Corrosioneering, Inc. v. Thyssen Environmental Systems, Inc.

• Decision Date: 15 December 1986
• Docket Number: Nos. 85-5997,85-5998,s. 85-5997
• Citation: 807 F.2d 1279
• Parties: CORROSIONEERING, INC., Plaintiff-Appellant (85-5997), and The Continental Insurance Company, Third-Party Complainant-Appellant (85-5998), v. THYSSEN ENVIRONMENTAL SYSTEMS, INC., Federal Insurance Company, Continental Insurance Company, Ashland Chemical Company and Berton Plastics, Inc., Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1279

807 F.2d 1279

6 Fed.R.Serv.3d 825

CORROSIONEERING, INC., Plaintiff-Appellant (85-5997) and The Continental Insurance Company, Third-Party Complainant-Appellant (85-5998), v. THYSSEN ENVIRONMENTAL SYSTEMS, INC., Federal Insurance Company, Continental Insurance Company, Ashland Chemical Company and Berton Plastics Inc., Defendants-Appellees.

Nos. 85-5997, 85-5998.

United States Court of Appeals Sixth Circuit.

Argued Aug. 15, 1986.

Decided Dec. 15, 1986.

Thomas R. Yocum (argued), Benjamin, Faulkner, Tepe and Sack, Cincinnati, Ohio, for Corrosioneering, Inc.

Leslie W. Morris, II (argued), Lexington, Ky., Robert B. Cetrulo (argued), Covington, Ky., for defendants-appellees.

J.W. Smirz, Landrum, Shouse and Patterson, Lexington, Ky., for Continental Ins. Co.

Before JONES and NELSON, Circuit Judges, and CELEBREZZE, Senior Circuit Judge.

CELEBREZZE, Senior Circuit Judge.

Plaintiff-appellant Corrosioneering, Inc. ("Corrosioneering") and its bonding company, Continental Insurance Company ("Continental"), appeal from the district court's dismissal of their third-party complaint against Ashland Chemical Company ("Ashland") and Berton Plastics, Inc. ("Berton"). On appeal, Corrosioneering and Continental argue that the district court erred in finding that no express or implied warranties were created in connection with the sale of goods by Ashland and Berton to Corrosioneering. Finding that this case was improperly certified under Fed.R.Civ.P. 54(b), we dismiss the appeal.

The facts relevant to this appeal are not in dispute. Eastern Kentucky Power Cooperative was building a power plant near Maysville, Kentucky called the Spurlock Power Plant ("the Spurlock project"). Part of the Spurlock project was a scrubber system on which Thyssen Environmental Systems, Inc. ("Thyssen") was the contractor. Thyssen, in turn, subcontracted with Corrosioneering for the installation of a corrosion resistant lining in portions of the scrubber system. The lining system installed by Corrosioneering, developed by Corrosioneering's president, Mr. Dennis Newton, had as primary components several polyester resins which had been manufactured by Ashland and which had been purchased by Corrosioneering directly from Ashland or from Berton, a distributor.

The lining system subsequently failed, however, and Thyssen refused to pay Corrosioneering. After Corrosioneering brought an action against Thyssen and Thyssen's bonding company, Federal Insurance Company ("Federal"), for nonpayment, Thyssen and Federal responded by filing a counterclaim against Corrosioneering and Continental alleging that Corrosioneering was liable for installing a defective lining system. Corrosioneering and Continental then filed a third-party complaint against Ashland and Berton, contending that Ashland and Berton had breached both express and implied warranties in the sale of the polyester resins used in the lining system, and seeking indemnification in the event Corrosioneering and Continental were found liable to Thyssen.

The district court held a bench trial on Thyssen's counterclaim and Corrosioneering's third-party complaint. The court determined that Corrosioneering was liable to Thyssen for installing the defective lining, but concluded that neither Ashland nor Berton had made any express or implied warranties to Corrosioneering. The issue of damages and several miscellaneous matters were not resolved by the district court, however, but were referred to a magistrate. Subsequently, the district court rendered a final judgment in favor of Ashland and Berton, dismissing the third-party complaint of Corrosioneering and Continental, and certified for immediate appeal under Rule 54(b) ¹ the issue of whether Ashland and Berton had made any express or implied warranties to Corrosioneering during the sale of the resins. Consequently, the question of whether Corrosioneering may be entitled to indemnification from Ashland or Berton is the only substantive issue presently before this court. ²

Although the parties have focused on the creation of warranties as dispositive of this appeal, we are required in the first instance to consider the propriety of the district court's Rule 54(b) certification. This court obtains jurisdiction only when an appeal is taken from a final order, 28 U.S.C. Sec. 1291 (1982), or from an appealable interlocutory order, 28 U.S.C. Sec. 1292 (1982). See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 431, 76 S.Ct. 895, 897, 100 L.Ed. 1297 (1956). Although Rule 54(b) provides a means by which a district court may release for immediate appeal final decisions resolving "one or more but fewer than all of the claims or parties" in a multiple-claim or multiple-party action, Fed.R.Civ.P. 54(b), it does not empower the district court to "treat as 'final' that which is not 'final' within the meaning of Sec. 1291." Mackey, 351 U.S. at 437, 76 S.Ct. at 900. Thus, if the district court's certification was improper, we are without jurisdiction to consider the merits of this appeal. See Solomon v. Aetna Life Insurance Co., 782 F.2d 58, 59-60 (6th Cir.1986); Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 362-63 (3d Cir.1975); B.B. Adams General Contractors, Inc. v. Department of Housing and Urban Development, 501 F.2d 176, 177 (5th Cir.1974).

Rule 54(b) was a response to the need created by the liberal joinder provisions of the Federal Rules of Civil Procedure to revise "what should be treated as a judicial unit for purposes of appellate jurisdiction." Mackey, 351 U.S. at 432, 76 S.Ct. at 897. The rule was "designed to facilitate the entry of judgment on one or more claims, or as to one or more parties, in a multi-claim/multi-party action," Solomon, 782 F.2d at 60; Allis-Chalmers, 521 F.2d at 363, "where the parties demonstrated a need for making review available on some of the claims or parties before entry of final judgment as to all," COMPACT v. Metropolitan Government of Nashville & Davidson County, Tennessee, 786 F.2d 227, 230 (6th Cir.1986). It "attempts to strike a balance between the undesirability of piecemeal appeals and the need for making review available at a time that best serves the needs of the parties." Solomon, 782 F.2d at 60; Allis-Chalmers, 521 F.2d at 363. By utilizing Rule 54(b), a district court "may, by the exercise of its discretion in the interest of sound judicial administration, release for appeal final decisions upon one or more, but less than all, claims ...," Mackey, 351 U.S. at 437, 76 S.Ct. at 900 (emphasis in original), or for fewer than all the parties.

The district court acts as a "dispatcher" and is permitted to determine, in the first instance, the appropriate time when each final decision is ready for appeal. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 8, 100 S.Ct. 1460, 1464, 64 L.Ed.2d 1 (1980); Mackey, 351 U.S. at 435, 76 S.Ct. at 899; Allis-Chalmers, 521 F.2d at 363; Campbell v. Westmoreland Farm, Inc., 403 F.2d 939, 942 (2d Cir.1968). The district court's discretion is not unbounded, however, and a Rule 54(b) certification can be reversed by an appellate court for abuse of that discretion. Mackey, 351 U.S. at 437, 76 S.Ct. at 900; COMPACT, 786 F.2d at 230; Campbell, 403 F.2d at 942; Panichella v. Pennsylvania Railroad Co., 252 F.2d 452, 454 (3d Cir.1958). Rule 54(b) is not to be used routinely, see Curtiss-Wright, 446 U.S. at 10, 100 S.Ct. at 1466; Panichella, 252 F.2d at 455, or as a courtesy or accommodation to counsel, Panichella, 252 F.2d at 455; see Solomon, 782 F.2d at 60; Campbell, 403 F.2d at 942. "The power which this Rule confers upon the trial judge should be used only 'in the infrequent harsh case' as an instrument for the improved administration of justice...." Panichella, 252 F.2d at 455; see also COMPACT, 786 F.2d at 230; Solomon, 782 F.2d at 60; Campbell, 403 F.2d at 942. Moreover, to avoid a finding of abuse of discretion in this Circuit a district court should do more than just recite the Rule 54(b) formula of "no just reason for delay." Solomon, 782 F.2d at 61; see COMPACT, 786 F.2d at 231. Deference is accorded to the district court only "on the assumption that the district court undertook to weigh and examine the competing factors involved in the certificate decision," Solomon, 782 F.2d at 61; see COMPACT, 786 F.2d at 231, and the absence of reasons in support of a district court's certification nullifies any deference due the Rule 54(b) order. Solomon, 782 F.2d at 62; COMPACT, 786 F.2d at 231.

In the instant case, the district court issued its Rule 54(b) order upon a determination "that the question of whether or not Ashland Chemical Company and Berton Plastics, Inc. made warranties to Corrosioneering is separate and distinct from other issues in the case...." The court also incorporated by reference into the Rule 54(b) order its findings of fact and conclusions of law which determined that Corrosioneering was liable to Thyssen but that Ashland and Berton had made no warranties subjecting them to indemnification. These findings and conclusions support the district court's determination that the warranty question certified for appeal is "separate and distinct" from other issues in the case. This grounding of the Rule 54(b) order on a determination that the issue certified was "separate and distinct" readily distinguishes the instant case from Solomon, in which the district court had given no reason to support its certification and had only recited the Rule 54(b) formula of "no just reason for delay." See Solomon, 782 F.2d at 61. Nevertheless, we find this to be a distinction without a difference. We conclude that the district court's findings of a "separate and distinct" issue in the matter being certified provides an insufficient basis in the instant case to support the Rule 54(b) certification.

Generally a finding that an issue being considered for Rule 54(b) certification is "separate and distinct" from remaining issues in a case will begin,...