Cambridge Holdings Group, Inc. v. Federal Ins. Co.

• Decision Date: 19 June 2007
• Docket Number: No. 05-7096.,05-7096.
• Citation: 489 F.3d 1356
• Parties: CAMBRIDGE HOLDINGS GROUP, INC., a Delaware Corporation, Appellant v. FEDERAL INSURANCE COMPANY d/b/a Chubb Group of Insurance Companies, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

489 F.3d 1356

CAMBRIDGE HOLDINGS GROUP, INC., a Delaware Corporation, Appellant v. FEDERAL INSURANCE COMPANY d/b/a Chubb Group of Insurance Companies, Appellee.

No. 05-7096.

United States Court of Appeals, District of Columbia Circuit.

Argued November 3, 2006.

Decided June 19, 2007.

Appeal from the United States District Court for the District of Columbia (No. 01cv02192).

Kenneth T. Ward argued the cause for appellant. With him on the briefs was Thomas A. Mauro.

Edward G. Gallagher argued the cause and filed the brief for appellee.

Before: GARLAND and BROWN, Circuit Judges, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge GARLAND.

GARLAND, Circuit Judge.

Cambridge Holdings Group, Inc. sued Federal Insurance Co. in the United States District Court for the District of Columbia, asserting breach of contract and related claims. The district court dismissed the suit for failure to state a claim upon which relief can be granted, and Cambridge now appeals. Federal Insurance contends that we must dismiss the appeal because it is was not filed within the time permitted by Federal Rule of Appellate Procedure 4(a). To resolve that issue, we must consider additional provisions of the Federal Rules that govern the following subissues: the appealability of an order that does not dismiss all of the named parties to a complaint; the validity of an attempt to serve process by mail; and the starting gun of the filing period when an order is not set forth in a separate document. After exploring the intricacies of those provisions, we conclude that the instant appeal was indeed untimely, and we therefore dismiss it.

I

This diversity case arose out of a complicated multiparty transaction, the details of which are neither in the appellate record nor relevant to our disposition. Cambridge, a Delaware corporation with its principal place of business in Washington, D.C., loaned $2.1 million to three entities that are not parties to this lawsuit. Part of the loan agreement required a Florida law firm, Altschul, Landy & Collier, P.A., to hold $1.5 million in escrow for distribution to the borrowers at a later date. The escrow arrangement was governed by a separate "Guaranty Deposit Agreement" signed by Cambridge, the three borrowers, and the escrow agent, Altschul Landy. The Agreement required that the escrow account be protected by a "fidelity bond" payable to Cambridge in the event of misfeasance, malfeasance, or breach of the Agreement by the law firm. To satisfy this requirement, Altschul Landy obtained an insurance policy from the Federal Insurance Company through the company's agent, Babb, Inc. The policy listed Altschul Landy as the insured party and Cambridge as the "loss payee."

Cambridge alleges that, after the $1.5 million was placed in escrow, Altschul Landy violated the Agreement and misappropriated the money. Despite repeated demands by Cambridge, the law firm failed to repay the misappropriated funds or to submit a claim on the policy to Federal Insurance. When Cambridge itself sought to make a claim on the policy, Federal Insurance refused to pay on the ground that only the insured party could make a claim.

On October 22, 2001, Cambridge sued Federal Insurance, Babb, and Altschul Landy in the United States District Court for the District of Columbia. Counts 1 through 4 of the complaint sought damages from Federal Insurance and Babb on breach of contract and related theories. Count 5 sought an injunction requiring Altschul Landy to submit a claim on the insurance policy.

On July 12, 2004, the district court issued a memorandum opinion and entered an order in its docket dismissing Counts 1 through 4 for failure to state claims upon which relief can be granted. See Cambridge Holdings Group, Inc. v. Fed. Ins. Co., 357 F.Supp.2d 89, 91 (D.D.C.2004) (memorandum opinion); U.S. District Court for the District of Columbia, Docket Report for Case No. 01-cv-02192. The court did not address the remaining count, Count 5, which sought injunctive relief solely against Altschul Landy.

After the court dismissed the claims against Federal Insurance and Babb, Cambridge's suit lay dormant. The docket reflects no activity between the entry of the dismissal on July 12, 2004, and April 28, 2005, when the court sua sponte scheduled a status hearing for the following month. At that hearing, which was attended by representatives of Cambridge, Federal Insurance, and Babb (but not Altschul Landy), a dispute arose as to whether the district court's July 12, 2004 order was final and appealable, in light of the failure to dismiss Count 5 of the complaint. Although the district court ordered briefing on the question, it never expressly resolved the issue. Instead, on June 20, 2005, the court entered an order dismissing Count 5 for failure to prosecute and dismissing the case in its entirety. This disposition was repeated in a separate document, entitled "Final Judgment," that was also entered on June 20, 2005.

Cambridge filed a notice of appeal on July 19, 2005.

II

On appeal, Cambridge challenges only the dismissal of its breach of contract claim against Federal Insurance. In addition to defending on the merits, Federal Insurance contends that we must dismiss the appeal because it is untimely.

The time for filing a notice of appeal is governed by Federal Rule of Appellate Procedure 4(a), which provides that an appeal from a decision of a district court in a civil case may only be taken by filing a notice of appeal "within 30 days after the judgment or order appealed from is entered." FED. R. APP. P. 4(a)(1)(A); see FED. R. APP. P. 3(a)(1); see also 28 U.S.C. § 2107(a). In this case, the district court's order dismissing Cambridge's breach of contract claim was entered in the docket on July 12, 2004. Cambridge, however, did not file a notice of appeal until July 19, 2005-372 days later.

Despite this delay, Cambridge asserts that its notice of appeal was timely because it was filed within thirty days of the entry of the district court's June 20, 2005 judgment, which dismissed Count 5 and the complaint in its entirety. Cambridge maintains that Rule 4(a)'s clock did not begin to run until the entry of that later judgment, for two reasons. First, it argues that the July 12, 2004 order was not an appealable final order because it did not resolve the litigation as to all parties as required by Federal Rule of Civil Procedure 54(b). Second, Cambridge asserts that, even if the July 12, 2004 order was otherwise appealable, it still did not start the Rule 4(a) clock because it was not set forth in a "separate document," as required by Federal Rule of Civil Procedure 58(a) and Federal Rule of Appellate Procedure 4(a)(7).

We address these two arguments in Parts III and IV, respectively.

III

Cambridge's first contention is that the district court's July 12, 2004 order was not appealable because it did not dispose of Count 5 of the complaint, which sought injunctive relief against Altschul Landy. Generally, the jurisdiction of courts of appeals is limited to appeals from "final decisions of the district courts." 28 U.S.C. § 1291; see Outlaw v. Airtech Air Conditioning & Heating, Inc., 412 F.3d 156, 159 (D.C.Cir.2005). The finality of a decision in a case involving multiple claims or multiple parties is governed in part by Federal Rule of Civil Procedure 54(b), which specifies that a district court

may direct the entry of a final judgment as to one or more but fewer than all of the claims or parties only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment. In the absence of such determination and direction, any order or other form of decision, however designated, which adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties shall not terminate the action as to any of the claims or parties . . . .

FED. R. CIV. P. 54(b). The district court's July 12, 2004 order indisputably failed to adjudicate Count 5 of the complaint, and did not make the required "determination and direction." Therefore, Cambridge argues, that order was not final, and hence not appealable, because it adjudicated "fewer than all the claims [and] the rights and liabilities of fewer than all the parties." Id. And if the July 12, 2004 order was unappealable, it could not have started Rule 4(a)'s limitation on Cambridge's time to file a notice of appeal. As a consequence, Cambridge asserts, the clock did not start until June 20, 2005, when the district court entered a final, appealable order under Rule 54(b).

Under most circumstances, Cambridge's analysis would undoubtedly be correct. In this case, however, Altschul Landy did not file an answer, enter an appearance, or otherwise participate in the litigation. Federal Insurance contends that Altschul Landy was never even served with a summons and complaint pursuant to Federal Rule of Civil Procedure 4. In these circumstances, Federal Insurance argues, Altschul Landy was not one of the "parties" to the litigation within the meaning of Rule 54(b). If this argument is correct, the district court's July 12, 2004 order was final and appealable because it did decide all of the claims against Federal Insurance and Babb, and thus fully resolved the rights and liabilities of all the properly served parties to the lawsuit.

In order to resolve this dispute, we must address two issues. First, we must determine whether a defendant that has never been served is a "party" for purposes of Rule 54(b), a question of first impression in this circuit. Second, because we conclude that an unserved defendant is not a party, we must determine whether Altschul Landy was ever served.

A

Although the interpretation of the term "parties" in Rule 54(b) is a question of first impression in this circuit, that is hardly the case elsewhere. To the contrary, our sister circuits "treat an improperly served defendant...