Horn v. Transcon Lines, Inc.

Decision Date02 April 1990
Docket NumberNo. 89-1747,89-1747
Citation898 F.2d 589
PartiesJeffrey R. HORN, et al., Plaintiffs, v. TRANSCON LINES, INC., et al., Defendants. R.L. JEFFRIES TRUCKING CO., INC., Defendant and Third-Party Plaintiff, v. Mary F. THURMOND, Personal Representative of the Estate of Thomas B. Thurmond, Third-Party Defendant and Fourth-Party Plaintiff-Appellee, v. LIBERTY MUTUAL INSURANCE COMPANY, Fourth-Party Defendant-Appellant.
CourtU.S. Court of Appeals — Seventh Circuit

Stephen H. Thomas, Statham, Johnson & McCray, F. Stephen Sheets, Hewins & Hewins, Evansville, Ind., for Jeffrey R. Horn, Lauri B. Horn and R.L. Jeffries Trucking Co., Inc.

Donald R. Wright, Wright, Evans & Daly, Evansville, Ind., for Transcon Lines, Inc., Keystone Lines and Liberty Mut. Ins. Co.

David V. Miller, Bowers, Harrison, Kent & Miller, Evansville, Ind., Henry C. Neel, Neel & Wilson, Henderson, Ky., for Mary F. Thurmond.

Before BAUER, Chief Judge, and EASTERBROOK and MANION, Circuit Judges.

EASTERBROOK, Circuit Judge.

Thomas B. Thurmond, who drove his own truck for a living, leased the rig and his services to Transcon Lines, Inc., which operates nationwide. When Transcon did not have a load for him at the place he dropped off the last one, Thurmond could do three things: first, arrange with Transcon to sublease the rig to another carrier that had cargo needing transportation (that is, enter into a trip lease); second, take the truck empty to a place where Transcon had cargo (dead-heading, called bobtailing if the tractor travels without trailer); third, go home to Kentucky and wait for instructions.

Transcon provides insurance when the driver is carrying its loads. Drivers must arrange their own insurance when trip-leasing, deadheading, and bobtailing. Liberty Mutual Insurance Company of Boston issued to Transcon a master policy covering lessors' deadheading and bobtailing, which Transcon offered to its drivers at $22 per month. Thurmond accepted the offer, and Transcon sent a certificate of insurance from its California office to his old Kentucky home.

Thurmond's lease with Transcon gave it the right to veto a driver's proposed trip leases with another carrier. Indeed, under the ICC's regulations, a trucker could do no more than propose a sublease to the lessor, which must make the formal arrangements. One carrier for which Transcon issued a standing ban is R.L. Jeffries Trucking Company of Indiana. (Transcon as lessor is responsible for state road and gas taxes; Jeffries apparently refused to reimburse Transcon for these.) Without telling Transcon, Thurmond subleased his rig to Jeffries in October 1985 and was carrying one of its loads when the tractor left the road in southern Indiana. Thurmond died; Jeffrey Horn, a passenger in the cab, was seriously injured.

Horn and spouse filed this diversity action against Transcon and Jeffries, seeking compensation for his injuries. Allstate Insurance Company, the Horns' personal insurer, joined the suit as subrogee. Jeffries filed a third-party action against Thurmond's estate, seeking to recover for any sums it might be required to pay Horn on account of Thurmond's negligent driving. The estate tendered the defense to Liberty Mutual, which declined on the ground that its policy covered only bobtailing and deadheading. The estate then added Liberty Mutual as an additional defendant, asking the court to declare that it had to defend the suit, indemnify the estate for any damages due to Jeffries, and compensate the estate for the value of Thurmond's lost truck and cargo. Liberty Mutual and the estate filed cross-motions for summary judgment, which the district court resolved in advance of the main action.

The policy Liberty Mutual issued to Transcon covers only deadheading and bobtailing. Both expected the driver to arrange for insurance in trip leases, probably through the carrier supplying the load. The certificate Liberty Mutual wrote, and which Transcon sent to Thurmond, did not describe the limitations on the coverage but said that the full terms could be found in the master policy. The estate argued, and the district court held, that California law applies because the master policy is held by a California corporation. California law requires a certificate to state the limitations on coverage. Cal.Ins.Code Sec. 383.5, incorporating Sec. 381. The district court held that this rule applies and that despite Cal.Ins.Code Sec. 384 a reference in the certificate to the master policy is insufficient. The court then directed the entry of judgment to allow an immediate appeal.

The parties briefed the choice-of-law question and the meaning of California law. The first question in every case, which the court must ask even if the parties do not, is whether it has jurisdiction. We do not have jurisdiction and so shall not discuss the merits. Three jurisdictional problems loom: the terms of the judgment, the adequacy of the direction for its entry, and the fact that the appeal concerns a third-party dispute that will be influenced by the disposition of the main litigation.

1. The judgment entered by the district court provides:

The Court expressly determines that there is no just reason for delay and expressly directs entry of final judgment on Third Party Defendant and Third Party Plaintiff, Mary F. Thurmond's, Motion for Summary Judgment against Third Party Defendant, Liberty Mutual Insurance Company Boston, with regard to liability and cargo coverage.

This judgment does not set out the relief to which the prevailing party is entitled and therefore is not "final". Although Fed.R.Civ.P. 54(b) lets the court make final a judgment covering fewer than all of the claims and parties, it does not allow a court to dispense with other essential ingredients of judgments. Judgments must award relief. This one does not. A document saying that judgment is entered, but not saying who is entitled to what from whom, is ineffectual. Reytblatt v. Denton, 812 F.2d 1042 (7th Cir.1987).

The judge must have meant to enter a declaratory judgment establishing the entitlements of the estate vis-a-vis the insurer, but he did not. See Azeez v. Fairman, 795 F.2d 1296, 1297 (7th Cir.1986). An opinion is not a sufficient substitute for a judgment, for the judgment must be self-contained, see Fed.R.Civ.P. 58. An opinion explains the reasons for entering a judgment but is not itself a source of legal obligations. Eakin v. Continental Illinois National Bank & Trust Co., 875 F.2d 114, 118 (7th Cir.1989); Bethune Plaza, Inc. v. Lumpkin, 863 F.2d 525, 527-28 (7th Cir.1988). Yet even the opinion is ambiguous. Logically the court must have meant to provide that Liberty Mutual had to defend the estate, pay for the truck and cargo, and reimburse the estate for any damages; the opinion does not say so, however. Although missing terms do not prevent finality when everything is clear, Chaka v. Lane, 894 F.2d 923, 924 (7th Cir.1990); Soo Line R.R. v. Escanaba & Lake Superior R.R., 840 F.2d 546, 549 (7th Cir.1988), one of the terms missing here--how much?--is important for reasons that we get to shortly.

2. Neither the judgment nor the accompanying opinion mentions Rule 54(b) or explains why the court is authorizing an appeal by one party at the outset of the litigation. Rule 54(b) departs from the norm of one appeal per case, a norm that prevents duplicative and time-consuming appeals. Because the Rules of Civil Procedure allow a single suit to resolve many claims among many parties--disputes that would have been separate cases under prior practice--it is useful to have a method to divide the litigation once again into separate units that could have stood alone. That way a discrete dispute may be finally resolved even though additional controversies await disposition. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 76 S.Ct. 895, 100 L.Ed. 1297 (1956); Exchange National Bank v. Daniels, 763 F.2d 286, 290-92 (7th Cir.1985); Jack Walters & Sons Corp. v. Morton Building, Inc., 737 F.2d 698, 702-03 (7th Cir.1984).

The tension between the presumptive rule of one appeal per case and the utility of segregating separate claims for immediate appeal makes it important to define a "claim" with care, lest the exception swallow the rule. We have done this by deciding in Jack Walters and other cases that different theories of relief are one "claim", and that when the questions remaining in the district court factually overlap those on appeal, presenting a specter of sequential appellate resolution, the appeal is impermissible. See also, e.g., Automatic Liquid Packaging, Inc. v. Dominik, 852 F.2d 1036 (7th Cir.1988); FDIC v. Elefant, 790 F.2d 661, 664 (7th Cir.1986); Minority Police Officers Ass'n v. South Bend, 721 F.2d 197 (7th Cir.1983). Even when claims are separate, an appeal ought not follow as of course. The possibility that developments in the litigation may moot a claim suggests that appellate resolution be deferred. McMunn v. Hertz Equipment Rental Corp., 791 F.2d 88, 90 (7th Cir.1986); United States General, Inc. v. Albert, 792 F.2d 678, 681 n. 3 (7th Cir.1986); Spiegel v. Tufts College, 843 F.2d 38, 44-45 (1st Cir.1988); United States Fire Insurance Co. v. Smith Barney, Harris Upham & Co., 724 F.2d 650, 653 (8th Cir.1983); Brunswick Corp. v. Sheridan, 582 F.2d 175, 184 (2d Cir.1978) (Friendly, J.). A significant possibility that the claim will go away (as it would if, for example, the court should conclude that Thurmond was not negligent) makes improvident the parties' and the judges' investment of resources to produce a speedy appellate ruling.

Resolution of this tension, as of so many other elements of litigation, is committed to the informed discretion of the district judge. Curtiss-Wright Corp. v. General Electric Co., 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980). Discretion carefully exercised is rarely upset. First, though, we must be confident that discretion has been...

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