LLOYD NOLAND FOUNDATION, INC., The, an Alabama nonprofit corporation, Plaintiff, v. TENET HEALTH CARE CORPORATION, a corporation, Defendant-Third Party-Plaintiff-Counter-Defendant-Appellant, Fairfield Healthcare Authority, City of, Third Party-Defendant-Counter-Claimant-Appellee, HealthSouth Corporation, Third Party-Defendant-Appellee. Tenet Healthsystem Medical, Inc., a corporation, Plaintiff-Counter-Defendant-Third Party-Plaintiff-Appellant, v. Lloyd Noland Foundation, Inc., an Alabama nonprofit corporation, Defendant-Counter-Claimant, Fairfield Healthcare Authority, Third Party-Defendant-Counter-Claimant-Appellee.
No. 04-16534.
United States Court of Appeals, Eleventh Circuit.
April 4, 2007.
Joel Scott Isenberg, Smith & Ely, L.L.P., Bruce F. Rogers, Bainbridge, Mims & Rogers, Charles K. Hamilton, Bainbridge, Mims, Rogers & Smith, LLP, Carol A. Smith, Carol Ann Smith, P.C., Birmingham, AL, Walter R. Byars, Montgomery, AL, for Appellees.
Before TJOFLAT and PRYOR, Circuit Judges, and GEORGE,* District Judge.
TJOFLAT, Circuit Judge:
This appeal asks us to interpret an indemnity provision under Alabama law. The district court granted summary judgment in favor of the third-party defendants on a claim based on this indemnity provision, but left another count of the third-party complaint undecided. That count also sought indemnity but was premised on Alabama common law rather than the indemnity provision itself. The district court entered partial judgment on the contractual indemnity claim under Federal
I.
The larger case here involves numerous claims, counter-claims and third-party claims arising from a series of business transactions relating to the sale and operation of a hospital in Fairfield, Alabama. Because we ultimately conclude that we have no jurisdiction over this appeal, we eschew a detailed examination of the somewhat convoluted facts in favor of a brief overview of those facts pertinent here.
In 1996, the Lloyd Noland Foundation, Inc. (“LNF“) sold the hospital in question to a subsidiary of Tenet Healthcare Corporation (“Tenet“).1 As a condition to closing the transaction, Tenet executed a Guaranty Agreement, in which it guaranteed the performance of certain obligations to LNF assumed by Tenet‘s subsidiaries as part of the transaction. Generally, these obligations related to an option for LNF to lease space in the hospital and repurchase beds from Tenet for the operation of an acute care unit, and Tenet‘s assumption of certain responsibilities for an LNF retiree benefit program.
Three years later, the City of Fairfield Healthcare Authority (“FHA“) purchased the hospital from Tenet, executing a six-month promissory note for the purchase price and a security agreement. FHA assumed the obligations, as described above, that were owed to LNF by Tenet‘s subsidiaries and guaranteed by Tenet (the “Assumed Obligations“). FHA‘s partner in the transaction was HealthSouth Corporation (“HealthSouth“), which executed with Tenet a separate agreement guaranteeing FHA‘s payment of the promissory note.
When the note came due six months later, FHA and HealthSouth were not prepared to pay. Accordingly, Tenet, FHA and HealthSouth together executed the “Agreement Regarding Amendment of Secured Promissory Note” (the “Amendment“).2 Its title notwithstanding, the parties actually agree about relatively little with regard to this document. One thing they do not dispute is that the Amendment extended the term of the promissory note, giving FHA and HealthSouth six additional months in which to pay Tenet. HealthSouth ultimately paid the promissory note in full after the extension.
The parties do disagree, however, about the scope of an indemnity provision contained in the Amendment. The provision made FHA and HealthSouth jointly and severally liable to indemnify Tenet for any claim by LNF based on the Assumed Obligations. By its terms, the indemnity provision specified its effective date, but it contained no expiration date. In short, Tenet contends that, in the absence of an
In 2001, this lawsuit began. LNF sued Tenet in the Northern District of Alabama for damages under the terms of Tenet‘s Guaranty Agreement, alleging that FHA had failed to carry out the Assumed Obligations. Tenet in turn filed an answer and third-party complaint against both FHA and HealthSouth, initially alleging only one count for indemnification under the terms of the Amendment. Later, Tenet amended its answer and third-party complaint to allege a second count of “Common Law Indemnification” under Alabama law. The parties dispute whether Tenet properly alleged this second count against both FHA and HealthSouth; on its face, the count names only FHA.
On March 7, 2002, the district court filed a scheduling order setting deadlines for discovery and motions “regarding liability” and staying all other proceedings in the case “pending the resolution of the liability issues.” In response to a request from counsel seeking clarification of the order, the district court filed a letter to counsel on March 18, 2002, specifying that “‘liability’ [as used in the March 7, 2002 scheduling order] means contractual liability under the indemnification agreement.” Tenet, FHA and HealthSouth proceeded to file competing motions for summary judgment on the contractual indemnification count of Tenet‘s amended third-party complaint, never addressing Tenet‘s second count for common-law indemnification.
By order on November 9, 2004, the district court granted FHA‘s and HealthSouth‘s motions for summary judgment on the contractual indemnification count and denied Tenet‘s motion, holding in its accompanying Memorandum Opinion that, under Alabama law, the indemnity provision of the Amendment expired upon payment of the promissory note. The court further ordered that, “[b]ecause no claims remain against [FHA and HealthSouth], the court dismisses them with prejudice from the case.” The district court nowhere mentioned the outstanding common-law indemnification count of Tenet‘s amended third-party complaint.
Desiring to appeal immediately to this court, Tenet moved the district court under
Thereafter, Tenet appealed, raising two issues. First, it argues that the district court erred in its interpretation of the contractual indemnity provision in the Amendment. Second, Tenet contends that the district court erred in “sua sponte” granting summary judgment in favor of the third-party defendants on the common-law indemnity claim in Count Two of Tenet‘s amended third-party complaint without giving Tenet an opportunity to present evidence on and brief that issue.
II.
Although no party on appeal directly questions the propriety of the district court‘s entry of final judgment under
A.
A district court must follow a two-step analysis in determining whether a partial final judgment may properly be certified under
As a threshold question, we consider whether the district court‘s November 9, 2004 order granting summary judgment to FHA and HealthSouth was a “final judgment” eligible for certification under
B.
By definition, entry of partial judgment under
The November 9 order did not, however, resolve Tenet‘s claim for indemnification under Alabama common law, alleged as Count Two in Tenet‘s amended third-party complaint. In response to the parties’ request for clarification, the district court explicitly limited the scope of briefing on summary judgment to the issue of contractual indemnification under the Amendment. Accordingly, the competing motions for summary judgment exclusively addressed the Amendment‘s indemnification clause. Notwithstanding the limited scope of the summary judgment inquiry, the district court, by its order of December 7, 2004, granted entry of partial judgment under
We have interpreted the first prong of
Although this court has noted that “the line between deciding one of several claims and deciding only part of a single claim is very obscure,” we have held that “when the plaintiff presents more than one legal theory, but will be permitted to recover on only one of them[,] . . . there is only a single inseparable claim for relief.” In re Se. Banking Corp., 69 F.3d at 1547; see also Schexnaydre v. Travelers Ins. Co., 527 F.2d 855, 856 (5th Cir. 1976).6 Thus, the touchstone for determining whether an entire “claim” has been adjudicated for the purposes of
It follows, therefore, that a partially adjudicated “claim” cannot serve as the basis for a
For example, in Schexnaydre, 527 F.2d at 856, the plaintiff pled two alternate tort theories in a one-count complaint. The district court dismissed only one of the two theories of liability, leaving the other theory undecided. Id. The court then entered partial judgment on the dismissed tort theory under
In light of the foregoing, our resolution of the instant case is straightforward. The district court‘s grant of summary judgment to the defendants on the issue of contractual indemnification did not “dispose[] entirely of a separable claim.” See In re Se. Banking Corp., 69 F.3d at 1547. The second count of the amended third-party complaint, seeking common-law indemnification, represented merely an alternate legal theory for a recovery identical to that sought by Count One. Though it pled two counts in its complaint, Tenet would be entitled to recover its losses through indemnification only once, at most. See In re Se. Banking Corp., 69 F.3d at 1547; Schexnaydre, 527 F.2d at 856. The second count remains unadjudicated because the district court, in its March 18, 2002 clarification order, explicitly limited the inquiry on summary judgment to “contractual liability under the indemnification agreement.” Although the district court‘s
Because the grant of summary judgment in the third-party defendants’ favor on the contractual indemnification count failed to adjudicate finally the indemnity claim as a whole, the first requirement for entry of partial judgment under
III.
Lamentably, the jurisdictional defect in this appeal was not identified until after briefing and oral argument on the merits. Nevertheless, lack of jurisdiction gives us no authority to go forward. On remand, however, the parties will be free to seek partial judgments with proper
DISMISSED.
Notes
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 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.
We recognize, of course, the Supreme Court‘s instruction that the second prong of the analysis—whether there is “any just reason for delay” in certifying the partial judgment for appeal—is within the district court‘s discretion. Id. at 437, 76 S. Ct. at 900-01 (“[T]he District Court may, by the exercise of its discretion in the interest of sound judicial administration, release for appeal final decisions upon one or more, but less than all, claims in multiple claims actions. The timing of such a release is, with good reason, vested by the rule primarily in the discretion of the District Court . . . . With equally good reason, any abuse of that discretion remains reviewable by the Court of Appeals.“); see Curtiss-Wright, 446 U.S. at 11, 100 S. Ct. at 1466 (observing that court of appeals must “scrutinize” the district court‘s evaluation of certain “juridical concerns,” but that those aspects of the trial court‘s judgment that are “discretionary,” such as its “assessment of the equities,” are to be granted “substantial deference“). In these discretionary matters, deference to the district court remains appropriate, but it would be peculiar for this court to defer to a district court in policing the boundaries of our appellate jurisdiction. See Sears, Roebuck & Co., 351 U.S. at 443-44, 76 S. Ct. at 904 (Frankfurter, J., concurring) (“Of course, as the Court‘s opinion appears to recognize, . . . [i]t is one thing for a district court to determine whether it is or is not through with a portion of a litigation. It is quite another thing for it to determine whether the requirements of
In any event, this court in In re Southeast Banking Corp. ultimately applied a pure de novo standard in reviewing the first prong of the
On the district court‘s unclear record, however, we would have to make certain assumptions in order to reach that result. In the above scenario, the analyses for the district court‘s entry of partial judgment would be quite different as between FHA and HealthSouth. The district court‘s order entering partial judgment, however, gives no explanation of its reasoning. It does not even acknowledge the existence of the common-law indemnification count, let alone discuss how that count does or does not apply to the case against each third-party defendant. The district court never resolved the underlying question of whether Count Two of the amended third-party complaint was properly alleged against HealthSouth in the first instance. Upon remand following our dismissal of this appeal, the district court will be in a position to consider that question.
