Appeals from the United States District Court for the Northern District of Illinois, Eastern Division, No. 84 C 3266, George N. Leighton and Brian Barnett Duff, Judges.
CUMMINGS and COFFEY, Circuit Judges, and SWYGERT, Senior Circuit Judge.
CUMMINGS, Circuit Judge. This case involves a suit to recover the proceeds payable on three fire insurance policies covering improved real estate which was destroyed by fire. Plaintiff appeals from an order of the district court dismissing with prejudice his amended complaint pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim upon which relief could be granted. Defendant cross-appeals form an order of the district court granting plaintiff an extension of time to file his notice of appeal. For the reasons set forth below, we affirm the district court's order granting an extension of time to file the notice of appeal, but reverse the order dismissing the amended complaint with prejudice.
At some time prior to January 23, 1982, Anthony Cairo created three Illinois land trusts to which he transferred title to three contiguous parcels of improved real estate at 3276-3280 South Archer Avenue, Chicago, Illinois. Chicago Title & Trust Company ("Chicago Title") was designated as Trustee and Anthony Cairo was named as the sole beneficiary under cash of the three trusts. On January 23, 1982, Anthony Cairo contracted with the defendant, Continental Casualty Corporation ("Continental"), to provide fire insurance for the real estate in each of the three trusts. The fire insurance policies, which were subsequently executed and delivered, provided that they were each to become effective on January 23, 1982, and would expire on January 23, 1983.
The named insured under Policy No. 018-58-91-08, covering property located at 3276 S. Archer Ave., was designated as "Chicago Title & Trust A/T/U/T # 1078091." The named insured under Policy No. 078-58-91-22, covering property located at 3278 S. Archer Ave., was designated as "Chicago Title & Trust U/T # 10771177." The named insured under Policy No. 018-89-33-31, covering property located at 3280 S. Archer Ave., was designated as "Chicago Title & Trust A/T/U/T # 1076790." The mailing address of the named insured under each of the three policies was given as "c/o Tony Cairo, 3280 S. Archer Avenue, Chicago, Illinois 60608."
On March 1, 1982, Cairo transferred title to the subject real estate to three land trusts at the First National Bank of Cicero ("the Bank"). The Bank was named as Trustee under Trust Agreement Nos. 7911, 7912, and 7913, and Anthony Cairo was again designated as the sole beneficiary under each of the trusts. The transfer was apparently effected so that Cairo's beneficial interest in the real estate could be used to secure his personal guaranty of a loan made by the Bank to Intercontinental Security Corp., of which Cairo was an officer.
In his brief to this Court, Cairo claims that he continued to pay the premiums due on the policies after the transfer. Defendant Continental conceded at oral argument that the premiums had indeed been paid and accepted during the period following the transfer, although it contended that it did not know who had paid the premiums.
On January 1, 1983, while the fire insurance policies were still in effect, the insured property was destroyed by fire. On March 30, 1983, Cairo notified Continental of the loss and submitted a sworn written account of the damage. Continental, however, refused to pay on the loss.
To compel Continental to perform on the three insurance contracts, the Bank, Anthony Cairo, and the Bank as Trustee under Trust Agreement Nos. 7911, 7912, and 7913 filed a complaint in the Illinois circuit court to recover the insurance proceeds. The defendant moved to strike and dismiss plaintiffs' complaint because the plaintiffs were neither parties to, nor named as additional insureds, mortgagees, loss payees, or assignees under, the subject insurance contracts. Furthermore, the complaint contained no allegations indicating that any of the plaintiffs were otherwise entitled to sue for an alleged breach of the insurance contracts. On March 1, 1984, the circuit court granted defendant's motion but allowed the plaintiffs 28 days in which to file an amended complaint.
In the interim, Anthony Cairo had filed for bankruptcy in federal Bankruptcy Court on February 9, 1984. As a consequence, Anthony Cairo was no longer a proper party to the state court proceeding when the order dismissing plaintiffs' complaint was issued on March 1, 1984. Rather than having himself substituted as the proper party in the state court suit and filing an amended complaint, Cairo's Trustee in Bankruptcy, John H. Redfield, removed the litigation to the Bankruptcy Court on March 30, 1984. Redfield then proceeded to file and amended complaint in Bankruptcy Court on July 18, 1984.
The amended complaint was substantially similar to the original complaint filed in state court except that the plaintiffs were now listed as John H. Redfield, Trustee in Bankruptcy of Anthony Cairo, and the First National Bank of Cicero, as Trustee under Trust Agreement Nos. 7911, 7912, and 7913. The complaint alleged that Cairo had been the sole beneficiary of the Bank land trusts since on or about March 1, 1982, but failed to explain how the Bank had come to have an insurable interest in the property covered by the Continental fire insurance policies, or what connection, if any, there was between Anthony Cairo and the named insured on the policies, Chicago Title & Trust Co. The complaint further alleged that Continental had executed and delivered the fire insurance policies to the "plaintiffs" on or about January 23, 1982. This allegation, however, was inconsistent with the previous allegation which indicated that the Bank land trusts had not been created until March 1, 1982.
In response to the amended complaint, defendant Continental renewed its motion to dismiss, this time pursuant to Fed. R. Civ. P. 12(b). In addition to its argument that the complaint failed to allege any facts which would indicate that either of the plaintiffs was entitled to sue for an alleged breach of the relevant insurance contracts, Continental advanced an additional ground justifying dismissal, namely, that the amended complaint failed to allege, even generally, compliance with express conditions precedent to a right of recovery under the insurance policies.
The litigation was subsequently transferred from Bankruptcy Court to federal district court where defendant's motion to dismiss the amended complaint with prejudice was granted on March 29, 1985. Concluding that the amended complaint alleged no cause of action against defendant Continental under the subject insurance policies, the district court held that its ruling was compelled by the law of the case doctrine in light of the earlier state court ruling on the identical ground. The district court's order dismissing the amended complaint was entered on April 2, 1985.
The Bank subsequently informed Redfield that it was not interested in pursuing the litigation on appeal. Redfield did attempt to perfect an appeal, but his notice of appeal was not filed in the district court until May 7, 1985, exceeding by five days the thirty-day period allowed for appeal under Fed. R. App. P. 4(a)(1). On May 17, 1985, Redfield filed a motion in the district court to extend the time for appeal and to clarify the record. On January 24, 1986, the district court granted Redfield's motion to extend the time for filing a notice of appeal until May 7, 1985, finding pursuant to Fed. R. App. P. 4(a)(5) that Redfield had demonstrated "excusable neglect" for his failure to file within the original thirty-day period. Defendant Continental appeals from this order.
Before analyzing whether the district court properly dismissed the amended complaint with prejudice, we must first determine whether plaintiff Redfield's notice of appeal was timely filed. The timely filing of a notice of appeal is mandatory and jurisdictional. Griggs v. Provident Consumer Discount Co., 459 U.S. 56, 61, 74 L. Ed. 2d 225, 103 S. Ct. 400 ; Browder v. Director, Illinois Dep't of Corrections, 434 U.S. 257, 264, 54 L. Ed. 2d 521, 98 S. Ct. 556 ; United States v. Robinson, 361 U.S. 220, 229, 80 S. Ct. 282, 4 L. Ed. 2d 259 ; Wort v. Vierling, 778 F.2d 1233, 1234 (7th Cir. 1985).
Fed. R. App. P. 4(a)(1) requires that a notice of appeal in a civil case, other than one to which the United States or an officer or agency thereof is a party, be filed with the clerk of the district court within 30 days after the entry of the judgment or order appealed from. Because the order dismissing the amended complaint in this case was entered on April 2, 1985, the plaintiff should have filed his notice of appeal no later than May 2, 1985. In fact, plaintiff's notice was not filed until May 7, 1985. Upon being notified of his error, plaintiff promptly filed on May 17, 1985, a motion with the district court requesting an extension of time in which to file his notice of appeal pursuant to Fed. R. App. P. 4(a)(5). Rule 4(a)(5) provides that "[t]he district court, upon a showing of excusable neglect or good cause, may extend the time for filing a notice of appeal upon motion filed not later than 30 days after the expiration of the time prescribed by this Rule 4(a)." Finding that the plaintiff had demonstrated "excusable neglect" for his failure to file within the original thirty-day period, the district court granted plaintiff's motion and extended the time for appeal until May 7, 1985.
Defendant Continental attacks the district court's order on essentially two grounds. Initially, Continental contends that the district court applied an incorrect legal standard in granting plaintiff's motion for an extension of time to appeal. As set out above, Fed. R. App. P. 4(a)(5) permits a district court to grant such a motion upon a showing of "excusable neglect or good cause." The Advisory Committee notes indicate that "excusable neglect" is the appropriate standard in cases in which the motion is made after the time for filing the notice of appeal has run, while "good cause" is the appropriate standard in cases in which the appellant seeks an extension of time before the expiration of the initial thirty-day period. See In re Cosmopolitan Aviation Corp., 763 F.2d 507, 514 (2d Cir. 1985). The "good cause" component, which demands a lesser showing than "excusable neglect," was added to Rule 4(a)(5) in 1979, the Committee notes explain, because the "excusable neglect" standard never precisely fit the latter situation.
Defendant Continental complains that the district court incorrectly applied the "good cause" standard in evaluating plaintiff's motion for an extension even though the motion was filed after the initial thirty-day period for appeal had expired. Although the district court did not explicitly set out the above distinction in its opinion after indicating that an extension of time for filing a notice of appeal required a showing of "'excusable neglect or good cause,'" we are confident from a reading of the district court's opinion as a whole that it correctly relied upon the "excusable neglect" standard in granting plaintiff's motion.*fn1 Indeed, in determining that excusable neglect existed, the district court relied on this Court's decision in Feeder Line Towing Serv., Inc. v. Toledo, Peoria & W. R.R. Co., 539 F.2d 1107 (7th Cir. 1976), a decision that was rendered prior to the 1979 amendment adding the "good cause" component and that therefore addressed itself solely to the "excusable neglect" standard.
Next, defendant contends that the district court erred in finding that plaintiff had made a showing of excusable neglect and granting plaintiff's motion for an extension of time to appeal. Although the standard of excusable neglect is a strict one, Feeder Line, 539 F.2d at 1109, this Court has consistently held that great deference must be accorded a district court's finding of excusable neglect. See Reinsurance Co. of America v. Administratia Asigurarilor de Stat, 808 F.2d 1249, 1251 (7th Cir. 1987); Files v. City of Rockford, 440 F.2d 811, 816 (7th Cir. 1971); In re Cosmopolitan, 763 F.2d at 514. Extensions granted under Rule 4(a)(5) should not be disturbed unless there has been a clear abuse of discretion by the district court. See Reinsurance Co. v. America, 808 F.2d at 1251; Feeder Line, 539 F.2d at 1109; Files, 440 F.2d at 816; see also Cuevas v. Reading & Bates Corp., 770 F.2d 1371, 1377 (5th Cir. 1985); In re Cosmopolitan, 763 F.2d at 514; McGarr v. United States, 736 F.2d 912, 919 (3d Cir. 1984); In re Estate of Butler's Tire & Battery Co., 592 F.2d 1028, 1032 (9th Cir. 1979). "If [the district court] finds excusable neglect and grants an extension, the court of appeals should not second-guess this determination and defeat the appeal . . ." 16 Wright, Miller, Cooper & Gressman, Federal Practice & Procedure § 3950, at 367.
Excusable neglect will generally be found where a party in good faith relied on the actions and representations of the district court or its officers, and consequently failed to file a timely notice of appeal. See, e.g., Mennen Co. v. Gillette Co., 719 F.2d 568, 570-571 (2d Cir. 1983); In re Donnell, 639 F.2d 535, 540 (9th Cir. 1981). Similarly, under appropriate circumstances, failure to learn of the entry of judgment will support a finding of excusable neglect, as will uncontrollable delays in the delivery of mail, unpredictable events that affect the delivery of the notice of appeal to the clerk, unpredictable events that affect the feasibility of appeal, and plausible misconstructions, but not mere ignorance, of the law or rules. 9 Moore's Federal Practice para. 204.13[1.-3], at 4-94 to 4-97.
On the basis of the record before us, we are unable to conclude that the district court abused its discretion in granting plaintiff's motion. When Redfield v. Continental Casualty Co., an adversary proceeding to a bankruptcy action, was initially transferred from Bankruptcy Court to district court, it was assigned to Judge Marshall and given No. 84 A. 383 . Defendant Continental then filed a motion for relatedness, seeking to have the Redfield case transferred to Judge Leighton, who already had pending before him a related case, Levy v. Continental Casualty Co., No. 84 C 3266, but to which Redfield was not a party. Judge Leighton granted the motion, and placed the Redfield case on his calendar.*fn2 However, case No. 84 A. 383 was never formally reassigned to Judge Leighton, and thus the docket sheet for No. 84 A. 383 was never transferred from Judge Marshall to Judge Leighton. Subsequent to the granting of the motion for relatedness, all further orders in case No. 84 A. 383 were entered under civil docket No. 84 C 3266. As a result of this error, plaintiff Redfield never received a copy of the March 29, 1985, order of the district court dismissing his amended complaint in case No. 84 A. 383, for he was not a party to case No. 84 C 3266. At some time within the original thirty-day period for appeal, Redfield learned of the district court's order and proceeded to check the official court file to determine the date on which the order had been entered. In reviewing the file, Redfield mistakenly ...