CAROLINA POWER AND LIGHT COMPANY, Plaintiff-Appellant, v. DYNEGY MARKETING AND TRADE, Defendant-Appellee. Carolina Power and Light Company, Plaintiff-Appellant, v. Dynegy Marketing and Trade, Defendant-Appellee.
Nos. 04-1604, 04-2197.
United States Court of Appeals, Fourth Circuit.
Decided July 20, 2005.
Argued May 25, 2005.
It is thus abundantly clear that the Sixth Amendment (as well as due process) does not demand that the mere fact of a prior conviction used as a basis for a sentencing enhancement be pleaded in an indictment and submitted to a jury for proof beyond a reasonable doubt. Accordingly, we affirm.
AFFIRMED
Before WIDENER, WILKINSON, and NIEMEYER, Circuit Judges.
Dismissed and remanded by published opinion. Judge NIEMEYER wrote the opinion, in which Judge WILKINSON joined. Judge WILKINSON wrote a separate concurring opinion. Judge WIDENER wrote a separate opinion concurring in the judgment and dissenting.
OPINION
NIEMEYER, Circuit Judge.
We consider here the scope of the general rule that an unresolved claim for attorneys fees does not prevent a judgment on the underlying claims from being a final decision under
In an order dated April 6, 2004, the district court entered a “judgment” in which it determined that Carolina Power and Light Company (“CP & L“) had breached a contract to purchase coal from Dynegy Marketing and Trade (“Dynegy“) and awarded roughly $10 million in damages to Dynegy under the contract‘s liquidated damages provision. The April 6 “judgment” left unresolved, and reserved for “a later date,” Dynegy‘s claim for damages under the contract‘s “legal costs” provision, under which the nonbreaching party was entitled to “reasonable out-of-pocket expenses incurred by it including legal fees, by reason of the enforcement
Treating the April 6 “judgment” as final and appealable, CP & L filed a notice of appeal on May 7, 2004, 31 days after the entry of the “judgment,” in which it challenged the district court‘s $10 million award to Dynegy. Dynegy filed a motion to dismiss CP & L‘s appeal as untimely. See
We conclude that the April 6 “judgment” was not a final decision under
I
CP & L and Dynegy entered into a contract dated August 22, 2001, under which CP & L agreed to purchase specific amounts of coal from Dynegy at predetermined prices. When Dynegy‘s financial rating declined in early 2002 and Dynegy failed to provide credit enhancements under the contract, CP & L declared Dynegy‘s financial condition to be a default event under the contract and declined thereafter to accept coal shipments from Dynegy. CP & L then commenced this action against Dynegy in North Carolina state court for a declaratory judgment that it had a right to terminate the contract. Dynegy removed the case to federal court under diversity jurisdiction and filed a counterclaim against CP & L for breach of contract and violation of North Carolina‘s Unfair Trade Practices Act.
The case proceeded to a bench trial, and after the close of CP & L‘s evidence, the district court granted Dynegy‘s
After the presentation of evidence, the district court rendered a Memorandum Opinion, in which it ruled in favor of Dynegy on its breach of contract claim, awarding Dynegy $9,995,730, and in favor of CP & L on Dynegy‘s unfair trade practices claim. The court also deferred ruling on Dynegy‘s claim for “legal costs,” directing the parties to submit briefs on that issue and explaining that it would issue a ruling on that claim “at a later date.” Treating Dynegy‘s claim for “legal costs” as a collateral issue, the court entered judgment in favor of Dynegy on April 6, 2004, in the amount of $9,995,730.
On May 7, 2004, 31 days after entry of the April 6 “judgment,” CP & L filed a notice of appeal “from the Judgment entered in this action on the 6th day of April, 2004.” Shortly thereafter, CP & L also filed a motion to stay execution on the judgment, together with a supersedeas bond, which the district court granted.
Dynegy has filed a motion in this court to dismiss CP & L‘s appeal, asserting that the appeal was untimely filed under
Thus, under neither party‘s theory would we reach the merits of CP & L‘s appeal at this time. Dynegy urges that we dismiss CP & L‘s appeal with prejudice because it was untimely; and CP & L urges, in essence, that we dismiss the appeal (or stay it) as interlocutory.
II
In urging dismissal of CP & L‘s appeal with prejudice, Dynegy contends that its claim for “legal costs” is collateral to, and not part of, the merits of its breach of contract claim and that, under Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988), the unresolved attorneys fees issue did not prevent the April 6 judgment from being final on April 6, 2004. In Budinich, the Supreme Court considered whether a district court‘s decision on the merits of an employment compensation claim was final under
CP & L contends that Budinich does not control here because Dynegy‘s claim for legal costs differs in significant respects from the claim for attorneys fees made in Budinich. CP & L points out that Dynegy requested legal costs pursuant to a contractual provision, whereas the
We are thus presented with the issue of whether the April 6 “judgment,” in which the district court deferred its ruling on Dynegy‘s claim for “legal costs,” was a final decision under
Section 1291 of Title 28 of the United States Code provides that “[t]he courts of appeals ... shall have jurisdiction of appeals from all final decisions of the district courts of the United States.” The label that a district court attaches to an order it issues does not control the question of whether the order is a final decision. See, e.g., Exchange Nat‘l Bank v. Daniels, 763 F.2d 286, 292 (7th Cir. 1985); Page v. Preisser, 585 F.2d 336, 338 (8th Cir. 1978). Rather, to determine whether a district court‘s order is a final decision we must determine whether it is a decision that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U.S. 229, 233, 65 S.Ct. 631, 89 L.Ed. 911 (1945). Thus, a judgment on liability that does not fix damages is not a final judgment because the assessment of damages is part of the merits of the claim that must be determined. See Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 742, 96 S.Ct. 1202, 47 L.Ed.2d 435 (1976); Republic Natural Gas Co. v. Oklahoma, 334 U.S. 62, 68, 68 S.Ct. 972, 92 L.Ed. 1212 (1948). But an unresolved motion to assess attorneys fees as costs to the prevailing party generally does not prevent a judgment on the merits from being final because it does not call into question a decision on the merits. See
After Budinich was decided, Congress enacted § 315 of the Judicial Improvements Act of 1990, which explicitly authorized the Supreme Court—if there was any doubt that the Court had the authority—to define by rule “when a ruling of a district court is final for the purposes of appeal under section 1291.”
In the case before us, the substantive law governing the action—the contract between the parties—clearly provides “for the recovery of [legal costs] as an element of damages to be proved at trial.”
III
Although we rely on Rules 54 and 58, as amended in 1993, to inform our understanding of
The fee-shifting statute in Budinich provided that attorneys fees shall be awarded ” ‘in favor of the winning party, to be taxed as part of the costs of the action.’ ” 486 U.S. at 197, 108 S.Ct. 1717 (quoting
The difference is important because claims, such as the one brought in Budinich, that are based on prevailing in underlying litigation will never involve “stand-alone” claims for attorneys fees. A “stand-alone” claim for attorneys fees is one that can be brought as an independent claim, such as, for example, a claim brought by an attorney to recover fees from a former client pursuant to a retainer agreement. When a stand-alone claim for attorneys fees remains unresolved, a district court decision is not final for purposes of appeal. For example, if an attorney were to bring suit to recover fees owed to him by a client, we certainly would not say that the district court decision was final before the court determined the amount of fees to which the attorney was entitled. See, e.g., Liberty Mut. Ins. Co., 424 U.S. at 742, 96 S.Ct. 1202; Republic Natural Gas Co., 334 U.S. at 68, 68 S.Ct. 972. When the governing law authorizes attorneys fees on some basis other than prevailing-party status, a claim for attorneys fees need not be linked to underlying litigation and therefore might be a stand-alone claim. In turn, the possibility that an unresolved claim will amount to a stand-alone claim for attorneys fees precludes the entry of a final decision.
Although Dynegy‘s claim for legal costs in this case, when fleshed out during litigation, will probably include costs incurred mostly in connection with this litigation, the authorizing contractual provision is nonetheless broader and leaves room for Dynegy to seek reimbursement for legal costs incurred at any time that CP & L rejected a shipment of coal. In other words, the claim could include what would
Moreover, the practical justification for treating a claim for attorneys fees as a collateral issue does not hold when the authorization for such fees is based on something other than prevailing-party status in the underlying litigation. When the law authorizes a fee award as part of the costs of the prevailing party, delaying the award of such fees until after appeal makes sense because the district court‘s assessment of which party prevailed might change depending on the outcome of the appeal. See White v. New Hampshire Dep‘t of Employment Security, 455 U.S. 445, 451-52, 102 S.Ct. 1162, 71 L.Ed.2d 325 (1982) (noting that when a statute provides for attorneys fees only to a prevailing party, “the court‘s decision of entitlement to fees will ... require an inquiry separate from the decision on the merits—an inquiry that cannot even commence until one party has ‘prevailed’ “). In contrast, when the controlling statute or contract provides for attorneys fees on some basis other than prevailing-party status in the underlying litigation, the outcome of any appeal should not affect the district court‘s fee determination.
In addition, when a claim for attorneys fees is based on something other than prevailing-party status in the underlying litigation, the factual findings necessary to dispose of the claim might affect the district court‘s assessment of other parts of the parties’ claims, thus making it desirable to delay appeal until those findings are made. Here, for example, legal costs are available only if the buyer failed to accept coal “prior to the Non-Defaulting Party‘s early termination due to an Event of Default.” When the district court assesses legal costs, it will have to determine the date of termination, which, in turn, might affect the court‘s earlier assessment of damages “resulting from the termination of [the contract].”
Finally, we note that the Budinich Court recognized that treating a claim for attorneys fees as a collateral issue makes sense only when the fees are sought as costs for prosecuting an underlying litigation. Thus, the Supreme Court held that “a claim for attorney‘s fees is not part of the merits of the action to which the fees pertain.” 486 U.S. at 200, 108 S.Ct. 1717 (emphasis added); see also Gleason v. Norwest Mortgage, Inc., 243 F.3d 130, 137-38 (3d Cir.2001) (distinguishing between contractual attorneys fees based on prevailing in litigation from those based on some other grounds, and classifying the former as collateral, and the latter as substantive); Deus v. Allstate Ins. Co., 15 F.3d 506, 520-23 (5th Cir.1994) (holding that a claim for attorneys fees under an attorney retainer contract was not collateral because it was brought as a separate claim and the claimant‘s rights “[were] not contingent on the outcome of the litigation“).
Dynegy argues that, by defining “legal costs” as “the reasonable out-of-pocket expenses incurred ... including legal fees, by reason of the enforcement and protection of ... rights under [the contract],” the contract effectively limits awards of legal costs to the prevailing party. According to Dynegy, “the use of the term ‘rights’ limits recovery to circumstances where the Party is vindicated, i.e. it has ‘rights’ that are properly enforceable under the circumstances.” Although Dynegy may have a point insofar as a party will be able to
At bottom, when a contract provides for an award of attorneys fees or legal costs, not as costs to the prevailing party, but as an element of damages, the grant or denial of such an award is a substantive issue that must be addressed before appeal is taken. This distinction was not only the basis of decision in Budinich but also the essence of the 1993 amendments to Rules 54 and 58.
We recognize that the desirability of maintaining a brighter-line jurisdictional rule than we have articulated has led more than one of our sister circuits to treat contractual awards of attorneys fees as collateral, without considering whether the contract at issue provided such awards as an element of damages or as costs to the prevailing party. See, e.g., U.S. ex rel. Familian Northwest, Inc. v. RG & B Contractors, Inc., 21 F.3d 952, 955 (9th Cir. 1994) (finding that the “need for a bright-line rule” justifies treating contractual attorneys fees as collateral); First Nationwide Bank v. Summer House Joint Venture, 902 F.2d 1197, 1199 (5th Cir.1990) (adopting a “bright line” rule that attorneys fees sought under a contract are collateral). But see, e.g., Brandon, Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. Medpartners, Inc., 312 F.3d 1349, 1355 (11th Cir.2002) (holding that “a request for attorneys’ fees pursuant to a contractual clause” is substantive and must be resolved before a judgment becomes final); Justine Realty Co. v. Am. Nat‘l Can Co., 945 F.2d 1044, 1048-49 (8th Cir. 1991) (holding that, when a party seeks to recover attorneys fees as “a portion of the contractual benefits in issue,” the judgment is not final before the court resolves the issue of attorneys fees). But whatever gains in predictability such a rule would bring would come only at the cost of an increased number of piecemeal appeals and an erosion of the well-established rule that a judgment is not final until damages are fixed. See, e.g., Liberty Mutual Ins. Co., 424 U.S. at 742, 96 S.Ct. 1202.
IV
For the foregoing reasons, we deny Dynegy‘s motion to dismiss CP & L‘s appeal from the April 6 order with prejudice on the ground that it was untimely filed because the time for taking an appeal never began. For the same reason, however, we do not reach the merits of that appeal. Rather, we dismiss it as interlocutory and remand for further proceedings. We similarly dismiss CP & L‘s appeal from the district court‘s September 10 order because it is mooted by our disposition of the primary appeal.
DISMISSED AND REMANDED.
WILKINSON, Circuit Judge, concurring:
I am pleased to concur in Judge Niemeyer‘s fine opinion. In this case, the contract is perfectly clear that the attorneys’ fees are a part of damages, as the majority opinion well illustrates. See ante at 359-60. The attorneys’ fees provision is in the remedies section of the contract, and it is not tied to the outcome of litigation. Rather, CP & L must pay the fees if CP &
Many cases, by contrast, will not be this clear. Rather, the contractual language will often be ambiguous as to whether attorneys’ fees are remedial, i.e., an element of damages, or, instead, are to be awarded to a prevailing party as costs of the underlying action. Further, the language may also suggest that the attorneys’ fees are a hybrid of both damages and costs. In these cases, the attorneys’ fees claim is collateral, and a party can immediately appeal before the trial court decides that claim.1
This approach balances the two competing concerns of the case. First, in those cases, like this one, in which attorneys’ fees are clearly remedial, an appeal should not be allowed until all the factual findings are made, including a determination regarding the attorneys’ fees provision. The concern of piecemeal litigation that § 1291 was designed to prevent is most relevant when the attorneys’ fees are obviously part and parcel of a remedy for damages. Second, in ambiguous or hybrid cases, an appeal should be immediately allowed. In these cases, the reasons underlying the Budinich rule predominate. See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 202-03, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). That is, the danger remains that the district court‘s resolution of the attorneys’ fees claim will go for naught if the appellate court finds that a different party should prevail.2 Further, when the attorneys’ fees provision contains any ambiguity or is a hybrid, the importance of having a bright-line jurisdictional rule increases because the level of uncertainty has correspondingly increased. After all, “[t]he time of appealability, having jurisdictional consequences, should above all be clear.” Id. at 202, 108 S.Ct. 1717.
This need for clarity commends the holdings of our sister circuits—that contractual attorneys’ fees provisions are always collateral—in cases where the nature of a contractual attorneys’ fees provision admits of any doubt. See, e.g., United States ex rel. Familian Northwest, Inc. v. RG & B Contractors, Inc., 21 F.3d 952, 1 Similarly, contractual provisions that are ambiguous or hybrid also fit within
WIDENER, Circuit Judge, concurring and dissenting:
I concur in the result. With respect, however, I do not agree with a part of the reasoning of either of the other opinions.
I think the correct rule is stated in Brandon, Jones, Sandall, Zeide, Kohn, Chalal & Musso, P.A. v. Medpartners, Inc., 312 F.3d 1349, 1355 (11th Cir. 2002). The court in that case stated the rule as follows:
In this Circuit, a request for attorneys’ fees pursuant to a contractual clause is considered a substantive issue; and an order that leaves a substantive fees issue pending cannot be “final.”
First, both the majority opinion and the other concurring opinion imply that attorneys’ fees may be a part of the taxable costs of the case when agreed to by contract. I doubt that such an agreement is valid absent statutory authority.
That aside, the reasons given for our decision today are bound to result in an even greater multiplication of the piecemeal appeals which have come about since the decision of the Court in Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S.Ct. 1717, 100 L.Ed.2d 178 (1988). Assuming only the solvency of the parties, our decision today offers monetary advantage to one of the parties, as well as to the attorneys, for failure to agree to, or to decide, the question of attorneys’ fees at the time the merits of the case are disposed of. Not only one of the parties, but the attorneys for both sides will profit by an appeal with its consequent attorneys’ fees. Public policy should encourage the ending of litigation, not its continued existence, in my opinion.
No. 04-1525.
United States Court of Appeals, Fourth Circuit.
Decided July 20, 2005.
Argued Feb. 1, 2005.