Opinion
CIVIL ACTION NO. 02-3263 SECTION "M" (2)
April 2, 2004
ORDER AND REASONS
Plaintiff, The Times-Picayune Publishing Corporation ("The Times-Picayune"), filed this action against defendant, Zurich American Insurance Company ("Zurich"), asserting state law claims of breach of contract, bad faith breach of contract, violations of Louisiana insurance statutes and breach of the implied covenant of good faith and fair dealing, and seeking damages and declaratory relief. Notice of Removal and Petition, Record Doc. No. 1. This matter was referred to the undersigned Magistrate Judge for all proceedings and entry of judgment in accordance with 28 U.S.C. § 636(c) upon written consent of all parties. Record Doc. No. 37.
Co-plaintiff Advance Publications, Inc. dismissed its claims without prejudice by joint stipulation of the parties. Record Doc. No. 26.
I. PROCEDURAL BACKGROUND
Zurich filed a motion for partial summary judgment on the question whether it is obligated under the excess insurance policy it issued to plaintiff to pay plaintiffs claims for losses that were sustained before, but discovered after, the inception date of Zurich's policy. Record Doc. No. 33. I granted the motion, holding that Zurich's excess policy obligated it to cover prior losses incurred during the two-year period before the date of Zurich's policy, but also holding that the prior loss provision of Zurich's policy was not triggered because the losses sustained by The Times-Picayune during that coverage period did not exhaust the limits of the primary insurance policy. Accordingly, I ordered counsel to confer and provide me with a joint report, setting forth the matters that remained in dispute in this lawsuit, addressing the considerations set forth in Rule 26(1) and reporting on the status of settlement discussions. Following receipt of the joint report, I intended to set a trial date and enter a scheduling order. Record Doc. No. 52.
Counsel for the parties complied with my order and filed a case management report in which they stated that they had been unable to settle this matter and that only limited issues remained for trial, including the amount of damages that would be due to The Times-Picayune for the time period when Zurich's policy was in effect. However, rather than suggesting a trial schedule for the remaining issues, counsel agreed that plaintiff would file an unopposed motion for an order under Fed.R.Civ.P. 54(b), asking the court to certify its ruling on Zurich's partial summary judgment motion as a final judgment so that The Times-Picayune might appeal it immediately, without first going through a trial on the remaining issues. Record Doc. No. 55.
The Times-Picayune filed an unopposed Motion on Consent for Rule 54(b) Order and a proposed judgment. In the motion and proposed judgment, plaintiff states that its remaining causes of action are contingent on its breach of contract claim, which the court has resolved against plaintiff. The Times-Picayune states that the only remaining factual dispute concerns proof of the amount of $72,809, which plaintiff claims is due from Zurich under the interpretation of the policies in my order. However, plaintiff notes that it would seek damages of more than $1.2 million if my order were to be reversed. The proposed final judgment does not actually say what the court has adjudged, but merely states that "final judgment is entered pursuant to Fed.R.Civ.P. 54(b) as to the matters resolved in the Court's Order and Reasons entered January 26, 2004." I took the motion under advisement. Record Doc. No. 56.
II. ANALYSIS
"The courts of appeals . . . shall have jurisdiction of appeals from all final decisions of the district courts. . . . " 28 U.S.C. § 1291 (emphasis added). When more than one claim for relief is presented in an action, or when multiple parties are involved, Rule 54(b) allows the court to "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." Fed.R.Civ.P. 54(b) (emphasis added). Thus, a partial final judgment under Rule 54(b) must first "be a `judgment' in the sense that it is a decision upon a cognizable claim for relief, and it must be `final' in the sense that it is an ultimate disposition of an individual claim entered in the course of a multiple claims action." Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 7 (1980) (quotation omitted).
Rule 54(b) "reflects a balancing of two policies: avoiding the `danger of hardship or injustice through delay which would be alleviated by immediate appeal' and `avoid[ing] piecemeal appeals.'" Eldredge v. Martin Marietta Corp., 207 F.3d 737, 740 (5th Cir. 2000) (quotingPYCA Indus., Inc. v. Harrison County Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 (5th Cir. 1996)). However, "a district court should grant certification only when there exists some danger of hardship or injustice through delay which would be alleviated by immediate appeal; it shouldnot be entered routinely as a courtesy to counsel.:" PYCA Indus., 81 F.3d at 1421 (emphasis added).
`To enter a Rule 54(b) final judgment, the district court must have disposed of `one or more . . . claims or parties.' That requirement is jurisdictional . . . and may be raised by this court even though the parties may not have challenged it." Id. (quoting Fed.R.Civ.P. 54(b); citing Samaad v. City of Dallas. 940 F.2d 925, 930 (5th Cir. 1991)); accord Tubos de Acero de Mexico. S.A. v. American Int'l Inv. Corp., 292 F.3d 471. 485 (5th Cir. 2002). "Jurisdictional barriers to appeal are not waivable by the parties. . . . " Pemberton v. State Farm Mut. Auto Ins. Co., 996 F.2d 789, 791 n. 1 (5th Cir. 1993) (citation omitted).
The second Rule 54(b) requirement, that the court must find no just reason for delay before directing entry of judgment, is not jurisdictional and rests within the court's sound discretion.Curtiss-Wright Corp., 446 U.S. at 8; Eldredge, 207 F.3d at 740 n. 2.
In the instant case, I agree with the parties that The Times-Picayune's remaining claims are contingent upon my finding that Zurich has not breached its contractual obligation. If Zurich has not breached the contract, it cannot be held liable for bad faith breach of contract, breach of the Louisiana Insurance Code's obligations to pay and adjust claims in good faith, or breach of the implied covenant of good faith and fair dealing, nor could The Times-Picayune succeed on its claim for a declaratory judgment. Thus, plaintiffs other claims could readily be disposed of by summary judgment or stipulation. The only issue remaining for trial would be plaintiffs proof of damages for the time period during which Zurich's policy was in effect.
Nonetheless, I find that my order cannot be certified as final because it does not dispose of one or more claims. The instant case is similar toWay v. Reliance Ins. Co., 815 F.2d 1033 (5th Cir. 1987). Although Way did not involve a multi-party or multi-claim situation under Rule 54(b), it addressed the finality of a judgment somewhat similar to the one that the court would enter if it granted The Times-Picayune's motion. In Way, plaintiffs alleged that the defendant insurance company had breached a contractual obligation to them. They sought damages for the breach. Before trial, the parties agreed that they would submit the damages issue to arbitration if the defendant were found liable under the contract. After a bench trial, the district court entered judgment that held defendant liable, but granted no damages because of the parties' agreement. Before proceeding to arbitration, defendant appealed the judgment. Id. at 1033.
As noted above, the proposed partial final judgment submitted by plaintiff does not say what the court has adjudged. If I granted the motion, I would draft a different judgment that would state what had actually been ordered in terms of Zurich's liability to The Times-Picayune.
The Fifth Circuit sua sponte found that it had no jurisdiction to hear the appeal because the judgment was not final within the meaning of 28 U.S.C. § 1291.
This suit . . . is simply a damage suit for breach of contract. In these circumstances, the parties' post-suit mutual intention to resolve the damages issue by arbitration is, for finality purposes, no different from their announced intention to settle that issue by agreement. In either instance, the lawsuit is not concluded until it is dismissed, or a judgment is entered awarding an amount of damages or decreeing that plaintiffs take nothing. Without such an ending, the merits of the litigation remain in controversy. Here, in effect, the district court granted "a partial summary judgment limited to the issue of petitioners liability. Such judgments are by their terms interlocutory, and where assessment of damages . . . remain[s] to be resolved have never been considered to be `final' within the meaning of 28 U.S.C. § 1291." The first prong of the finality test, therefore, is not met.Id. at 1033-34 (citing Fed.R.Civ.P. 56(c); quotingLiberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 744 (1976)) (emphasis added).
The Way court understood that the parties, not unreasonably, wished to resolve the question of liability by appeal before expending time and money on arbitration, but the court held that the convenience of the parties was not a sufficient reason to enter judgment.
We, however, sit to settle only controversies fully developed below. We must conserve scarce judicial resources for that purpose. When, because of the parties' own agreement, the choice is between conserving the resources required for arbitration and conserving the resources of this Court, the doctrine of finality requires that we choose the latter.Id. at 1034. In other words, the district court cannot enter a judgment simply "as a courtesy to counsel." PYCA Indus., 81 F.3d at 1421.
The rules announced in Way have been followed when the parties have sought to certify partial judgments as final under Rule 54(b). A judgment
that determines liability for, but does not fix the amount of, damages is appealable solely under 28 U.S.C. § 1292(b) [governing interlocutory appeals]. . . . Federal Rule of Civil Procedure 54(b) is not available in such a case because it applies only to judgments that dispose of the entirety of one or more claims.Pemberton, 996 F.2d at 791. A judgment of liability on a claim for damages that does not include the amount of damages awarded "is ambiguous, incomplete and nonfinal" for Rule 54(b) purposes.Id. at 792.
In Saizan v. Delta Concrete Prods. Co., No. 03-30231, 2003 WL 22975403 (5th Cir. Dec. 16, 2003), defendant obtained a summary judgment ruling in its favor on the issue of damages in a Fair Labor Standards Act case. Although the trial court made no determination of liability, the parties agreed that a decision from the appeals court on the damages ruling might eliminate the need for a trial. Accordingly, the district court entered a Rule 54(b) judgment and plaintiffs filed an appeal.Id. at * 1.
The Fifth Circuit raised the jurisdictional issue sua sponte and held that "the district court's rulings, which addressed only damages and did not determine liability, did not dispose of any of the plaintiffs' claims in their entirety" and therefore were not appropriate for Rule 54(b) certification. The court dismissed the appeal for lack of jurisdiction. Id. (citingMonument Mgmt. Ltd. P'ship I v. City of Pearl, 952 F.2d 883, 885 (5th Cir. 1992); Pemberton, 996 F.2d at 791).
Finally, in Monument Mgmt. Ltd. P'ship I, the Fifth Circuit held that the trial court's grant of summary judgment to defendant on plaintiffs' claims for certain elements of damages was not a final judgment for Rule 54(b) purposes because it did not dispose of any claim entirely, when other elements of damages were still available to plaintiffs on their inverse condemnation claim. Monument Mgmt. Ltd. P'ship I, 952 F.2d at 885.
Based on these Fifth Circuit precedents, which are binding upon this court, I find that my grant of partial summary judgment to Zurich on The Times-Picayune's breach of contract claim, in the absence of any award of damages on that claim, does not dispose of any claim entirely and is not appropriately designated under Rule 54(b). In addition, it appears that disposition of the remaining causes of action and determination of the amount of damages that would be due to The Times-Picayune on its breach of contract claim in light of my ruling on Zurich's motion for partial summary judgment can be accomplished in short order, perhaps even on stipulation, so that a final, appealable judgment can be entered without undue delay.
For all of the foregoing reasons, I am convinced that entry of the consent order counsel have submitted would properly result in swift, sua sponte dismissal by the United States Court of Appeals for the Fifth Circuit of any appeal based upon it. Thus, the unopposed Motion on Consent for Rule 54(b) Order is DENIED. A trial date and Rule 16 scheduling order will be separately entered.