
USCA1 Opinion

	




        September 6, 1994   UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT                                [NOT FOR PUBLICATION]                                 ____________________        No. 94-1377                              JOSE M. TOUS, INC., ET AL.,                               Plaintiffs, Appellants,                                          v.                         CONTINENTAL SUPPLIES, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                           FOR THE DISTRICT OF PUERTO RICO                  [Hon. Juan M. Perez-Gimenez, U.S. District Judge]                                               ___________________                                 ____________________                                        Before                                Torruella, Chief Judge,                                           ___________                           Cyr and Boudin, Circuit Judges.                                           ______________                                 ____________________            Jose M. Tous-Rodriquez on brief pro se.            ______________________            Agusto  A.  Cirino  Gerena  on  brief  for  appellees  Continental            __________________________        Supplies,  Inc., Efrain  Ortiz, and  his wife  Maria Guzman  and their        Conjugal Partnership.            P.  Casto  Amy,   Rafael  F.  Castro  Lang,  and  Alfonso   Rivera            ______________    ________________________        ________________        Valdivieso on brief for appellees Cuevas and Family Restaurant, Inc.        __________                                 ____________________                                 ____________________                      Per Curiam.   Appellants,  Jose M. Tous,  Inc., and                      __________            Jose M. Tous (referred to as "Tous") appeal from the judgment            of  the  Puerto Rico  district  court  dismissing the  second            amended complaint filed  by Tous for  failure to comply  with            Fed.  R.  Civ.  P. 9(b).    Tous  and  Hermanos Ramon,  Inc.,            Reynaldo  Luis Ramon,  Iris Delia  Rodriguez Rivera  (Ramon's            spouse)  and  their  conjugal  partnership  (referred  to  as            "Ramon") also appeal from  the denial of the motion to file a            third  amended complaint  and  to add  the  Ramon parties  as            plaintiffs  to   that  complaint.     Both  pleadings  allege            violations   of   the   Racketeer   Influenced   and  Corrupt            Organizations  Act, 18 U.S.C.   1961 et seq. ("RICO").  Named                                                 __ ____            as defendants in the second and third amended complaints  are            (1) Continental  Supplies Corp.;  (2) Efrain Ortiz,  his wife            and their conjugal partnership; (3) Hector Cuevas Cuevas, his            wife and their conjugal partnership; (4) Hector Cuevas Ramos,            his  wife and  their conjugal  partnership; (5)  Miguel Elias            Boneta,  his wife  and  their conjugal  partnership; and  (6)            Family Restaurants, Inc.                              I.  APPELLATE JURISDICTION                              _   ______________________                      Before addressing the merits of the appeal, we must            dispose of  two jurisdictional issues.  The  first, raised by            Family Restaurants, Cuevas Cuevas and Cuevas  Ramos, concerns            Fed. R. App. P. 3(c).  Appellees point out that the notice of            appeal  refers only  to  the judgment  dismissing the  second                                         -2-            amended complaint.   Rule 3(c) requires  that "[a] notice  of            appeal  must .  . .  designate the  judgment, order,  or part            thereof appealed  from . . .  ."  By failing  to specifically            refer  to the  order  denying the  motion  to add  the  Ramon            parties  as plaintiffs,  appellees argue,  this  court cannot            review the order.                      Appellees are  mistaken.  The general  rule is that            interlocutory  orders, such  as  the one  to which  appellees            refer, are subject to appeal once the district court enters a            final  judgment.  See Mangual v. Gen. Battery Corp., 710 F.2d                              ___ _______    __________________            15, 17  n.2 (1st  Cir. 1983) (interlocutory  order dismissing            complaint as to some, but not all, defendants appealable when            final  judgment entered); 9 James W. Moore, Bernard J. Ward &            Jo Desha Lucas, Moore's Federal  Practice   110.08[1], at 47-                            _________________________            54  (2d ed. 1994) (interlocutory orders  that leave the cause            of  action  pending  are  "reviewable on  appeal  from  final            judgment").  Thus, we have  jurisdiction to review the  order            denying the  motion to file  the third amended  complaint and            the request to add parties.1                        Also  unavailing is appellees'  argument that the            Ramon  parties cannot  be  appellants because  the notice  of            appeal  is  defective.    First,  they  argue,  it  does  not                                            ____________________            1.  This renders moot appellees' further contention  that the            appeal should be dismissed  because the Ramon appellants were            not parties  to the second amended  complaint and, therefore,            had no right to complain about the judgment dismissing it.                                         -3-            specifically refer  to them as "appellants"  and, second, the            body of  the notice only states  that "plaintiff above-named"            is  appealing.    Under Rule  3(c),  a  notice  of appeal  is            effective  if it names each  appellant in the  caption of the            notice of appeal.   The Ramon parties are, in fact, listed in            the caption.   The fact that  the caption  refers to them  as            "plaintiff" does not invalidate  the propriety of the notice.            "An appeal will not  be dismissed for informality of  form or            title of the notice of appeal, or for failure to name a party            whose intent to appeal  is otherwise clear from  the notice."            Fed. R. App. P. 3(c).  This is such a case.                      The second  issue we  raise sua  sponte.   In their                                                  ___  ______            answer  to  the  complaint, Continental  Supplies  and  Ortiz            asserted a  counterclaim for  abuse of  the legal  process by            Tous  and  for  attorney's  fees.   They  also  cross-claimed            against Cuevas Cuevas and  Cuevas Ramos for recompense should            Tous  prevail.  The  district court  never disposed  of these            claims.    Under  Fed. R.  Civ.  P.  54(b),  an order  "which            adjudicates  fewer  than all  the  claims or  the  rights and            liabilities of fewer than all the parties shall not terminate            the action as to any of the claims or parties . . . ."   Such            an  order  is  not  generally  appealable.    See  Rule 54(b)                                                          ___            (requiring certification  of  such interlocutory  orders  for            purposes of appeal).                      There are exceptions  to this rule,  however, which                                         -4-            we  believe  control  this appeal.    First,  an order  which            "necessarily  resolve[s]"  an  outstanding   counterclaim  or            cross-claim is  final despite  the lack  of reference  to the            claim in the  final judgment.   See Boston Car  Co. v.  Acura                                            ___ _______________     _____            Auto.  Div., 971  F.2d 811,  814 (1st  Cir. 1992).   Here the            ___________            cross-claim for  recompense was  resolved when  the complaint            was dismissed.   That  is, once  appellants lost, this  claim            became moot.                      The  counterclaim, however, was  not decided by the            dismissal of the action  and still is pending.   Nonetheless,            the  nature of this  claim does not  preclude a determination            that  the judgment appealed from is final.  Under Budinich v.                                                              ________            Becton Dickinson  & Co.,  486  U.S. 196  (1988), the  Supreme            _______________________            Court  held  that  an   outstanding  request  or  motion  for            attorney's  fees  does  not  prevent  finality  because  "its            resolution will not alter  the order [on the merits]  or moot            or revise decisions embodied in the order."   See id. at 199-                                                          ___ ___            200.                      As for the  claim for abuse  of the legal  process,            appellees do  not  press it  on  appeal.   In any  event,  it            necessarily could  not arise  until the action  was concluded            and the appellants  had lost.   Cf.  In  re Sweet Transfer  &                                            ___  ________________________            Storage,  Inc., 896 F.2d 1189, 1191 (9th Cir. 1990) (an order            ______________            dismissing an  involuntary bankruptcy petition  is final  and            appealable despite pending counterclaim by debtor for damages                                         -5-            for bad faith  in filing  the petition;  "[a]ny actual  claim            brought  for damages is  premature prior to  dismissal of the            petition").  Finally, the resolution  of the abuse of process            claim does not affect the merits of the final judgment.   See                                                                      ___            Budinich, 486  U.S. at 199.   We therefore  have jurisdiction            ________            over this appeal.                                   II.  THE MERITS                                   __   __________                      A.  The Motion to Amend.                          ___________________                      A decision  of the district court  denying leave to            amend  under Fed. R. Civ.  P. 15(a) is  reviewed for abuse of            discretion.2   See Colmenares Vivas v. Sun Alliance Ins. Co.,                           ___ ________________    _____________________            807  F.2d 1102, 1108 (1st Cir. 1986); Isaac v. Harvard Univ.,                                                  _____    _____________            769  F.2d 817,  829 (1st Cir.  1985); Carter  v. Supermarkets                                                  ______     ____________            Gen. Corp.,  684 F.2d 187, 192  (1st Cir. 1982).   Rule 15(a)            __________            provides  that leave  to  amend "shall  be freely  given when            justice so requires."  Thus, if a court decides not to permit            amendment, "it must  do so  for a  valid reason  such as  bad            faith  by  the  moving  party, unwarranted  delay,  or  undue            prejudice to the opposing party."  Colmenares Vivas, 807 F.2d                                               ________________            at  1108 (citing Foman v.  Davis, 371 U.S.  178, 182 (1962)).                             _____     _____            Because there  were essentially two separate  requests in the                                            ____________________            2.  Appellants mistakenly refer to Rule 15(d) in their brief.            This  rule, by  its  language, only  applies to  supplemental            pleadings  which contain  averments  of  "events  which  have            happened  since  the  date  of  the  pleading  sought  to  be                      ___________________________________________________            supplemented."   (emphasis added).  The  new averments in the            ____________            third amended complaint refer  to events which occurred prior                                                                    _____            to the filing of the complaint.            __                                         -6-            motion under review, we will address them separately.                      1.    Motion  to  add  the  Ramon  parties  as  new                            _____________________________________________            plaintiffs.   In 1991, Ramon had filed a separate RICO action            __________            in the district court.  However, it was dismissed in 1992 for            failure to  comply with Fed. R. Civ. P. 9(b).  The court held            that the  complaint did not  identify any  letters, or  their            senders, dates or contents.  In support of the request to add            the  Ramon   parties  as  plaintiffs  in   the  Tous  action,            appellants  point out  that  the order  dismissing the  Ramon            complaint  did  not  state whether  it  was  with or  without            prejudice.   From this, they argue that the dismissal must be            construed  as  having been  without  prejudice  to amend  the            complaint's  "facial"  deficiencies.     As  a  result,  they            conclude  that  the  district  court erred  in  applying  the            doctrine of res  judicata to  bar the addition  of the  Ramon            parties to the Tous action.                      We begin with Fed. R. Civ. P. 41(b):                             (b)   Involuntary  Dismissal:                                   _______________________                           Effect Thereof.  For failure of                           ______________                           the  plaintiff to  prosecute or                           to comply with  these rules  or                           any order of court, a defendant                           may  move  for dismissal  of an                           action or of any  claim against                           the  defendant.     Unless  the                           court   in    its   order   for                           dismissal  otherwise specifies,                           a    dismissal    under    this                           subdivision  and  any dismissal                           not provided for in  this rule,                           other than a dismissal for lack                           of  jurisdiction,  for improper                           venue, or for failure to join a                                         -7-                           party  under Rule  19, operates                           as  an  adjudication  upon  the                           merits.            A dismissal  under Rule  41(b) for  a plaintiff's  failure to            comply with  the rules, unless the  court otherwise provides,            is  with prejudice  and on  the merits.   See LeBeau  v. Taco                                                      ___ ______     ____            Bell,  Inc., 892 F.2d 605, 607 (7th Cir. 1989) (dismissal for            ___________            want of prosecution  was on the  merits and "with  prejudice"            where judgment did not "otherwise state"); Nagle  v. Lee, 807                                                       _____     ___            F.2d 435,  442-43 (5th  Cir. 1987)  (where  judgment did  not            state whether  it was without prejudice,  Rule 41(b) requires            court to treat dismissal  as being with prejudice and  on the            merits).                      In Ramon's  case the  dismissal was for  failure to            comply with one  of the Rules of Civil Procedure  and not, as            appellants argue,  for lack of jurisdiction.   Dismissals for            violations  of other  rules in  similar situations  have been            treated as being with prejudice and on the merits.  See In re                                                                ___ _____            Reed, 861  F.2d 1381, 1382  (5th Cir. 1988)  (dismissal under            ____            Fed.  R.  Civ.  P. 37(b)(2)(C)  for  failure  to comply  with            discovery orders  was with  prejudice and, therefore,  on the            merits);  Nevijel v. North Coast Life Ins. Co., 651 F.2d 671,                      _______    _________________________            673  (9th Cir.  1981) (complaint which  fails to  comply with            Fed. R. Civ. P. 8(a) and (e) may be  dismissed with prejudice            under Rule 41(b)).                      In this  situation, "Rule 41(b) puts  the burden on                                         -8-            the  plaintiff  to take  action --  to persuade  the district            court  either   to  specify  that  a   dismissal  is  without            prejudice,  or  to  vacate  the  dismissal.    Failing  that,            plaintiff's recourse is to appeal."  LeBeau, 892 F.2d at 608;                                                 ______            see also  In re Reed,  861 F.2d  at 1383 (if  a dismissal  is            ___ ____  __________            inequitable, recourse  is to appeal  or file  a motion  under            Fed.  R. Civ. P. 60(b)); 1B James  W. Moore, Jo Desha Lucas &            Thomas S. Currier, Moore's Federal Practice   0.409[1.-2], at                               ________________________            III-137,  III-139  (2d  ed.  1993)  (plaintiff cannot  ignore            court's dismissal for failure  to comply with Rules  and just            file a new  action; plaintiff  must make a  timely motion  to            amend the judgment to state that it is without prejudice).                      As for the failure  of the Ramon parties to  file a            motion  to amend  their complaint  or a  Fed. R.  Civ. P.  60            motion for clarification concerning whether  the judgment, in            fact, was  with or without prejudice,  appellants assert that            they chose not to act for "economic and time-saving" reasons.            That is,  because both complaints concerned  the same pattern            of racketeering by defendants,  the two cases, they believed,            should  be  filed  jointly.   This  is  not  a valid  excuse.            Similarly unavailing is their assertion that the letters upon            which Ramon's RICO claim was based were not found until after                                                                    _____            the dismissal of the complaint.  This statement is conclusory            in  nature and is not accompanied  by supporting documents or            affidavits.                                         -9-                      Based  on  the  foregoing,  we  conclude  that  the            judgment  dismissing the Ramon  complaint was  with prejudice            and  on the merits.  Under federal law, which governs federal            actions, res judicata bars a second action if (1) there was a            final judgment on the merits in the earlier action, (2) there            exists  sufficient  identity  between the  causes  of  action            asserted  in each suit, and  (3) there is sufficient identity            between  the parties in the  two actions.   Gonzalez v. Banco                                                        ________    _____            Central Corp., No. 93-2021, slip op. at 6  (1st Cir. June 30,            _____________            1994).3                      Plainly,  the  first requirement  has  been met  as            discussed, supra.  Second, a comparison between the complaint                       _____            filed  in the first action and the third amended complaint in            the case at  hand reveals that the RICO claims  in both suits            are  identical.   Indeed,  appellants  do  not dispute  this.            Finally,  the parties to the  two actions also are identical.            That is, the plaintiffs in  both actions are Reynaldo  Ramon,            his wife, their conjugal partnership and Hermanos Ramon, Inc.            and  the defendants  they  are suing  are Family  Restaurant,            Cuevas Cuevas,  Cuevas Ramos,  Elias Boneta and  Jose Nazario                                            ____________________            3.  Appellants  attempt  to  argue  that  collateral estoppel            rather  than res judicata applies  to their case.   They cite            Guzowski v.  Hartman, 969  F.2d 211  (6th  Cir. 1992),  cert.            ________     _______                                    _____            denied, 113 S. Ct. 978 (1993), in support of this contention.            ______            In   Guzowski,  however,  the   order  dismissing  the  first                 ________            complaint was without prejudice.  Guzowski, therefore, is not                          _______ _________   ________            applicable to this case.                                           -10-            (and their spouses and conjugal partnerships).4                      We  therefore conclude that  the Ramon parties were            barred  from relitigating  their RICO  claim.   As a  result,            permitting them to  join as plaintiffs  in the third  amended            complaint  ultimately would  have  led  to  their  dismissal.            "Where  an  amendment  would  be  futile  or  would serve  no            legitimate purpose, the district  court should not needlessly            prolong matters."  Correa-Martinez v. Arrillaga-Belendez, 903                               _______________    __________________            F.2d 49, 59 (1st Cir. 1990).  In such a situation, the denial            of leave to amend is not an abuse of discretion.  See id.                                                              ___ ___                      2.  Motion to file the third amended complaint.  In                          __________________________________________            certain  circumstances, undue  delay  in filing  a motion  to            amend  can provide  a  basis for  the  denial of  a  proposed            amendment.5  See  Quaker State Oil Refining  Corp. v. Garrity                         ___  ________________________________    _______            Oil Co., 884 F.2d 1510, 1517 (1st Cir. 1989) (two-year period            _______            elapsed  between filing of counterclaims  and motion to add a            fifth); Hayes v. New England Millwork Distributors, Inc., 602                    _____    _______________________________________                                            ____________________            4.  The  third  amended complaint  also  lists as  defendants            Continental  Supplies  and Ortiz.    Although  they were  not            defendants  in the Ramon case, a reading of the third amended            complaint reveals that the Ramon plaintiffs are not asserting            a  claim against them.  See Third Amended Complaint,    48-68                                    ___            (only  referring to  Fidelity  National Leasing,  Inc., Banco            National and  Family Restaurants as RICO  "enterprises" whose            affairs  were  conducted through  a  pattern of  racketeering            activity).            5.  The position taken by  Tous on appeal that the  denial of            leave to file the  third amended complaint was based  on Fed.            R. Civ. P. 21 (misjoinder of parties) is not supported by the            record.                                         -11-            F.2d  15, 19  (1st Cir.  1979) (two  years between  filing of            complaint  and motion to amend).  In such cases, "courts have            placed  the burden upon the movant to show some `valid reason            for  his neglect  and  delay.'"   Hayes,  602 F.2d  at  19-20                                              _____            (citing Freeman  v. Continental  Gin Co.,  381 F.2d  459, 469                    _______     ____________________            (5th Cir. 1967)); see also Stepanischen v. Merchants Despatch                              ________ ____________    __________________            Transp. Corp., 722 F.2d 922, 933 (1st Cir. 1983).            _____________                      Here,  Tous does  not provide  any reasons  for his            delay  in   requesting  leave  to  file   the  third  amended            complaint.   Indeed, it was  not until some  of the appellees            filed a motion to dismiss in  August 1992 -- almost two years            after  the filing of the  initial complaint --  that Tous was            prompted  to  request  discovery  on  the  Rule  9(b)  issue.            Further, the motion to amend was  not filed until May 1993 --            almost  nine months after the motion to dismiss was filed and            over two years  since Tous  initiated the action.   "We  have            held  .  . .  that  a  late motion  for  summary  judgment or            dismissal  may not  in itself  justify an excessive  delay in            moving to amend."   Andrews v. Bechtel Power Corp.,  780 F.2d                                _______    ___________________            124, 139 (1st Cir. 1985), cert. denied, 476 U.S. 1172 (1986).                                      ____________            Finally,   although  Tous   proposed   an  interrogatory   to            Continental and  Ortiz, there is no indication  that the data            he received from them, if any, could not have been discovered            earlier.   See First Nat'l  Bank of Lousville  v. Master Auto                       ___ ______________________________     ___________            Serv.  Corp., 693  F.2d 308,  314 (4th  Cir.  1982) (district            ____________                                         -12-            court's  denial  of motion  to  amend  upheld where  movant's            amended claim was not premised on new information to which it            previously had not had  access).  We therefore find  that the            district court did  not abuse its  discretion in denying  the            motion to amend.                      B.  Dismissal of the Second Amended Complaint.                          _________________________________________                      As the district court held, Rule 9(b) requires that            a RICO plaintiff "must go beyond a showing of fraud and state            the  time, place  and content  of the  alleged mail  and wire            communications perpetrating  that fraud."   New England  Data                                                        _________________            Services,  Inc. v. Becher, 829 F.2d 286, 291 (1st Cir. 1987).            _______________    ______            On appeal Tous  only argues that the  third amended complaint            satisfies  this  standard;  indeed, Tous  concedes  that  the            second amended  complaint is  defective under Becher.   Thus,                                                          ______            for essentially  the reasons  stated in the  district court's            Opinion and Order, dated February 23, 1994, we agree with its            decision  that the  second amended  complaint did  not comply            with Rule 9(b).                                     III.  CONCLUSION                                   ___   __________                      The judgment of the district court is affirmed.                                                            ________                                         -13-
