                                     United States Court of Appeals,
                                              Fifth Circuit.


                                              No. 90–2529.

                                GENE L. ACKERMAN, et al., Plaintiffs,

                          EMIL J. AMBERBOY, et al., Plaintiffs–Appellants,

                                                    v.

                    FEDERAL DEPOSIT INSURANCE CORP., et al., Defendants,

             Societe De Banque Privee, f/k/a Saudi European Bank, Defendant–Appellee.

                                              Oct. 1, 1992.

Appeal from the United States District Court for the Southern District of Texas.

Before DUHÉ and RONEY,1 Circuit Judges.2

          DUHÉ, Circuit Judge.

                                                    I.

          Appellants purchased limited partnership participation interests in an oil and gas investment

program formed by Vanguard Group International, Inc. (VGI) in 1983. In consideration for their

interests, each Appellant made a cash downpayment and executed a promissory note for the balance

of the investment payable to the limited partnership or to the lender, who was to be identified later.

Several months later, VGI assigned the promissory notes to Appellees, Saudi European Bank (the

Bank), as the lender. The Bank received only the first annual payment due on the notes. When

subsequent payments were not made and the surety company guaranteeing the notes failed, the Bank

sought payment from Appellants, alleging that it was a holder in due course of the notes.



          Appellants brought suit in Texas state court against the Bank and numerous other parties

alleging various violations of federal and state securities laws and common law offenses in the sale

   1
       Circuit Judge of the Eleventh Circuit, sitting by designation.
   2
    Chief Judge Clark was a member of the panel when this case was argued and a question
certified to the Texas Supreme Court. He has since resigned. Accordingly, this case is being
decided by a quorum.
of the investments. The Federal Deposit Insurance Corp. (FDIC), receiver for one of the involved

banks, removed the act ion to federal court. In December 1989, the Bank obtained a summary

judgment against Appellants based on the district court's finding that the Bank was a holder in due

course of Appellants' promissory notes. Appellant first moved to alter and amend the court's order

granting summary judgment and the court's entry of final judgment on that order and then moved for

reconsideration of the court's orders. The district court denied all motions and the propriety of the

district court's summary judgment is now before us.



        Appellants argue that the Bank was not a holder in due course of the promissory notes

because the notes are not "negotiable instruments" as defined by the Texas Uniform Commercial

Code (the "Code"). They reason that because the interest rate on the notes can be calculated only

by reference to a source outside the notes themselves, a bank's published prime rate, the notes cannot

be negotiable instruments.3 The parties have stipulated to the applicable rate of interest and only the

effect of that rate is at issue here.



        After hearing argument in this case, this court certified the negotiability question to the Texas

Supreme Court. On April 15, 1992, that Court issued its opinion in Amberboy v. Societe de Banque

Privee, 831 S.W.2d 793 (Tex.1992), enabling us to rule on Appellants' claims.



                                                   II.

   3
    Appellants' promissory notes set forth the following statement regarding the interest to be
charged:

                Interest on the principle amount remaining unpaid hereunder from time to time
                outstanding, at a rate per annum equal to the lesser of (a) the rate (the "Basic
                Rate") which is equal to the sum of the prime interest rate (the "Prime Rate") for
                short-term loans published by Lender, plus 2 percent (2%) per annum, which Basic
                Rate shall be variable and shall be adjusted for the term hereof, effective at the
                close of business on the day of any such change in the Prime Rate; or, (b) the
                maximum lawful rate of interest (the "Maximum Rate") permitted by applicable
                usury laws, and, interest shall be due and payable as it accrues on the outstanding
                balance of principle from time to time, on the same dates as, but in addition to said
                installments of principle....
           Appellants first argue that the district court erred in granting the Bank's summary judgment

motion and denying Appellant's Cross–Motion for Summary Judgment. We review summary

judgment determinations de novo. Fields v. Hallsville Independent School Dist., 906 F.2d 1017,

1019 (5th Cir.1990), cert. denied, ––– U.S. ––––, 111 S.Ct. 676, 112 L.Ed.2d 668 (1991). The

district court based its order adjudicating these motions on its finding that the Bank was a holder in

due course.4 Appellants challenge this holding on two grounds. First, they contend that the necessity

of referring to a source external to the notes to calculate the applicable interest rate renders the notes

nonnegotiable and defeats the Bank's argument that it is a holder in due course. Second, Appellants

assert that there remain issues of material fact as to the Bank's knowledge at the time the notes were

assigned to it of investor defenses, which knowledge would defeat the Bank's status as a holder in due

course.



           In Amberboy v. Societe de Banque Privee, the Texas Supreme Court authoritatively

determined that promissory notes requiring interest to be charged at a rate that can only be

determined by reference to a bank's published prime rate are negotiable instruments under the Code.

831 S.W.2d at 797. Texas law being contrary to Appellants' position, this argument fails.



           We now turn to Appellants' second argument. Specifically, Appellants contend that the Bank

was aware that VGI had violated various federal and state securities laws in its handling of Appellants'

investments and that the Bank was aware that defenses existed to payment of the notes. Appellants

   4
       Section 3.302 of the Code, in pertinent part, defines holder in due course:

                  (a) A holder in due course is a holder who takes the instrument

                         (1) for value; and

                         (2) in good faith; and

                         (3) without notice that it is overdue or has been dishonored or of any
                         defense against or claim to it on the part of any person.

          Under Chapter 3 of the Code, "instrument" means "negotiable instrument." Section
          3.102(a)(5).
assert that awareness of either of these facts would defeat the Bank's status as a holder in due course

under the Code and that genuine issues of material fact exist as to these issues, making summary

judgment inappropriate.



       The district court concluded that the Bank could not be held liable under either federal or state

securities laws where Appellants presented no evidence to refute the Bank's proof that it played no

part in offering the interests to Appellants or in drawing up offering documents, and, in fact, did not

become involved in the transaction at all until after approximately four months after Appellants signed

the notes. On these facts, the district court correctly concluded that the Bank was not a "seller" of

unregistered securities under federal securities law. See Pinter v. Dahl, 486 U.S. 622, 641–655, 108

S.Ct. 2063, 2075–2082, 100 L.Ed.2d 658 (1988) (a "seller" for purposes of § 12 of the Securities

Act of 1933, 15 U.S.C. § 771, is one who passes title or solicits the purchase of a security); Cyrak

v. Lemon, 919 F.2d 320, 324–25 (5th Cir.1990).5 Because we find no dispositive Texas law on this

issue, we follow federal securities case law. See Huddleston v. Herman & MacLean, 640 F.2d 534,

551 and n. 27 (5th Cir.1981) (applying federal case law defining "seller" to Texas Security Act issue

in absence of contrary Texas authority), aff'd in part and rev'd in part on different grounds, 459 U.S.

375, 103 S.Ct. 683, 74 L.Ed.2d 548 (1983). Accordingly, the distri ct court was also correct in

concluding that no material facts remained at issue as to Appellants' state securities law allegations.



        In rejecting Appellants' argument that the Bank was aware that defenses existed to the

payment of the notes, the district court concluded that Appellants presented "no facts or evidence to

show that [the Bank] was anything other than a holder in due course who purchased the notes from

VGI." To support their argument, Appellants only vaguely describe such defenses and fall far short

   5
    The district court, in concluding that the Bank could not be a seller under federal securities
law, relied on Pharo v. Smith, 621 F.2d 656 (5th Cir.1990). The United States Supreme Court
explicitly rejected the test of "seller" status under § 12 espoused by this case: whether the
potential seller's participation in the buy-sell transaction was a substantial factor in causing the
transaction to take place. Pinter v. Dahl, 486 U.S. at 648–654, 108 S.Ct. at 2079–2082.
Nonetheless, the test announced in Pinter was more restrictive than the "substantial factor" test of
Pharo, and the district court's conclusion that the Bank was not a seller was correct.
of establishing that the Bank was aware of these alleged defenses. For instance, they contend that

the Bank wrongfully disbursed funds to the general partner of VGI rather than to the individual

partnerships and that the Bank was aware that its purchase of the not es violated the terms of the

investment and the Confidential Memorandum. That the Bank may have wrongfully disbursed funds

after its purchase of the notes does not affect its status as a holder in due course. Tex.Bus. &

Comm.Code § 3.302(a). Furthermore, our review of the record supports the di strict court's

conclusions that Appellants signed the notes knowing that Baker would fill in the name of the lender

later; that the notes made clear that the lender would be a holder in due course; and that Appellants

later signed powers of attorney and letters of estoppel authorizing and ratifying Baker's power to fill

in the lender's name on the notes. Although Appellants insist the Bank violated or knew of violations

of the Confidential Memorandum, they have failed to identify such violations. Appellants have failed

to rebut the presumption that the Bank was a holder in due course. See, e.g., Favors v. Yaffe, 605

S.W.2d 342, 344 (Tex.Civ.App.1980—write ref'd n.r.e. 1981) (holder of note presumed to be holder

in due course absent contrary evidence). Accordingly, we affirm the district court's order entering

summary judgment on behalf of the Bank, as a holder in due course.



                                                   III.

          Appellants make several arguments with respect to the district court's entry of final judgment.

First, they argue that it violated the requirements of Fed.R.Civ.P. 54(b).6 Rule 54(b) allows a district

court, after careful consideration, to certify as a final, appealable judgment a disposition of less than

   6
       Rule 54(b) provides

                 When more than one claim for relief is presented in an action, whether as a claim,
                 counterclaim, cross-claim, or third-party claim, or when multiple parties are
                 involved, the court may direct the entry of a final judgment as to one or more but
                 fewer than all of the claims or parties only upon an express determination that
                 there is no just reason for delay and upon an express direction for the entry of
                 judgment. In the absence of such determination and direction, any order or other
                 form of decision, however designated, which adjudicates fewer than all the claims
                 or the rights and liabilities of fewer than all the parties shall not terminate the
                 action as to any of the claims or parties, and the order or other form of decision is
                 subject to revision at any time before the entry of judgment adjudicating all the
                 claims and the rights and liabilities of all the parties.
all the claims or parties in a complex litigation. The district court must weigh a variety of factors to

determine whether such a disposition is appropriate for Rule 54(b) certification and make an "express

determination that there is no just reason for delay" in entering the judgment. Curtiss–Wright Corp.

v. General Electric Co., 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980). We reverse such orders

only if we find an abuse of discretion. Id. at 8, 100 S.Ct. at 1465.



        The district court's order entering final judgment stated:



        On this day the Court considered Defendant Saudi European Bank, S.A.'s Motion for Entry
        of Final Judgment, and having determined that there is no just reason for delay, is of the
        opinion that it should be GRANTED. It is therefore

                ORDERED that with respect to the issues determined by summary judgment pursuant
        to a Memorandum and Order Decision dated December 19, 1989, the Court directs entry of
        a Final Judgment.

Appellants contend that the district court's failure to enumerate the factors it considered and the

conclusions it reached in determining that there existed "no just reason for delay" constituted a per

se abuse of discretion. They further contend that this conclusion was clearly unreasonable under

Curtiss–Wright. Id. at 11, 100 S.Ct. at 1466.



        While the parties prepared the briefs in this case, this court decided, en banc, Kelly v. Lee's

Old Fashioned Hamburgers, Inc., 908 F.2d 1218 (5th Cir.1990). In that case, we held that a district

court need not mechanically recite the words "no just reason for delay" in order to certify a judgment

as final under Rule 54(b). Id. at 1220. We stated



        If the language in the order appealed from, either independently or together with related
        portions of the record referred to in the order, reflects the district court's unmistakable intent
        to enter a partial final judgment under Rule 54(b), nothing else is required to make the order
        appealable[....]

Id. at 1220. The district court's order leaves no doubt that it intended to enter a final, appealable,

partial judgment under Rule 54(b). Not only did the court "mechanically recite" the words "final

judgment" twice in its order, but its order was in response to the Bank's Motion for Entry of Final
Judgment under Rule 54(b). As we stated in Kelly, "[w]hen the court ... grants a motion requesting

entry of judgment under Rule 54(b), the court expressly incorporates the entire rule by reference and

signals its conclusions that the requirements of the rule have been met and entry of partial final

judgment is proper." Id. at 1220–21.



        Appellants further argue that the district court's conclusion that there existed "no just reason

for delay" was "clearly unreasonable" under Curtiss–Wright because related claims involving other

parties7 rest on the same factual and legal issues as these adjudicated claims. 446 U.S. at 11, 100

S.Ct. at 1466. Whether we review the district court's decision to enter final judgment under the

"clearly unreasonable" standard suggested by Appellants or under the abuse of discretion standard

suggested by our case law,8 we find no reversible error in that decision. As we made clear in H & W

Industries v. Formosa Plastics Corp. 860 F.2d 172, 175 (5th Cir.1988), the "cautionary language"

in Curtiss–Wright directing the district court to consider claims remaining to be adjudicated when

ruling on Rule 54(b) motions9 is only cautionary. In H & W Industries, we found no abuse of

discretion where the district court certified as a final judgment its dismissal of an attempted

monopolization claim while retaining jurisdiction over an antitrust claim between the same parties.

Id. In this case, the remaining claims which Appellants contend should prevent Rule 54(b)

certification involve different parties. The district court's certification was neither unreasonable nor

an abuse of discretion.


   7
    Specifically, Appellants identify claims involving Enterprise Finance Company and Mutual
Fire, Marine and Inland Insurance Co.
   8
    This circuit's post-Curtiss–Wright cases establish a two-part appellate review of Rule 54(b)
certifications: 1) a de novo review as to whether more than one legal claim was presented, and 2)
an abuse of discretion review as to whether entry of final judgment was appropriate under the
facts of a particular case. Samaad v. City of Dallas, 940 F.2d 925, 929–30 (5th Cir.1991); H &
W Industries v. Formosa Plastics Corp., 860 F.2d 172, 175 (5th Cir.1988). Appellants do not
make any argument as to the first part of this test.
   9
     The balancing test enunciated by Curtiss–Wright requires the district court to examine the
relationship between adjudicated claims and dismissed parties with those claims and parties
remaining in the action as well as efficiency considerations for the court system. 446 U.S. at 11,
100 S.Ct. at 1466.
        Finally, Appellants contend that the district court's entry of final judgment in response to the

Bank's Motion violated the notice and hearing requirements of the local rules governing motion

practice.10 They argue that this violated their due process rights by denying them adequate notice that

the court was considering entering final judgment and an opportunity to respond to the Bank's

motion. Appellants have had full opportunity during the course of this appeal to develop arguments

which they would have raised had they had received the notice they now claim was their due. Having

found no merit to these arguments, we will not now reverse the district court's order on the basis that

it violated a local rule of practice.



                                                 IV.

        For the reasons stated above, we affirm the order of the district court.



        AFFIRMED.




   10
      Specifically, Appellants argue that the district court violated Rule 6 of the Local rules of the
United States District Court for the Southern District of Texas. They allege that the Bank filed its
motion January 12, 1990. The motion did not contain an averment that the Bank had conferred
with Appellants and that counsel did not agree about the disposition of the matter as required by
Rule 6(A)(4)(a) and (b). Appellants did not receive notice of the motion until January 24, twelve
days after it was filed, evidently because the Bank mailed Appellants' copy to an old address. The
district court had until February 1 to enter judgment under Local Rule 6(D) and (E), but instead
entered judgment on January 26, giving Appellants only two days to respond.
