Court Opinion

ID: 6971929
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:04:03.507542+00
Date Added: 2024-06-11T09:12:14.803188
License: Public Domain

SLOVITER, Circuit Judge,
concurring in the judgment to affirm.
I concur in the judgment to affirm, but I write-separately because my reasons differ to a significant extent from those given by my colleague, Judge Rosenn. Judge Rosenn’s opinion sets forth, with his usual thoroughness and clarity, the procedural history, and I therefore will only augment his recitation with facts that I believe need emphasis.
The complaint was filed by Continental Casualty Company against Dominick D’Andrea, Inc., a subcontractor, for subrogation for damages Continental had to pay to Al-monesson Associates, L.P., the owner and developer of a shopping mall, when concrete walls that D’Andrea had constructed collapsed during a storm. Continental, who filed the complaint, had the obligation to prove that it was entitled to recover as sub-rogee. During discovery, Continental was requested by D’Andrea’s prior attorney to produce the contract on which it based its suit, and in response it produced the contract between the Owner, Almonesson, and the general contractor, The Douglas Company. Although the first page of the contract incorporates by reference another document, “The 1987 Edition of the ALA Document A201, General Conditions of the Contract for Construction,” a standard form document that is apparently used often in construction contracts, that document, “the A201 document,” was not produced by Continental in discovery. Nor did D’Andrea’s counsel specifically request it. It was only after D’Andrea’s new counsel realized he did not have the complete contract, a matter he learned from the motion for summary judgment filed by Douglas, a third-party defendant, did he obtain the A201 document. From that document, he discovered a provision in which Continental had waived its rights to subrogation of Al-monesson’s claim against D’Andrea. In other words, Continental had filed a lawsuit claiming subrogation when it had no legal right to do so, a conclusion confirmed by the district court when it granted summary judgment to D’Andrea and against Continental on that basis.
Unfortunately for D’Andrea, the discovery of that addendum to the contract was not made until March 1995, by which time the magistrate judge to whom the pretrial proceedings had been assigned had reached the limit of his patience, apparently because of delays caused by the illness of D’Andrea’s former counsel. I note that no party disagrees that D’Andrea’s former counsel was seriously ill, periodically hospitalized, and affected mentally by the illness.
The motion of D’Andrea’s new counsel to amend the answer to assert this dispositive defense of the waiver-of-subrogation clause was filed March 10,1995, which was after the magistrate judge had filed the pretrial order (February 1995) expressly stating that there would be no further extensions. Nonetheless, D’Andrea moved to amend the Pretrial Order to add the affirmative defense and to move for summary judgment on that basis. Continental objected but sought additional discovery and an opportunity to oppose the summary judgment motion should the court grant D’Andrea’s requests. The magistrate judge told the parties to address the motion to the district court, and that court then referred it back to him..
The magistrate judge, apparently frustrated at this turn of events, granted the motion to amend the Pretrial Order based on the *255waiver-of-subrogation provision of the contract only on condition that all fees and expenses of Continental “that relate to the amendment” shall be borne by D’Andrea. Order dated Feb. 5, 1996. App. at 328. More explicitly, the magistrate judge stated:
all fees and expenses of [Continental] that relate to the amendment shall be borne by [D’Andrea], including but not limited to costs and fees for (i) briefing and argument of the present motion, (ii) any further discovery [Continental] requires, (iii) a scheduling conference, (iv) all opposition to [Continental’s] motion for summary judgment; and [Continental] shall timely submit certifications which reflect its expenses related to the amendment.
... [I]f [D’Andrea] does not pay[Continental’s] fees ... the affirmative defense which is the subject of this order shall be stricken and the ... motion for summary judgment shall be dismissed.
App. at 328-29 (emphasis in original).
It is true, as Judge Rosenn points out, that D’Andrea’s counsel did not object at that time to the order conditioning the right to amend on payment of fees and expenses, nor did it appeal. But we cannot ignore evidence in the record that may help explain why D’Andrea’s counsel may have thought that silence, rather than an appeal at that time, was his required course. The transcript of the hearing on the motion to amend before the magistrate judge on February 2, 1996 discloses that the hearing was scheduled only because the district court requested him to take a look at it. The magistrate judge also asked D’Andrea’s original counsel to be present because some of the issues pertained to his conduct.
The attitude of the magistrate judge toward the motion was evident at the start, when he stated, “This is a textbook example of abuse of the legal system.” App. at 298. His hostility toward the arguments presented on behalf of D’Andrea is evident throughout, illustrated by his denomination of D’Andrea’s counsel’s argument, inter alia, as “hutzpa.” App. at 304. I will not go through the colloquy verbatim, but Judge Rosenn also acknowledges the magistrate judge’s “harsh comments” and “captious behavior.” Ultimately the magistrate judge announced that he would permit the amendment because he believed that otherwise under the law of the Third Circuit, they would be “right back here in three years.” App. at 321. He advised counsel that D’Andrea’s insurance company would have to pay the legal fees related to the additional work needed to allow Continental to respond to the additional affirmative defenses.
Toward the end of that colloquy, counsel for Continental asked the court, which had contemplated that the additional discovery should be completed in 20 days, to change that time to 60 days, which the court immediately agreed to do. The following then took place:
MR. HUDSON [counsel for D’Andrea]: I almost hate to do this, but you’re raising a calendar. I know the second week in February I’m going to be at expert depositions that—
THE COURT: You are going to have to get someone else from your firm here. Now look it—
MR. HUDSON: All right, I know. I thought I would tell you—
THE COURT: Don’t push the envelope here, my friend. I have this big huge marshall sitting back there.
MR. HUDSON: I just wanted to raise it.
THE COURT: Don’t, don’t, don’t, don’t.
App. at 325 (emphasis added).
I do not know for a fact what the magistrate intended by the reference to the “big huge marshall,” but it is reasonable to believe that an attorney might take that as some kind of threat, whether intended benignly or not. When coupled with the fact that the fate of the amendment, with what counsel believed was a dispositive affirmative defense, and the fact, as Judge Rosenn acknowledges, that the client faced a potential judgment for $1.3 million, it is no wonder that counsel determined to proceed with the discovery under an order that he may have believed was unfair but which had not been reduced to any dollar amount. Nor do I believe it is reasonable to fault counsel for failing to appeal that non-dispositive order to the district court at that time. Counsel, having been subject to the magistrate judge’s *256temper, may have reasonably determined not to risk his ire by an appeal.
Thus, I respectfully disagree with Judge Rosenn that D’Andrea has no excuse for its failure to object to or appeal the order of February 5, 1996. Nor do I agree that Rule 72(a) provides an unbreachable barrier under circumstances such as that here.
In United Steelworkers of America v. New Jersey Zinc Co., 828 F.2d 1001 (3d Cir.1987), we stated that although a party ordinarily waives its ability to challenge on appeal a magistrate’s pretrial order by failing to file a timely objection, the failure to file a formal objection with the district court is not fatal to our review under “extraordinary circumstances.” Id. at 1008 (citations omitted). Although Judge Rosenn acknowledges the “extraordinary circumstances” exception, he believes that none have been shown here. I, on the contrary, believe that what appears to be an unexplained judicial threat, together with the possibility that a client will not be permitted to interpose a dispositive defense to a $1.3 million claim, is enough to constitute “extraordinary circumstances.”
We have construed language in Fed. R.Civ.P. 51 similar to that in Rule 72 to permit appellate review for plain error. See Fashauer v. New Jersey Transit, 57 F.3d 1269, 1289 (3d Cir.1995). We have defined plain errors as those errors that “ ‘seriously affect the fairness, integrity or public reputation of judicial proceedings.’ ” Osei-Afriyie v. Medical College of Pennsylvania, 937 F.2d 876, 881 (3d Cir.1991) (quoting United States v. Atkinson, 297 U.S. 157, 160, 56 S.Ct. 391, 80 L.Ed. 555 (1936)). In Walden v. Georgia-Pacific Corp., 126 F.3d 506 (3d Cir.1997), we explained that a plain error challenge will succeed if there is an actual error, i.e., a deviation from or violation of a legal rule, the error is plain, i.e., clear and obvious under current law, and the error affects substantial rights. In other words, the error must be prejudicial and must have affected the outcome of the district court proceedings. Id. at 520 (citing United States v. Olano, 507 U.S. 725, 732-34, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993)); see also 21 Charles Alan Wright & Kenneth W. Graham, Jr., Federal Practice & Procedure § 5043 (1996). Although we exercise our power to reverse for plain error sparingly, Chemical Leaman Tank Lines, Inc. v. Aetna Cas. & Surety Co., 89 F.3d 976, 994 (3d Cir.), cert. denied, — U.S.-, 117 S.Ct. 485, 136 L.Ed.2d 379 (1996), the circumstances of this case are sufficiently serious for us to question the integrity of the proceedings.
Finally, D’Andrea’s counsel might well have decided that there was little possibility that the order would be overturned at that juncture. It is not unusual for trial courts to impose costs on a party for its delay as a condition to permit an extension. There was no basis to assume that the amount of costs imposed would be anything but reasonable. Thus, I would not preclude review on the basis of D’Andrea’s failure to appeal from the February 5,1996 order.
D’Andrea, however, was not without other opportunities to seek redress at the trial court level. Assuming, as I am willing to do, that counsel’s obligation to the client justified taking no action that might jeopardize the ultimate disposition of the case, D’Andrea offers no plausible explanation why it took no action once the district court granted summary judgment. At that time, of course, D’Andrea had already paid the full amount of the fees and costs requested by Continental’s counsel because that was a condition precedent to the ruling. In the same order of December 12, 1996 containing the district court’s order granting summary judgment to D’Andrea based on the waiver of subrogation clause, the court also ordered “that defendant comply with the February 5,1996 order of[the magistrate judge] regarding the fees and expenses incurred by plaintiff in opposing the present summary judgment motion.”
As Judge Rosenn suggests in his opinion, the purpose and effect of that provision of the order is unclear. D’Andrea had already complied with the order to pay the fees and expenses. Thus, if Judge Rosenn is correct that the district court did not actually review the magistrate judge’s order, then the district court never focused on the substance of D’Andrea’s objection to the amount of fees and costs which it had been required to pay.
Those objections are not without some facial plausibility. While I personally am not persuaded by D’Andrea’s argument that the delay in interposing the dispositive affirmative defense was not serious or prejudicial to Continental, I believe there may. be more *257basis to its contention that the magistrate judge failed to assess the relative responsibility for the delayed production of the contract form.
The magistrate judge does not appear to have considered the role of Continental in filing a subrogation claim where the contract of the subrogor precluded such an action. To the contrary, his approach absolved Continental of any blame in filing and maintaining an action that lacked merit. But Continental was the party that had the obligation under Rule 11 of the Federal Rules of Civil Procedure to investigate in good faith whether the claim could be pursued under the law and the facts. Presumably, someone in its organization was aware of the incorporation of the A201 document in a contract negotiated by its insured, and its failure to produce the' entire document when requested to do so in discovery led to the succeeding events.
Moreover, there is no suggestion that the magistrate judge focused on D’Andrea’s contention that Continental pursued unreasonable discovery, such as that ultimately precluded by the parol evidence rule, confident that someone else would be paying the bill. Of course, discovery is not limited to admissible evidence but the magistrate judge had emphasized that costs it had authorized had to be in connection with “reasonable” discovery, and there is no indication on the record that Continental’s counsel’s bill for fees and expenses was scrutinized by a judge for its reasonableness after D’Andrea interposed its objection. In fact, the magistrate judge summarily denied D’Andrea’s objections even after Continental agreed to modify its fee request. See App. at 402, 415.
Despite what appear to me to be serious deficiencies in the procedure relating to the assessment of the fees and expenses, I do not vote to reverse and remand because I see no indication in the record that D’Andrea’s counsel made an effort post-judgment to bring these matters to the district court’s attention. The docket does not show that counsel made a motion under FRCP 59(e) to alter or amend the judgment, which would have afforded the district court the chance to hear from both parties. There is nothing at all to suggest that any statement or action by the district court created whatever in terro-rem effect may have been caused by the magistrate judge’s attitude. Issues relating to costs and expenses are by their very nature appropriate for consideration in the first instance at.the district court level. Having neglected the opportunity to do this earlier, D’Andrea is not entitled to have them considered by this court. In so holding, however, I note that D’Andrea may not be precluded from seeking relief by filing a Rule 60(b)(6) motion in the district court, although I take no position on its use in these circumstances.
Accordingly, I join Judge Rosenn in affirming the judgment of the district court.1

. Following the filing of this opinion, four district court judges of the District of New Jersey who are familiar with the magistrate judge in question have informed me that the magistrate judge is “one of the most understanding, patient, and attorney-friendly judges [they] know.” Nothing in this opinion is intended to reflect on the ability of the magistrate judge, nor on his behavior or performance in any case other than the one at issue.