Braswell Shipyards, Inc. v. Beazer East, Inc.

• Decision Date: 23 August 1993
• Docket Number: No. 92-1476,92-1476
• Parties: , 24 Envtl. L. Rep. 20,132 BRASWELL SHIPYARDS, INCORPORATED, Plaintiff-Appellee, v. BEAZER EAST, INCORPORATED, formerly known as Koppers Company, Defendant & Third Party Plaintiff-Appellant, and Elliott S. Braswell, d/b/a Neckland Associates; John Squire; Conserv Oil; Fleet Transport, Incorporated; Pepper Industries; United States Navy; Fedserv Industries, Incorporated, Third Party Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 1331

2 F.3d 1331

26 Fed.R.Serv.3d 807, 24 Envtl. L. Rep. 20,132

BRASWELL SHIPYARDS, INCORPORATED, Plaintiff-Appellee, v. BEAZER EAST, INCORPORATED, formerly known as Koppers Company, Defendant & Third Party Plaintiff-Appellant and Elliott S. Braswell, d/b/a Neckland Associates; John Squire; Conserv Oil; Fleet Transport, Incorporated Pepper Industries; United States Navy; Fedserv Industries Incorporated, Third Party Defendants.

No. 92-1476.

United States Court of Appeals Fourth Circuit.

Argued Feb. 2, 1993.

Decided Aug. 23, 1993.

Elmer A. Simpson, Jr., argued (V. Robert Denham, Jr. and Linda G. Birchall, on brief), Powell, Goldstein, Frazer & Murphy, Atlanta, GA, for plaintiff-appellant.

Lemuel Gray Geddie, Jr., argued (Eric C. Schweitzer, on brief), Ogletree, Deakins, Nash, Smoak & Stewart, Greenville, SC, for plaintiff-appellee.

Before HAMILTON and LUTTIG, Circuit Judges, and WARD, Senior United States District Judge for the Middle District of North Carolina, sitting by designation.

OPINION

HAMILTON, Circuit Judge:

Beazer East, Inc. (Beazer) appeals from an adverse judgment in the district court finding it liable to Braswell Shipyards, Inc. (Braswell) in the amount of $2,095,144.45, including $1,064,313.63 in prejudgment interest. This judgment compensated Braswell for Beazer's negligent failure to disclose a defective condition in property located in Charleston, South Carolina, which it sold to Braswell. Braswell asserted in its complaint, among other things, claims under state law and Sec. 107 of the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 U.S.C. Sec. 9607(a). The district court bifurcated the state law claims from the CERCLA claims and held a jury trial on the state law claims. The jury found in favor of Braswell on its negligent nondisclosure claim, and the district court entered judgment on that claim pursuant to Fed.R.Civ.P. 54(b). The CERCLA claims are still pending. Because we conclude the district court abused its discretion in entering judgment pursuant to Fed.R.Civ.P. 54(b) on the state law claim of negligent nondisclosure, we dismiss Beazer's appeal.

I

For approximately forty years prior to 1978, Beazer, formerly known as Koppers Company, Inc., owned and operated a wood treatment plant on a forty-five acre tract of land adjacent to the Ashley River in Charleston, South Carolina. During the treatment process, wood preservatives, mainly creosote, were pumped into cylinders that contained timbers to be treated. During this process, a sludge by-product, containing among other things creosote, accumulated at the bottom of each cylinder. This sludge was removed from the cylinders and dumped in a marsh area on the property and covered with sand. This habit of burying and covering the sludge continued, lasting approximately thirty years.

In 1977, Braswell became interested in purchasing the property for the purpose of erecting a shipyard. A short time later, Braswell purchased the property, and over the next several years, Braswell sold portions of the property. In 1988, Braswell was awarded a ship repair contract with the United States Navy which required the construction of, among other things, a parking lot. In October 1988, Braswell began construction. In clearing the land, the construction crew hired by Braswell discovered pools of creosote underground.

On February 28, 1989, Braswell brought an action against Beazer in the United States District Court for the District of South Carolina alleging claims under Sec. 107 of CERCLA, and state law claims of fraud, negligence (negligent nondisclosure and negligent operation of the property), ultrahazardous activity, money had and received, and indemnity. Braswell also sought declaratory relief pursuant to Sec. 113(g)(2) of CERCLA, 42 U.S.C. Sec. 9613(g)(2), and 28 U.S.C. Secs. 2201-02. On October 3, 1989, Braswell and Beazer stipulated that the CERCLA claims related to the entire tract of land originally purchased by Braswell, but that the state law claims only related to three parcels owned by Braswell as of the date of the stipulation. Those parcels were referred to by their numbers, 19, 35, and 49, on the Charleston County Tax Assessor's map attached to the stipulation. ¹ On November 15, 1989, Beazer filed a third-party complaint against seven defendants, claiming contribution and requesting a declaratory judgment against these additional parties under Secs. 113(f) and (g) of CERCLA.

On July 5, 1990, Braswell filed a motion to bifurcate the state law claims from the CERCLA claims. Braswell reasoned that the state law claims were sufficiently different to warrant bifurcation and the introduction of evidence of the third-parties' activities created a threat of undue prejudice to Braswell because that evidence concerned property that was not the subject of the state law claims. With Beazer's assent, the district court bifurcated the state law claims from the CERCLA claims and stayed the CERCLA claims pending the resolution of the state law claims. As to the state law claims, prior to the submission of the case to the jury, Braswell withdrew or the district court dismissed all of the state law claims except the claims for fraud and negligent nondisclosure. The jury awarded Braswell $1,029,830.82 in actual damages and $1,000 punitive damages on the negligent nondisclosure claim, but found in favor of Beazer on the fraud claim. The parties agree that the actual damages represented the original cost of parcel 19 and the improvements made to that parcel. ² Braswell then moved for the entry of judgment on the negligent nondisclosure claim and prejudgment interest. In addition, Beazer moved for, among other things, a renewed judgment as a matter of law (formerly judgment n.o.v.) and/or new trial, and a stay in the entry of judgment on the negligent nondisclosure claim pending the outcome of the CERCLA claims. The district court denied Beazer's motions. In granting Braswell's motion for entry of judgment, the district court concluded "due to the issues of first impression raised in the state common law claims portion of this case, no just reason for delay exists for the entry of judgment as to the state common law claims...." (J.A. 842). The district court then entered judgment pursuant to Fed.R.Civ.P. 54(b) on the negligent nondisclosure claim in the amount of $2,095,144.45, which included $1,064,313.63 in prejudgment interest. This appeal ensued.

II

We are constrained at first to resolve the propriety of the district court's Rule 54(b) certification because we only obtain jurisdiction when an appeal is taken from a final order, 28 U.S.C. Sec. 1291, or from an appealable interlocutory order, 28 U.S.C. Sec. 1292. See Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 431, 76 S.Ct. 895, 897, 100 L.Ed. 1297 (1956).

Rule 54(b) permits a district court to enter final judgment as to one or more but fewer than all claims in a multiclaim action, thus allowing an appeal on fewer than all claims in a multiclaim action. ³ The chief purpose of a Rule 54(b) certification is to prevent piecemeal appeals when multiple claims are resolved in the course of a single lawsuit. The Rule also allows the district court to provide relief to litigants that would suffer undue hardship if final judgment is not entered on the adjudicated claim prior to the resolution of the unadjudicated claims.

Rule 54(b) certification is recognized as the exception rather than the norm. It should neither be granted routinely, Curtis-Wright Corp. v. General Electric Co., 446 U.S. 1, 10, 100 S.Ct. 1460, 1466, 64 L.Ed.2d 1 (1980), nor as an accommodation to counsel. Corrosioneering v. Thyssen Environmental Systems, 807 F.2d 1279, 1282 (6th Cir.1986) (citations omitted). As Judge (now Justice) Kennedy observed:

Judgments under Rule 54(b) must be reserved for the unusual case in which the costs and risks of multiplying the number of proceedings and overcrowding the appellate docket are outbalanced by pressing needs of the litigants for an early and separate judgment as to some claims or parties.

Morrison-Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir.1981). The burden is on the party endeavoring to obtain Rule 54(b) certification to demonstrate that the case warrants certification. Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 364 (3d Cir.1975) (footnote omitted).

The tack which the district court must follow to effectuate a Rule 54(b) certification involves two steps. Curtis-Wright, 446 U.S. at 7-8, 100 S.Ct. at 1464-65. First, the district court must determine whether the judgment is final. Id. at 7, 100 S.Ct. at 1464. The Court in Curtis-Wright stated that a judgment "must be 'final' in the sense that it is 'an ultimate disposition of an individual claim entered in the course of a multiple claims action.' " Id. (quoting Sears, Roebuck & Co., 351 U.S. at 436, 76 S.Ct. at 900). Second, the district court must determine whether there is no just reason for the delay in the entry of judgment. Curtis-Wright, 446 U.S. at 8, 100 S.Ct. at 1465. This inquiry, "tilted from the start against fragmentation of appeals, is necessarily case-specific." Spiegel v. Trustees of Tufts College, 843 F.2d 38, 43 (1st Cir.1988); see also Curtis-Wright, 446 U.S. at 10-11, 100 S.Ct. at 1466-67 ("because the number of possible [Rule 54(b) ] situations is large, we are reluctant either to fix or sanction narrow guidelines for district courts to follow"). In determining whether there is no just reason for delay in the entry of judgment, factors the district court should consider, if applicable, include:

(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim...