Construction Resources Corp. v. Courts, Ltd.
| Decision Date | 09 January 1979 |
| Docket Number | No. 1,No. 50452,50452,1 |
| Citation | 591 P.2d 335 |
| Parties | CONSTRUCTION RESOURCES CORPORATION, Appellant, v. The COURTS, LTD., the Denman Company, Inc., and Maryland Casualty Company, Appellees |
| Court | United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma |
Appeal from the District Court of Oklahoma County; William S. Myers, Jr., Judge.
AFFIRMED.
Eagleton, Eagleton & Owens, Inc. by Gregory M. Pensabene, Tulsa, for appellant.
McKinney, Stringer & Webster by Kenneth N. McKinney, Oklahoma City, for appellee The Courts, Ltd.
Monnet, Hayes, Bullis, Thompson & Edwards by James M. Robinson, Oklahoma City, for appellee The Denman Co.
The Appellant (Construction Resources Corporation General Contractor hereafter) was the general contractor under a contract with Appellee The Courts, Ltd. (Owner) for the construction of an indoor tennis court facility. Appellee The Denman Company, Inc. (Subcontractor) had a subcontract with the General Contractor to install the tennis court surfacing.
The Subcontractor brought this action against the General Contractor for unpaid retainage on the subcontract and sought to foreclose a mechanic and materialman's lien against the property. Also named as defendants were the Owner and mortgagee for purposes of lien foreclosure and the General Contractor's surety on "a payment And/or performance bond(s)" (emphasis supplied).
The General Contractor admitted its liability for the retainage but asserted a counterclaim against the Subcontractor and its surety as a third party defendant based on the allegations that the General Contractor "may have become liable" to the Owner for delays in construction and that the Subcontractor is liable to the General Contractor for damages resulting from the delays. The General Contractor included in its counterclaim a request for a declaratory judgment as to its liability, if any, to the Owner and included the Owner as a third party defendant to its counterclaim. A demurrer by the Owner to this claim was overruled but the District Court dismissed the Owner as a party after the General Contractor deposited the claimed funds and a bond for attorney's fees and costs into court in discharge of the lien.
The General Contractor appeals the dismissal of the Owner as a third party defendant to its counterclaim.
The issue for this Court is whether our statutes permit a defendant to assert as a counterclaim potential liability to a third party and bring the third party in as a third party defendant for a declaratory judgment. Before we can reach this issue we must rule on the Subcontractor's Motion to Dismiss for lack of an appealable order. No brief was filed in support of this motion but the General Contractor has opposed the motion by a written brief.
Under 12 O.S.1971, § 952 the Supreme Court has jurisdiction over appeals from, Inter alia, "final order(s)". Section 953 of Title 12 defines a final order as an "order affecting a substantial right in an action, when such order, in effect, determines the action and prevents a judgment . . .." For all its importance § 953 has been little construed. We view the issue as one dealing with the appealability of an order dismissing a third party defendant. The matter is hardly free from doubt. Did the order of dismissal affect "a substantial right In an action " which, "in effect, determines the action and prevents a judgment"? We think the answer must be yes. The effect of the District Court's order is to terminate the declaratory judgment action against the owner preventing such a judgment. In contrast to a ruling sustaining a demurrer where the plaintiffs have not elected to stand on their pleading, this order terminated the possibility for relief as requested when the District Court had already ruled that a cause of action against the Owner had been stated. Cf. Merchants Delivery Service v. Joe Esco Tire Co., Okl., 497 P.2d 766 (1972). Generally speaking, orders of dismissal have been held final and appealable. See e. g. St. Louis-San Francisco Ry. Co. v. Superior Court, Okl., 290 P.2d 118 (1955); Thompson v. Thompson, 184 Okl. 208, 86 P.2d 286 (1939); Southwestern Natural Gas Co. v. Vernor, 178 Okl. 344, 62 P.2d 1262 (1937); State Bank of DaKoma v. Weaber, 125 Okl. 186, 256 P. 50 (1927); and Avery v. Jayhawker Gasoline Co., 101 Okl. 286, 225 P. 544 (1924). Contra, Shaw v. Sturgeon, Okl., 266 P.2d 462 (1954) and Barker v. Daniels, 195 Okl. 690, 161 P.2d 854 (1945).
The final judgment or order rule has a long and confused history in federal and state practice. See Wright, Handbook of the Law of Federal Courts (3rd Ed. 1976) § 101. The rationale has been stated
" . . . that it prevents piecemeal review of the rulings made in a single controversy and also recurring interruption of the proceedings in the trial court while interlocutory orders . . . are being tested in the appellate court." James, Civil Procedure (1965) p. 50 (footnotes omitted).
In commenting on the inconsistent history of the federal rule the U. S. Supreme Court has stated
. Cobbledick v. United States, 309 U.S. 323, 326, 60 S.Ct. 540, 542, 84 L.Ed. 783 (1940) (footnotes and citations omitted).
We believe the application of the statutory language and the historical purpose of the rule indicate the appealability of this order. It not only terminates the action against the Owner but it hardly reflects "piecemeal review". Whether "(a)n order affect(s) . . . a substantial right in an action" necessarily requires some glimpse into the potential merits of the claim. Were this merely a declaratory judgment action against the Owner there could be no doubt that its dismissal would be appealable. Where, as here, the General Contractor's liability to the Subcontractor may be subject to reduction by reason of the Subcontractor's liability to the General Contractor for the General Contractor's alleged breach of its contract with the Owner, it becomes clear that the District Court subjected the Appellant to the risk of (1) a judgment in favor of the Subcontractor and (2) a later action by the Owner against the General Contractor in which it would be forced to implead the Subcontractor. We believe this is a substantial right and clearly prevents an appealable issue. If the District Court is wrong nothing should go forward until its error is corrected. Whether the whole procedural setting is appropriate is an issue to which we now turn our attention.
The General Contractor counterclaimed against the Subcontractor alleging that the Owner was claiming damages for delay (although no action was filed until after this order was entered), that under the contract which was the basis of the Subcontractor's claim, the Subcontractor was liable to the General Contractor for any liability the General Contractor had to the Owner where such delay was caused by the Subcontractor, and that the delay in question was caused by the Subcontractor. This claim clearly arises out of the "contract . . . set forth in the petition as the foundation of the plaintiff's claim . . .." 12 O.S.1971, § 273. As relief it sought a declaration of its liability, if any, to the Owner, and a determination that it was entitled to reimbursement from the Subcontractor for any liability the Court determined it owed the Owner.
We find nothing objectionable to the seeking of declaratory relief by way of counterclaim. See e. g. 12 O.S.1971, § 1651 which provides generally that the "District Courts may, in cases of actual controversy, determine rights, status, or other legal relations . . .." Indeed, the magic of who files first and what relief is sought plays no proper role in determining what relief is appropriate. Cf. Gray v. Defa, 103 Utah 339, 135 P.2d 251 (1943); Central Ice Cream Co. v. Universal Leaseway System, Inc., 20 Ill.App.2d 145, 155 N.E.2d 324 (1959); and Midwest Transfer Co. v. Preferred Acc. Ins. Co., 342 Ill.App. 231, 96 N.E.2d 228 (1951). 1
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...This Court has concluded that "nonjoinder is not an automatic deficiency." Constr. Res. Corp. v. Courts, Ltd. , 1979 OK CIV APP 1, ¶ 12, 591 P.2d 335.¶ 8 In Oliver v. City of Tulsa , 1982 OK 121, 654 P.2d 607, the Supreme Court cited Reed , Construction Resources and decisions from other ju......
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