Lehman v. Revolution Portfolio LLC

166 F.3d 389 (1st Cir. 1999)

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Nature of the Case

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Facts

A Trust, acting through its trustee, executed a promissory note for $2,800,000 in favor of the Bank in order to fund the purchase of property. Lehman (P) and Roffman (D), each of whom enjoyed a 50% beneficial interest in the Trust, personally guaranteed the note, and P proffered two parcels of real estate as additional collateral. The Trust defaulted on the loan and the Bank foreclosed on P's properties. P sued the Bank in a Massachusetts state court seeking restraint or rescission of the imminent sale of his real estate. P claimed that Roffman (D) had fraudulently introduced a sham investor to the Bank in order to gull it into making the loan and that the Bank had failed to exercise due diligence. One year after answering the complaint, the Bank failed. The FDIC, acting as receiver, removed the action to the federal district court and successfully asked to be substituted as defendant. FDIC also moved for leave to serve a third-party complaint against Roffman (D), and it was granted. The FDIC's third-party complaint contained three counts. The first two sought indemnification and contribution, respectively, in regard to the claims advanced by P. The third sought judgment against Roffman (D) for the outstanding loan balance. The FDIC moved for summary judgment. Roffman (D) objected and moved to strike the third-party complaint in its entirety. P entered bankruptcy and requested a stay of proceedings in the civil suit. The district court dismissed without prejudice to either party moving to restore it to the docket if any further action is required upon completion and termination of all bankruptcy or arbitration proceedings. The clerk of court closed the file but did not enter a final judgment. Eight months later, and periodically thereafter, the FDIC's counsel wrote to the district court soliciting action on its summary judgment motion. Roffman's lawyer also got notice of them. In late 1997, the judge set a motions hearing. At the hearing, the court entered an order reinstating the third-party complaint. It denied Roffman's (D) motion to strike, granted the FDIC's motion for brevis disposition and dismissed the remainder of the third-party complaint without prejudice. Roffman (D) filed a notice of appeal