The Lawletter Vol. 48 No. 1

Paul Ferrer, Senior Attorney, National Legal Research Group, Inc.

            Rule 60(b) of the Federal Rules of Civil Procedure authorizes a court to relieve a party from a final judgment, order, or proceeding for various reasons, including “mistake, inadvertence, surprise, or excusable neglect.” Fed. R. Civ. P. 60(b)(1). The U.S. Circuit Courts of Appeal have had a “longstanding disagreement whether ‘mistake’ in Rule 60(b)(1) includes a judge’s errors of law.” Kemp v. United States, 142 S. Ct. 1856, 1861 & n.1, 213 L. Ed. 2d 90 (2022). Resolving that question in Kemp, the U.S. Supreme Court held, based on the text, structure, and history of Rule 60(b), that “a judge’s errors of law are indeed ‘mistake[s]’ under Rule 60(b)(1).” Id. at 1860. In so holding, the Supreme Court indicated that the term “mistake” in Rule 60(b)(1) should be given its broadest possible interpretation to include any mistake, including “all mistakes of law made by a judge.” Id. at 1862.

            The Supreme Court specifically rejected the Government’s narrower reading of Rule 60(b)(1) in Kemp that the term “mistake” includes “only so-called ‘obvious’ legal errors.” Id. The Supreme Court’s decision sensibly spared the federal district courts from having “to decide not only whether there was a ‘mistake’ but also whether that mistake was sufficiently ‘obvious,’” since the plain language of Rule 60(b)(1) “does not support—let alone require—that judges engage in this sort of complex line-drawing.” Id. at 1863. Thus, the rule going forward could not be any simpler: relief from a final judgment or order may be granted under Rule 60(b)(1) based on a judge’s “mistakes,” including legal errors.

The Lawletter Vol 47 No 4

Paul Ferrer—Senior Attorney, National Legal Research Group

            A question that has long vexed both litigants and courts alike is what constitutes a “final decision” triggering the right to file an appeal under 28 U.S.C. § 1291, which confers jurisdiction on the federal circuit courts of appeals over “appeals from all final decisions of the district courts of the United States.” In a civil case (except where the United States is a party), the notice of appeal from a “final decision” must be filed “within 30 days after entry of the judgment or order appealed from.” Fed. R. App. P. 4(a)(1)(A). Many an appeal has been lost just by failing to timely file the notice of appeal.

            Making a determination as to when an appeal must be filed to comply with the 30-day time limit is supposed to be relatively easy in light of the procedures specified in Federal Rule of Civil Procedure 58. Rule 58 requires that every judgment generally “must be set out in a separate document.” Fed. R. Civ. P. 58(a). If a separate document is required by Rule 58(a), then judgment is “entered,” and the time to appeal starts running, when the judgment is entered in the civil docket and the earlier of one of these two events occurs: (1) the judgment is, in fact, set out in a separate document, or (2) 150 days have run from the entry of the judgment in the civil docket. Fed. R. Civ. P. 58(c)(2). The second alternative deals with those situations in which the district court, despite the requirements of Rule 58(a), does not set the judgment out in a separate document.

The Lawletter Vol 47 No 2

Paul Ferrer—Senior Attorney, National Legal Research Group

            As part of the check collection process governed by Article 4 of the Uniform Commercial Code (“UCC”), the “midnight deadline” rule of § 4-302 requires that a payor bank pay or return an item, or send notice of its dishonor, before midnight of the next banking day following the banking day on which the bank receives the item. The rule imposes strict liability on a payor bank that fails to meet the midnight deadline requirement. But what if something happens to the payee while the check is being dishonored as part of the collection process? Who has standing to sue the payor bank to enforce the midnight deadline rule?

            That was the unusual question decided by the Virginia Supreme Court in Stahl v. Stitt, ___ Va. ___, 869 S.E.2d 55 (2022).

The Lawletter Vol 46 No 4

Paul Ferrer—Senior Attorney, National Legal Research Group

            Well-established contract law holds that when one party breaches a contract, the nonbreaching party must make reasonable efforts to mitigate its damages. The consequences of failing to mitigate are well illustrated by a recent Illinois appellate decision. See Mayster v. Santacruz, 2020 IL App (2d) 190840, 163 N.E.3d 246.

            The plaintiff owned and operated a Mathnasium math tutoring franchise. The franchisee entered into a binding purchase agreement to sell the franchise for $100,000. The parties bickered over several terms, but the disagreement did not justify the buyer's termination, which therefore constituted a breach. Soon after the breach, however, the buyer offered to reinstate the deal and buy the franchise for the same $100,000 originally agreed. The franchisee refused, choosing instead to raise the asking price to $130,000 to explore more profitable opportunities. The franchisee also declined the franchisor's suggestion that it advertise the franchise for sale in an internal publication that targeted Mathnasium owners, and would thus have been more likely to produce a new buyer. The trial court concluded that the buyer had breached the contract but that the franchisee could not recover any damages based on its absolute failure to mitigate. The only questions presented on appeal were whether the franchisee had failed to mitigate its damages and, if so, whether its failure barred it from recovering anything at all.

The Lawletter Vol 46 No 4

Paul Ferrer—Senior Attorney, National Legal Research Group

            The familiar "American rule" holds that a prevailing party generally cannot recover its attorney's fees from the losing party in the absence of a statute or contract provision specifically authorizing an award of such fees. Jurisdictions are divided on the issue of whether a party can recover its attorney's fees as damages, rather than costs, for the breach of a covenant not to sue the other party. In those jurisdictions that have not permitted attorney's fees to be awarded as damages, courts have reasoned that the contract containing the covenant not to sue can itself provide for attorney's fees in the event of its breach if that is the parties' intention. See Artvale, Inc. v. Rugby Fabrics Corp., 363 F.2d 1002, 1008 (2d Cir. 1966) ("Certainly it is not beyond the powers of a lawyer to draw a covenant not to sue in such terms as to make clear that any breach will entail liability for damages, including the most certain of all—defendant's litigation expense."). By contrast, other courts have determined that the American rule does not apply in "those cases in which the attorney fees are not awarded to the successful litigant in the case at hand, but rather are the subject of the law suit itself." Zuniga v. United Can Co., 812 F.2d 443, 455 (9th Cir. 1987). Virginia recently adopted the latter view.

The Lawletter Vol 45 No 6

Paul Ferrer—Senior Attorney, National Legal Research Group

            Laches is "a defense developed by courts of equity to protect defendants against unreasonable, prejudicial delay in commencing suit." SCA Hygiene Prods. Aktiebolag v. First Quality Baby Prods., LLC, 137 S. Ct. 954, 960 (2017) (internal quotation marks omitted). It is frequently said, however, that laches cannot be invoked to bar legal relief in the face of an express statute of limitations enacted by Congress. Id. at 959. But that is exactly what happened in Zuckerman v. Metropolitan Museum of Art, 928 F.3d 186 (2d Cir. 2019), cert. denied, 140 S. Ct. 1269 (2020).

            In Zuckerman, the plaintiff, Laurel Zuckerman, brought suit to recover a painting—"The Actor" by Pablo Picasso—that had been owned by her great-granduncle and aunt, the Leffmanns. The Leffmanns were German Jews who were forced to flee the country in 1937. They arranged for the painting to be held by a Swiss acquaintance, who sold the painting in 1938 to raise funds for the Leffmanns to relocate to Brazil.

Paul Ferrer, Senior Attorney, National Legal Research Group

     The Virginia Supreme Court's recent decision in Flint Hill School v. McIntosh, No. 181678, 2020 WL 33258 (Va. Jan. 2, 2020), seems to provide some support for the old adage that "bad facts make bad law." In that case, the McIntoshes enrolled their minor child in Flint Hill School, a private school in Fairfax County, Virginia. The McIntoshes signed an enrollment contract in which they agreed to pay "all attorneys' fees and costs" incurred by the school "in any action arising out of or relating to this Enrollment Contract." Significantly, the provision did not require that the school be the prevailing party in order to recover its attorneys' fees. As the Virginia Supreme Court pointed out, the practical effect of such a provision, if applied as written, is essentially to foreclose all litigation on the contract.

The Lawletter Vol 45 No 3

Paul Ferrer—Senior Attorney, National Legal Research Group

     Based on the exceptional circumstances presented by the COVID-19 pandemic, many state and federal courts have entered general orders altering deadlines for a wide variety of matters, including deadlines for filing appeals, the most notable example being the U.S. Supreme Court's extending the period to seek review of a lower court decision by writ of certiorari from 90 to 150 days. Counsel should be aware, however, that in the absence of an order of general applicability, deadlines will not be extended without a specific order from the court in a particular case. To the contrary, judges are loath to allow "all litigation to grind to a halt in many cases," as "allowing that to happen will only exacerbate, in many cases, the detrimental effects of this crisis." Horning v. Resolve Marine Group, No. 19-60899-CIV, 2020 WL 1540326, at *1 (S.D. Fla. Mar. 30, 2020) (Scola, J.).

The Lawletter Vol 45 No 1

Paul Ferrer—Senior Attorney, National Legal Research Group

            Practitioners in federal court are by now aware of the revolution in federal pleading fashioned by the U.S. Supreme Court in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), and Ashcroft v. Iqbal, 556 U.S. 662 (2009), which are often referred to jointly using the portmanteau "Twiqbal." Under the Twiqbal analysis, a district court considering the legal sufficiency of a complaint on a motion to dismiss for failure to state a claim initially separates factual allegations, which are still entitled to the presumption of truth, from legal conclusions (such as "[t]hreadbare recitals of the elements of a cause of action"), which are not.

The Lawletter Vol 44 No 6

Paul Ferrer—Senior Attorney, National Legal Research Group

            In a decision with far-reaching implications in the commercial world, the Virginia Supreme Court has decided that contractual waivers of the right to plead the statute of limitations that do not meet specified statutory criteria are unenforceable under Virginia law. See Radiance Capital Receivables Fourteen, LLC v. Foster,  ___ Va. ___, 833 S.E.2d 867 (2019), available at http://www.courts.state.va.us/opinions/opnscvwp/1180678.pdf. The statute in question provides that unless the failure to enforce a promise not to plead the statute of limitations would operate as a fraud on the promisee, a written promise not to plead the statute of limitations is valid and enforceable only "when (i) it is made to avoid or defer litigation pending settlement of any case, (ii) it is not made contemporaneously with any other contract, and (iii) it is made for an additional term not longer than the applicable limitations period." Va. Code Ann. § 8.01-232(A).