filed: February 3, 1994; As Corrected February 10, 1994.
On Appeal from the United States District Court for the District of New Jersey. D.C. Civil Nos. 89-04069 and 93-01256.
Before: Sloviter, Chief Judge, and Greenberg and Roth, Circuit Judges.
GREENBERG, Circuit Judge.
This appeal arises from loans of $1,150,000 from the appellees, two pension plans established for the employees of Compton Press, Inc., to appellants, Granada Investments, Inc. (Granada Inc.), a Delaware corporation, and Andrew N. Heine, its president. The loans were evidenced by three notes, executed after the actual transfer of funds, providing for repayment of the principal with interest and costs. Granada Inc. and Heine did not repay the Plans which thus brought this action to recover the funds. On the Plans' motion the district court entered partial summary judgments on November 24, 1992, in their favor for a total of $1,150,000 on a theory of unjust enrichment, $400,000 against Heine, and $750,000 against Granada Inc.*fn1 In addition, on that day by a separate order, the court entered a preliminary injunction against Granada Inc. and Heine, as well as against a third appellant, Granada Investments, L. P. (Granada Partnership), enjoining the three appellants from disposing of $1,500,000 obtained by Granada Inc. in settlement of other litigation we describe below. Granada Partnership is a limited partnership of which Granada Inc. is the general partner.
On the appellants' motion the district court certified the partial summary judgments as final under Fed. R. Civ. P. 54(b) in an order entered March 24, 1993. However, because the Plans' action seeks repayment based on the notes themselves, their claims remain open in part in the district court. Moreover, it is undisputed that a recovery on the notes would result in judgments including the $1,150,000 already awarded, though it could include additional recoveries for attorneys' fees, interest, and costs.
Granada Inc., Granada Partnership, and Heine appeal from the orders of November 24, 1992, and March 24, 1993. Because we conclude that the district court abused its discretion in making the certification under Rule 54(b), we will dismiss the appeal from the partial summary judgments and will consider the issues raised with respect to those judgments only incidentally to the appeal from the preliminary injunction. We will affirm the district court order granting the preliminary injunction.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case arises from activities of Leonard Pelullo and various of his associates. Prior to March 1989, Pelullo interested Heine, a prominent attorney, in making a tender offer to acquire a controlling interest in DWG Corporation, a diversified Miami-based public company for which Pelullo had served as a consultant. With Heine providing investment and legal advice, Pelullo formed Granada Partnership for use in acquiring DWG.
In the spring of 1989, while the takeover bid for DWG was pending, and after Granada Inc. had started litigation against DWG regarding that bid, Pelullo obtained control of Compton Press, Inc., a New Jersey corporation,*fn2 by acquiring Equity Finance Group, Inc., Compton's owner. Compton at that time maintained the appellee Plans, Compton Press, Inc. Employees' Profit Sharing Retirement Plan and Compton Press, Inc. Employees' Thrift Plan. The Plans are regulated under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq.
After Pelullo took control of Compton, its board of directors at a meeting on May 19, 1989, appointed Pelullo and his associate, David Hellhake, as a new committee for the Plans. In addition, the board appointed Hellhake and another Pelullo associate, Raul Corona, Plan trustees and administrators. In those capacities Hellhake and Corona joined the previous trustees and administrators, Harry Gerardi and Coolidge Marqueen, who stayed in their positions until removed in September 1989.*fn3
The events giving rise to this litigation occurred shortly after Pelullo gained control of Compton. In early June 1989, the Plans transferred $750,000 to Granada Inc.'s account at the Imperial Bank in Miami, and in July 1989, the Plans transferred $400,000 to Heine's account at the Marine Midland Bank in New York. Though the legal character of these transfers initially was not documented, the transfers some months later retroactively were made into formal loans. This structuring was accomplished when Granada Inc. delivered three notes for $600,000, $150,000, and $400,000, thus totaling $1,150,000, to the Plans, all bearing the purported signature of Heine as Granada Inc.'s president. Though the Plans supplied an expert's report supporting their summary judgment motion which asserted that Heine signed all three notes, he challenges the authenticity of his signature on the notes for $600,000 and $150,000. Heine does acknowledge signing the $400,000 note, but he asserts that the note is nevertheless invalid as it was delivered subject to a condition which never was met.
In response to these transfers of funds, litigation commenced. On September 26, 1989, Gerardi and Marqueen as beneficiaries of the Plans filed a complaint in the district court against Pelullo, Hellhake, Corona, other Pelullo associates, Compton Press, Inc., and Equity Finance Group, Inc., seeking removal of the trustees and administrators of the Plans, a preliminary and permanent injunction appointing a neutral trustee and administrator, compensatory damages, and attorneys' fees. On March 27, 1991, the Plans filed the action presently before us against Heine, Granada Inc., and Granada Partnership seeking return of the $1,150,000 in funds transferred to Granada Inc. and Heine.*fn4 In response to the Plans' action, Granada Inc., Granada Partnership, and Heine, rather than contending that the challenged transactions were pristine, argued that Pelullo had victimized them as well as the Plans.
On February 27, 1992, the parties consented to an order imposing temporary restraints on Granada Inc., Granada Partnership, and Heine which prohibited them from dissipating $1,500,000 of the proceeds obtained from DWG as a settlement of a suit against that corporation arising from the takeover bid.*fn5 The order provided, however, that either side could seek a hearing on whether the restraints should be continued.
Subsequently, the Plans moved for summary judgment and sought a preliminary injunction to continue the temporary restraints. On November 24, 1992, the district court entered an opinion and orders granting the Plans partial summary judgments against Granada Inc. for $750,000 and against Heine for $400,000 and granting the Plans' motion for a preliminary injunction against them as well as against Granada Partnership.
In its opinion, the district court first denied the Plans' motion for summary judgment to the extent they sought recovery directly on the notes, as the court determined that there were genuine issues of material fact concerning liability in dispute.*fn6 In particular the district court based its decision on the $600,000 and $150,000 notes on Heine's testimony that he did not recall executing the notes, that he did recall specifically advising Pelullo that he declined to execute them, and he did not believe that the disputed signatures were his. The court further predicated its decision on the opinion of the appellants' expert that Heine's handwriting on the notes could not be identified with any degree of reasonable certainty.
While Heine acknowledged that he signed the $400,000 note, the district court nevertheless denied summary judgment on that note on the grounds that there was a factual issue as to whether it was delivered for a special purpose or subject to a condition precedent.*fn7 The district court held that even though the parole evidence rule generally bars attempts to offer oral evidence to vary the terms of a fully integrated written contract, under N.J. Stat. Ann. § 12A:3-306 (West 1962), "defenses based upon non-performance of a condition precedent, or delivery for a special purpose, may be asserted against a party who is not a holder in due course."*fn8 Compton Press, Inc. Employees' Profit Sharing Retirement Plan v. Granada Investments, Inc., No. 91-1256, at 10 (D.N.J. Oct. 20, 1992). Inasmuch as the Plans did not claim to be holders in due course, Heine's contention created an issue of material fact which required that summary judgment be denied.
The district court did, however, grant partial summary judgments to the Plans on the theory of unjust enrichment. With respect to the $750,000, the district court reasoned that the Plans received notes from Granada Inc. in return for the loan and expected to be repaid. The district court dismissed a defense which Heine raised that he lacked knowledge of and did not participate in the monetary transfers. The court further reasoned that Hellhake and Lynn, employees of Granada Inc., knew that Granada Inc. obtained the funds from the Plans and that their knowledge as agents of Granada Inc. should be attributed to it as their principal.
The district court held that Heine's actions did not support his defense that he innocently changed his position with respect to the $400,000 transfer. Heine had argued that although he utilized the funds from the Plans to retain financial services in conjunction with the DWG takeover attempt, he thought that Pelullo and his associates had paid the money to Granada Inc. to satisfy a debt Pelullo owed Granada Inc. which thus appropriately regarded the $400,000 as equity. Heine contended that the debt represented the consideration for DWG shares Granada Inc. transferred to Pelullo when he withdrew from the takeover attempt. Heine contended that he never knowingly would have used funds borrowed from the Plans for the purposes for which they actually were used. The district court held that these allegations could not establish a defense, ...