United States District Court, S.D. New York
October 12, 2005.
LEWIS SMALL, Individually and as Trustee of the RICHARD SMALL VOTING TRUST and the AMERICAN INDEPENDENT COMPANY VOTING TRUST, RICHARD SMALL, DAVID WILSTEIN, LEONARD WILSTEIN, DENISE WILSTEIN, GARY WILSTEIN, RONALD WILSTEIN and FREDERICK GITTERMAN, Plaintiffs,
ARCH CAPITAL GROUP, LTD., AMERICAN INDEPENDENT INSURANCE HOLDING COMPANY, TDH CAPITAL PARTNERS, TDH III, L.P., JOSEPH KING, WILLIAM B. LOCKHORN and BCI HOLDINGS, INC., Defendants.
The opinion of the court was delivered by: JOHN KEENAN, Senior District Judge
OPINION and ORDER
Plaintiffs move to vacate the judgment in this matter pursuant
to Local Civil Rule 6.3 and Fed.R.Civ.P. 59(e), 11(a) and
6(b), and for leave to file their Second Amended Complaint. For
the reasons that follow, the Court grants the motion.
In an Opinion and Order entered on March 24, 2005, the Court
granted a motion to dismiss the 1934 Act claim under
Fed.R.Civ.P. 9(b) because of Plaintiffs' failure to plead scienter
adequately, and dismissed the remainder of the Amended Complaint
pursuant to 28 U.S.C. § 1367(c)(3). In its discretion, the Court
granted Plaintiffs leave to file a Second Amended Complaint
("Complaint") and set a filing deadline of April 15, 2005.
Plaintiffs' counsel served the Complaint on that date and deposited a copy in the Court's night depository box. (McNamara
Aff. ¶ 3). There is no dispute that this copy of the Complaint
and the accompanying certificate of service bore a photocopied,
not an original, rendition of counsel's signature. (See id. ¶
The Court rejected the Complaint pursuant to Fed.R.Civ.P.
11(a) and Local Civil Rule 11.1(a), which require that pleadings
be signed. See Becker v. Montgomery, 532 U.S. 757 (2001)
(attorney's typed name is not a signature for Rule 11 purposes).
On April 21, 2005, counsel received the Complaint and a rejection
memorandum from the Court. (Id. ¶ 5). The memorandum did not
specify the nature of the rules violation, so counsel telephoned
the Clerk's office for an explanation. Based on this conversation
and his own review of the Complaint, he surmised the problem.
(Id. ¶ 6).*fn1
On April 25, 2005, counsel submitted a duplicate Complaint and
certificate of service, this time with original signatures.
(Id. ¶ 7). He also had a letter hand-delivered to the Court,
dated the same day, apologizing for the oversight and requesting
that the Court deem the Complaint timely nunc pro tunc, or
extend the time for filing to April 25, 2005. (Id., Exh. D). By
this time, however, the filing deadline of April 15, 2005 had passed. The Court again rejected the Complaint, and the
Clerk's office forwarded to counsel a memorandum dated April 27,
2005 that read: "Leave to file ended on 4-15-05." (McNamara Aff.,
Exh. E). At this point, the Clerk's office already had entered a
judgment dismissing the action with prejudice.
Plaintiffs have filed a timely motion for vacatur of the
judgment under Rule 59(e) and Local Civil Rule 6.3, and for
permission to file their Complaint. They argue that the judgment
was entered in error because Rule 11(a) permits prompt correction
of unsigned submissions after notice of the error. (Pl. Mem. at
5). Alternatively, Plaintiffs argue that the Court should extend
the April 15, 2005 filing deadline under Fed.R.Civ.P. 6(b).
Because the Court finds the Rule 11 argument persuasive, there is
no need to extend the filing deadline under Rule 6(b).
The Court treats Local Civil Rule 6.3 and Fed.R.Civ.P. 59(e)
together because the analysis under both rules is identical.
Williams v. N.Y. City Dep't of Corrections, 219 F.R.D. 78, 83
(S.D.N.Y. 2003).*fn2 Under either rule, the movant "must
demonstrate controlling law or factual matters put before the
court on the underlying motion that the movant believes the court overlooked and that might reasonably be expected to alter
the court's decision." Parrish v. Sollecito,
253 F. Supp. 2d 713, 715 (S.D.N.Y. 2003). The Court can find no overlooked
factual matters, and Plaintiffs highlight none. Accordingly, the
focus is on the law.
At the outset, the Court rejects Defendants' argument that
Plaintiffs are barred from making the instant motion because it
merely re-opens an already-decided matter. (Def. Mem. at 8). The
Court presumes that Defendants refer to the "law of the case"
doctrine, which provides that "when a court decides upon a rule
of law, that decision should continue to govern the same issues
in subsequent stages of the same case." Arizona v. California,
460 U.S. 605, 618 (1982). This doctrine does not prevent the
instant challenge to the judgment as clearly erroneous. See
id. at 618 n. 8. The Court also disagrees with Defendants'
argument that Plaintiffs should have brought the instant motion
under Fed.R.Civ.P. 60(b), not Rule 59(e). A motion to vacate
that challenges the correctness of a judgment may be made under
Rule 59(e). See Foman v. Davis, 371 U.S. 178, 181 (1962)
(approving treatment of a motion to vacate a judgment as a motion
pursuant to Rule 59(e)); Lyell Theater Corp. v. Loews Corp.,
682 F.2d 37, 41 (2d Cir. 1982) (same).
Plaintiffs argue that the judgment should be vacated because
Rule 11 excuses the omission of an original signature from the attempted filing of the Complaint on April 15, 2005. The
Rule states in relevant part:
Every pleading, written motion and other paper shall
be signed by at least one attorney of record in the
attorney's individual name, or, if the party is not
represented by an attorney, shall be signed by the
party. . . . An unsigned paper shall be striken
unless omission of the signature is corrected
promptly after being called to the attention of the
attorney or party.
Fed.R.Civ.P. 11(a); see also Local Civil Rule 11.1(a)
(name of signatory must be typed or printed "below the
signature"). The Supreme Court has interpreted Rule 11 to
require, "as it did in John Hancock's day, a name handwritten (or
a mark handplaced)." Becker v. Montgomery, 532 U.S. 757
Plaintiffs' counsel claims that he received the Court's mailing
of the rejected Complaint on Thursday, April 18, 2005 and filed
the corrected version on Monday, April 22, 2005. In the Court's
view, this was both a prompt and proper Rule 11 correction. See
Fed.R.Civ.P. 11 advisory committee's note, reprinted in
146 F.R.D. 401, 584 (1993) ("Correction can be made by signing the
paper on file or by submitting a duplicate that contains the
signature."). As Defendants already had been timely served with
the Complaint, the Court sees no prejudice to Defendants in
allowing Plaintiffs to correct an inadvertent technical defect in
their filing with the Court. See Grant v. Morgan Guar. Trust
Co. of New York, 638 F. Supp. 1528, 1531 n. 6 (S.D.N.Y. 1986);
5A Wright & Miller, Federal Practice & Procedure § 1333 (3d ed. 2004) ("[I]n the absence of prejudice, the
district court can treat the defect as technical and should grant
leave to correct a failure to sign. . . .").
Defendants contend that corrective action under Rule 11(a) does
not extend filing deadlines. (Def. Mem. at 12). This argument
flies in the face of the plain language of the Rule, which
provides that the "unsigned paper" is stricken unless counsel
fails to promptly correct the error. As counsel has made the
prompt correction, the unsigned paper (which was timely) may be
accepted, even if the correction is after the deadline. In the
absence of prejudice, it makes little sense to grant the
opportunity to make a technical correction to a pleading under
Rule 11, only to strike the pleading anyway because the
correction necessarily occurs after the deadline. As the Supreme
Court has instructed: "It is too late in the day and entirely
contrary to the spirit of the Federal Rules of Civil Procedure
for decisions on the merits to be avoided on the basis of such
mere technicalities." Foman, 371 U.S. at 181.
The Court does not intend to condone violations of Rule 11 or
to imply that a technical error would not cause a paper to be
stricken under different circumstances. After considering the
submissions on this motion, however, the Court is convinced that
counsel's error was inadvertent, that Defendants are not
prejudiced by the correction to the Complaint, and that Rule 11(a) favors the correction in this situation. The judgment
dismissing the Complaint was erroneous and should be vacated.
Plaintiffs' motion to vacate the judgment is granted. The Clerk
of the Court is directed to vacate the judgment entered April 26,
2005 and re-open this case. Plaintiffs are directed to file their
corrected Second Amended Complaint no later than October 28,
2005. Defendants may answer or move with respect to this
Complaint no later than December 21, 2005.
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