Associated Business Telephone Systems Corp. v. Greater Capital Corp., s. 88-5274
| Citation | 861 F.2d 793 |
| Decision Date | 18 November 1988 |
| Docket Number | 88-5353,Nos. 88-5274,s. 88-5274 |
| Parties | ASSOCIATED BUSINESS TELEPHONE SYSTEMS CORPORATION, Appellee, v. GREATER CAPITAL CORPORATION, Mark Cohn, Steve Cohn, John Doe, Richard Doe and Jane Doe, Appellants. |
| Court | United States Courts of Appeals. United States Court of Appeals (3rd Circuit) |
David L. Creskoff, Mark R. Rosen (argued), Anthony Watkins (Mesirov, Gelman, Jafee, Cramer & Jamieson, Cherry Hill, N.J., of counsel), for appellants.
Thomas R. O'Brien (argued), Robert E. Nies (Kimmelman, Wolff & Samson, Roseland, N.J., of counsel), for appellee.
Before GIBBONS, Chief Judge, SEITZ, Circuit Judge and POLLAK, District Judge *.
This matter is before us as a result of the filing of two notices of appeal. One notice, filed April 4, 1988, seeks review of an order of the district court dated March 2, 1988. The second notice, filed April 28, 1988, seeks review of an order of the district court dated April 22, 1988. Both orders were entered in the course of a diversity contract dispute over the performance of a commercial contract for the installation and operation of a telephone system in a hotel. The plaintiff is Associated Business Telephone Systems Corporation (Associated), a New Jersey corporation with its principal place of business in that state. The defendants are Greater Capital Corporation (Greater Capital), a California corporation which operates a hotel in Rosemont, Illinois, and several of its principal officers, directors, and stockholders.
Pursuant to a contract, Associated installed its telephone equipment at the hotel. Greater Capital was obliged to collect the revenue generated from hotel guest use of the system, and deposit that revenue in a designated federally insured bank account. From that bank account, the gross revenue was supposed to be distributed to pay the cost of telephone charges from local and long distance carriers, the cost of maintenance of the system, the cost of debt service for the system, and 25% of the revenue was to be returned to Greater Capital. The system was designed so that Associated could monitor telephone activity and account for use of the system remotely from New Jersey.
Associated filed a complaint charging that, in violation of the agreement, Greater Capital failed to deposit in the designated bank account charges collected from hotel guests, and disconnected the remote monitoring system. The complaint also alleged that those charges are trust funds, and that the individual officers, directors, and stockholders participated in the conversion of those trust funds. Associated sought, alternatively, possession of the system, an injunction against use of the system without depositing the gross receipts, compensatory damages of various kinds, and punitive damages for conversion. Initially the defendants moved to dismiss the complaint for lack of personal jurisdiction over them. When that motion was denied, they filed an answer and a counterclaim. The counterclaim charged that (1) as a result of improper programming of the system, hotel guests were overcharged, with resulting damage to the hotel's reputation and business; (2) Associated failed and refused to provide records verifying its charges to the account; and (3) Associated relied excessively on microwave and satellite transmission instead of land lines, which resulted in reduced quality of service.
The April 28, 1988 notice of appeal is from an order dated April 22, 1988, which provides:
For the reasons set forth in the Court's opinion filed this day; and For good cause shown; It is on this 22nd day of April 1988 ORDERED that the Court's prior orders are hereby MODIFIED consistent with the Court's opinion filed this day.
The opinion to which the order refers disposed of a motion to modify the district court's prior orders on the ground that they were incapable of performance. One such order was that of December 8, 1987, which, without resolving which side had breached the contract, granted Associated's motion for partial summary judgment ordering defendants "to make payments of the gross telephone operating revenue and other charges under the Agreement to a federally insured bank for further distribution therefrom pursuant to the terms of the Agreement." Greater Capital did not make such payments, contending that the December 8, 1987 order failed to identify which bank should receive the money. On Associated's motion for further relief, the court on March 2, 1988, directed that Greater Capital should deposit $338,269.14 in New Jersey National Bank. The defendants then moved for relief from the March 2, 1988 order on the ground that they lacked present financial ability to comply. Confronted with this admission of inability to comply, the district court, relying on the Event of Default provision in the agreement, declared Greater Capital to be in default, and ordered the defendants to afford Associated access, after ten days, to the hotel so that it could repossess and remove the system.
The April 4 notice of appeal is from the March 2, 1988 order referred to above, which directs the payment of $338,269.14 into an account at New Jersey National Bank. The April 22, 1988 order does not, at least explicitly modify the March 2, 1988 order to pay $338,269.14, which represents revenue collected by the hotel from guests, prior to March 2, for telephone service utilizing the system.
The complaint and counterclaim remain pending in the district court, and this circumstance requires that we consider whether either order is appealable.
In the opinion to which the April 22, 1988 order refers, the district court states:
The Court's findings that defendants have breached the Agreement and that plaintiff is entitled to remove its telephone system are hereby certified as final for purposes of execution and appeal pursuant to Federal Rule of Civil Procedure 54(b).
Assuming, without deciding, that this language would be sufficient compliance with Fed.R.Civ.P. 54(b), 1 this certification is nevertheless insufficient for purposes of appellate jurisdiction under 28 U.S.C. Sec. 1291. The order does not dispose of a separate claim, but only of a part of Associated's claim for breach of contract. A partial disposition of a single claim may not be treated as a final judgment. Marino v. Nevitt, 311 F.2d 406, 408 (3d Cir.1968). The defendants, who are the appellants here, conceded at oral argument that neither the April 22, 1988 order nor the March 2, 1988 order are appealable as final judgments.
The defendants contend, however, that both orders are appealable under 28 U.S.C. Sec. 1292(a)(1). The March 2, 1988 order should be regarded as a preliminary injunction, they urge, because it directs them, under pain of contempt, to pay money into the account at New Jersey National Bank. We note that in the April 22, 1988 opinion the district court observed:
Because defendants represent that they are unable to comply with the order to deposit money, the Court will not find defendants in contempt of that order.
Arguably the district court inferred that absent inability to pay, the defendants might have been held in contempt. If so, the March 2, 1988 order might properly be treated as an injunction. At oral argument on this appeal, however, counsel for Associated conceded that the order to pay $338,269.14 was not presently enforceable either by execution or by contempt. It is, therefore, at most a partial adjudication of the breach of contract claim. As such, it is not appealable under 28 U.S.C. Sec. 1292(a)(1).
The April 22, 1988 order, on the other hand, directed the defendants to permit Associated access to the hotel in order to remove its equipment. Both parties agree...
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