Firstier Mortgage Company v. Investors Mortgage Insurance Company

• Citation: 112 L.Ed.2d 743,111 S.Ct. 648,498 U.S. 269
• Decision Date: 15 January 1991
• Docket Number: No. 89-1063,89-1063
• Parties: FIRSTIER MORTGAGE COMPANY, aka Realbanc, Inc., Petitioner v. INVESTORS MORTGAGE INSURANCE COMPANY
• Court: United States Supreme Court

498 U.S. 269

111 S.Ct. 648

112 L.Ed.2d 743

FIRSTIER MORTGAGE COMPANY, aka Realbanc, Inc., Petitioner

v INVESTORS MORTGAGE INSURANCE COMPANY.

No. 89-1063.

Argued Oct. 10, 1990.

Decided Jan. 15, 1991.

Jack S. Dawson, Oklahoma City, Okl., for petitioner.

John P. Roberts, Oklahoma City, Okl., for respondent.

Syllabus

Federal Rule of Appellate Procedure 4(a)(2) provides that a "notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the day thereof." On January 26, 1989, the District Court announced from the bench that it intended to grant a motion for summary judgment filed by respondent Investors Mortgage Insurance Co. (IMI) in a suit brought by petitioner FirsTier Mortgage Co. against IMI, requested that the parties file proposed findings of fact and conclusions of law to support that ruling, and clarified that its ruling extinguished all of FirsTier's claims. FirsTier filed a notice of appeal on February 8, identifying the January 26 ruling as the decision from which it was appealing, but the District Court did not enter judgment until March 3. The Court of Appeals dismissed the appeal on the ground that the January 26 decision was not a final decision appealable under 28 U.S.C. § 1291.

Held: Rule 4(a)(2) permits a notice of appeal filed from a nonfinal decision to serve as an effective notice of appeal from a subsequently entered final judgment when a district court announces a decision that would be appealable if immediately followed by the entry of judgment. In such an instance, it would be reasonable for a litigant to believe that the decision is final, and permitting a notice of appeal to become effective when judgment is entered would not catch the appellee by surprise. This interpretation of the Rule best comports with its drafters' intent. And it does not contravene Rule 1(b)'s prohibition on construing the appellate rules to extend or limit courts' jurisdiction as established by law. Even if a bench ruling were not final under § 1291, Rule 4(a)(2) would not render that ruling appealable in contravention of § 1291. Rather, it treats the premature notice as a notice filed from the subsequently entered judgment. The instant bench ruling is a "decision" under the Rule. It purported to dispose of all of FirsTier's claims and would have been final under § 1291 had the judge set forth his judgment immediately and the clerk entered the judgment on the docket. FirsTier's confusion as to the litigation's status was understandable, and no unfairness to IMI results from allowing the appeal to go forward. Pp. 272-277.

Reversed and remanded.

MARSHALL, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion.

Justice MARSHALL delivered the opinion of the Court.

Federal Rule of Appellate Procedure 4(a)(2) provides that a "notice of appeal filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the day thereof." In this case, petitioner filed its notice of appeal after the District Court announced from the bench that it intended to grant summary judgment for respondent, but before entry of judgment and before the parties had, at the court's request, submitted proposed findings of fact and conclusions of law. The question presented is whether the bench ruling is a "decision" under Rule 4(a)(2). We hold that it is.

I

Respondent, Investors Mortgage Insurance Co. (IMI), issued eight insurance policies to petitioner, FirsTier Mortgage Co. (FirsTier). The parties intended these policies to insure FirsTier for the risk of borrower default on eight real estate loans that FirsTier had made. After the eight borrowers defaulted, FirsTier submitted claims on the policies, which IMI refused to pay. Invoking the District Court's diversity jurisdiction under 28 U.S.C. § 1332, FirsTier filed suit, seeking damages for IMI's alleged breach of contract and breach of its duty of good faith and fair dealing.

On January 26, 1989, the District Court held a hearing on IMI's motion for summary judgment. After hearing argument from counsel, the District Court announced from the bench that it was granting IMI's motion. The judge stated that FirsTier's eight policies had been secured from IMI through fraud or bad faith and therefore were void:

"I find that the policies should be and are cancelled as void for want of [sic ] fraud, bad faith. The Court has heard no evidence in the matter of this hearing to change its mind from holding that the policies are void.

"Of course in a case of this kind, the losing party has a right to appeal. If the Court happens to be wrong, I don't think I am, but if the Court happens to be wrong, it could be righted by the Circuit.

"The Court does find that [IMI] relied on the package [of information furnished by FirsTier] in each of these loans and the package was not honest. In fact it was dishonest. The dishonesty should and does void the policy." App. 27.

The District Court then requested that IMI submit proposed findings of fact and conclusions of law to support the ruling, adding that FirsTier would thereafter be permitted to submit any objections it might have to IMI's proposed findings:

"The Court will then look at what you submit as your suggestion and it is your suggestion only. The Court then will modify, add to it, delete and write its own findings of fact and conclusions of law and judgment in each of these eight policies that we have talked about.

. . . . .

"And if [FirsTier] cares to do so, within five days you may file with the Court your objection or suggestion wherein you find that the suggestions of [IMI] are in error, if you care to do so." Ibid.

Finally, the District Court clarified that its ruling extinguished both FirsTier's claim for breach of contract and FirsTier's claim for breach of the duty of good faith and fair dealing. Id., at 28.

FirsTier filed its notice of appeal on February 8, 1989, identifying the January 26 bench ruling as the decision from which it was appealing. On March 3, 1989, the District Court issued its findings of fact and conclusions of law in support of its ruling that IMI was entitled to summary judgment. In a separate document, also dated March 3, 1989, the District Court entered judgment. See Fed.Rule Civ.Proc. 58 (requiring that "[e]very judgment shall be set forth on a separate document").

After notifying the parties that it was considering dismissing FirsTier's appeal for lack of jurisdiction, the Court of Appeals requested that the parties brief two issues: first, whether the February 8 notice of appeal was filed prematurely; and, second, whether the January 26 bench ruling was a final decision appealable under 28 U.S.C. § 1291. See App. to Pet. for Cert. B-2. The Court of Appeals dismissed the appeal on the ground that the January 26 decision was not final under § 1291. The court did not address whether FirsTier's notice of appeal could be effective as a notice of appeal from the March 3 final judgment despite the fact that it identified the January 26 ruling as the ruling appealed from. See id., at A-2. We granted certiorari, 494 U.S. 1003, 110 S.Ct. 1295, 108 L.Ed.2d 472 (1990), and now reverse.

II

The issue before us is whether FirsTier's February 8 notice of appeal is fatally premature. Federal Rule of Appellate Procedure 4(a)(1) requires an appellant to file its notice of appeal "within 30 days after the date of entry of the judgment or order appealed from." See also 28 U.S.C. § 2107. In this case, FirsTier filed its notice of appeal close to a month before entry of judgment. However, under Federal Rule of Appellate Procedure 4(a)(2) a notice of appeal "filed after the announcement of a decision or order but before the entry of the judgment or order shall be treated as filed after such entry and on the day thereof." ¹ Added to the Federal Rules in 1979, Rule 4(a)(2) was intended to codify a general practice in the courts of appeals of deeming certain premature notices of appeal effective. See Advisory Committee's Note on Fed.Rule App.Proc. 4(a)(2), 28 U.S.C.App., p. 516. The Rule recognizes that, unlike a tardy notice of appeal, certain premature notices do not prejudice the appellee and that the technical defect of prematurity therefore should not be allowed to extinguish an otherwise proper appeal. See In re Grand Jury Impaneled Jan. 21, 1975, 541 F.2d 373, 377 (CA3 1976) (cited with approval in Advisory Committee's Note on Fed.Rule App.Proc. 4(a)(2), supra, at 516); Hodge v. Hodge, 507 F.2d 87, 89 (CA3 1975) (same).

IMI maintains that the relation forward provision of Rule 4(a)(2) rescues a premature notice of appeal only if such notice is filed after the announcement of a decision that is "final" within the meaning of 28 U.S.C. § 1291.² IMI further contends that the January 26 bench ruling did not constitute a final decision. For a ruling to be final, it must "en[d] the litigation on the merits," Catlin v. United States, 324 U.S. 229 233, 65 S.Ct. 631, 633-34, 89 L.Ed. 911 (1945) (citation omitted),³ and the judge must "clearly declar[e] his intention in this respect," United States v. F. & M. Schaefer Brewing Co., 356 U.S. 227, 232, 78 S.Ct. 674, 678, 2 L.Ed.2d 721 (1958). IMI contends that the judge did not clearly intend to terminate the litigation on the merits. Although the judge stated from the bench his legal conclusions about the case, he also stated his intention to set forth his rationale in a more detailed and disciplined fashion at a later date. Moreover, the judge did not explicitly exclude the possibility that he might change his mind in the interim.

We find it unnecessary to resolve this question whether the bench ruling was final. For we believe the Court of Appeals erred in its threshold determination that a notice of appeal filed from a bench ruling can only be effective if...