Millville Quarry Inc v. Liberty Mutual Fire ( 2000 )


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  • UNPUBLISHED
    UNITED STATES COURT OF APPEALS
    FOR THE FOURTH CIRCUIT
    MILLVILLE QUARRY, INCORPORATED,
    Plaintiff-Appellant,
    v.
    No. 99-2169
    LIBERTY MUTUAL FIRE INSURANCE
    COMPANY,
    Defendant-Appellee.
    Appeal from the United States District Court
    for the Northern District of West Virginia, at Martinsburg.
    W. Craig Broadwater, District Judge.
    (CA-98-4-3)
    Argued: April 7, 2000
    Decided: July 20, 2000
    Before MOTZ, Circuit Judge, Samuel Grayson WILSON,
    Chief United States District Judge for the
    Western District of Virginia, sitting by designation, and
    Gerald Bruce LEE, United States District Judge for the
    Eastern District of Virginia, sitting by designation.
    _________________________________________________________________
    Vacated and remanded by unpublished per curiam opinion.
    _________________________________________________________________
    COUNSEL
    ARGUED: Howard Gary Goldberg, GOLDBERG, PIKE &
    BESCHE, P.C., Baltimore, Maryland, for Appellant. James William
    Logan, Jr., LOGAN, JOLLY & SMITH, L.L.P., Anderson, South
    Carolina, for Appellee. ON BRIEF: Curtis G. Power, III, BOWLES,
    RICE, MCDAVID, GRAFF & LOVE, Martinsburg, West Virginia,
    for Appellant. James D. Jolly, Jr., Michael T. Smith, LOGAN,
    JOLLY & SMITH, L.L.P., Anderson, South Carolina; Walter M.
    Jones, III, MARTIN & SEIBERG, L.C., Martinsburg, West Virginia,
    for Appellee.
    _________________________________________________________________
    Unpublished opinions are not binding precedent in this circuit. See
    Local Rule 36(c).
    _________________________________________________________________
    OPINION
    PER CURIAM:
    Millville Quarry, Inc. ("Millville") appeals an order of summary
    judgment in favor of its insurer, Liberty Mutual Fire Insurance Com-
    pany ("Liberty"). The district court's final judgment order expressly
    dismissed all claims with prejudice, struck the matter from the court's
    active docket, and provided that "in the event that settlement [was]
    not finalized, any party [could] move to reopen" the case within
    ninety days. Neither party raised the question of whether this appeal
    is interlocutory. We raised the question sua sponte during oral argu-
    ment. We conclude that we have jurisdiction, vacate the dismissal
    with prejudice, and remand for further proceedings.
    I.
    Millville owns and operates a quarry in Millville, West Virginia.
    It constructed a platform to support water pumps for removing water
    that naturally accumulates at the bottom of its quarry. Liberty issued
    a policy to Millville. The quarry is a "covered location," and the plat-
    form and pumps are "covered property" under the policy. In April
    1997, water began entering the Millville quarry through a sidewall
    and through the quarry floor. Eventually, the water level rose to
    eighty-five feet above the quarry floor, sixty-five feet above the plat-
    form and pumps. Millville mounted pumps on a pump barge and
    2
    installed piping in order to pump water into the nearby Shenandoah
    River. Although the makeshift pumping operation exceeded the
    pumping capacity of the inundated platform and pumps, it was insuf-
    ficient to lower the water level below them so that it could resume
    normal quarrying and pumping operations.
    In May 1997, Millville submitted its first installment of costs on its
    flood claim, $178,016.30, and Liberty advanced Millville $250,000.
    In July 1997, Millville submitted a second installment of pumping
    costs, $556,659, and Liberty advanced $200,000. Liberty advanced
    these amounts under the "additional expense" coverage of the policy.
    Millville retained experts who determined that the water was enter-
    ing the quarry from the Shenandoah River through a series of under-
    ground conduits. Despite adding a second pumping barge, Millville
    still was unable to lower substantially the water level. So to resume
    normal quarrying operations, Millville began costly grouting opera-
    tions to seal the underground conduits from the Shenandoah River.
    Millville maintained that the "additional expense" provision of the
    policy covered those operations and all related expenses. Liberty
    agreed to pay the value of the replacement pumps once Millville doc-
    umented that value but maintained that the grouting operations were
    not covered. Millville then commenced this diversity action for dam-
    ages.
    On cross-motions for summary judgment, the district court deter-
    mined that the quarry was a "covered location," that the pumps were
    "covered property," and that the flood was a"covered cause of loss."
    The court determined that Millville was entitled to recover the value
    of the pumps, but left that value undetermined. The court expressly
    concluded, however, that the "additional expense" provisions of the
    policy did not cover the grouting operations because the additional
    expense provisions covered only "those additional expenses necessary
    to attempt to recover those permanent pumps" and the cost of substi-
    tute pumps for a reasonable time until Millville could replace the
    inundated pumps. Thus, the grouting operation did not qualify as an
    "additional expense" because its purpose "was to prevent further
    inflow of water into the quarry," not to recover"covered property."
    The court concluded that it should enter summary judgment for
    Liberty, noting that Liberty "is obligated to pay additional expense
    3
    coverage under the terms of the policy only for those actual and nec-
    essary expenses [Millville] incurred as a result of the loss of the
    pumps and platform, rock inventory, and damage to the graded road."
    However, the district court did not quantify those amounts.
    Millville moved to clarify or amend the court's memorandum opin-
    ion and order. The motion noted that the parties engaged in mediation
    after the court's memorandum opinion and order in an attempt "to
    resolve the issues left open by the Court" (emphasis added) but that
    the parties "disagreed upon the meaning or interpretation of the
    Court's opinion." The court denied the motion and ordered the fol-
    lowing:
    1. That plaintiff's motion to clarify or amend memoran-
    dum opinion and order dated March 29, 1999 (Docs.
    No. 48) be DENIED as more fully set forth above;
    2. That action and all claims asserted herein are DIS-
    MISSED with prejudice;
    3. That in the event that settlement is not finalized, any
    party may move to reopen the case, provided that such
    motion is filed within ninety (90) days of the date of
    this Order;
    4. That there remaining nothing further to consider herein,
    this matter is STRICKEN from the Court's active
    docket;
    5. That all remaining deadlines, including the trial date be
    REMOVED from the court's calendar.
    On the same day, July 30, 1999, the court entered its order, the
    clerk prepared, signed, and entered the judgment on a separate docu-
    ment as required by Federal Rule of Civil Procedure 58, and, on
    August 13, 1999, Millville appealed. Nearly three months later, on
    October 26, 1999, the district court entered the following order:
    Upon consideration of the Motion to Reopen Case and to
    Stay Proceedings filed by the plaintiff, and any opposition
    thereto, It is this 26th day of October, 1999, ORDERED:
    4
    1. That the above case shall and hereby is reopened and
    the proceedings are stayed until after receipt of a man-
    date from the United States Court of Appeals for the
    Fourth Circuit.1
    II.
    We find the procedural posture of this case problematic. The dis-
    trict court failed to resolve all claims, yet it expressly dismissed all
    claims with prejudice, purportedly leaving a ninety day window to
    reopen. We find this problematic because either the self-styled "final
    judgment" is indeed a final judgment which finally determines all
    matters in dispute, or it is not a final judgment, and therefore not sub-
    ject to appeal except on an interlocutory basis. See 
    28 U.S.C. §§ 1291
    ,
    1292; Catlin v. United States, 
    324 U.S. 229
    , 233 (1945) ("A `final
    decision' generally is one which ends the litigation on the merits and
    leaves nothing for the court to do but execute the judgment."). We
    conclude that because the order dismisses plaintiff's claims with prej-
    udice, it is a final order that is subject to appeal. Therefore, consistent
    with Federal Rule of Civil Procedure 59, the district court could not
    reopen the case after ten days even though the district court expressly
    reserved that right. See Fed. R. Civ. P. 6(b) ("[The district court] may
    not extend the time for taking any action under Rules 50(b) and
    (c)(2), 52(b), 59(b), (d), and (e), 60(b), and 74(a), except under the
    conditions stated in them.").2
    A district 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." Fed. R. Civ. P. 54(b).
    In the absence of that determination and direction, an order that adju-
    dicates fewer than all claims or the rights and liabilities of fewer than
    all the parties "however designated" is "subject to revision at any time
    before the entry of judgment adjudicating all the claims and the rights
    _________________________________________________________________
    1 The only docket entry before us reflecting a motion to reopen is the
    docket entry for Millville's June 9, 1999, motion to clarify or amend the
    district court's March 29, 1999, memorandum opinion and order.
    2 We do not address the circumstances that would justify relief from
    such a judgment under Federal Rule of Civil Procedure 60.
    5
    and liabilities of all the parties." 
    Id.
     Therefore, such an order is not
    a final judgment.3
    The judgment from which Millville appeals stands in sharp contrast
    to a decision that is subject to revision at any time. Although the dis-
    trict court recognized that it had not decided all issues raised by the
    pleadings, the judgment it entered nevertheless adjudicated all claims
    because it dismissed all claims and the action with prejudice.4
    Accordingly, the judgment in this case is a final judgment under Fed-
    eral Rule of Civil Procedure 54(b), and the district court could revise
    it only if it did so within ten days or following a timely motion under
    Rule 59 to alter, amend, or reconsider. For the same reason, we con-
    clude that we have jurisdiction to hear the appeal under 
    28 U.S.C. § 1291
    , which gives us jurisdiction over final decisions of the district
    courts.
    _________________________________________________________________
    3 The finality rule is a "historic characteristic of federal appellate proce-
    dure," Cobbledick v. United States, 
    309 U.S. 323
    , 324 (1940), that
    advances the important interest of avoiding piecemeal review of ongoing
    district court proceedings. See United States v. Nixon, 
    418 U.S. 683
    , 690
    (1974); MDK v. Mike's Train House, 
    27 F.3d 116
    , 119 (4th Cir. 1994).
    Such piecemeal review would not only delay the ultimate resolution of
    disputes by spawning multiple appeals, see Firestone Tire & Rubber Co.
    v. Risjord, 
    449 U.S. 368
    , 374 (1981), it would also "undermine the inde-
    pendence of the district judge" in conducting court proceedings. 
    Id.
     The
    finality rule "thus serves twin purposes. It both avoids the `enfeebling
    [of] judicial administration' that comes with undue delay, and preserves
    the primacy of the district court as the arbiter of the proceedings before
    it." MDK, 
    27 F.3d at 119
     (quoting Cobbledick, 
    309 U.S. at 325
    ).
    4 See, e.g., Larkin v. Wray, 
    189 F.3d 729
    , 732 (8th Cir. 1999) ("When
    the parties to a previous lawsuit agree to dismiss a claim with prejudice,
    such a dismissal constitutes a `final judgment on the merits' for purposes
    of res judicata"); Randolph v. Green Tree Financial Corp., 
    178 F.3d 1149
    , 1157 (11th Cir. 1999) (order compelling arbitration and dismissing
    the remaining claims with prejudice is an appealable"final decision");
    Chase Manhattan Bank, N.A. v. Celotex Corp., 
    56 F.3d 343
    , 345 (2d Cir.
    1995); Brooks v. Barbour Energy Corp., 
    804 F.2d 1144
    , 1146 (10th Cir.
    1986). Compare Bailey v. McCann, 
    539 F. 2d 501
     (5th Cir. 1976) (a dis-
    missal without prejudice in which the court reserves the right to reopen
    upon motion of a party is not a final judgment).
    6
    We reach this decision because we conclude that in an action for
    damages a district court cannot retain jurisdiction to alter or amend
    a final judgment unless it does so in conformity with Federal Rule of
    Civil Procedure 59. That rule provides that "[a]ny motion to alter or
    amend the judgment shall be filed no later than 10 days after entry of
    the judgment." Fed. R. Civ. P. 59(e). The rule applies with equal force
    to a sua sponte motion, and the district court cannot circumvent it by
    reserving a longer period in the final judgment order.5 If the district
    court desires to grant the parties additional time to move to alter,
    amend or reconsider its rulings it should not dismiss those claims with
    prejudice.
    Were we to reach any other conclusion we would be injecting
    uncertainty and peril into the final judgment rule. Finality for appel-
    late purposes would be a moving target, the question of when the
    notice of appeal must be filed uncertain, and much of Rule 59 ren-
    dered meaningless.6
    _________________________________________________________________
    5 Our decision does not implicate the authority of the district court to
    reserve expressly the right to reopen a case that it dismisses following a
    tentative settlement if the parties fail to consummate that settlement. See
    Choice Hotels International, Inc. v. Goodwin and Boone, 11 F.3rd 469
    (4th Cir. 1993). Before the district court dismissed this case, however,
    the parties informed it that they had not reached an agreement. Thus, the
    dismissal was not an appropriate conditional dismissal under Federal
    Rule of Civil Procedure 41.
    6 The question of which court has jurisdiction to take action demands
    clarity. Jurisdictional clarity not only protects the parties from confusion
    that prejudices appellate rights, see Caperton v. Beatrice Pocahontas
    Coal Co., 
    585 F.2d 683
    , 690-91 (4th Cir. 1978) (discussing separate doc-
    ument rule), but it avoids costly duplication of effort. The dual tracking
    of this case is a case in point. Millville filed its notice to appeal on
    August 13, 1999. Yet, nearly three months later, while the case was
    pending in this court, the District Court purported to reopen the case pre-
    sumably pursuant to the authority it purported to reserve in its final judg-
    ment order. But, except to rule on a timely motion under Rule 59, and
    for other narrowly proscribed exceptions, see Fobian v. Storage Technol-
    ogy Corp., 
    164 F.3d 887
    , 888-92 (4th Cir. 1999) (discussing circum-
    stances under which a district court may entertain a Rule 60(b) motion
    during pendency of appeal), the district court lost jurisdiction when Mill-
    ville filed its timely notice of appeal. See Griggs v. Provident Consumer
    7
    Moreover, were we to dismiss this appeal as interlocutory we
    would be overlooking the serious res judicata claims a dismissal with
    prejudice creates. Accordingly, we will not dismiss the appeal as
    interlocutory. That is not to say, however, that we will decide the
    merits. If we did so, we would be fostering piecemeal litigation and
    making findings that the district court should have made but failed to
    make because it erroneously believed it could reopen its purported
    final judgment. "When an appellate court discerns that a district court
    has failed to make a finding because of an erroneous view of the law,
    the usual rule is that there should be a remand for further proceedings
    to permit the trial court to make the missing findings." Pullman-
    Standard v. Swint, 
    456 U.S. 273
    , 291 (1982); see also Columbus-
    America Discovery Group v. Atlantic Mutual Ins. Co. , 
    56 F.3d 556
    ,
    575-76 (4th Cir. 1995) ("It is a basic tenet of our legal system that,
    although appellate courts often review facts found by a judge or jury
    to ensure that they are not clearly erroneous, they do not make such
    findings in the first instance."). Accordingly, we will not reach the
    merits of this appeal.
    III.
    For the reasons stated, we vacate the judgment of the district court
    and remand this case for a complete resolution.
    VACATED AND REMANDED
    _________________________________________________________________
    Discount Co., 
    459 U.S. 56
    , 58 (1982) (an appeal divests a trial court of
    jurisdiction over "those aspects of the case involved in the appeal"); In
    re Grand Jury Proceedings Under Seal, 
    947 F.2d 1188
    , 1190 (4th Cir.
    1991).
    8