit Judge, dissenting.

The District Court’s understanding In my view, the District Court was was confirmed a few months later when correct in denying Penn West’s Motion to the settlement fell apart and the bankruptcy List the Case for Trial and For Other trustee for Penn West filed a motion Relief. The majority’s holding – that this asking the District Court to enforce the case has remained on the District Court’s settlement. The District Court responded docket in a state of suspended animation that the case was “settled and closed,” that for nearly five years – is unsound and may it was going to stay closed, and that the cause problems in other cases. I therefore Trustee would have to file an independent respectfully dissent. action if it wished to claim that the settlement had been breached. Neither before nor after this ruling did any party I. complain that the Court was failing to open a case that had not been dismissed but had merely been administratively The relevant facts are simple. After closed. receiving notice that a settlement had been reached, the District Court waited a few days and then, on August 19, 1999, signed Several years later, after Penn West 16 emerged from bankruptcy and after the the case was closed. Isn’t Bankruptcy Court had declared that no that tanta m ount to a valid settlement agreement existed, Penn dismissal of the complaint? West filed in the District Court a Motion Counsel: It certainly is your to List the Case for Trial and For Other honor. That’s the reality of Relief. The motion did not specify the life, that’s what it is . . . . legal authority on which it was based, but the District Court, consistent with its view that the case had been dismissed long ago, Audio tape: Transcript of Oral Arguments assumed that Penn West was moving for in Penn West v. Littman, (Sep. 15, 2003) relief from a final judgment or order under at 093 (emphasis added). Federal Rule of Civil Procedure 60(b). Concluding that the motion did not meet the standard for relief under that rule, the Under further questioning, counsel Court denied the motion, and Penn West for Penn West held to this position: took the present appeal.

The Court:. . . [W]hat’s the On appeal, Penn West has not legal significance of the argued that the District Court erred in August 19, 1999 order of treating its motion as a Rule 60(b) motion Judge Bloch ordering that for relief from a final judgment or order. the case be closed? Rather, Penn W est’s sole argument is that it is entitled to relief under Rule 60(b)(4) Counsel:It closes the case. because the order at issue is void because The Court:What’s the legal it was based on the mistaken belief that the significance of that? case had been settled. Counsel:The case is over. At oral argument, counsel for Penn The case is over. What the West insisted, even under questioning that case does. What the order invited him to change his position, that the does... August 19 order was a final order and that the issue before our Court is whether his The Court:Are you sure you client should have been granted relief from want to say. . . Is the case that order under Rule 60(b). The over or is it just an following exchange occurred: administrative closing?

The Court:The effect of the Id. at 111. Even after this suggestion that order of Judge Bloch saying counsel might not “want to say” that the August 19 order signified that “[t]he case 17 [was] over,” counsel for Penn West dismissal with prejudice when parties continued to maintain the position that the engaged in conduct “akin to standing on August 19 order was a final order from their complaint”), the order was final; which relief should have been granted Penn West’s motion was properly under Rule 60(b). See Audio tape: categorized by the District Court as an Transcript of Oral Arguments in Penn order for relief under Fed. R. Civ. Proc. West v. Littman, (Sep. 15, 2003) at 163 (“I 60(b); and because Penn West cannot am appealing [the District Court’s] qualify for such relief, the order denying application of 60(b)(2) because I suggest its Motion to List the Case for Trial and that my motion makes it pretty clear that For Other Relief should be affirmed. there is a denial of due process.”). Id. at 163 (emphasis added). The majority, however, concludes, contrary to the understanding of the II. District Court and the parties, that the case was never dismissed but merely placed on hold – apparently indefinitely – and that In my view, the District Court’s therefore Penn West is entitled to revive order of August 19, 1999, was exactly the case, unless it is equitably barred from what the Court and the parties understood doing so. The majority cites nothing in the it to be: an order dismissing the case. The Federal Rules or in case law that supports fact that the order did not use the correct this result, and I see no justification for the terminology is unfortunate but not majority’s approach. When a dispute dispositive. If the dismissal was without arises as to whether an ambiguously prejudice, see Fed. R. Civ. Proc. 41(a)(2), worded order is in effect a dismissal, we the order nevertheless removed the case should take a practical approach. If it from the District Court’s docket, and Penn appears that the order was intended to have West could not restore the case to the the same effect as a dismissal and was docket simply by moving for such relief. understood by all concerned as having the Rather, Penn West would have to refile its same effect as a dismissal, the order complaint, assuming that its claims, which should be treated as such. date from the late 1980s and early 1990s, were not time-barred. An example of this approach is provided by Delgrosso v. Spang and Co., Alternatively, if the dismissal 903 F.2d 234 (3d Cir. 1990). The order in eventually ripened into a dismissal with that case stated: prejudice when Penn West stood pat, cf. Berke v. Bloch, 242 F.3d 131 (3d Cir. 2001)(conditional dismissal became IT IS HEREBY ORDERED 18 that the Clerk of Court mark Id. Other courts of appeals have taken a the above caption case similar tack. See, e.g., American Heritage closed. Nothing in this Life Ins. Co. v. Orr, 294 F.3d 702 , 707-08 order shall be considered a (5 th Cir. 2002), cert. denied, 537 U.S. 1106 dismissal or disposition of (2003); Corion Corp. v. Chen, 964 F.2d this matter and, should 55, 56 (1 st Cir. 1992). further proceedings in it b e co m e n e ce ss ar y o r desirable, either party may The order involved here is nothing initiate it in the same like the “administrative closing” orders manner as if this order had that the majority discusses. As the not been entered. majority notes, those orders typically state that the parties may restore the case to the docket if further action is required. See Id. at 236. We did not hold that this order Maj. Op. at 10. See also Mercer v. was interlocutory simply because it did not Allegheny Ludlum Corp., 132 F.R.D. 38 , state that the case was dismissed. Rather, 38-39 (W.D. Pa. 1990), aff’d, 931 F.2d 50

we analyzed the practical effect of the (3d Cir. 1991(describing order generally order and observed: entered in the W estern District of Pennsylvania to accomplish a mere “administrative closing”). The August 19, [T]he order in this case 1999, order in this case contained no permits reinstatement and similar language and, as noted, it recited contemplates the possibility that there were “no further matters pending of future proceedings. The before the Court.” order does not purport to end litigation on the merits and the parties agree that it The majority argues that the August does not determine any 19 order was not a final order, but this issues or resolve the entire argument does not support vacatur of the case. We recognize that the order denying the Motion to List the Case conduct of the district court for Trial and For Other Relief. First, even raises the question whether if the August 19 order never ripened into a the order effectively, if not dismissal with prejudice and thus never expressly, brings the case to became a final order, it would not follow a close. O n bala nce, that Penn W est, years later, could restore however, we believe that the the case to the District Court’s active order is not final. docket simply by moving to do so. Penn West would have to file a complaint. It did not do so, and therefore the denial of 19 its motion was correct. Maj. Op. 9.

Second, if the August 19 order This argument confuses the eventually became a dismissal with question whether an order resolves all the prejudice, that order resolved all of the claims that are before a court with the claims that Penn West asserted in its separate and (for present purposes) complaint and was thus final. Compare irrelevant question whether an order Maj. Op. 9 (stating that the this order was resolves all the issues that may arise not final because it “did not resolve, or between the parties in the future. Suppose even purport to resolve, any of the claims that the August 19, 1999, order had stated that Penn West presented to the District expressly that all the claims in the case Court”). Once Penn West’s claims were were dismissed with prejudice. There dismissed with prejudice and Penn West would then be no basis for disputing the failed to appeal, further assertion of those finality of the order, but disagreements claims was barred, and Penn West was might nevertheless arise between the relegated to asserting claims under the parties regarding the meaning or, indeed, settlement agreement. the validity of the settlement agreement. The parties might then wish to return to the District Court to litigate those The majority contends that the disagreements, but the parities’ desire to August 19 order was not final because resume litigation would not undermine the “there was more for the District Court to finality of the order of dismissal. do.” Maj. Op. 9. The majority elaborates: For these reasons, I believe that the majority’s analysis is incorrect, that the District Court dismissed this case long [T]he parties had to ago, and that Penn West’s motion to continue their litigation in restore the case to the active docket was both the District Court and properly denied. The majority’s decision the Bankruptcy Court to is unfair to Penn West’s adversaries, and I determine: (1) whether they have some concern about the effect of this had indeed “settled” their decision on other cases. The majority case in July 1999, and (2)(a) notes that there may be other “cases in our if so, the terms of that Circuit in which the last order docketed is settlement and whether to an administrative closing order” and that approve it, or (b) if not, how “[it] is indeed possible that, as a to achieve a resolution of consequence of our holding that the their ongoing dispute. administrative closing order in our case has no legal significance beyond removing 20 the case from the District Court’s docket, litigants will return to the courts to re-open their administratively closed cases.” Maj. Op. 13-14. I see no justification for creating this danger.

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