Thomas Hooks, a Minor, by Harlin Hooks, His Father and Next Friend v. Washington Sheraton Corporation, a Corporation

TAMM, Circuit Judge:

In this case, we must decide whether an express determination of finality is required before interest may accrue on a judgment entered while third-party claims remain pending. United States District Judge Oliver Gasch ruled that interest may not accrue in the absence of such a determination. We agree and affirm.

I.

Following an unfortunate swimming pool accident at the Sheraton Park Hotel in Washington, D. C., Thomas Hooks and his parents brought suit against the Washington Sheraton Corporation and the ITT Sheraton Corporation of America (Sheraton) and against the Paddock Swimming Pool Company and the Paddock Pool Construction Company, Incorporated (Paddock), alleging liability based on improper construction and maintenance of the pool. Paddock filed third-party complaints against its insurers, Hanover Insurance Company and Continental Casualty Company, claiming that the insurers were obligated to defend Paddock in the action and to indemnify Paddock for any liability that might be incurred. Prior to trial, the district court granted summary judgment for the insurance companies on Paddock’s third-party claims, but then agreed to Paddock’s request that it reconsider those summary judgment rulings. Thus, the third-party claims had not been finally determined at the time the trial was held.

The jury returned a verdict for $7,000,000 in favor of plaintiffs and against Sheraton. The jury absolved Paddock of any responsibility for the accident. On May 27, 1975, the same day as the jury verdict, the district court clerk entered judgment on the verdict pursuant to Rule 58(1) of the Federal Rules of Civil Procedure.

Sheraton filed a motion for a new trial or remittitur and, on July 2, 1976, the district court ruled that it would order a new trial unless plaintiffs filed remittiturs of all damages in excess of $4,680,000. Plaintiffs agreed to accept the reduced recovery. On July 30, 1976, the district court entered final judgment on that amount pursuant to rule 54(b).

Plaintiffs made a timely request that interest accrue from the date of the jury verdict and clerk-entered judgment, but the district court held this request in abeyance pending resolution of Sheraton’s appeal on the questions of liability and damages. On that appeal, this court affirmed the judgment as entered after the remittitur, but did not address the question of interest. See Hooks v. Washington Sheraton Corp., 578 F.2d 313 (D.C.Cir. 1977).

After this court’s affirmance, plaintiffs renewed their request to the district court for interest from the date of the jury verdict and clerk-entered judgment. On July 19, 1979, the district court denied plaintiffs’ motion. The court noted that there had been third-party claims pending at the time the judgment had been entered by the clerk and that there had been no express court finding under rule 54(b) that the judgment would be final despite the presence of those third-party claims.¹ Plaintiffs filed a timely appeal from this decision.

II.

Plaintiffs seek interest for the time period from May 27,1975, the date of their jury verdict and clerk-entered judgment, until July 30,1976, the date on which the district court entered a final judgment under rule 54(b). Under section 1961 of title 28, interest is calculated “from the date of the entry of the judgment.” 28 U.S.C. § 1961 (1976). The language of this statute, however, does not define when an entry of judgment is deemed to have occurred in a case such as the one before us, and so we must seek other guidance.²

The parties agree that the appropriate reference point, if applicable, is rule 54(b), which provides a method for determining when a judgment is final in cases involving multiple claims. See Caputo v. U. S. Lines Co., 311 F.2d 413, 416-17 (2d Cir.), cert. denied sub nom. Imparato Stevedoring Corp. v. United States Lines Co., 374 U.S. 833, 83 S.Ct. 1871, 10 L.Ed.2d 1055 (1963); 10 C. Wright & A. Miller, Federal Practice & Procedure § 2661, at 90-91 (1973); 6 Moore’s Federal Practice ¶ 54.42, at 814 (2d ed. 1976). See also Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 11-12, 100 S.Ct. 1460, 1466-67, 64 L.Ed.2d 1 (1980); Redding & Co. v. Russwine Construction Corp., 417 F.2d 721, 727 (D.C.Cir. 1969).³ Rule 54(b) provides;

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 j'ust 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 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.

Fed.R.Civ.P. 54(b) (emphasis added).⁴

Throughout the period for which plaintiffs claim the additional interest, there remained pending third-party claims by Paddock against its insurers for the recovery of its litigation expenses.⁵ Thus, this case would appear to involve multiple claims and therefore would appear to be governed by the terms of rule 54(b). The district court, however, did not make an express rule 54(b) determination at the time of the clerk-entered judgment, but instead made such a ruling only when the court later entered judgment after the remittitur. Accordingly, if rule 54(b) does control, the clerk-entered judgment was not final and plaintiffs’ claim for the additional interest must therefore fail.⁶

Plaintiffs contend, however, that rule 54(b) does not apply in this case because Paddock’s third-party claims were “collateral” to the basic dispute resolved by the clerk-entered judgment. Under the collateral order doctrine, a “collateral” order may be considered final, despite the absence of a rule 54(b) determination, if “it is a final disposition of a claimed right which is not an ingredient of the cause of action and does not require consideration with it,” at least if the collateral matter that has been decided by the district court is “too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated.” Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949). See Redding & Co. v. Russwine Construction Corp., 417 F.2d 721, 726 n.33 (D.C.Cir. 1969); 10 C. Wright & A. Miller, supra, § 2658, at 67-73; 6 Moore’s Federal Practice, supra, 154.31. In the present case, plaintiffs urge a “reverse collateral order” theory, maintaining that their clerk-entered judgment should be considered final and outside the scope of rule 54(b) because the remaining third-party claims of Paddock were collateral to this judgment.

We believe that the collateral order doctrine, whether applied in the usual or in a “reverse” fashion,⁷ is inapposite in the circumstances of this case. The doctrine applies only to certain remedial and procedural matters that are separable from and not ingredients of any identifiable claims for relief. It does not apply, and therefore rule 54(b) is applicable, when the “collateral” matters themselves constitute claims for relief. As two notable commentators have observed:

Without question the better view is that Rule 54(b) applies only when there are multiple claims and the collateral order doctrine applies to the determination of a matter that really is not an ingredient of any identifiable claim. A “claim” for purposes of the collateral order doctrine, like the request for security for costs in Cohen, is not a “claim for relief” within the meaning of Rule 54(b) inasmuch as the rule refers only to claims in the sense of the substantive right being asserted — the cause of action — -rather than requests that are incidental to the procedure for obtaining a judicial award and enforcing it.

10 C. Wright & A. Miller, supra, § 2658, at 71 (emphasis added, footnotes omitted). See 6 Moore’s Federal Practice, supra, 1154.31. Paddock’s third-party claims plainly are independent claims for relief, claims based on the terms of insurance contracts that it had with its insurers. See Sargent v. Johnson, 521 F.2d 1260 (8th Cir. 1975).⁸ Thus, the collateral order doctrine does not apply, and the provisions of rule 54(b) control.

Because the district court did not make a rule 54(b) determination, the clerk-entered judgment was not a valid judgment to which interest could attach.⁹ Accordingly, Judge Gasch’s denial of interest from the time of the clerk-entered judgment is

Affirmed.

1 . Four days later, the district court finally confirmed its earlier decision granting summary judgment on Paddock’s third-party claims.

2 . A federal court sitting in diversity should allow interest upon a verdict if such interest would be allowed by local law. See Klaxon Co. v. Stentor Co., 313 U.S. 487, 497, 61 S.Ct. 1020, 1022, 85 L.Ed. 1477 (1941); Casto v. Arkansas - Louisiana Gas Co., 562 F.2d 622 (10th Cir. 1977). See generally Note, Interest on Judgments in the Federal Courts, 64 Yale L.J. 1019 (1955). Unfortunately, neither local statutory law nor case law provides any guidance on this point. The District of Columbia statute merely states that “[i]n an action to recover damages for a wrong the judgment for the plaintiff shall bear interest.” 15 D.C.Code Ann. § 109 (1973). We believe that a local court would interpret this statute in terms of the applicable procedural rules. Because Federal Rules of Civil Procedure 58 and 54(b) apply without modification to the District of Columbia courts, a local court would therefore turn to federal precedent for guidance in such a situation.

3 . The primary purpose of rule 54(b) is to determine finality for purposes of appeal. See 10 C. Wright & A. Miller, supra, § 2654; 6 Moore’s Federal Practice, supra, " 54.20, 54.27[l]-[2],

4 . Being directed primarily to a determination of finality for purposes of appeal, see note 3 supra, rule 54(b) gives the district court discretion to certify that its decision on one or more (but not all) of the claims is ready for appeal. See Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980). As a result, the district court can function as a “dispatcher,” announcing, if it finds it appropriate to do so, that it will have no further modifications or additions to a partial disposition, and thus that it believes appellate review of the partial disposition can proceed without being disturbed by the district court’s resolution of the remainder of the case. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 435, 76 S.Ct. 895, 899, 100 L.Ed. 1297 (1956). The requirements of “an express determination that there is not just reason for delay” and “an express direction for the entry of judgment” were added to the rule in 1948 to “provide[ ] an opportunity for litigants to obtain from the District Court a clear statement of what that court is intending with reference to finality, and if such a direction is denied, the litigant can at least protect himself accordingly.” Dickinson v. Petroleum Conversion Corp., 338 U.S. 507, 512, 70 S.Ct. 322, 325, 94 L.Ed. 299 (1950).

5 . Although Paddock’s claims for indemnity were rendered moot when the jury determined that Paddock was not liable for any damages, its claims for litigation expenses survived this jury verdict.

6 . The dissent relies primarily upon Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821 (7th Cir. 1978), cert. denied, 440 U.S. 930, 99 S.Ct. 1267, 59 L.Ed.2d 486 (1979). There the court explicitly distinguished the case before it, involving merely one claim for two types of relief, from cases involving more than one claim for relief, cases which fall “squarely within Rule 54(b), which governs judgment ... . ” Id. at 846. Contrary to the dissent’s assertion, this court expressly recognized the authority of Caputo v. U. S. Lines Co., 311 F.2d 413 (2d Cir.), cert. denied sub nom. Imparato Stevedoring Corp. v. United States Lines Co., 374 U.S. 833, 83 S.Ct. 1871, 10 L.Ed.2d 1055 (1963).

7 . For a case applying the “reverse collateral order” theory, see Swanson v. American Consumer Indus., Inc., 517 F.2d 555, 560-61 (7th Cir. 1975).

8 . Plaintiffs rely on Swanson v. American Consumer Indus., Inc., 517 F.2d 555 (7th Cir. 1975). In Swanson, the court held the collateral order doctrine applicable to a district court’s determination of the attorney’s fees to be paid under a “fund” theory in a class action. See id. at 560-61. The allegedly “collateral” matters in the present case, on the other hand, are distinct third-party claims for relief, claims relying on the provisions of insurance contracts. We do not believe that the Swanson ruling applies here. See also Boeing Co. v. Van Gemert, 444 U.S. 472, 479 n. 5, 100 S.Ct. 745, 750 n. 5, 62 L.Ed.2d 676 (1980); Richerson v. Jones, 551 F.2d 918, 921-22 (3d Cir. 1977).

9 . Sheraton argues that even if rule 54(b) were inapplicable, the proper date from which to begin computing interest would be the date of the post-remittitur judgment. Having resolved this case on the basis of rule 54(b), we have no occasion to address this argument.