Opinion
Case No. 2:13-cv-0677
01-22-2015
HOWARD INDUSTRIES, INC., Plaintiff, v. ACE AMERICAN INSURANCE COMPANY, et al., Defendants.
Magistrate Judge E.A. Preston Deavers
OPINION AND ORDER
This matter is before the Court for consideration of Plaintiff Howard Industries, Inc.'s motion for certificate of appealability (ECF No. 54), Defendant Ace American Insurance Company's ("Ace") response in opposition (ECF No. 56), and Plaintiff's reply memorandum (ECF No. 57). For the reasons that follow, the Court GRANTS IN PART and DENIES IN PART the motion.
I. BACKGROUND
This case involves an insurance policy between Plaintiff and Ace (the "Policy"). The parties dispute whether the Policy covers certain losses that Plaintiff allegedly incurred when a fire damaged its property. Plaintiff alleges that it submitted a claim for recovery under the Policy and that Ace wrongfully denied payment on all or part of that claim.
Plaintiff brought this lawsuit against Ace and the Policy's underwriter, Starr Technical Risks Agency, Inc. ("Starr"). In its Amended Complaint, Plaintiff asserted four claims for relief against Ace and Starr: (1) breach of fiduciary duty, (2) breach of contract, (3) breach of the duty of good faith, and (4) punitive damages. (ECF No. 17.) Plaintiff sought damages in excess of $890,000.
Starr filed a motion to dismiss on the ground that it was not a party to the Policy. (ECF No. 24.) The Court granted the motion in an Opinion and Order dated March 12, 2014 ("March 12, 2014 Order"). (ECF No. 52.)
Shortly after Starr filed its motion to dismiss, Plaintiff filed a "Motion for Declaratory Judgment." (ECF No. 31.) In that motion, Plaintiff requested that the Court adopt its interpretation of two pivotal provisions in the Policy: a coinsurance provision and a pollution cleanup provision. (ECF No. 31.) Plaintiff asserted that interpretation of those provisions "would settle a majority of the overall claim submitted under the Policy." (ECF No. 31, at PAGEID # 207.) In support of that statement, Plaintiff asserted that the dispute over the Policy's coinsurance provision alone "results in a difference of over $800,000 in losses" that Plaintiff sought but Ace refused to cover. (Id. at PAGEID # 208.)
Ace responded that Plaintiff's motion was procedurally defective because Plaintiff did not assert a declaratory judgment claim in its Amended Complaint. Ace also filed a cross-motion for partial summary judgment in which it asked the Court to adopt its interpretation of the Policy's coinsurance and pollution cleanup provisions. (ECF No. 38.)
Plaintiff immediately filed a motion to amend its Amended Complaint to add two claims for declaratory judgment. The Magistrate Judge granted the motion. (ECF No. 47.) Plaintiff's Second Amended Complaint asserts six claims for relief against Ace and Starr: (1) breach of fiduciary duty, (2) breach of contract, (3) breach of the duty of good faith, (4) punitive damages, (5) declaratory judgment as to coinsurance provision, and (6) declaratory judgment as to pollution cleanup provision. (ECF No. 48.) With all parties' consent, the Court construed the pending motions as being directed at the Second Amended Complaint.
The Court adjudicated Plaintiff's motion for declaratory judgment and Ace's cross-motion for partial summary judgment in the March 12, 2014 Order. There, the Court adopted Plaintiff's interpretation of the pollution cleanup provision and Ace's interpretation of the coinsurance provision. (ECF No. 52.) The March 12, 2014 Order therefore disposed of Plaintiff's claims for declaratory judgment (Counts Five and Six of the Second Amended Complaint). The claims for breach of fiduciary duty, breach of contract, breach of the duty of good faith, and punitive damages remain pending before the Court; however, those claims are highly dependent on the correct interpretation of the Policy's pollution cleanup provision and coinsurance provision.
Plaintiff now moves for a certificate of appealability of the March 12, 2014 Order pursuant to Federal Rule of Civil Procedure 54(b) and/or 28 U.S.C. § 1292(b). Plaintiff asserts that the Court should certify for immediate appeal its rulings on the declaratory judgment claims and on Starr's motion to dismiss. The Court will address each argument below.
In addition to adjudicating Starr's motion to dismiss, Plaintiff's motion for declaratory judgment, and Ace's cross-motion for partial summary judgment, the Court's March 12, 2014 Order also addressed Ace's then-pending motion for judgment on the pleadings. (ECF No. 28.) Because neither party addresses the Court's ruling on the latter motion, the Court similarly declines to address that issue in this Opinion and Order.
II. ANALYSIS
Interlocutory appeals generally are disfavored. See Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 10-12 (1980); Rudd Constr. Equip. Co., Inc. v. Home Ins. Co., 711 F.2d 54, 56 (6th Cir. 1983). Federal Rule of Civil Procedure Rule 54(b), however, provides a procedural mechanism through which courts can certify a partial judgment for immediate appeal. Pursuant to Rule 54(b):
When an action presents more than one claim for relief—whether as a claim, counterclaim, crossclaim, or third-party claim—or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay. Otherwise, any order or other decision, however designated, that adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties does not end the action as to any of the claims or parties and may be revised at any time before the entry of a judgment adjudicating all the claims and all the parties' rights and liabilities.To determine whether Rule 54(b) certification is appropriate, the Court must engage in a two-step analysis. It must first determine "that it is dealing with a 'final judgment.' " Gen. Acquisition, Inc v. GenCORP, Inc., 23 F.3d 1022, 1027 (6th Cir. 1994) (quoting Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7 (1980)). This inquiry has two sub-issues: "[i]t must be a judgment in the sense that it is a decision upon a cognizable claim for relief, and it must be final in the sense that it is an ultimate disposition of an individual claim entered in the course of a multiple claims action." Id. (internal quotations omitted).
The second step of the analysis requires the Court to determine whether there exists "no just reason for delay." Fed. R. Civ. P. 54(b); Gen. Acquisition, Inc., 23 F.3d at 1027. This inquiry "requires the district court to balance the needs of the parties against the interests of efficient case management." Gen. Acquisition, Inc., 23 F.3d at 1027. Five factors are relevant here:
(1) the relationship between the adjudicated and the unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in set-off against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like. Depending upon the factors of the particular case, all or some of the above factors may bear upon the propriety of the trial court's discretion in certifying a judgment as final under Rule 54(b).Akers v. Alvey, 338 F.3d 491, 495 (6th Cir. 2003) (quoting Corrosioneering v. Thyssen Envtl. Sys., 807 F.2d 1279, 1282 (6th Cir. 1986)).
A. Adjudication of the Declaratory Judgment Claims
Plaintiff argues that the March 12, 2014 Order constitutes a "final judgment" with respect to the declaratory judgment claims. Plaintiff also argues that the five factors set forth in Akers support an interlocutory appeal in this case.
Ace counters that the March 12, 2014 Order does not constitute a "final judgment" within the meaning of Rule 54(b) because it is not a decision upon a cognizable claim for relief. Specifically, Ace argues that the declaratory judgment claims are subsumed by Plaintiff's breach of contract claims such that, standing alone, the declaratory judgment claims are not cognizable claims for relief. From there, Ace argues that the March 12, 2014 Order is not the "ultimate disposition" of any claim because the issues of liability and damages remain in dispute.
The Court finds Ace's arguments to be without merit. Ace cites no support for its argument that a declaratory judgment claim is not a cognizable claim for relief. To the contrary, 28 U.S.C. § 2201 creates a remedy for the relief Plaintiff seeks in its declaratory judgment claims, and Ace did not argue in the parties' earlier briefing that declaratory judgment pursuant to 28 U.S.C. § 2201 was improper. Ace similarly fails to cite any authority to support its argument that an order adjudicating a declaratory judgment claim is not "final" until the court determines the issues of liability and damages in an accompanying breach of contract claim. Absent any such authority or persuasive reasoning from Ace, the Court concludes that the March 12, 2014 Order constitutes the ultimate disposition of two cognizable claims for relief. The Court therefore finds that its rulings on the declaratory judgment claims constitute "final judgments" within the meaning of Rule 54(b).
Ace cites Rudd Construction Equipment Co., Inc. v. Home Insurance Co. in support of its position, but Rudd does not support Ace's argument. In Rudd, the district court ruled that a defendant was entitled to a proration of liability with eight other defendants, and then certified its ruling on that issue for immediate appeal pursuant to Rule 54(b). 711 F.2d at 55. Because the district court's order did not resolve any of Plaintiff's claims for relief, the Sixth Circuit concluded that the Rule 54(b) certification was improper. See id. at 56. The facts in Rudd are unlike the facts in this case, in which the Court's March 12, 2104 Order did resolve two claims for relief. Rudd, therefore, is inapposite.
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The Court then proceeds to the second step of the analysis. Having reviewed the parties' arguments and the cited authority, the Court agrees with Plaintiff that the five factors set forth in Akers favor immediate appeal of its rulings on the declaratory judgment claims. Resolution of those claims—i.e., the proper construction of the coinsurance provision and the pollution cleanup provision—is the pivotal issue affecting the remainder of Plaintiff's claims. A ruling from the appellate court construing those provisions in Ace's favor could moot or drastically alter the relief Plaintiff is able to obtain in this case. Moreover, the reviewing court will not be obligated to consider the same issue a second time, there are no claims or counterclaims that would result in a set-off against judgment, and miscellaneous factors (such as efficiency and expense to the parties) support immediate appeal.
Ace's arguments on this point miss the mark. Regardless of the fact that additional issues such as "business interruption/income" and "loss of use" remain in this lawsuit, Ace does not dispute that Plaintiff's ability to recover a majority of the claim it submitted under the Policy depends on the correct interpretation of the coinsurance and pollution cleanup provisions. And although Ace argued in previous briefs that Plaintiff failed to satisfy a condition precedent under the Policy (which, presumably, could moot the need for appellate review of the Policy's provisions), Ace does not advance any such argument here.
The Court therefore finds no just reason to delay appeal of its rulings on the declaratory judgment claims. The Court need not consider Plaintiff's alternative argument regarding certification of the declaratory judgment claims for appeal under 28 U.S.C. § 1292(b).
B. Adjudication of Starr's Motion to Dismiss
Plaintiff suggests, in passing, that the Court should certify its ruling on Starr's motion to dismiss for immediate appeal because "[Plaintiff] believes that it must be permitted to proceed as against both ACE and Starr." (ECF No. 54, at 4.) Plaintiff does not offer any meaningful analysis on this point, choosing instead to focus on the pivotal nature of the contractual interpretation issues.
The Court declines to certify its ruling on Starr's motion to dismiss for immediate appeal under Rule 54(b) for several reasons. First, unlike its decision on the declaratory judgment claims, the Court's decision regarding Starr's role in this lawsuit is not a pivotal issue with respect to Plaintiff's remaining claims. Second, the appellate court's decision on the contractual interpretation issues could moot the need for appellate consideration of the Court's decision on Starr's motion to dismiss. Finally, the Court does not anticipate that immediate appeal of its ruling on the motion to dismiss would conserve time or resources for any party. The Court therefore denies Plaintiff's request to certify this issue for immediate appeal under Rule 54(b).
The Court similarly denies Plaintiff's request to certify its ruling on Starr's motion to dismiss for immediate appeal under 28 U.S.C. § 1292(b). Plaintiff does not explain or argue how the issues presented in Starr's motion to dismiss involve a controlling question of law as to which there is a substantial ground for difference of opinion. Nor does Plaintiff explain how immediate appeal from this ruling would materially advance the litigation. As such, the Court cannot conclude that immediate appeal of its ruling on Starr's motion to dismiss is appropriate under 28 U.S.C. § 1292(b).
III. CONCLUSION
For the foregoing reasons, the Court GRANTS IN PART and DENIES IN PART Plaintiff's motion to certify the Court's March 12, 2014 Order for immediate appeal. (ECF No. 54.) Having found that there exists no just reason for delay, the Court hereby DIRECTS entry of a final judgment in Ace's favor as to Count Five in the Second Amended Complaint (Declaratory Judgment as to Co-Insurance Provision) and DIRECTS entry of a final judgment in Plaintiff's favor as to Count Six of the Second Amended Complaint against Ace (Declaratory Judgment as to Pollution Cleanup Provision).
IT IS SO ORDERED.
/s/ Gregory L. Frost
GREGORY L. FROST
UNITED STATES DISTRICT JUDGE