CBX Resources, L.L.C. v. ACE American Insurance Co ( 2020 )

Case: 18-50740 Document: 00515412610 Page: 1 Date Filed: 05/12/2020
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
May 12, 2020
No. 18-50740 Lyle W. Cayce
Clerk
CBX RESOURCES, L.L.C.,
Plaintiff - Appellant
v.
ACE AMERICAN INSURANCE COMPANY; ACE PROPERTY AND
CASUALTY INSURANCE COMPANY,
Defendants - Appellees
Appeal from the United States District Court
for the Western District of Texas
Before BARKSDALE, STEWART, and COSTA, Circuit Judges.
GREGG COSTA, Circuit Judge:
Appellant finds itself in the so-called “finality trap.” Williams v. Taylor
Seidenbach, Inc., --- F.3d ---, 2020 WL 2111307, at *1 (5th Cir. May 4, 2020)
(en banc). After losing on its claim for a declaratory judgment that ACE
American Insurance Company had a duty to defend, CBX Resources dismissed
its Texas Insurance Code claims without prejudice. Because those statutory
claims were not resolved on the merits, CBX “is entitled to bring a later suit
on the same cause of action.” Ryan v. Occidental Petroleum Corp., 577 F.2d
298, 302 (5th Cir. 1978). As a result, there is not yet a final appealable
judgment. Id.; see also Marshall v. Kan. City S. Ry. Co., 378 F.3d 495, 500 (5th
Cir. 2004) (per curiam) (“[A] party cannot use voluntary dismissal without
prejudice as an end-run around the final judgment rule to convert an otherwise
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non-final—and thus non-appealable—ruling into a final decision appealable
under § 1291.”).
We held this case in abeyance because our full court was reconsidering
the finality trap in a different case. See generally Williams, 2020 WL 2111307.
That decision has now issued, and we did not end up overruling our decades-
old caselaw holding that there is not an appealable final judgment when some
claims are dismissed without prejudice. Id. at *3, *6. Instead, we concluded
that appellate jurisdiction existed in Williams because the appellant had
obtained a Rule 54(b) partial summary judgment on the claims it sought to
appeal. Id. at *4–6. CBX has not asked for such a partial summary judgment,
which is a discretionary matter for the district court. See FED. R. CIV. P. 54(b).
Williams, then, does not free CBX from the trap. So we consider its
arguments for why the trap does not apply in the first place. It first submits
that the concern about dismissals without prejudice being “manipulative”
attempts to manufacture appellate jurisdiction while a plaintiff keeps its
future options open should not apply to a suit brought against a single
defendant. Marshall, 378 F.3d at 500. In such a suit, CBX explains, a merits
dismissal of some claims will have preclusive effect on other claims even if they
were dismissed without prejudice. That is because res judicata bars not just
claims that were resolved in a prior suit, but also claims that could have been
resolved. See Allen v. McCurry, 449 U.S. 90, 94 (1980) (“Under res judicata, a
final judgment on the merits of an action precludes the parties or their privies
from relitigating issues that were or could have been raised in that action.”
(emphasis added)). Preclusion does not arise, however, when a plaintiff loses
on the merits to one defendant but dismisses claims without prejudice against
another defendant who is not in privity with the party that obtained the
favorable judgment. See Test Masters Educ. Servs., Inc. v. Singh, 428 F.3d 559,
571 (5th Cir. 2005) (discussing the privity requirement for res judicata).
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There are at least two problems with CBX’s attempt to limit the “finality
trap” to cases with multiple defendants. First, it is looking at the concern about
manufacturing jurisdiction only from the perspective of an appellate decision
that affirms the with-prejudice dismissal of certain claims. When the appellate
court reverses, there is no preclusion and the plaintiff on remand can seek to
reallege the claims that it had dismissed without prejudice. That tactic, what
CBX apparently hopes to do with its statutory claims if we were to reverse the
district court’s “no duty to defend” decision, is the “end-run” around the final
judgment rule to obtain a “quasi-interlocutory” appeal that our cases are
concerned about. See Marshall, 378 F.3d at 500 (noting that allowing a
plaintiff to appeal when it dismisses some claims without prejudice allows him
to “hav[e] his cake (the ability to refile the claims voluntarily dismissed) and
eat[] it too (getting an early appellate bite at reversing the claims dismissed
involuntarily)”).
The even bigger problem for CBX is that our rule originated in a single
defendant case just like this one. See Ryan, 577 F.2d at 300. To be sure, many
cases applying the Ryan rule have multiple defendants, one or more of which
was dismissed without prejudice while at least one defendant prevailed on the
merits. See, e.g., Williams, 2020 WL 2111307, at *1–2; Luvata Grenada, L.L.C.
v. Danfoss Indus. S.A. de C.V., 813 F.3d 238, 239 (5th Cir. 2016); Marshall, 378
F.3d at 496–98. But Ryan itself was an employment dispute with a single
plaintiff suing a single defendant, his employer. 577 F.2d at 300; see also
Marshall, 378 F.3d at 500 (“[T]he Ryan rule operates when a plaintiff has filed
multiple claims against a single party, or against multiple parties, and the
district court has dismissed some but not all of the claims.” (emphasis added)).
Precedent thus forecloses CBX’s argument that the finality trap does not apply
in single defendant cases where res judicata might eliminate concerns about a
second suit.
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Precedent is also the stumbling block for CBX’s suggestion that its Rule
41(a) dismissal without prejudice of the statutory claims “may be wholly
ineffective” because that rule does not allow a partial dismissal of claims. Ryan
recognizes that Rule 41(a) should not be available to dismiss only some claims
a plaintiff has against a defendant. 577 F.2d 302 n.2; see also Bailey v. Shell
W. E&P, Inc., 609 F.3d 710, 720 (5th Cir. 2010) (“Rule 41(a) dismissal only
applies to the dismissal of an entire action—not particular claims.”).1 But
Ryan did not allow the plaintiff to undo the improper Rule 41(a) dismissal he
had asked for. 577 F.2d at 300–02; see also McCaig v. Wells Fargo Bank (Tex.),
N.A., 788 F.3d 463, 476 (5th Cir. 2015) (“A party cannot complain on appeal of
errors which he himself induced the district court to commit.” (quotations
omitted)). In any event, if the Rule 41(a) dismissal were undone, that would
not give us appellate jurisdiction. It would instead highlight what Ryan
recognizes: that CBX’s statutory claims have not yet been resolved.
CBX’s final jurisdictional argument is that the district judge made “clear
his intention that an appeal of his rulings be available immediately.” But any
intention to issue a “partial final judgment under Rule 54(b)” must be
“unmistakable.” Kelly v. Lee’s Old Fashioned Hamburgers, Inc., 908 F.2d 1218,
1220 (5th Cir. 1990) (en banc) (per curiam). And that unmistakable intent
must be found in the judgment itself or in documents that it references; “we
can look nowhere else to find such intent, nor can we speculate on the thought
process of the district judge.” Briargrove Shopping Ctr. Joint Venture v.
Pilgrim Enters., Inc., 170 F.3d 536, 539 (5th Cir. 1999). We do not see any
1 In contrast to our caselaw not allowing Rule 41(a) dismissals of some claims against
a single defendant, we have allowed full dismissals of all claims against a defendant even
when other defendants remained in the suit. Williams, 2020 WL 2111307, at *2; see also
Plains Growers, Inc. ex rel. Florists’ Mut. Ins. Co. v. Ickes-Braun Glasshouses, Inc., 474 F.2d
250, 253 (5th Cir. 1973).
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indication—let alone unmistakable intent—that the district court entered a
partial final judgment under Rule 54(b) before this appeal was filed.
At this point in the litigation there is not a final appealable judgment.
The appeal therefore is DISMISSED for lack of jurisdiction.
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