In re: Odyssey Contracting Cor v. ( 2019 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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Nos. 19-1150 & 19-1151
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In re: ODYSSEY CONTRACTING CORP.,
Appellant
L&L PAINTING CO., INC.
v.
ODYSSEY CONTRACTING CORP.;
FEDERAL INSURANCE COMPANY
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Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civil Action Nos. 2-18-cv-00456 and 2-18-cv-00458)
District Judge: Honorable Cathy Bissoon
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Argued September 25, 2019
Before: SMITH, Chief Judge,
McKEE, AMBRO, Circuit Judges
(Opinion filed: December 12, 2019)
Chris Georgoulis (Argued)
Georgoulis
120 Wall Street, Suite 1803
New York, NY 10005
Robert O. Lampl
Rober O Lampl & Associates
223 Fourth Avenue, 4th Floor
Pittsburgh, PA 15222
Counsel for Appellant
Jose Aquino
Charles Fastenberg (Argued)
Jeffrey W. Spear
Duane Morris
1540 Broadway
New York, NY 10036
Joel M. Walker
Duane Morris
600 Grant Street, Suite 5010
Pittsburgh, PA 15219
Counsel for Appellees
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OPINION OF THE COURT
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AMBRO, Circuit Judge
2
Appellant Odyssey Contracting Corp. and Appellee
L&L Painting Co., Inc. were, respectively, a subcontractor and
the prime contractor on a project to repaint the Queensboro
Bridge. Over the course of that project, Odyssey and L&L
became embroiled in a dispute over whether L&L was
underpaying Odyssey. Consequently, Odyssey stopped its
work, and the parties sued each other for breach of contract.
After Odyssey filed for bankruptcy, this litigation became the
subject of an adversary proceeding in the Bankruptcy Court.
At the final pre-trial conference, the parties entered into
a stipulation approved by the Bankruptcy Court. The
stipulation provided that if the Bankruptcy Court determined
that Odyssey was the breaching party, then “all of the [p]arties’
pending claims will be withdrawn and disposed of in their
entirety with prejudice” and the adversary proceeding “shall be
deemed to be finally concluded in all respects.”
Following a bench trial, the Bankruptcy Court
concluded that Odyssey was the breaching party. Accordingly,
it entered an order “direct[ing] [the] parties to resolve the . . .
adversary proceeding . . . in compliance with the [s]tipulation.”
The order also required the parties to provide a status update
within three weeks as to whether that had been done.
Instead, Odyssey appealed to the District Court, seeking
review of the Bankruptcy Court’s decision that it was the
breaching party. L&L moved to dismiss the appeal, arguing
that, under the terms of the stipulation, Odyssey had released
its claims and waived its right to appeal. The District Court
agreed and modified the Bankruptcy Court’s order to make it a
dismissal of the adversary proceeding with prejudice.
Odyssey now appeals to us. Because we agree that
Odyssey waived its right to appeal by entering into the
stipulation, we will affirm.
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I. Jurisdiction
The Bankruptcy Court had jurisdiction under 28 U.S.C.
§§ 157(a) and 1334(b). The District Court’s jurisdiction, on
which our jurisdiction depends, is less certain.
District courts have jurisdiction to “hear appeals . . .
from final judgments, orders, and decrees . . . of bankruptcy
judges.” 28 U.S.C. § 158(a)(1). The order from which
Odyssey appealed was the Bankruptcy Court’s order directing
the parties to resolve the adversary proceeding per the
stipulation and requiring a status update on whether that had
been done. Was this a final order conferring appellate
jurisdiction on the District Court? With some hesitation, we
conclude that it was.
“[C]onsiderations unique to bankruptcy appeals”
require “constru[ing] finality in a more pragmatic, functional
sense . . . .” In re Prof’l Ins. Mgmt., 285 F.3d 268, 279 (3d Cir.
2002). Thus, “a bankruptcy court order ending a separate
adversary proceeding is appealable as a final order even though
that order does not conclude the entire bankruptcy case.” Id.
at 281 (quoting In re Moody, 817 F.2d 365, 367–68 (5th Cir.
1987)). But in determining whether an order deciding a
specific adversary proceeding is final, we typically “apply the
same concepts of appealability as those used in general civil
litigation.” In re White Beauty View, Inc., 841 F.2d 524, 526
(3d Cir. 1988). “A final judgment is one which ends the
litigation on the merits and leaves nothing for the court to do
but execute the judgment.” Riley v. Kennedy, 553 U.S. 406,
419 (2008) (internal quotation marks omitted). Thus an order
is not final where it “contemplates the possibility of future
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proceedings.” Delgrosso v. Spang & Co., 903 F.2d 234, 236
(3d Cir. 1990).
The Bankruptcy Court’s order here could suggest—if
not contemplate—the possibility of future proceedings, as it
required the parties to “file a joint status report indicating
whether all actions in compliance with the [s]tipulation and
[o]rder ha[d] been taken to resolve [the adversary proceeding]
or, if . . . not, why [not,]. . . and what steps remain to be taken.”
If Odyssey had not appealed when it did, the Bankruptcy Court
may have issued a further order dismissing the parties’ claims
pursuant to the stipulation. Or it may have entertained a motion
by L&L to enforce the stipulation. But as things stood when
Odyssey appealed, some further action was required—either
by the parties or the Bankruptcy Court1—as the order did not
itself dismiss the parties’ claims or provide that it would
automatically ripen into a final order of dismissal absent some
further action by the parties within a specified time period. See
United States v. Wang, 926 F.2d 92, 94–96 (1st Cir. 1991)
(concluding that an order was final where it provided that a
settlement agreement would take effect unless the parties
agreed to modify it within sixty days, and noting that the order
“did not instruct the parties to report back for further
proceedings”); cf. Weber v. McGrogan, 939 F.3d 232, 239–40
(3d Cir. 2019) (holding that an order dismissing a case without
prejudice may be final where it is “self-executing” because it
1
The parties, for example, could have further stipulated to
dismissal under Federal Rule of Civil Procedure 41, which
would have required the Bankruptcy Court to take no further
action to dismiss the matter. See Fed. R. Civ. P. 41(a)(1)(A)(ii)
(providing that an action may be dismissed without a court
order when a stipulation of dismissal signed by all parties is
filed); Fed. R. Bank. P. 7041 (providing that Federal Rule of
Civil Procedure 41 applies in adversary proceedings).
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contains “language converting the dismissal to a final order at
the end of [a specified] period”).
On the other hand, “if only a ‘ministerial’ task remains
for the court to perform”—such as calculating damages when
that task is mechanical and uncontroversial—“then immediate
appeal is allowed.” Skretvedt v. E.I. DuPont De Nemours, 372
F.3d 193, 200 n.8 (3d Cir. 2004). Here, the most that remained
for the Bankruptcy Court to do was to enter a further order
dismissing the parties’ claims per the stipulation. Perhaps
recognizing this, the District Court declined to remand the case
for the Bankruptcy Court to “further interpret and enforce its
order approving the stipulation,” concluding that this would be
“senseless[] given that Odyssey most[ ]likely would appeal the
resulting[ ]decision” back to the District Court. J.A. 7. Instead,
it took that small, ministerial step itself, modifying the
Bankruptcy Court’s order to dismiss the adversary proceeding
with prejudice.
Because all that remained for the Bankruptcy Court to
do was to dismiss the claims in accord with the stipulation, and
mindful that in the bankruptcy context we construe finality in
a more pragmatic, functional sense, we conclude that the
Bankruptcy Court’s order was final such that the District Court
had jurisdiction to consider Odyssey’s appeal under 28 U.S.C.
§ 158(a)(1). And because that Court had appellate jurisdiction,
we have jurisdiction to review its final order disposing of the
appeal under 28 U.S.C. §§ 158(d)(1) and 1291.
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II. Analysis2
Having determined that we have jurisdiction, we next
consider whether Odyssey waived its right to appeal by
agreeing to the stipulation. We conclude that it did.
In construing a stipulation, we consider first its plain
language. Waldorf, 142 F.3d at 612. What the words indicate
is that Odyssey waived its right to appeal the Bankruptcy
Court’s determination that it was the breaching party.
Paragraphs 1 and 2 of the stipulation set out the relevant
language:
1. In the event this Court [i.e., the
Bankruptcy Court] determines after trial
that Odyssey was the breaching party,
then L&L’s damages claim for the said
breach(es) will be deemed to exceed
Odyssey’s damages claims for all of its
claims . . . ; and, thereupon, all of the
Parties’ pending claims will be
withdrawn and disposed of in their
entirety with prejudice by L&L and
Odyssey, respectively.
2. In the event the Court determines after
trial that Odyssey was the breaching
party, the Parties’ withdrawal and
2
“Because the District Court sat [here] as an appellate court,
[we] conduct[] the same review of the Bankruptcy Court’s
order as did the District Court.” In re Telegroup, Inc., 281 F.3d
133, 136 (3d Cir. 2002). Our review of the latter’s construction
of the stipulation is plenary. Waldorf v. Shuta, 142 F.3d 601,
608 & n.1 (3d Cir. 1998).
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disposition of their respective claims . . .
shall include all their damages claims for
. . . any and all . . . alleged wrongdoing of
any type or description; . . . and this
proceeding shall be deemed to be finally
concluded in all respects. The Parties
shall exchange mutual final releases
reflecting the terms of this Stipulation.
J.A. 473–74 (emphases added).
The stipulation does not specifically refer to Odyssey’s
right to appeal the Bankruptcy Court’s determination, yet
several aspects of the above language indicate an intent to
waive that right.
First, the stipulation provides that, following the
Bankruptcy Court’s determination, Odyssey will “thereupon
. . . withdraw[] and dispose[] of” its claims. Id. at 474.
“[T]hereupon” indicates that Odyssey will resolve its claims
“immediate[ly]; without delay; [or] promptly.” Thereupon,
Black’s Law Dictionary (11th ed. 2019). It is difficult to
reconcile this language with Odyssey’s reading of the
stipulation, under which Odyssey need not dispose of its claims
until after the resolution of one or more appeals, which would
necessarily prolong the litigation.
Second, the stipulation provides that, upon the
Bankruptcy Court’s decision, “this proceeding shall be deemed
to be finally concluded in all respects.” J.A. 474 (emphasis
added). Again, the possibility of an appeal is not consistent
with this language: if an appeal were possible, then the
proceeding is not finally concluded in all respects; indeed, the
proceeding may continue on appeal and, should the appeal
result in reversal, it may continue in the Bankruptcy Court.
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Furthermore, paragraph 1 of the stipulation not only
provides for the disposal of all of the parties’ pending claims,
but specifies that this disposition is “with prejudice.” The
inclusion of this legal term of art undeniably established that if
the Bankruptcy Court—not the District Court or the Court of
Appeals—found Odyssey to be the party that breached the
contract, the litigation would end. In other words, the
stipulation barred any appeal. See With Prejudice, Black’s
Law Dictionary (11th ed. 2019).
Apart from disputing the meaning of the stipulation’s
plain language, the parties ask us to apply opposite rules of
construction where the stipulation is silent as to the right to
appeal. Odyssey argues silence cuts in its favor, positing that
a stipulation for a trial court to decide a certain claim does not
waive the right to appeal the claim unless it is expressly
waived. L&L urges the opposite rule—under which silence
would support its position—arguing that a stipulation to a
certain resolution of a claim waives the right to appeal the
claim unless the right is expressly reserved. While neither
party’s position finds direct support in our cases, L&L’s
position is the better fit here.
L&L relies on the well-established principle that a party
cannot appeal from a consent judgment if it did not expressly
reserve its right to do so. See, e.g., Keefe v. Prudential Prop.
& Cas. Ins. Co., 203 F.3d 218, 222–23 (3d Cir. 2000). In Keefe
we held that a party may appeal from a consent judgment in
order to challenge some contested order preceding the
judgment so long as “it is clear from the record that the parties
stipulated to [the] consent judgment with the express
understanding that the party against whom judgment was
entered would appeal [the] contested issue.” Id. at 223. Our
rationale for requiring a party to make clear its intent to appeal
is to prevent unfair surprise to the opposing party, who agreed,
after all, to settle the case without further litigation and “should
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not be left guessing about the finality and hence efficacy of the
settlement.” Id. (quoting Ass’n of Cmty. Orgs. for Reform Now
v. Edgar (“ACORN”), 99 F.3d 261, 262 (7th Cir. 1996)).
Odyssey correctly points out that the stipulation here is
not a consent judgment as it was in Keefe. There the parties
stipulated to a judgment in favor of the plaintiff with the
understanding that the defendant would then appeal to seek
review of a previous order—specifically, an order denying
summary judgment to the defendant. 203 F.3d at 220. Here,
by contrast, the stipulation was entered before trial, setting out
the effect that a subsequent determination at trial would have
on the proceedings—specifically the determination that
Odyssey was the breaching party.
We conclude that this distinction makes no meaningful
difference. In both instances the parties have agreed to resolve
and end the litigation based on the Court’s determination of a
contested issue. The parties did so in Keefe after the District
Court decided the contested issue; here the parties did so
prospectively, that is, before the contested issue was decided.
But the rationale for the rule in Keefe applies equally in both
circumstances: a party that agrees to resolve and end a case—
and thus gives up its right to press its claims or defenses in
exchange for finality—should not be left guessing whether the
opposing party can appeal. Rather, the party seeking to appeal
must make its intent to do so clear at the time of the stipulation.
For its part, Odyssey relies on cases from our sister
circuits that it contends establish a different rule: where the
parties have stipulated that a trial court will decide a certain
issue, the right to appeal must be expressly waived. See, e.g.,
In re Deepwater Horizon, 785 F.3d 986, 997 (5th Cir. 2015);
Montez v. Hickenlooper, 640 F.3d 1126, 1132 (10th Cir.
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2011).3 But even assuming these cases are persuasive, they are
distinguishable in a significant way: they involve class-action
consent decrees, in which the parties established a dispute
resolution procedure for addressing individual class members’
claims over which a district court was made the decisionmaker.
In re Deepwater Horizon, 785 F.3d at 989; Montez, 640 F.3d
at 1129.
The interest at stake in those cases was different from
that at issue here. In class actions, settlement agreements
cannot be approved unless the court determines that they are
“fundamentally fair, reasonable, and adequate,” the purpose of
3
Odyssey also relies on two of our decisions, Nicholson v.
Altona Corp., 320 F.2d 8, 12 (3d Cir. 1963), and Anderson v.
White, 888 F.2d 985, 990–91 (3d Cir. 1989). Both are
distinguishable, as neither involved a stipulation setting the
process for resolving and ending the litigation.
In Nicholson the parties stipulated that the defendant
would deposit a check in escrow to satisfy “any [j]udgment that
may be rendered . . . in favor of plaintiff.” 320 F.2d at 12. We
held that this stipulation did not waive the defendant’s right to
appeal the judgment. Id.In Anderson the Court entered summary judgment in
favor of all defendants except one (Kravitz), who had failed to
move for summary judgment even though the claims against
her turned on the same issues. 888 F.2d at 990. Recognizing
this oversight prevented an immediate appeal, the plaintiffs and
Kravitz stipulated to entry of summary judgment for Kravitz.
Id. We held the stipulation did not waive the plaintiffs’ right
to appeal and had merely “cure[d] a procedural problem.” Id.
at 991.
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which is to “protect unnamed members of the class from unjust
or unfair settlements.” Ehrheart v. Verizon Wireless, 609 F.3d
590, 592–93 (3d Cir. 2010). It may be that the interest in
protecting individual class members requires an explicit waiver
of the right to appeal. But that interest does not apply in our
case, which involves a dispute between sophisticated business
entities. What does apply is the interest we identified in
Keefe—preventing a party from being caught by surprise or
“left guessing about the finality and hence efficacy of the
[stipulation for resolution].” Keefe, 203 F.3d at 223 (quoting
ACORN, 99 F.3d at 262).
In sum, the language of the stipulation confirms
Odyssey’s intent to end all its pending claims if the Bankruptcy
Court rules that Odyssey breached its contract with L&L. And
this construction is further supported by the rule we set out in
Keefe: a party that seeks to appeal must make its intent to do
so clear at the time of the stipulation setting the manner for
resolution. Accordingly, we conclude that Odyssey waived its
right to appeal the Bankruptcy Court’s order and will affirm
the order of the District Court.
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