Appeal from the United States District Court for the District of New Jersey - Newark, D.C. Civil No. 82-1730.
Stapleton and Mansmann, Circuit Judges, and Huyett, District Judge.*fn*
Before us is the remaining balance of litigation commenced in 1981 in which individuals and corporations owned by them sought injunctive relief and money damages arising out of a lending institution's alleged mishandling in both the granting and administering of a Small Business Administration ("SBA") guaranteed loan.
The government has recently filed an appeal from an order entered May 15, 1984 which precluded it from asserting a counterclaim against the plaintiffs (the "Livera group") for its alleged default on the SBA-guaranteed loan. The government was finally able to appeal the order when the district court entered a final judgment in the litigation on February 4, 1988. The Livera group cross-appealed, claiming that the same May 15, 1984 order improvidently dismissed the action it had commenced against the SBA.
We conclude that the district court properly dismissed the Livera group's initial complaint because of its failure to file the requisite administrative claim before the SBA.
In refusing to allow the government to assert its counterclaim, however, the district court failed to consider the factors outlined by us in Poulis v. State Farm Fire and Casualty Company, 747 F.2d 863 (3d Cir. 1984), which we have deemed to govern judicial determinations in dismissing actions. This represents an abuse of discretion necessitating a remand to the district court.
Finally, if, on remand, after analysis of the Poulis factors, the district court determines the dismissal was unwarranted and permits the government's counterclaim to stand, the Livera group shall be given the opportunity to respond to the counterclaim by asserting a defense of recoupment grounded on the allegations in its original complaint.
As part of the Small Business Administration's guaranteed loan program designed to assist small businesses in obtaining credit, First National State Bank made a $150,000 loan to Alpha Hermetic, Inc. in 1980. Under the program, should all other guarantors default in their obligations, ninety percent of the loan was guaranteed by the SBA. Here, the loan was personally guaranteed by certain of the individual and corporate plaintiffs to this lawsuit, Aldo Livera, Donald and Alice McAllister and C.M.R. Industries, i.e., the Livera group. Similar guarantees were signed by Susan Livera and the Livera Company.
In 1981 suit was commenced by the Livera group, alleging that the SBA and certain of its employees, acting through First National State Bank,*fn1 deprived it of the regulatory protections and benefits of the Small Business Act and charged a variable and usurious rate of interest on a loan issued by the bank under the guaranteed loan program.
Six months after the action was filed, the SBA received permission from the district court to file an amended answer and to assert a counterclaim against the Livera group for the ninety percent portion of the loan which the SBA had reimbursed to the bank. Although the Livera group, Susan Livera and the Livera Company were aware of the contents of these pleadings and were presented with copies, the amended answer and counterclaim were not served or filed in accordance with procedural rules.
In March 1983 the government moved for dismissal of the Livera group's claims, contending that the district court lacked subject matter jurisdiction. The government argued that since the Livera group's claim arose under the Federal Tort Claims Act, 28 U.S.C. § 1346(b) (1948), the Livera group's failure to file the statutorily prescribed administrative claim before the appropriate agency under 28 U.S.C. § 2401(a) precluded the present action. In the same motion, the government also attempted to reassert its counterclaim for the balance due on the loan. The district court dismissed the complaint, agreeing that the Livera group's failure to file the prerequisite administrative claim was fatal to its cause of action before the district court. The Livera group requested reconsideration and also asked for clarification of the status of the SBA's counterclaim. The motion for reconsideration was denied. As to the counterclaim, the district court stated that the government "failed to serve and file an amended answer with proposed counterclaim" and that "its request to assert a counterclaim at this point in the proceedings, nunc pro tunc, is denied." App. at 124. The government filed a notice of appeal; however, upon threshold jurisdictional inquiry from us, it decided that the order was interlocutory and voluntarily withdrew the appeal without our final determination as to appealability.
In May 1985, the government, on behalf of the SBA, commenced a separate, plenary action in the district court against the Livera group, raising the same allegations concerning the unpaid balance of the loans as in its previous counterclaim in the 1981 action.*fn2 The Livera group moved for dismissal based upon the district court's adverse ruling on the government's counterclaim in the 1981 action. The motion was granted by the district court and a final order, dismissing "with prejudice" all claims of the government against the plaintiffs, was entered on January 14, 1986. An order denying the government's motion for reconsideration was entered on March 27, 1986 from which the government noticed an appeal to this court. The government, however, did not prosecute the appeal, securing an order of dismissal on its own motion in July 1986.
On February 4, 1988, with respect to the original 1981 case, the district court entered a final order dismissing the 1981 action, it appearing that all claims not previously dismissed had been settled or compromised to the satisfaction of the parties.
The government now seeks review of the 1984 order entered in the 1981 action. Particularly, the government seeks to reinstate its counterclaim for the unpaid balance of the loan and to proceed to trial.
The Livera group filed a motion to dismiss this appeal premised on principles of res judicata. It alleges that the 1986 order dismissing the government's plenary action was an adjudication on the merits of the government's counterclaim in the present matter and, accordingly, deprives us of subject matter jurisdiction to hear this appeal.
The Livera group's characterization of the doctrine of res judicata is misplaced. While it is true that res judicata can be applied to bar relitigation of claims previously decided on the merits, res judicata is an affirmative defense and not a doctrine which would defeat subject matter jurisdiction of this court.
In any event, although the district court in granting the Livera group's summary judgment motion in the plenary action referenced the "res judicata" effect of its May 15, 1984 order dismissing the SBA's counterclaim for failure to prosecute under Fed.R.Civ.P. 41(b), it obviously meant that it had already ruled on the issue and would not do so again in a different posture. The district court's use of this language has no preclusive effect on us. The May 15, 1984 order was interlocutory and did not become final until the district court entered its order on February 4, 1988 disposing of the 1981 action.
The government's withdrawal of its appeal in the plenary action, which could have been interpreted as a collateral attack on the May 15, 1984 order, likewise has no res judicata effect on our consideration of an issue which has now finally "matured" for appealability purposes. We will therefore deny the motion to dismiss for lack of subject matter jurisdiction and proceed to the merits of the appeal.
Our jurisdiction is premised on 28 U.S.C. § 1291. When a district court enters its final order terminating a litigation, orders previously entered during the course of the action can be ...