Fastener Systems, Inc v. Mbna America

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 01-2457
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FASTENER SYSTEMS, INC.,
Appellant
v.
MBNA AMERICA
Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil Action No. 01-cv-01295)
District Judge: Honorable John P. Fullam
____________________
Submitted Under Third Circuit LAR 34.1(a)
on June 11, 2002
Before:SLOVITER, ROTH
and MCKEE, Circuit Judges
(Opinion filed September 26, 2002)
O P I N I O N
ROTH, Circuit Judge:
The bookkeeper at Fastener Systems, Inc., embezzled substantial company funds
to pay off the credit card debts owed to MBNA America on the MBNA credit card issued
to the bookkeeper’s husband. Fastener Systems then sued MBNA for its alleged
negligence in enabling the bookkeeper’s activities. The District Court dismissed
Fastener’s case and denied its Motion for Relief from Order. Fastener appealed.
Specifically, Fastener raises three issues on appeal: (1) The District Judge abused his
discretion by dismissing the case with prejudice, pursuant to Rule 12(b)(6), without
reviewing the totality of the circumstances; (2) the District Judge abused his discretion by
dismissing the case with prejudice, pursuant to Rule 12(b)(6), without affording Fastener
an opportunity to appear under Rule 56, and, if so, Fastener has stated a cause of action
upon which relief may be granted; (3) the District Judge erred when he failed to give
Fastener notice pursuant to Rule 55(b).

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We exercise diversity jurisdiction in this matter pursuant to 28 U.S.C. 1332. We
exercise appellate jurisdiction pursuant to 28 U.S.C. 1291 to review the District Court’s
final order. Because this appeal involves a Motion for Relief of Order, we review for
abuse of discretion. In Re O’Brien Environmental Energy Inc., 188 F.3d 116 (3d Cir.
1999). We have found that an abuse of discretion exists when, "the district court’s
decision rests upon a clearly erroneous finding of fact, an errant conclusion of law or an
improper application of law to fact." Hanover Potato Products, Inc. v. Shalala, 989 F.2d
123, 127 (3d Cir. 1993) (quoting NLRB v. Frazier, 966 F.2d 812, 815 (3d Cir. 1992)).
For the following reasons, we will affirm the judgment of the District Court.
Fastener claims abuse of discretion from the fact that the judge did not review the
totality of the circumstances with regard to Rule 60(b) and a claim for excusable neglect.
Fastener cites Pioneer Inv. Services Co. v. Brunswick Associates Ltd. Partnership, 507
U.S. 380 (1993), as instruction for the court in deciding what is "excusable neglect."
Fastener has ignored an important rule - in its Motion for Relief of Order in the District
Court, it mentions exclusively subsection 6, which reads "any other reason justifying
relief from the operation of the judgment," and not subsection 1, "excusable neglect."
We have found that Rule 60(b)(1) and 60(b)(6) are mutually exclusive grounds upon
which a party can seek relief. See Pioneer Inv. Services Co. 507 U.S. at 393. "An
argument not raised in the district court is not properly preserved for appellate review."
United States v. Gilchrist, 215 F.3d 333, 339 (3d Cir. 2000) (citing In Re City of
Philadelphia Litig., 158 F.3d 723, 727 (3d Cir. 1998)). Because Rule 60(b)(1) was not
raised in the District Court, we cannot review an appeal of the rejection of the "excusable
neglect" basis for the motion.
Nonetheless, Fastener argues that the sole reason for the "excusable neglect" was a
reliance on 28 U.S.C. 1146(5). Despite Fastener’s mis-citation, the motion quotes 28
U.S.C. 1446(c). This subsection deals specifically with criminal prosecutions, which
are not involved in this matter. We have found that failure to respond to a motion
because of unfamiliarity with federal practice was not "excusable neglect." See Quality
Prefabrication, Inc. v. Daniel J. Keating Co., 675 F.2d 77, 79 n.2 (3d Cir. 1982). See
also Andrews v. Time Inc., 690 F.Supp. 362, 364 (E.D. Pa. 1988); Struck v. Binns, 1996
WL 135332, *2 (E.D. Pa. Mar. 19, 1996). Therefore, Fastener’s mistake in misreading
the Federal Rules of Civil Procedure does not amount to excusable neglect sufficient to
relieve judgment under Rule 60(b).
Even so, Fastener contends that there remains a cause of action upon which relief
can be granted. The District Court considered the merits in both the original Motion to
Dismiss and upon the Motion for Relief of Order. Ultimately, the court found that the
order dismissing plaintiff’s complaint was correct on the merits, and the plaintiff had
shown no basis for a different outcome. We find no abuse of discretion.
Further, Fastener claims that the judge abused his discretion by not allowing the
appellant an opportunity to appear before the court and present material pertinent to a
Rule 56 motion. This argument stems from Fastener’s conclusion that MBNA’s Motion
to Dismiss asserted matters outside the pleadings. If this were so, the motion would be
treated as one for summary judgment and disposed of as provided in Rule 56. F.R.C.P.
12(b)(6). This is an incorrect conclusion by Fastener. Fastener cites to two examples of
matters outside the pleadings in MBNA’s motion: the assertions that MBNA is a holder
in due course of checks presented for payment and thus a party that takes the instrument
free from nearly all defenses against the payment of the instrument, and that the plaintiff’s
own negligence precludes the plaintiff’s action against the defendant. These represent
legal arguments made by counsel for MBNA for purposes of the Motion to Dismiss. It is
not extrinsic evidence or outside affidavits or papers. We have found that the court may
consider "legal arguments presented in memorandums or briefs and arguments of
counsel" when deciding a Rule 12(b)(6) motion to dismiss without invoking Rule 56
summary judgment. Pryor v. National Collegiate Athletic Ass’n., 288 F.3d 548 (3d Cir.
2002). MBNA’s motion to dismiss contained no matters outside the pleadings.
Therefore, no Rule 56 hearing was necessary.
Finally, Fastener contends that the court erred in not giving it notice pursuant to
F.R.C.P. 55(b). Rule 55(b) deals with default judgments. However, this appeal involves
the granting of a motion to dismiss under Rule 12(b)(6), and not a default judgment under
Rule 55(b). Therefore, there is no need for an inquiry in Rule 55 because it is not
applicable to this appeal.

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For the foregoing reasons, we will affirm the judgment of the District Court.
TO THE CLERK:
Please file the foregoing Opinion.
By the Court,
/s/ Jane R. Roth
Circuit Judge

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