Opinion ID: 336170
Heading Depth: 2
Heading Rank: 2

Heading: Motions to Vacate the Adjudication of Bankruptcy

Text: 29 Approximately eight months after judgment was entered adjudicating Crateo to be a bankrupt, and while the appeal from the judgment was pending, Crateo filed a motion in the District Court to vacate the judgment under Rule 60(b) of the Federal Rules of Civil Procedure. Because of the pending appeal, the District Court had no jurisdiction to enter an order under Rule 60(b). The most the District Court could do was to either indicate that it would  entertain such a motion or indicate that it would grant such a motion. If appellant had received such an indication, its next step would have been to apply to this Court for a remand. Canadian Ingersoll-Rand Co. v. Peterson Products, 350 F.2d 18, 27-28 (9th Cir. 1965). 30 In this case, however, the District Court found that it was inappropriate to either grant or entertain the Rule 60(b) motion. This was only a procedural ruling and not a final determination of the merits of the Rule 60(b) motion. Such an order is not appealable. Crateo's appeal from the District Court's order must therefore be considered as a motion for remand of the case for consideration of the Rule 60(b) motion. Weiss v. Hunna, 312 F.2d 711, 713 (2d Cir. 1963) cert. denied, 374 U.S. 753, 83 S.Ct. 1920, 10 L.Ed.2d 1073 (1963); Canadian Ingersoll-Rand Co. v. Peterson Products,supra, 350 F.2d at 27 n. 16. We decline to order such a remand. 31 The basis of Crateo's motion was an attack upon the validity of a judgment from the United States District Court for the Southern District of Texas in favor of the Southern National Bank of Houston and against Crateo. See Southern National Bank of Houston v. Tri Financial Corporation, 317 F.Supp. 1173 (S.D.Tex.1970), affirmed sub nom., Southern National Bank of Houston v. Crateo, Inc., 458 F.2d 688 (5th Cir. 1972). This judgment was introduced as evidence tending to prove that Crateo was unable to pay its debts as they matured and comprised a large proportion of Crateo's unpaid debts. In its Rule 60(b) motion, Crateo claimed that the Texas judgment was obtained by fraud and should not have been considered at Crateo's bankruptcy trial. 32 The District Court in Texas had determined that Tri Financial, a predecessor of Crateo, was obligated to purchase a promissory note from the bank. While that decision was on appeal to the Fifth Circuit, the bank brought an action against one of the signers of the note in the United States District Court for the District of Nevada. After the defendant in the Nevada action raised the claim that her signature on the note had been forged, the bank decided not to prosecute its suit and the case was dismissed. The Fifth Circuit's decision came after the events in Nevada. 33 The bank, however, was not a party in Crateo's bankruptcy proceeding. The Texas judgment was merely introduced into evidence by other creditors of Crateo as tending to show Crateo was unable to pay its debts as they matured. There is no indication that any of those petitioning creditors knew of any possible irregularities connected with the evidence. Despite Crateo's protestations of fraud in the obtaining of the Texas judgment, its Rule 60(b) motion in this case cannot be considered as falling under the third clause of that section because the bank's actions cannot be charged to any adverse party in the bankruptcy proceeding. 13 34 The jurisdiction of the District Court in Texas over the parties in Southern National Bank of Houston v. Tri Financial Corporation, supra, was not challenged in the bankruptcy proceedings, and the petitioning creditors were entitled to rely on the judgment's presumptive validity. Crateo's post-judgment collateral attack on the Texas judgment was brought in the wrong forum. 14 35 In its Rule 60(b) motion, Crateo also claimed that the bank had received some payments on the promissory note and that Crateo's indebtedness to the bank was therefore less than the amount stated in the Texas judgment. Again, the collateral attack on a presumptively valid judgment was brought in the wrong forum. 36 We also decline to remand the case because of Crateo's second Rule 60(b) motion. All of the pertinent information that is the basis for this motion should have been known to Crateo well before the 1973 trial on the issue of its insolvency. There is no excuse for waiting over two years after entry of judgment before filing this motion. 15