Court Opinion

ID: 4362197
Source: CourtListenerOpinion
Date Created: 2019-01-25 22:00:15.069736+00
Date Added: 2024-06-11T14:48:29.362747
License: Public Domain

United States Court of Appeals
                     For the First Circuit

No. 16-2316

                   OLGA TORRES; PEDRO BONILLA,

                     Plaintiffs, Appellants,

                               v.

    BELLA VISTA HOSPITAL, INC.; BANCO POPULAR DE PUERTO RICO;
       THE WATSON WYATT COMPANY; RUBÉN PERÉZ; JOHANA DOE 1;
                 CONJUGAL PARTNERSHIP PERÉZ-DOE 1,

                     Defendants, Appellees,

 THE ANTILLIAN UNION CONFERENCE OF THE SEVEN DAY ADVENTIST; THE
  RETIREMENT COMMITTEE OF THE GENERAL CONFERENCE OF THE SEVENTH
DAY ADVENTISTS INTERAMERICAN DIVISION; THE GENERAL CONFERENCE OF
 THE SEVENTH DAY ADVENTIST; BELLA VISTA PENSION PLAN AND TRUST;
      THE ADVENTIST OF THE SEVENTH DAY INTERAMERICAN DIVISION
RETIREMENT PLAN; BELLA VISTA HOSPITAL, INC. 401K PLAN AND TRUST;
     PANNELL KERR & FOSTER, L.L.P.; MIGUEL RAMOS; JOHANA DOE;
                  CONJUGAL PARTNERSHIP RAMOS-DOE,

                           Defendants.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                 FOR THE DISTRICT OF PUERTO RICO

        [Hon. Jay A. García-Gregory, U.S. District Judge]

                             Before

                      Howard, Chief Judge,
               Boudin and Barron, Circuit Judges.

     Luis A. Vivaldi Oliver on brief for appellants.
     Carlos G. Martínez-Vivas on brief for appellees Bella Vista
Hospital, Inc.; Ruben Perez; Johana Doe 1; and Conjugal Partnership
Perez-Doe 1.
     Cristina S. Belaval-Burger on brief for appellee Banco
Popular de Puerto Rico.
     Juan A. Marqués-Díaz, Sonia M. López del Valle-Carrera, and
McConnell Valdés LLC, on brief for appellee Watson Wyatt Company.

                         January 25, 2019
            BOUDIN, Circuit Judge.          Olga Torres and Pedro Bonilla

are former employees of Bella Vista Hospital ("Bella Vista"), a

Mayaguez,   Puerto    Rico-based    hospital    operated      by    the   General

Conference of Seventh Day Adventist Church.          In 1982, the hospital

created a pension program, advising its employees that the plan

was subject to the Employee Retirement Income Security Act of 1974

("ERISA"), 29 U.S.C. §§ 1001-1461.            ERISA is a federal statute

imposing obligations on private employers offering pension plans.

See Advocate Health Care Network v. Stapleton, 137 S. Ct. 1652,

1656 (2017).

            Certain   types   of    plans      are   exempt        from   ERISA's

requirements, including plans which meet the statutory definition

of "church plan," 29 U.S.C. § 1003(b)(2).            In 2000, the Internal

Revenue Service, which is empowered to issue rulings to parties as

to the status of their plans, advised Bella Vista that its pension

plan met the definition of "church plan" and so was exempt from

ERISA.    In 2003, Bella Vista terminated the plan.                  Torres and

Bonilla   had   become   disabled   some     years   earlier,       and   certain

benefits they were receiving from the hospital ended.                In November

2006, Torres and Bonilla sued in federal district court in Puerto

Rico to recover lost benefits.1

     1 Torres and Bonilla had initially sued in a local Puerto Rico
court in 2004, naming not only the hospital but also others as
defendants. The local case was suspended to await the outcome of
the federal case.    Defendants in addition to the hospital were

                                    - 3 -
           Although the plaintiffs claimed federal subject matter

jurisdiction under ERISA, the district court found that the church

plan exception applied so ERISA did not govern the hospital's

pension regime.   The court granted summary judgment in favor of

the defendants, dismissing the case on May 21, 2009, for lack of

subject matter jurisdiction--there being no federal claim in the

case outside of the purported ERISA count.   Torres and Bonilla did

not appeal that decision and took no further action in court for

five years.

           On November 24, 2014, Torres and Bonilla filed a motion

in the district court to set aside the 2009 judgment, invoking the

court's authority to vacate a judgment procured by "fraud on the

court."   Although such an action is recognized in the rules, Fed.

R. Civ. P. 60(d)(3), the power of federal courts, both trial and

appellate, to set aside or alter prior judgments obtained by fraud

antedates the rules' adoption in 1938 and is a long-settled

equitable power of the federal courts not constrained by any

statute of limitations, Hazel-Atlas Glass Co. v. Hartford-Empire

Co., 322 U.S. 238, 244-45 (1944).

           This drastic remedy is hedged with restrictions.   Here,

plaintiffs claimed that in the original federal action they brought

also named in the federal case but were dismissed prior to this
appeal, with two exceptions: Banco Popular de Puerto Rico and
Watson Wyatt Company. Each has filed its own brief here.

                               - 4 -
in 2006, various defendants made deliberate material misstatements

in their answers and various sworn statements.                 After referring

the reopening request to a magistrate judge, the district court in

September 2015, in agreement with the magistrate judge, rejected

the request as not coming even close to the level of "fraud on the

court."

               The plaintiffs moved for reconsideration citing evidence

unearthed during the state-court proceeding, which had resumed

following the 2009 dismissal order in the federal case.                         The

district court denied the motion, and this appeal followed.                     The

appeal    is    hopeless   on    the   merits;   but    the   defendants      raise

threshold objections that they argue divest this court of authority

over the appeal, namely (1) that the appeal is untimely, and (2)

that the notice of appeal is insufficient.

               "'Jurisdiction' is a term used multiple ways," McKenna

v. Wells Fargo Bank, N.A., 693 F.3d 207, 213 (1st Cir. 2012); not

every rule governing the timing of appeals can be said to be

"jurisdictional," only those accorded that status by statute,

Hamer v. Neighborhood Housing Services of Chicago, 138 S. Ct. 13,

17   (2017),      or   where    Congress   has   otherwise         made   a   "clear

indication" of its desire to treat a particular rule as having

"jurisdictional        attributes."     Henderson      ex   rel.    Henderson    v.

Shinseki, 562 U.S. 428, 439 (2011).

                                       - 5 -
           In   all   events,     Supreme    Court   precedent    generally

contemplates that a federal appeals court consider the timeliness

of the appeal before proceeding to the merits, Bowles v. Russell,

551 U.S. 205, 213-14 (2007), even where the merits issue is

straightforward and where the same party would lose under either

a jurisdictional or a merits ruling.         Steel Co. v. Citizens for a

Better Env't, 523 U.S. 83, 94–95 (1998); see also McKenna, 693
F.3d at 213 ("[I]t is settled that a civil appeal filed out of

time is barred, that the error in timing cannot be waived, and

that circuit courts are expected to notice the error sua sponte

. . .").

           In the nineteenth century and well into the twentieth,

some   courts     including     this   one   (1)     accepted    that   even

jurisdictional objections could be deemed waived if not raised

early in a lawsuit, and (2) often reached the merits of certain

disputes without deciding jurisdiction where the result would have

been unchanged.    E.g., Carter v. Bennett, 56 U.S. 354, 357 (1853);

United States v. Parcel of Land With Bldg., Appurtenances &

Improvements, Known as Woburn City Athletic Club, Inc., 928 F.2d
1, 4 (1st Cir. 1991).

           Steel Co. has ended this debate, see Hart & Wechsler,

The Federal Courts and the Federal System 1412 (6th ed. 2009), at

least with respect to Article III jurisdiction. But the timeliness

of an appeal or its scope do not turn on the "arising under"

                                   - 6 -
language of Article III or the scope of diversity jurisdiction.

It depends on whether the appeal was filed within the proper time

or encompasses the issue sought to be raised.

              In our case the district judge dismissed the plaintiffs'

reopening motion on the merits on September 30, 2015, holding that

the allegations by plaintiffs even if factually supported did not

constitute     fraud     on    the    court.        Plaintiffs    then    moved      for

reconsideration on October 8, 2015, within the required time period

of twenty-eight days, see Fed. R. Civ. P. 59(e).                        The district

court denied the motion for reconsideration on September 19, 2016;

a notice of appeal from that order was then filed within the

required thirty-day period.            Fed. R. App. P. 4(a)(1)(A).

              Although a timely motion for reconsideration normally

tolls   the    running    of    the    time    to    appeal,     Fed.    R.   App.    P.

4(a)(4)(A)(iv), various defendants argue here that this is not

true of where, without bringing anything new to the table, the

motion repeats claims already disposed of by the dismissal order,

Johnson v. Teamsters Local 559, 102 F.3d 21, 29–30 (1st Cir. 1996),

or is merely an eleventh-hour effort to undo the party's procedural

failures, Marks 3 Zet-Ernst Marks GmBh & Co. KG v. Presstek, Inc.,

455 F.3d 7, 15-16 (1st Cir. 2006).              But here plaintiffs did offer

something not previously advanced, namely, evidence unearthed

during the state proceeding, so the present appeal is thus timely.

                                        - 7 -
             Alternatively,   defendants   argue   that   the   notice   of

appeal identifies only the September 19, 2016, denial of the motion

for reconsideration and that this court therefore lacks authority

to consider the original September 30, 2015, dismissal of their

fraud claim.     See Fed. R. App. P. 3(c)(1)(B) (requiring that the

notice of appeal "designate the judgment, order, or part thereof

being appealed").     But, as this court said in McKenna,

             Technically, an appeal that attacks only an order
             denying reconsideration can fairly be limited by
             the court solely to issues raised in the
             reconsideration motion; but so long as that order
             is timely appealed, courts have some latitude to
             consider other grounds originally urged against the
             underlying dismissal, especially where the issues
             on original dismissal and the reconsideration order
             overlap or are intertwined.
693 F.3d at 213.

             In this case the only substantive issue on which Torres

and Bonilla seek review is the district court's denial of their

effort to set aside the 2009 judgment based on alleged fraud on

the court; so we exercise our discretion to review that ruling

notwithstanding the lack of clarity in the notice of appeal,

Chamorro v. Puerto Rican Cars, Inc., 304 F.3d 1, 3 (1st Cir. 2002)

(explaining that notices of appeal should be "construe[d] . . .

liberally" and "examine[d] . . . in the context of the record as

a whole").

             Turning to the merits, claims of false statements by

lawyers or parties are a serious matter and might meet some

                                  - 8 -
definitions of "fraud," but the phrase "fraud on the court" has a

special,   well-understood      and   limited       office.       Inaccurate

assertions in lawsuits are commonplace and to allow all such claims

to be presented as "fraud on the court," with no time limit, would

undermine the finality of judgments and the need for all litigation

to come to an end, cf. Klimowicz v. Deutsche Bank Nat'l Trust Co.,

907 F.3d 61, 67 (1st Cir. 2018).

           Thus "fraud on the court" is limited to fraud that

"'seriously'   affects   the    integrity   of   the    normal   process   of

adjudication," "defile[s] the court itself," and prevents "the

judicial   machinery"    from   performing    its      usual   function--for

example, bribery of a judge or jury tampering.           12 Moore's Federal

Practice § 60.21[4][a] (2018); see also George P. Reintjes Co. v.

Riley Stoker Corp., 71 F.3d 44, 48 n.5 (1st Cir. 1995).             Nothing

of this severity is present in the plaintiffs' allegations.

           Plaintiffs' mainly contend that Banco Popular de Puerto

Rico and Bella Vista and their agents committed perjury by denying

the existence of an ERISA-covered 401(k) plan and covered up the

transfer of funds between the liquidated employee benefits plan

and the 401(k) plan. Even assuming the truth of these allegations,

"perjury alone . . . has never been sufficient" to constitute

"fraud upon the court."    George P. Reintjes Co., 71 F.3d at 49.

                                  - 9 -
          Sorry   though   one   may   be   about   the   plight    of   the

plaintiffs, the fraud on the court claim is hopeless.              The 2006

litigation is at an end.

          Affirmed.

                                 - 10 -