United States Bancorp Mortgage Co. v. Bonner Mall Partnership

Supreme Court of the United States · 1994 · Federal Courts

Federal CourtsVacaturMootnessSettlementvacaturmootnesssettlementequitable remedy

Facts

Bonner filed for Chapter 11 bankruptcy on the eve of Bancorp's scheduled foreclosure sale and proposed a reorganization plan that depended on the new value exception. Bancorp argued the plan was legally unconfirmable, and the Bankruptcy Court agreed, but the District Court reversed and the Ninth Circuit affirmed the District Court. After the Supreme Court granted certiorari and received merits briefing, the parties agreed to a consensual reorganization plan that mooted the case. Bancorp nevertheless sought vacatur of the court of appeals judgment, and Bonner opposed that request.

Issue

When a case becomes moot because the parties settle after appeal is filed or certiorari is granted, should a federal appellate court vacate the judgment under review? More specifically, does settlement-caused mootness ordinarily justify vacatur under 28 U.S.C. § 2106?

Rule

Vacatur under 28 U.S.C. § 2106 is an equitable remedy. When mootness results from happenstance or from the unilateral action of the party who prevailed below, vacatur is generally appropriate; but when mootness results from settlement, the losing party has voluntarily forfeited review and ordinarily is not entitled to vacatur. Settlement-caused mootness does not justify vacatur absent exceptional circumstances, and a settlement provision calling for vacatur is not itself such a circumstance.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

A federal district court in Chicago entered judgment for Lakefront Biologics against Orion Clinical Labs. Orion appealed to the Seventh Circuit, but after briefing and oral argument the parties settled and jointly moved the court of appeals to vacate the district court judgment as part of their settlement.

How should the court of appeals most likely rule on the vacatur request?

Explanation. Vacatur is an equitable remedy, not an automatic consequence of mootness. When mootness results from settlement, the losing party has voluntarily forfeited appellate review and ordinarily is not entitled to vacatur. Joint agreement does not suffice, and settlement-related efficiency does not create an ordinary entitlement. (Derived from United States Bancorp Mortgage Co. v. Bonner Mall Partnership (1994).)