101 Wash. App. 517 | Wash. Ct. App. | 2000
The trial court certified orders it entered on summary judgment as final under CR 54(b). Because the court’s reasons for certification do not support the decision and were untenable, the judgments are not appealable, and we dismiss the appeal.
Baypack sued Nelbro and its parent companies in Alaska, seeking damages for breach of contract, breach of the covenant of good faith and fair dealing, tortious interference, “lender liability,” and fraud. Nelbro counterclaimed for the balance due on a note and moved to dismiss on forum non conveniens grounds. The motion to dismiss was denied, discovery proceeded, and the court granted summary judgment for Nelbro on its note.
Over a year later, Nelbro renewed its motion to dismiss based on forum non conveniens grounds, and the Alaska court granted the motion in September 1998. Baypack appealed, but before the Alaska Supreme Court decided the appeal, Nelbro sued Baypack in King County to collect on its note. Baypack filed compulsory counterclaims and later also initiated its own suit in King County, alleging the same claims it alleged in Alaska. The two King County actions were consolidated and assigned to a superior court judge. Baypack moved to stay the King County action pending a decision on its appeal in Alaska, but the motion was denied, and this court denied discretionary review.
The judge denied Baypack’s motion for a stay and granted Nelbro’s motion to certify the judgments already entered as final. Baypack moved for discretionary review of the order denying its motion for a stay and asked for accelerated review of its appeal of the decision certifying the partial judgments as final. A commissioner of this court held that Baypack had not met the standards for discretionary review, but he referred to a panel of judges the issue of whether the decision certifying the partial judgments as final was correct.
On the same day the commissioner entered his ruling, the Alaska trial court issued an injunction prohibiting Nelbro from prosecuting the action in Washington, except that it may defend itself in the appeal pending before this court. In granting the injunction, the Alaska court concluded that Baypack would suffer irreparable harm if the Washington action were allowed to proceed because it filed its case in Alaska first, and it would be denied its choice of a forum, despite the Alaska Supreme Court’s ruling that the Alaska court was the proper forum. As a result of the injunction, the King County court dismissed all the remaining unresolved claims and counterclaims asserted by the parties in Washington.
CR 54(b) makes an immediate appeal available in situations in which it could be unjust to delay entering a judgment on a distinctly separate claim until the entire case has been finally adjudicated.
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 in the judgment, supported by written findings, that there is no just reason for delay and upon an express direction for the entry of judgment.[5 ]
There are two aspects to the appellate court’s review in Rule 54(b) cases.
According to Wright, Miller, and Kane, “[tjhere is no generally accepted test that is used to determine whether more than one claim for relief is before the court.”
Several courts have adopted a test enunciated by the Second Circuit to determine whether more than one claim for relief is before the court: “ ‘The ultimate determination of multiplicity of claims must rest in every case on whether the underlying factual bases for recovery state a number of different claims which could have been separately enforced.’ ”
Applying the Second Circuit’s test, we agree with the trial court that Baypack presented multiple claims for relief, fulfilling the first requirement. For example, Baypack alleged that Nelbro breached an oral agreement to loan Baypack money to modify the P/V Red Sea. That claim could have been enforced separately from Baypack’s breach of a written agreement and other remaining claims. Similarly, Baypack’s claims that Nelbro schemed to destroy Baypack by initiating foreclosure proceedings on the P/V Stormy Seas and by acquiring the P/V Red Sea for itself after WestOne Bank initiated foreclosure proceedings could have been enforced separately from Baypack’s other claims. The same is true of Baypack’s tortious interference claim. Therefore, although all of Baypack’s claims arose out of arguably related transactions or occurrences, the claims that were dismissed could have been enforced separately from the remaining claims.
Although we are satisfied that the trial court properly concluded that the claims were separable, we must now
Even if individual claims are in some sense separable from the remaining unresolved claims, not all final judgments should be immediately appealable.
(1) [T]he relationship between the adjudicated and the unadjudicated claims, (2) whether questions which would be reviewed on appeal are still before the trial court for determination in the unadjudicated portion of the case, (3) whether it is likely that the need for review may be mooted by future developments in the trial court, (4) whether an immediate appeal will delay the trial of the unadjudicated matters without gaining any offsetting advantage in terms of the simplification and facilitation of that trial, and (5) the practical effects of allowing an immediate appeal.[20 ]
Because a Rule 54(b) ruling may have potentially important res judicata ramifications, a trial court does not abuse its discretion by considering those ramifications in deciding whether or not to certify a judgment as final under CR 54(b).
The trial judge explained his decision to certify the
This court finds that the failure to make the above-mentioned orders final would cause Nelbro Packing Company to suffer the hardship and injustice of having to incur additional delay, and the substantial and unnecessary expenses of rebriefing and rearguing issues before another court that were already resolved in this Court. Moreover, the Court finds that certifying the above-mentioned orders as final would prevent a waste of judicial resources in litigating the claims in the Alaska Superior Court. Finally, the issues decided in those orders are distinct from the remaining unresolved issues raised by the parties.
Under the circumstances in this case, we conclude that the trial court abused its discretion. Although the judge’s decision reflects that he considered some of the practical effects of immediate appeal, he did not address the other relevant factors, which appear to weigh against a conclusion that there was no just reason for delay. Without an explanation of why the other factors were disregarded, the court’s stated reasons for the decision were untenable.
When adjudicated and pending claims are closely related and stem from essentially the same factual allegations, judicial economy generally is best served by delaying the appeal until all the issues can be considered by the appellate court in a unified package.
Nelbro agreed to assist Baypack in processing and marketing its fish and to provide Baypack with a $1.5 million line of credit. According to Baypack, despite Nelbro’s agreement that WestOne Bank’s line of credit was superior to its own security interest, Nelbro later told WestOne that it would not recognize the bank’s interest in the fish. After that, WestOne informed Baypack it was not allowed to draw on its line of credit and the amount already owing was
Baypack alleged that by refusing to honor the priority of WestOne’s security, Nelbro tortiously interfered with Baypack’s relationship with WestOne Bank. Baypack also claimed that Nelbro’s repudiating its obligation to accord priority to WestOne’s security interest amounted to a breach of the contract and of its covenants of good faith and fair dealing.
According to Baypack, Nelbro also breached the contract by failing to provide the marketing assistance it had promised, so Baypack’s 1995 season was not as profitable as it would have been if Nelbro had performed as required. Baypack alleged that Nelbro said it would make amends for its conduct in 1995 by agreeing to finance Baypack’s operation in 1996. Baypack claimed that Nelbro agreed to pay for work needed to modify the PA/ Red Sea, but after the repairs were begun and the vessel could not be made seaworthy again without a considerable sum of money, Nelbro refused to advance the funds. According to Baypack, Nelbro refused to provide the money knowing that Baypack would miss the 1996 Alaska fishing season and would be destroyed without the funds to finish the work on the vessel.
Baypack’s claim of “lender liability” was based, in part, on Nelbro’s failure to honor its promise to finance Baypack’s operations for the 1996 season. Baypack also claimed that Nelbro’s reneging on its promise to finance the modifications to the P/V Red Sea breached the oral contract and was another way Nelbro breached its covenants of good faith and fair dealing.
According to Baypack, all of Nelbro’s actions amounted to fraud. Baypack asserted that Nelbro intended to put Baypack out of business and, therefore, intentionally or negligently made false assertions, including its promises to provide marketing assistance and to pay for modifications to the P/V Red Sea, which Baypack relied upon to its detriment. Thus, the claims dismissed on summary judg
The next factor to consider is whether questions that would be reviewed on appeal are still before the trial court for determination in the unadjudicated portion of the case. The issues to be reviewed on appeal are whether the trial court properly granted summary judgment to Nelbro on the oral contract, tortious interference, and claims regarding the vessels. If this court rules in favor of Nelbro, those issues, because of the doctrine of res judicata, would not still be before the trial court for determination. However, much of the evidence that will be presented on the remaining claims will be the same. Therefore, even though the questions to be reviewed on appeal are not still before the trial court, this factor does not weigh strongly in favor of an immediate appeal.
Another factor to consider to determine whether there was no just reason for delay in entering a final judgment is whether the need for review is likely to be mooted by future developments in the trial court. In general, an appeal should be deferred if there is a possibility that developments in the litigation may moot a claim.
Baypack has indicated there will be no need for it to appeal from the summary judgments certified as final if it is fully compensated for its damages under its remaining claims. Although we are not in a position to comment on whether Baypack is likely to prevail on its remaining claims, we agree it is unlikely Baypack would carry through with an appeal of the summary judgment orders if it is otherwise able to avoid its liability under the loans. This factor, therefore, weighs against a determination that there is no just reason for delay of an appeal.
The fourth factor to consider is whether an immediate appeal will delay the trial of the unadjudicated matters without gaining any offsetting advantage in terms of the
The court must also consider the practical effects of allowing an immediate appeal. The most obvious practical effect is that the certifications reduce the number of issues the Alaska court will have to resolve. Assuming that Nelbro prevails on appeal, allowing it an immediate appeal will allow it to recover under its judgment more quickly. But Nelbro does not contend, and did not contend below, that it will suffer greatly by having to wait to execute on its judgment. Moreover, as will be discussed more fully below, allowing an immediate appeal on some issues in Washington while the remainder of the case proceeds in Alaska may unnecessarily complicate the entire case. Thus, it is not clear that the practical effects of an immediate appeal weigh in favor of CR 54(b) certification.
Nelbro relies upon Texaco, Inc. v. Ponsoldt in support of its position that the trial court’s certification of the summary judgment orders as final was correct. The Ninth Circuit held in Texaco that even though the resolved claims and the remaining claims required proof of the same facts,
The Texaco case involved a dispute over an unconsummated land sale. Ponsoldt agreed to purchase ranch land from Texaco. The purchase and sale agreement contained a liquidated damages provision that retention of Ponsoldt’s $200,000 deposit would be Texaco’s sole remedy if Ponsoldt defaulted before the close of escrow.
Ponsoldt refused to close the sale and filed suit in state court for specific performance, breach of contract, and fraud. The following day, Texaco filed suit in federal district court, asking for specific performance and declaratory relief. The state court stayed its action, so Ponsoldt filed counterclaims against Texaco in the federal court for breach of contract, specific performance, bad faith denial of the existence of a contract, breach of the covenant of good faith and fair dealing, fraud, and negligent misrepresentation.
Texaco and Ponsoldt attempted to resolve their dispute. Texaco later filed a second action against Ponsoldt, asserting breach of the settlement agreement, fraud, and negligent misrepresentation. Ponsoldt counterclaimed for breach of contract, specific performance, fraud, and negligent misrepresentation.
Ponsoldt moved for summary judgment, raising the liquidated damages provision as a complete defense to the claim for specific performance in the first action. The motion was granted, and Texaco did not appeal that ruling. Later, Ponsoldt moved for summary judgment on the declaratory relief claim, arguing the claim was moot because the relief requested was the same as the relief requested in the specific performance claim. Ponsoldt also moved for summary judgment on all claims in the second action, asserting that the statute of frauds made the settlement agreement unenforceable and barred the fraud claims. The court granted the summary judgment motions and certified
Texaco argued that the trial court erred in certifying the decisions as final because Ponsoldt’s remaining counterclaims involved the same factual determinations as the dismissed claims. But the appellate court held that the judgments were properly certified for appeal because the decisions separated the legal from the factual questions and streamlined the litigation.
In this case, however, it is not clear that certifying the summary judgment orders for appeal will streamline the litigation. As the trial court was aware when it certified the judgments as final, the Alaska Supreme Court had remanded the case to the Alaska trial court. Therefore, the trial court should have been aware that by certifying the judgments as final, an appeal would be taken in Washington while the case proceeded in Alaska. If the Alaska case proceeds with that court giving res judicata effect to the King County judgments, and a Washington appellate court later reverses the summary judgment orders, the dismissed claims might need to be reheard after the Alaska case has concluded. Thus, while it generally may be true that resolving discrete legal issues will streamline litigation, the Washington court should have considered whether the litigation would truly be streamlined under these circumstances.
The written findings do not reflect whether the trial judge considered how certifying the judgments as final might complicate the case. The trial court’s CR 54(b) order also does not indicate whether the court considered if the need for review might be mooted by future developments in the trial court.
The court referred to the unnecessary time and expense of rebriefing and rearguing issues, but at least some of the issues apparently were already briefed and argued in the Alaska court. Therefore, although the judgment indicated
The court also said that failing to make the orders final would cause Nelbro “to suffer the hardship and injustice of having to incur additional delay,” but di¡d not say why, or explain how the injustice to Nelbro outweighed the injustice to Baypack of being deprived of having the issues decided by its chosen forum.
Written findings are important because
[explanation produces intellectual discipline; a judge who sets down in writing (or articulates in court) the reasons pro and con, and his method of reaching a decision, must work through the factors before deciding, and we then may be sure that the conclusion is based on appropriate considerations even if not necessarily one we would have reached ourselves.[29 ]
As the United States Supreme Court said in a decision in which the findings were inadequate to support the judgment,
“[fit is essential. . . that a reviewing court have some basis for distinguishing between well-reasoned conclusions arrived at after a comprehensive consideration of all relevant factors, and mere boiler-plate approval phrased in appropriate language*533 but unsupported by evaluation of the facts or analysis of the law.”[30 ]
To summarize, without consideration of all the relevant factors, the reasons the court gave for granting CR 54(b) certification do not support the decision and were untenable. Thus, the judgments are not appealable.
We reverse the CR 54(b) certifications and dismiss the appeal.
Reconsideration denied July 25, 2000.
Baypack objected to the dismissal of its claims against Nelbro and has filed a notice of appeal from the order of dismissal, presumably out of fear that the
Doerflinger v. New York Life Ins. Co., 88 Wn.2d 878, 567 P.2d 230 (1977); 10 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2654 (3d ed. 1998).
Schiffman v. Hanson Excavating Co., 82 Wn.2d 681, 684, 513 P.2d 29 (1973).
See Fox v. Sunmaster Prods., Inc., 115 Wn.2d 498, 503, 798 P.2d 808 (1990); Doerflinger, 88 Wn.2d at 880.
The relevant part of Fed. R. Civ. P 54(b) is as follows:
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.
The substance of RAP 2.2(d) also is virtually identical to CR 54(b). RAP 2.2(d) states, in part:
In any case with multiple parties or multiple claims for relief, or in a criminal case with multiple counts, an appeal may be taken from a final judgment which does not dispose of all the claims or counts as to all the parties, but only after an express direction by the trial court for entry of judgment and an express determination in the judgment, supported by written findings, that there is no just reason for delay.
Pepper v. King County, 61 Wn. App. 339, 345, 810 P.2d 527 (1991).
Curtiss-Wright Corp. v. General Elec. Co., 446 U.S. 1, 10, 100 S. Ct. 1460, 64 L. Ed. 2d 1 (1980); Schiffman, 82 Wn.2d at 687.
10 Wright § 2655, at 42.
Curtiss-Wright Corp., 446 U.S. at 10; 10 Weight, § 2655, at 39-40 (“Since the court has no discretion to authorize an appeal when Rule 54(b) does not apply, its decision that the requirements of the rule have been met is fully reviewable by an appellate court.”); Fox, 115 Wn.2d at 503. Wright, Miller, and Kane explain that difficulties arise in analyzing Rule 54(b) cases when a court believes it may dismiss an appeal only for an abuse of discretion, when what is truly in question is the propriety of trial court’s direction that a final judgment be entered. 10 Weight, § 2655, at 42.
10 Wright § 2657, at 68.
See Cold Metal Process Co. v. United Eng’g & Foundry Co., 351 U.S. 445, 451-52, 76 S. Ct. 904, 100 L. Ed. 1311 (1956).
See 10 Wright § 2657, at 69 n.10, referring to a note in the Harvard Law Review (Note, Appealability in the Federal Courts, 75 Harv. L. Rev. 351, 360 (1961)).
10 Wright § 2657, at 73, (quoting Rieser v. Baltimore & Ohio R.R., 224 F.2d 198,199 (1955), cert. denied, 350 U.S. 1006, 76 S. Ct. 651,100 L. Ed. 868 (1956)).
10 Wright § 2657, at 76-77.
See Curtiss-Wright Corp., 446 U.S. at 10; 10 Wright § 2655, at 42-43.
Brand v. Department of Labor & Indus., 139 Wn.2d 659, 665, 989 P.2d 1111 (1999).
Curtiss-Wright, 446 U.S. at 10; 10 Wright § 2655, at 42-43.
Curtiss-Wright, 446 U.S. at 8; Horn v. Transcon Lines, Inc., 898 F.2d 589, 592 (7th Cir. 1990).
Curtiss-Wright, 446 U.S. at 8.
Schiffman, 82 Wn.2d at 687.
Continental Airlines, Inc. v. Goodyear Tire & Rubber Co., 819 F.2d 1519, 1525 (9th Cir. 1987); Shamley v. ITT Corp., 869 F.2d 167, 170 (2d Cir. 1989).
Solomon v. Aetna Life Ins. Co., 782 F.2d 58, 60 (6th Cir. 1986).
Horn, 898 F.2d at 592.
Nelbro argues that if the summary judgment orders are not appealable, in addition to relitigating those issues, the parties will also have to argue whether Baypack should be allowed to amend its complaint to include claims based on the foreclosures of the P/V Red Sea and PAf Stormy Sea. If those claims are not part of the Alaska case, the issues relating to them presumably have not been briefed or argued.
Texaco, Inc. v. Ponsoldt, 939 F.2d 794, 798 (9th Cir. 1991).
Texaco, 939 F.2d at 798.
The decision dismissing the oral contract claims was based on Washington law. Baypack asserted in the trial court that the Alaska court should be allowed to determine whether Alaska or Washington law applied.
Pepper, 61 Wn. App. at 350 (“ ‘the record must affirmatively show there is in fact some danger of hardship or injustice that will be alleviated by an immediate appeal’ ”) (quoting Fox, 115 Wn.2d at 503).
Horn, 898 F.2d at 592. In this case, the trial court’s oral decision is no more complete than the written decision.
Solomon, 782 F.2d at 61 (quoting Protective Comm. for Indep. Stockholders of TMT Trailer Ferry, Inc. v. Anderson, 390 U.S. 414, 434, 88 S. Ct. 1157, 20 L. Ed. 2d 1 (1968)). The Anderson case did not involve Rule 54(b), but the Solomon case did.