Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 85-C-02442 -- James F. Holderman, Judge.
Easterbrook, Ripple, and Kanne, Circuit Judges.
This is a truly impossible fact scenario. It is complicated further by the mistakes of counsel, the death of a party, the unusual use of the Federal Rules of Civil Procedure and the involvement of both state and federal courts. There are a myriad of alternative solutions, each of which is riddled with land mines. We affirm the district judge's denial of defendants-appellants' "motion for recoupment" for the reasons set out below.*fn1
Leo Hribar was president of the Wisconsin corporation Hribar Trucking, Inc. He retained Eliot Landau, an attorney with the Illinois law firm of Landau & Cleary, to represent his company in an appeal to this court regarding a pension fund dispute.*fn2 Hribar signed an agreement with Landau and authorized Landau to retain the Illinois accounting firm of Sweeney Financial Analysts to examine membership contribution reports prepared by a pension fund. This work was done with Hribar's knowledge and consent, and Mr. Hribar testified that he retained Sweeney to do an analysis and audit of the work done by Central States Pension Fund.
Landau sued Hribar in Illinois state court for failing to pay the $28,035.98 bill tendered for legal services. The case was removed on March 25, 1985 to the United States District Court for the Northern District of Illinois pursuant to 28 U.S.C. §§ 1332 and 1441(a). Landau filed an amended complaint on August 27, 1985. It included a $15,382.40 claim for Sweeney's services, but did not name Sweeney as an additional party. The district court held a bench trial, and on November 19, 1985, it ordered judgment in favor of Landau on the contract dispute, but denied Landau's claim regarding prejudgment interest. Finding against Hribar, the exact language of Judge Holderman's order was ". . . judgment is entered in favor of plaintiff on Count I of the complaint in the amount of $43,418.38 ($28,035.98 for plaintiff; $15,382.40 for Sweeney Financial Analysts, Ltd.). No interest is assessed thereon."
Following the entry of judgment on November 20, 1985, the proceedings were automatically stayed for ten days pursuant to Fed.R.Civ.P. 62(a). Presumably, during those ten days the parties were negotiating the terms of a supersedeas bond. The record does not reveal a stay, or a request for a stay, until December 20, 1985, when the court granted Hribar a stay of enforcement until the posting of the $48,444.40 supersedeas bond on January 6, 1986. Thus, the judgment was technically enforceable from November 30, 1985, until December 20, 1985. It was during this time period that the current chaos germinated.
On December 4, 1985, Sweeney, who was not involved in the federal litigation, took advantage of the district court's judgment naming him (apparently as a non-party under Fed.R.Civ.P. 71) and sought garnishment against Hribar and its bank in Wisconsin state court. Hribar's bank was served with a garnishment summons and complaint the same day, and it filed an answer on December 9, 1985. On December 9, 1985, the state judge issued a garnishment order in favor of Sweeney and against Hribar Trucking, Inc. for $15,382.40. This amount apparently was paid to Sweeney.*fn3
On December 18, 1985, Hribar filed a motion in the federal district court for a supersedeas bond. The federal court established the term of the bond and granted a temporary stay of enforcement on December 20, 1985. Also on December 20, 1985, Hribar filed a motion to vacate the garnishment order in the Wisconsin court. The state court denied this motion, apparently on January 6, 1986.*fn4
During the time of Sweeney's questionable action, Landau and Hribar were still negotiating the terms of the supersedeas bond. The bond eventually was posted on January 27, 1986. Without reference to Sweeney's Wisconsin suit, both Landau and Hribar sought relief in this court; Landau appealing the denial of prejudgment interest and Hribar appealing the judgment against it on the contract claim. We affirmed the district court on December 3, 1986, and remanded for a determination of prejudgment interest. See Landau & Cleary, Ltd. v. Hribar Trucking, Inc., 807 F.2d 91 (7th Cir. 1986).
Alter the appeal to this court, Landau and Hribar entered into a stipulation on December 24, 1986. Pursuant to that agreement, Hribar authorized payment to Landau of $48,444.40 (which included post-judgment interest and the amount directed by the district court to go to Sweeney) from the letter of credit posted by it as a supersedeas bond. This stipulation was filed with the district court on December 30, 1986, and an Order and Judgment on Remand was entered the same day. Michael Steinle, who had replaced Roland Steinle, III, in representing Hribar, apparently was unaware that his client had paid Sweeney pursuant to the Wisconsin judgment. Upon discovering that Hribar had entered into the stipulation with Landau without consideration of the Sweeney action, Michael Steinle telephoned attorney Sommerfield in the office of Landau and Cleary.*fn5 Sommerfield, according to Steinle, assured him that Landau would return the Sweeney portion of the district court judgment to Hribar. According to Steinle, Eliot Landau later called Gerald Boyle and reneged on Sommerfield's statement. Landau allegedly said: "We are not giving you back the $15,000, and if you entered into the stipulation erroneously, that's too bad, because your action is against Sweeney and it's not an action against us."*fn6
Hribar next filed a "motion for recoupment"*fn7 in the federal district court in Illinois seeking the $15,382.40 plus interest it paid Landau to settle its debt with Sweeney. No responsive pleadings were filed until February 20, 1987, when a hearing on the "motion for recoupment" was held in the district court. The hearing was not for the submission of evidence, but merely an opportunity for counsel to address the court. During the hearing, Hribar argued that recoupment was in order because it had paid twice for Sweeney's services. Landau's response to Hribar's motion presumed that the motion was a motion under Rule 60(b) of the Federal Rules of Civil Procedure. Based on this premise, Landau argued in response, both in writing and at the hearing, that Hribar's motion was neither timely filed nor warranted relief under Rule 60(b)(1).
It is the substance of the motion, and not the label the moving party places upon it, that determines whether a motion is a Rule 60(b) motion. See, e.g., Smith v. United States Parole Comm'n, 721 F.2d 346, 348 (11th Cir. 1983). It is clear to us, however, that Hribar's "motion for recoupment" was not a Rule 60(b) motion. Hribar's attorney's final comment to the district judge was "I'm not attacking the judgment. I'm just saying the parties who were entitled to the money have now gotten the money, and Landau and Cleary unjustly have $15,000 plus interest in their possession. That's it." (emphasis added). Hribar's counsel declined several opportunities, even as recently as in its brief and in the oral argument before this court, to assert a Rule 60(b) motion for relief from judgment. Because Hribar specifically claimed that he was not attacking the judgment, moreover, his motion should not qualify as an independent action permitted to be brought under this rule. In other words, a proper "independent action" must seek the same type of relief one seeks under Rule 60(b). Cf. Hadden v. Rumsey Prods., 196 F.2d 92, 95 (2d Cir. 1952) (debtors' petition seeking relief from judgment allegedly obtained by fraud was properly "treated as an independent action to obtain relief from the . . . judgment" ...