Court Opinion

ID: 194575
Source: CourtListenerOpinion
Date Created: 2011-02-07 02:20:23+00
Date Added: 2024-06-11T15:10:29.792331
License: Public Domain

March 4, 1993
                  UNITED STATES COURT OF APPEALS
                      FOR THE FIRST CIRCUIT

                                             

No. 92-1976

                OAKVILLE DEVELOPMENT CORPORATION,
              TRUSTEE OF THE 10-12 LOPEZ ST. TRUST,

                      Plaintiff, Appellant,

                                v.

              FEDERAL DEPOSIT INSURANCE CORPORATION,

                       Defendant, Appellee.

                                             

           APPEAL FROM THE UNITED STATES DISTRICT COURT

                FOR THE DISTRICT OF MASSACHUSETTS

          [Hon. Walter Jay Skinner, U.S. District Judge]
                                                       
           [Hon.  Mark  L.  Wolf,  U.S. District Judge]
                                                      

                                             

                              Before

                      Selya, Circuit Judge,
                                          

                  Bownes, Senior Circuit Judge,
                                              

                     and Cyr, Circuit Judge.
                                           

                                             

     David Hoicka,  with whom  Hoicka & Associates,  P.C. was  on
                                                         
brief, for appellant.
     Edward J.  O'Meara, Staff  Counsel, FDIC,  with whom  Ann S.
                                                                 
DuRoss,  Assistant General  Counsel,  Richard  J. Osterman,  Jr.,
                                                                
Senior Counsel, John Houlihan, Sarianna T. Honkola, and Edwards &
                                                                 
Angell were on brief, for appellee.
      

                                             

                          March 4, 1993

                                             

          SELYA,  Circuit  Judge.   Plaintiff-appellant  Oakville
          SELYA,  Circuit  Judge.
                                

Development  Corporation (Oakville)  challenges orders  issued by

two different  district judges which  had the combined  effect of

allowing a foreclosure  sale to  proceed.  For  the reasons  that

follow, we dismiss Oakville's appeal as moot.

                                I

            Oakville borrowed $78,000  from First American  Bank.

The loan  was evidenced  by a  promissory note  and secured  by a

second mortgage on  a parcel  of real property  located at  10-12

Lopez Street, Cambridge, Massachusetts.  On October 19, 1990, the

bank  was declared  insolvent and  the Federal  Deposit Insurance

Corporation (FDIC)  was appointed  as receiver.   Oakville's loan

appeared on the bank's books as an asset.

          The  FDIC   published   notice  to   First   American's

creditors, setting  a 90-day deadline  for the filing  of claims.

Because  Oakville  was mired  in  a dispute  with  First American

regarding the  aforementioned loan,  it filed a  proof of  claim.

The FDIC  rejected Oakville's  claim as  untimely and  refused to

entertain administrative appeals.  Oakville did not seek judicial

review within the time  allotted.  See 12 U.S.C.    1821(d)(6)(A)
                                      

(1988).  Some months later, however, Oakville sued in state court

based on First  American's alleged failure  to accept and  credit

payments on the loan.  The FDIC removed the case to federal court

and moved for dismissal.  The FDIC's motion remains undecided.

          Because  Oakville's  payments  were   substantially  in

arrears, the FDIC  also embarked on foreclosure proceedings.   It

                                2

scheduled a  foreclosure  sale for  May  20, 1992.    On May  15,

Oakville  moved to  enjoin the  proposed sale.   On  May  19, the

district court (Skinner, U.S.D.J.) issued a temporary restraining

order  (TRO) stalling the sale.   Oakville subsequently failed to

submit  documents and appear  at a  hearing.   Accordingly, Judge

Skinner dissolved the TRO on July 13, 1992.

          The FDIC readvertised the  foreclosure sale, this  time

stipulating  a  date  of August  12,  1992.    Oakville filed  an

emergency  motion to  reinstate  the TRO.1    The district  court

(Wolf, U.S.D.J.)  denied the  motion, determining that  the court

lacked  statutory authority  to grant  an injunction  against the

FDIC  qua receiver.   See 18 U.S.C.    1821(j) (1988).   Oakville
                         

took  an appeal but did not request  a stay of the impending sale

(although  counsel  claims  that  he circulated  notices  at  the

auction, warning prospective bidders that an appeal was pending).

The property  was sold  to a  third party  and has  since changed

hands.

                                II

          It  is important  to  stress that  Oakville takes  this

appeal strictly and  solely from two interlocutory  orders of the

district court:   Judge Skinner's  order dissolving  the TRO  and

Judge  Wolf's order  refusing to  reinstate the  injunction (and,

thus, allowing  the  foreclosure sale  to proceed).   Hence,  the

merits are  not before us  and Oakville's action  remains pending

                    

     1The motion was filed on August 11, 1992.  Judge Skinner was
on vacation.  In his absence, Judge Wolf presided.

                                3

below.  Seen in  this light, it  is readily apparent that,  since

the  foreclosure  sale  has now  taken  place  and  title to  the

property rests  with  a  third  party, reversing  the  orders  in

question would give Oakville no more than a moral victory.  Ergo,

its appeal is moot.   

          Article  III of  the Constitution confines  the federal

courts'  jurisdiction  to those  claims  which  embody an  actual

"case" or "controversy."  U.S. Const.  art. III,   2, cl. 1.   It

is well established  that, in circumstances where  a court cannot

provide  effectual relief,  no justiciable  case remains  and the

court must dismiss the appeal  as moot.  See Mills v.  Green, 159
                                                            

U.S. 651, 653 (1895).  This doctrine applies with full force  and

effect  where, as here, a  plaintiff appeals from the dissolution

of an injunction or the denial of injunctive relief, but neglects

to  obtain a stay.  When, as will often happen, the act sought to

be  enjoined actually  transpires,  the court  may thereafter  be

unable  to fashion  a   meaningful anodyne.   In  such straitened

circumstances, the appeal becomes moot.  See, e.g., In re Stadium
                                                                 

Management  Corp., 895 F.2d 845, 847 (1st Cir. 1990) (holding, in
                 

analogous circumstances,  that "[a]bsent  a stay, the  court must

dismiss  a  pending  appeal as  moot  because  the  court has  no

remedy"); In re Continental Mortgage Investors, 578 F.2d 872, 877
                                              

(1st Cir. 1978) (explaining that "[a]n appeal  is considered moot

if it cannot affect the matter in issue or cannot grant effectual

relief"); see  also Railway Labor Executives  Ass'n v. Chesapeake
                                                                 

W. Ry., 915 F.2d 116,  118 (4th Cir. 1990), cert. denied,  111 S.
                                                        

                                4

Ct. 1312 (1991); In re Kahihikolo, 807 F.2d 1540, 1542 (11th Cir.
                                 

1987) (per  curiam); Holloway  v. United  States, 789  F.2d 1372,
                                                

1374  (9th Cir. 1986); In  re Combined Metals  Reduction Co., 557
                                                            

F.2d 179, 189 (9th Cir. 1977); In re Information Dialogues, Inc.,
                                                                

662 F.2d 475, 476 (8th Cir. 1981); In re Cantwell, 639 F.2d 1050,
                                                 

1053-54 (3d Cir. 1981).

                               III

          Appellant offers  three counter arguments in  an effort

to ward off the inevitable.  We consider them seriatim.   
                                                      

                                A

          Oakville  contends that we  can grant  effective relief

even at this late date.  Its contention assumes that the sale can

be   voided  because  prospective  purchasers  were  notified  of

Oakville's pending appeal.2  Oakville's premise is wrong.

          Oakville furnishes no authority to contradict the black

letter  law that  a  sale to  a good  faith  purchaser cannot  be

rescinded  in these circumstances.  See, e.g., Mass. Gen. L. Ann.
                                             

ch. 106,   2-702 (West 1990) (explaining that a seller's right to

reclaim   goods  is  subject  to  the  rights  of  a  good  faith

purchaser).   Generally speaking, a  good faith purchaser  is one

who  purchases assets  for value,  without fraud,  misconduct, or

knowledge of adverse  claims.  In re  Bel Air Assocs., Ltd.,  706
                                                           

F.2d  301,  304-05  (10th  Cir.  1983);  Greylock Glen  Corp.  v.
                                                             

                    

     2We address this  argument even though  the record does  not
contain  a  copy of  the supposed  notice  or any  other specific
information as  to its contents or  as to the manner  in which it
was distributed.

                                5

Community Sav. Bank, 656 F.2d 1, 3-4 (1st Cir. 1981).   Knowledge
                   

of a pending appeal,  without more, does not deprive  a purchaser

of good faith status.   Put another way, claims asserted in  such

an  appeal are  not "adverse  claims" within  the meaning  of the

rule.   See Greylock  Glen, 656 F.2d  at 4 (holding  that a bank,
                          

although  a party  to a  pending appeal,  was nonetheless  a good

faith purchaser); In re Dutch Inn of Orlando, Ltd., 614 F.2d 504,
                                                  

506  (5th  Cir. 1980)  (holding  that  a third-party  purchaser's

knowledge  of claims asserted in a pending appeal did not deprive

the  purchaser  of  good  faith  protection);  see  also  Stadium
                                                                 

Management, 895  F.2d at 848  n. 4;  cf. 11 U.S.C.    363(m)  (an
                                        

appeal  of the authorization to  hold a bankruptcy  sale does not

affect the good faith  status of an ensuing transaction).   Thus,

Oakville  takes nothing simply  by reason  of having  told likely

bidders about its pending appeal.

                                B

          Oakville's  second  basis for  claiming  that  we could

still grant  effective relief is  predicated on the  notion that,

under  Massachusetts law, it has a right to redeem the foreclosed

property.3  Thus, its thesis runs, the appeal is alive because an

affirmative exercise of redemptive  rights will unravel the sale.

The infertility of this theory is starkly apparent.

           As  previously  remarked,  Oakville  appeals  only the

                    

     3Whether Oakville has such a right is far from pellucid.  In
general, Massachusetts law does not provide a right of redemption
where  the  "land has  been  sold pursuant  to  a  power of  sale
contained in the mortgage deed,"   Mass. Gen. L. Ann. ch.  244,  
18 (West 1988), as would appear to be the case here.

                                6

dissolution  of  the  TRO  and the  district  court's  subsequent

refusal to  reinstate it.   But,  redemption assumes  a completed

foreclosure   not a stalled sale.  Thus, whatever state-law right

of redemption Oakville might have is independent of the merits of

the challenged  orders.  Indeed, it is the lifting of the TRO and

the consequent happening of  the foreclosure that allows Oakville

to pursue its  claimed redemptive  remedies.  What  is more,  our

contemplation  of  whatever  as-yet-unexercised redemptive  right

Oakville  may enjoy  would contravene  Article III's  prohibition

against  advisory opinions.    See  Holloway,  789 F.2d  at  1374
                                            

(refusing to reach merits  of redemption argument where purchaser

of  property was  not  a party  because  to do  so  would be  "an

advisory opinion upon a moot question") (citations omitted). 

                                C

          Appellant  also  argues  that  its  appeal  skirts  the

jurisdictional bar because the  question presented is "capable of

repetition, yet evading  review."  Southern Pac. Terminal  Co. v.
                                                              

ICC,  219  U.S. 498,  515  (1911).   Although  this  asseveration
   

fastens  upon a  recognized  exception to  general principles  of

mootness, see, e.g., Caroline  T. v. Hudson Sch. Dist.,  915 F.2d
                                                      

752, 757 (1st  Cir. 1990); In re Grand Jury Proceedings, 814 F.2d
                                                       

61, 68 (1st Cir. 1987); Anderson v. Cryovac, Inc., 805 F.2d 1, 4-
                                                 

5 (1st  Cir.  1986), the  exception  is not  a  juju, capable  of

dispelling mootness  by mere  invocation.  Rather,  the exception

applies  only  if  there  is  "a 'reasonable  expectation'  or  a

'demonstrated probability'  that the same  controversy will recur

                                7

involving  the same complaining party."  Murphy v. Hunt, 455 U.S.
                                                       

478, 482 (1982) (quoting Weinstein v. Bradford, 423 U.S. 147, 149
                                              

(1975)).  

          Appellant's case  does not  come within the  margins of

this  definition.    Unlike  pregnant women,  who  are  likely to

conceive again,  see Roe v.  Wade, 410 U.S.  113, 125  (1973), or
                                 

handicapped  children, who  are  likely to  require placement  in

subsequent school years, see  Honig v. Doe, 484 U.S.  305, 317-23
                                          

(1988),  it is highly unlikely that appellant will again secure a

mortgage with a federally insured bank that then fails, prompting

FDIC  involvement and  ensuing foreclosure.4   Appellant  has not

shown, or even  alleged, that  it has the  slightest prospect  of

suffering  this fate anew.   Instead, appellant contends that the

FDIC's arbitrariness  will imperil  other property owners.   But,

even  if  this  contention  is  true,  it  is  irrelevant:    the

possibility   or even the probability   that others may be called

upon  to  litigate similar  claims  does  not  save a  particular

plaintiff's case from mootness.   See Lane v. Williams,  455 U.S.
                                                      

624,  634 (1982); Pallazola v.  Rucker, 797 F.2d  1116, 1129 (1st
                                      

Cir. 1986).   Thus, appellant  cannot bring its  case within  the

narrow  confines  of  the  "capable of  repetition,  yet  evading

review" exception.

                                IV

          While  most  of  appellant's  claims against  the  FDIC

                    

     4The record in this  case does not show that  appellant owns
any  other property, has any other mortgage loans, or retains any
borrowing power.

                                8

remain to be litigated below, its claims pertinent to  injunctive

relief  became  moot  when  the property  was  sold  at  auction.

Although the transgressions of the FDIC may be a tempting subject

for soliloquy, for us to pronounce judgment in the absence of any

effective remedy would be to wander impermissibly  into the realm

of the advisory and 

the hypothetical.   Because jurisdictional concerns  prevent this

court  from  rendering  judgment   where  no  relief  is  legally

possible, we must go no further.5

          The appeal is dismissed as moot.  Costs to appellee.
          The appeal is dismissed as moot   Costs to appellee
                                                             

                    

     5The  FDIC  has  asked  that  we   order  appellant  to  pay
attorneys' fees and double costs.  While the question is not free
from  doubt, we decline, on balance, to impose sanctions.  We do,
however, award the FDIC its ordinary costs.

                                9