Continental Casualty v. Anderson Excavat. & Wrecking

• Decision Date: 27 August 1999
• Docket Number: No. 98-3730,98-3730
• Citation: 189 F.3d 512
• Parties: (7th Cir. 1999) Continental Casualty Company, Plaintiff-Appellee, v. Anderson Excavating & Wrecking Company, Defendant-Appellant
• Court: U.S. Court of Appeals — Seventh Circuit

Page 512

189 F.3d 512 (7th Cir. 1999)

Continental Casualty Company, Plaintiff-Appellee, v. Anderson Excavating & Wrecking Company, Defendant-Appellant.

No. 98-3730

United States Court of Appeals, Seventh Circuit

Argued April 8, 1999

Decided August 27, 1999

Appeal from the United States District Court for the Southern District of Illinois. Nos. 97 C 396 & 97 C 835--G. Patrick Murphy, Judge. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Posner, Chief Judge, and Easterbrook and Manion, Circuit Judges.

Posner, Chief Judge.

The Continental insurance company brought suit in the Northern District of Illinois under 28 U.S.C. sec. 1333 (admiralty) against two of its insureds, McDonough Marine Service and Anderson Excavating & Wrecking Company, seeking a declaration that it was not liable to them on their policies. Anderson had been hired by the Army Corps of Engineers to demolish the wall of a concrete lock in the Mississippi River and remove the debris. It chartered barges from McDonough. The charter agreement required it both to indemnify McDonough for any damage to the barges while they were in Anderson's custody and to procure an insurance policy from Continental against such damage, which it did. The policy named both McDonough and Anderson as insureds. Sure enough, the barges were damaged during the loading of the debris by Anderson. McDonough sued Anderson in the Southern District of Illinois under the indemnification provision, basing federal jurisdiction on 28 U.S.C. sec. 1331 (federal question) by virtue of the Miller Act, 40 U.S.C. sec.sec. 270a et seq., which governs certain federal contracts (remember that Anderson was working for the Corps of Engineers). Continental's suit was consolidated with McDonough's in the Southern District. McDonough and Anderson settled their suit. McDonough then assigned any insurance claim it might have against Continental to Anderson, and the district judge substituted Anderson for McDonough in Continental's suit. This gave Anderson two roles in that suit: defendant in its own right; defendant in the capacity of McDonough's assignee. In the second role, in which Continental seeks a declaration of nonliability as to McDonough, Continental's claim remains pending in the district court.

After a hearing on the parties' cross-motions for summary judgment, the district judge entered a Rule 54(b) judgment in Continental's favor against Anderson in Anderson's own capacity (that is, Anderson in its first role). The judgment is not further described in the judgment order except for the statement that the complaint is being dismissed with prejudice pursuant to a minute order filed on September 25, 1998. The statement is mysterious. The minute order makes no reference to dismissing the complaint, and there is a stark inconsistency between awarding judgment to a party and dismissing its complaint- -especially since the complaint also made an unrelated claim against a different party (McDonough). We will not repeat what we said in Health Cost Controls of Illinois, Inc. v. Washington 187 F.3d 703, 707-08 (7th Cir. Aug. 10, 1999), about the importance of a clear, definite, and specific judgment (here as there missing), or about the duty (here as there unfulfilled) of the parties' lawyers to take steps to see to the entry of a proper judgment. Here, as also in Health Cost Controls, supra, at 708, and in our even more recent opinion in JTC Petroleum Co. v. Piasa Motor Fuels, Inc., 190 F.3d 775, 776-77 (7th Cir.1999), the normal consequence of dispensing with that duty--a dismissal of the appeal for want of a final appealable judgment--is averted by the happenstance of the parties' agreeing on what the judgment is: a judgment that Anderson has no right to coverage from Continental.

McDonough's assignment of its claim to Anderson also has potential jurisdictional implications. Anderson sustained no loss different from McDonough. It indemnified McDonough for that loss in the settlement of McDonough's suit for indemnification, receiving in return a chance to recoup the amount of the indemnity by enforcing McDonough's insurance claim against Continental. If the claim is a good one, Anderson will be made whole and will have nothing to gain from winning this appeal. So unless Continental has some defense against McDonough's insurance claim, Anderson's appeal is moot. We are told, however, and have no reason to doubt, that Continental may well have good defenses against McDonough, just as, the district court ruled, it has a good defense against Anderson. In that event, if Anderson loses this appeal it will be out the money that it paid McDonough in settlement of the latter's indemnity claim against it.

This shows that Anderson has a probability of gaining a tangible benefit from winning this appeal, and nothing more is necessary to show that the appeal is not moot, that is, that the appellant continues to have a sufficient stake in the litigation to give him standing to pursue it. E.g., Murphy v. Hunt, 455 U.S. 478, 482 (1982); Walters v. Edgar, 163 F.3d 430, 434 (7th Cir. 1998); North Shore Gas Co. v. EPA, 930 F.2d 1239, 1242 (7th Cir. 1991); United States v. Articles of Drug, 818 F.2d 569, 573-74 (7th Cir. 1987). But it does not show that the entry of a Rule 54(b) judgment (final, and hence appealable without having to wait for the entire litigation to wind up) was proper. Such a judgment is proper only if it either resolves all disputes with one party, Lawyers Title Ins. Corp. v. Dearborn Title Corp., 118 F.3d 1157, 1162 (7th Cir. 1997); Curtis-Universal, Inc. v. Sheboygan Emergency Medical Services, Inc., 43 F.3d 1119, 1121 (7th Cir. 1994); Horn v. Transcon Lines, Inc., 898 F.2d 589, 593 (7th Cir. 1990); Credit Francais Int'l, S.A. v. Bio-Vita, Ltd., 78 F.3d 698, 706 (1st Cir. 1996), or resolves a separate claim between parties remaining in the suit in the district court, "separate" meaning having minimal factual overlap. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8 (1980); Baltimore & Ohio Chicago Terminal R.R. v. Wisconsin Central Ltd., 154 F.3d 404, 407 (7th Cir. 1998); Newman v. Indiana, 129 F.3d 937, 940 (7th Cir. 1997); Kersey v. Dennison Mfg. Co., 3 F.3d 482, 487-88 (1st Cir. 1993).

But before delving further into the mysteries of Rule 54(b), we must consider whether it is applicable to this case. Section 1292(a)(3) of the Judicial Code provides that "interlocutory decrees . . . determining the rights and liabilities of the parties to admiralty cases in which appeals from final decrees are allowed" are appealable. See, e.g., Brotherhood Shipping Co. v. St. Paul Fire & Marine Ins. Co., 985 F.2d 323, 324-25 (7th Cir. 1993). If this section is applicable, it is immaterial whether the requirements of Rule 54(b) are satisfied. That rule authorizes the entry of a final judgment appealable under 28 U.S.C. sec. 1291; section 1292(a)(3) authorizes the appeal of nonfinal judgments. After Anderson and McDonough settled their suit, the only suit remaining in the district court was Continental's suit for a declaration of rights under a standard marine insurance policy covering damage to barges employed in a project in the Mississippi River, which is part of the navigable waters of the United States. A suit on such a policy is comfortably within the admiralty jurisdiction, Kossick v. United Fruit Co., 365 U.S. 731, 735 (1961); Acadia Ins. Co. v. McNeil, 116 F.3d 599, 601-03 (1st Cir. 1997); New Hampshire Ins. Co. v. Martech USA, Inc., 993 F.2d 1195, 1198 (5th Cir. 1993), which extends to all contracts that "have reference to maritime service or maritime transactions." North Pacific S.S. Co. v. Hall Bros. Marine Ry. & Shipbuilding Co., 249 U.S. 119, 125 (1919); David P. Currie, Federal Jurisdiction in a Nutshell 111 (3d ed. 1990). Section 1293(a) does not authorize the appeal of all interlocutory orders in admiralty cases; reflecting its origin in the admiralty practice of trying liability and damages separately (long before such bifurcated procedure became common in nonadmiralty cases as well), the statute limits the right of appeal to interlocutory orders that finally determine substantive rights, as distinct from merely procedural, managerial, preliminary, or tentative orders. Wingerter v. Chester Quarry Co., 185 F.3d 657, 668-71 (7th Cir.1999) (per curiam); Cement Division v. City of Milwaukee, 915 F.2d 1154, 1158 (7th Cir. 1990); Martha's Vineyard Scuba Headquarters, Inc. v. Unidentified, Wrecked and Abandoned Steam Vessel, 833 F.2d 1059, 1063-64 (1st Cir. 1987). The order sought to be appealed in this case, however, is a final, definitive (so far as the district court was concerned, at any rate) declaration of rights and liabilities--just the kind of order covered by section 1292(a)(3).

When an admiralty case is also within federal jurisdiction on another basis, such as diversity, the parties are not entitled to invoke any of the special procedures or remedies of admiralty, including the right of interlocutory appeal under section 1292(a)(3), unless the plaintiff has expressly invoked the admiralty jurisdiction under Fed. R. Civ. P. 9(h) so that the parties and the court are clear about what procedures will apply. E.g., Wingerter v. Chester Quarry Co., supra, at 663-66; Baris v. Sulpicio Lines, Inc., 932 F.2d 1540, 1547 (5th Cir. 1991); 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure sec. 1313 (2d ed. 1990). Continental did not invoke admiralty jurisdiction under the rule, but as the only basis for jurisdiction that Continental pleaded was admiralty it had no occasion to do so. The fact that the suit was consolidated with McDonough's nonadmiralty suit against Anderson in the Southern District of Illinois did not alter the jurisdictional basis of Continental's claim. And we shall not treat the fact that until the appeal the parties accepted the characterization of the district judge's order as a Rule 54(b) order, which...