Opinion ID: 16726
Heading Depth: 2
Heading Rank: 2

Heading: Mootness and Vacatur

Text: 18 Having concluded that the trust terminated July 15, 1997, we must examine the effects of this determination. Appellees contend that the termination of the trust stripped the trustee of standing and mooted the case. The trustee is thus barred from appealing the judgment, which is left in effect. While we agree that the bulk of the case is moot, we find that the district court's decision must therefore be vacated rather than rendered unappealable by the termination of the trust. 19 Mootness in this context is  'the doctrine of standing set in a time frame: The requisite personal interest that must exist at the commencement of the litigation (standing) must continue throughout its existence (mootness).'  Arizonans For Official English v. Arizona, 520 U.S. 43, 117 S.Ct. 1055, 1069 n. 22, 137 L.Ed.2d 170 (1997), quoting United States Parole Comm. v. Geraghty, 445 U.S. 388, 397, 100 S.Ct. 1202, 63 L.Ed.2d 479 (1980). A controversy is mooted when there are no longer adverse parties with sufficient legal interests to maintain the litigation. See Chevron, U.S.A. v. Traillour Oil Co., 987 F.2d 1138, 1153 (5th Cir.1993). 7 A moot case presents no Article III case or controversy, and a court has no constitutional jurisdiction to resolve the issues it presents. See Hogan v. Mississippi University for Women, 646 F.2d 1116, 1117 n. 1 (5th Cir.1981) . When the trust terminates, the trustee no longer has any personal, substantial interest in the outcome of the litigation. His lack of standing would thus render the trust's claims against the appellees moot from the moment of termination. 8 The termination may have similarly mooted the claims by the appellees for severance benefits and costs from the trust. In any case, the termination stripped Goldin of standing to appeal, thus causing mootness before this Court. 20 We have no power under Article III to decide the merits of a case that is moot when it comes before us. See Manges v. Seattle-First National Bank, 29 F.3d 1034, 1038 (5th Cir.1994) (distinguishing Article III mootness inquiry from equitable mootness in bankruptcy). We retain authority to order vacatur of a moot case, however. U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 115 S.Ct. 386, 390, 130 L.Ed.2d 233 (1994). Our disposition of a moot case may depend on when mootness occurred. 21 If mootness occurred prior to the rendering of final judgment by the district court, vacatur and dismissal is automatic. The district court would not have had Article III jurisdiction to render the judgment, and we cannot leave undisturbed a decision that lacked jurisdiction. See Iron Arrow Honor Society v. Heckler, 464 U.S. 67, 104 S.Ct. 373, 376, 78 L.Ed.2d 58 (1983); New Left Education Project v. Board of Regents of University of Texas System, 472 F.2d 218, 220 (5th Cir.1973), vacated on other grounds, 414 U.S. 807, 94 S.Ct. 118, 38 L.Ed.2d 43. (If the case became moot before a final adjudication, we must vacate the judgment and direct that the case be dismissed. The district court has no power to decide moot causes.). 9 22 If a case becomes moot on appeal, the general rule is still to vacate the judgment of the lower court and remand with instructions to dismiss the case as moot. See, e.g., United States v. Munsingwear, 340 U.S. 36, 71 S.Ct. 104, 106-07, 95 L.Ed. 36 (1950)(leading case); United States v. Sarmiento-Rozo, 592 F.2d 1318, 1321 (5th Cir.1979). However, this Munsingwear doctrine is an equitable one, justified as a means of avoiding the unfairness of a party's being denied the power to appeal an unfavorable judgment by factors beyond its control. See Northshore Development, Inc. v. Lee, 835 F.2d 580, 583 (5th Cir.1988). Accordingly, if the mootness can be traced to the actions of the party seeking vacatur, the decision of the lower court will usually be allowed to stand. See Bonner Mall, 115 S.Ct. at 391-92 (party that voluntarily settled case, thus creating mootness, is not entitled to vacatur ); Arizonans, 117 S.Ct at 1071-72. 23 For the reasons stated earlier, we find that the trust terminated automatically on July 15, 1997. This was prior to the entry of any final, appealable judgment in the case. 10 It is by no means clear to us that the district court had the power to somehow maintain the status quo pending final judgment in the face of the trust instrument's terms, but in any event its actions demonstrate without a doubt that it did not intend to do so. The district judge stated in his final orders that the trust was dead and has been dead since July 15th, 1997. He characterized the continuation of efforts by the trustee after this point as simple disobedience. These statements are inconsistent with an attempt by the district court to defer termination of the trust past its allotted time. 24 We thus need not make an equitable determination under Munsingwear and Bonner Mall with regard to the trust's claims against the appellees, since we find that the case was moot prior to the district court's decisions. 11 The district court had no jurisdiction to render judgment on these claims. The district court's judgment so far as it disposes of the trust's misuse of estate property claims and action for declaratory judgment is thus vacated and those claims are dismissed as moot for want of a party plaintiff having a legally cognizable interest in the outcome. 25 The effect of the termination on appellees' claims against the trust is somewhat more difficult to resolve. The classic cases of mootness due to changed circumstances involve plaintiffs whose relations to the case have changed. Because of the liberal allowance for substitution in the federal rules, cases in which a defendant's change in status leads to mootness are rare. See 15 Moore's Federal Practice § 101.94 (3d ed.1998). 26 Here, however, the officer appellees have an undeniable interest in recovering the severance payments that they claim they are owed. The difficulty is that the party they seek to recover from, and which resisted their claims in court, has, as they have consistently insisted, ceased to exist. They have been in effect litigating against an inert lump of assets while continuing to leave the trust--which has terminated and is not a legal entity--as their named opponent, and without ever seeking a substitution of parties. 27 It is a standard truism that [t]here can be no live controversy without at least two active combatants. See Martinez v. Winner, 800 F.2d 230, 231 (10th Cir.1986). The standing of both parties must be inquired into as part of the Article III jurisdictional inquiry. Standing to sue or defend is an aspect of the case or controversy requirement. Arizonans, 117 S.Ct. at 1067. Generally, the issue of mootness due to the loss of standing of a party is phrased in the plural so as to require that both parties to an action have maintained standing. See, e.g., Sierra Club v. Glickman, 156 F.3d at 619 (a matter is moot for Article III purposes if ... the parties lack a legally cognizable interest in the outcome.). 28 But despite this general language, courts have recognized that the standing inquiry is fundamentally different in the rare case where the defendant is its focus. See, e.g., People v. Highland Irrigation Co., 893 P.2d 122, 127 (Colorado 1995) (en banc) (finding that defendant had standing to raise affirmative defense, and noting that the rules for determining whether a plaintiff has standing are simply inapplicable to the defendants). It has been argued that a standing inquiry involving defendants is really part of a broader examination of the case's justiciability. See Natural Resources Defense Council, Inc. v. Jamison, 787 F.Supp. 231, 235 n. 1 (D.C.D.C.1990) (noting in dicta that the Article III question when defendant's standing is involved is whether defendant has sufficient interest to present the court with a justiciable controversy). Cases such as in rem actions illustrate that actions in which the plaintiff has valid standing may continue in the absence of any defendant whatsoever. The trust's termination and Goldin's lack of standing thus arguably may not have automatically terminated the district court's jurisdiction of the claims against the trust, as it did Goldin's claims against appellees. 29 However, whatever other effect the termination might have, it makes it impossible for us to hear an appeal pressed in the name of the defunct trust by the former trustee on any point, including the claims made by the appellees as plaintiffs. See Arizonans, 117 S.Ct. at 1067 (The standing Article III requires must be met by persons seeking appellate review, just as it must be met by persons appearing in courts of first instance.); Diamond v. Charles, 476 U.S. 54, 106 S.Ct. 1697, 1708, 90 L.Ed.2d 48 (1986) (intervenor who lacked standing could not appeal in place of defendant). All parties, whether defendants or plaintiffs below, must meet the requirements of Article III standing when appealing to this Court. 12 Since Goldin lacks an adequate interest to proceed with an appeal, his appeal is moot. Accordingly, we apply Munsingwear's equitable vacatur doctrine. Since we find vacatur warranted under Munsingwear, we need not determine whether the district court lost jurisdiction over appellees' claims against the trust immediately upon its termination. 30 Our resolution of this question must begin with a recognition that dismissing the appeal due to Goldin's lack of standing, as appellees argue we should, would lead to the problem at the heart of the Munsingwear doctrine--that an order may become unappealable due to no fault of the losing party, thus denying review of a possibly erroneous decision. See Northshore, 835 F.2d at 583 (finding vacatur not warranted when party requesting it was at fault, having failed to press its appeal in state court); Bonner Mall, 115 S.Ct. at 391 (A party who seeks review of the merits of an adverse ruling, but is frustrated by the vagaries of circumstance, ought not in fairness be forced to acquiesce in the judgment.). 31 We recognize that application of Munsingwear has sometimes been rejected when a party's change in status robs it of standing and mootness results from the unwillingness of a successor to pursue the appeal. See Karcher v. May, 484 U.S. 72, 108 S.Ct. 388, 395, 98 L.Ed.2d 327 (1987) (former state legislators were not entitled to vacatur since decision was not unreviewable--their successors could have appealed, but chose not to). Here, however, the trust has terminated and no successor has yet emerged. Cf. United States v. Zolin, 491 U.S. 554, 109 S.Ct. 2619, 2623 n. 3, 105 L.Ed.2d 469 (1989) (discovery issue related to criminal and civil IRS investigation was not mooted by defendant's death since civil audit could affect liability of estate, represented before the court by decedent's widow). We find it unlikely that the assets themselves can be held responsible for their failure to appeal. The ability of the creditors to appeal without a declaration that one or all of them is a successor in interest to the trust is procedurally unclear. See Karcher, 108 S.Ct. at 392 ([W]e have consistently applied the general rule that one who is not a party or has not been treated as a party to judgment has no right to appeal therefrom.) 32 Thus, despite Goldin's status as a defendant, under the unique facts of this case he--and the beneficiaries of the trust--have been denied any meaningful ability to appeal. This result cannot be traced to any fault on the part of Goldin. He legitimately advanced a nonfrivolous, if ultimately unsuccessful, argument for the continuation of his powers in an attempt to stave off mootness. As for the creditors, a party is under no duty to intervene if the plaintiff has proceeded against the wrong party. See Cheramie v. Orgeron, 434 F.2d 721, 725 (5th Cir.1970) (successors in interest to dead defendant not required to intervene). In any case, we find the creditors' failure to attempt to prevent Goldin from continuing to represent them was not unreasonable under all the circumstances. 33 The party at fault in creating this situation is not Goldin, but the appellees. They, unlike Goldin, argued that the trust had terminated. They seemingly remained oblivious to the necessary effect this contention had on the propriety of continuing their litigation solely against the defunct trust. Under the Rules of Civil Procedure, a party is allowed, and strongly encouraged, to substitute the proper defendant when circumstances change so as to render the prior defendant not the real party in interest. See Fed.R.Civ.P. Rules, 17, 19, 21, and 25. Had the appellees recognized that their own arguments created doubts about whether Goldin was properly before the court and simply sought substitution of the trust assets or other proper defendant or defendants, this litigation would have become much less troublesome. 34 Because the district court declined to create a new trust or other mechanism to handle the suit, the proper course of action might have been to name the assets themselves as an in rem defendant. This likely would have allowed the creditor beneficiaries to intervene directly, and clarified the need for them to do so. As intervenors with a concrete individual stake in the status of the former trust's funds, they would presumably have had standing to appeal a judgment in favor of appellees as plaintiffs. See United States v. State of Texas, 158 F.3d 299, 303-304 (5th Cir.1998) (intervenors had standing to appeal federal court's decision for plaintiff when the decision deprived them of a right they had gained in state court). Appellees should have recognized that the termination they sought raised issues of standing and mootness that needed to be addressed. Instead, appellees allowed the district court to erroneously continue to proceed on the merits. 35 The district court lacked Article III power to resolve the trust's misuse of estate property and declaratory judgment claims, and we vacate so much of the judgment as disposes of those claims and direct that they be dismissed as moot. Goldin's requests for mandamus relief are denied. We also conclude that the appellees' claims against the trust, regardless of whether they were moot before final judgment below, are moot on appeal, and because this mootness is not traceable to fault on Goldin's part, we vacate under Munsingwear. 13 We remand with instructions to dismiss the consolidated cases as moot. 14