Contractors Edge, Inc. v. City of Mankato, A14–0223.

Decision Date20 May 2015
Docket NumberNo. A14–0223.,A14–0223.
Citation863 N.W.2d 765
PartiesCONTRACTORS EDGE, INC., Appellant, v. CITY OF MANKATO, Respondent.
CourtMinnesota Supreme Court

Stephen F. Buterin, Heley, Duncan & Melander, PLLP, Minneapolis, MN; and Aaron A. Dean, Kerry C. Raymond, Best & Flanagan, Minneapolis, MN, for appellant.

James M. Strommen, James J. Thomson, Kennedy & Graven, Chartered, Minneapolis, MN, for respondent.

OPINION

GILDEA, Chief Justice.

The questions presented in this case are whether the district court abused its discretion in certifying an order as a final partial judgment under Minn. R. Civ. P. 54.02 (“Rule 54.02 ”), and if so, whether an erroneously certified order results in a judgment that is immediately appealable. The case arises from a dispute over a construction contract entered into between appellant Contractors Edge, Inc. (Contractors Edge) and respondent City of Mankato (“the City”). Contractors Edge sued the City alleging breach of contract, equitable estoppel, and violation of the Prompt Payment Act, Minn.Stat. § 471.425 (2014). By 2012 only the breach of contract and the Prompt Payment Act claims remained. The City moved for summary judgment and the district court dismissed the breach of contract claim on October 3, 2012, in an order (October 2012 order”) that is at the center of this appeal. Although neither party asked for a certification of final judgment under Rule 54.02, the district court concluded the October 2012 order by stating, “THERE BEING NO JUST REASON FOR DELAY, LET JUDGMENT BE ENTERED ACCORDINGLY.” Summary judgment on the claim was entered on the same day. The parties eventually settled the remaining Prompt Payment Act claim and the district court administrator entered final judgment on January 6, 2014.

Contractors Edge appealed on February 7, 2014, seeking review of the October 2012 order.1 The court of appeals dismissed the appeal as untimely, holding that regardless of whether the district court properly certified the October 2012 order, the partial judgment was immediately appealable and Contractors Edge's appeal time had expired. Contractors Edge, Inc. v. City of Mankato, No. A14–0223, Order at 3 (Minn.App. filed Mar. 18, 2014). Because we conclude that the district court abused its discretion in certifying the October 2012 order as final under Rule 54.02 and that a judgment resulting from an improperly certified order is not immediately appealable, we reverse.

I.

The court of appeals dismissed Contractors Edge's appeal, concluding that it was late. Contractors Edge, Inc. v. City of Mankato, No. A14–0223, Order at 3 (Minn.App. filed Mar. 18, 2014). Under Minn. R. Civ.App. P. 104.01, subd. 1, a judgment entered “pursuant to Rule 54.02 must be appealed within 60 days of the date the judgment is entered if the trial court makes an express determination that there is no just reason for delay and expressly directs the entry of a final judgment.” Consistent with the appellate rule, if the district court properly certified the October 2012 order under Rule 54.02, Contractors Edge's appeal, which was not filed until February 2014, was late and the court of appeals did not have jurisdiction. See Tischendorf v. Tischendorf, 321 N.W.2d 405, 409 (Minn.1982) (recognizing that an appellate court does not have jurisdiction over an appeal that is filed late). Accordingly, we turn first to a determination of whether the district court properly certified the October 2012 order as final under Rule 54.02.

Minnesota Rule of Civil Procedure 54.02 allows a district court to direct the entry of a final judgment “as to one or more but fewer than all of the claims” if it determines “there is no just reason for delay.” In the October 2012 order, the district court used the language set forth in Rule 54.02. But the court did not explain its reasons for certifying under Rule 54.02. Contractors Edge argues that it is an abuse of discretion for a district court to fail to provide reasons for its decision and that without a recitation of reasons for the certification, the requirements of Rule 54.02 are not met. The City argues that although articulated reasons are an aid to review, they are not a requirement for a proper Rule 54.02 certification.

The parties' arguments require us to interpret procedural rules. We review the construction and application of procedural rules de novo. Commandeur LLC v. Howard Hartry, Inc., 724 N.W.2d 508, 510 (Minn.2006). In construing procedural rules, we look to the plain language of the rule and its purpose. Id.

A.

Rule 54.02 provides that the district court “may direct the entry of a final judgment as to one or more but fewer than all of the claims ... only upon an express determination that there is no just reason for delay and upon an express direction for the entry of judgment.” Minn. R. Civ. P. 54.02. Black's Law Dictionary defines “express” as [c]learly and unmistakably communicated; stated with directness and clarity.” Black's Law Dictionary 701 (10th ed.2014). It defines “determination” as “a final decision by a court.” Black's Law Dictionary 544 (10th ed.2014). Further, Webster's Third New International Dictionary defines “determination” as [t]he resolving of a question by argument or reasoning.” Webster's Third New International Dictionary 616 (2002). These definitions do not support the argument that an “express determination” must include an explanation of the district court's reasoning. See Elliott v. Archdiocese of N.Y., 682 F.3d 213, 225–26 (3d Cir.2012) (examining the language of analogous Federal Rule of Civil Procedure 54(b) and concluding that the district court simply must articulate that it has made a determination that there is no just reason for delay). Instead, the phrase “express determination” suggests that a statement indicating that there is no just reason for delay may be sufficient, even without articulated reasons supporting the conclusion.

Cases interpreting Rule 54.02 and Fed.R.Civ.P. 54(b), the analogous federal provision, also support the conclusion that Rule 54.02 does not require an explanation for the certification. In terms of our precedent, we have never held that articulated reasons are required for a valid certification under Rule 54.02. And most federal courts reviewing the issue have held that although stated reasoning from the district court is preferred, it is not necessary for proper certification.2 See, e.g., Explosives Supply Co. v. Columbia Nitrogen Corp., 691 F.2d 486, 486 (11th Cir.1982) (holding that the articulated reasons do not need to be in the judgment); Bank of Lincolnwood v. Fed. Leasing, Inc., 622 F.2d 944, 948–49 (7th Cir.1980) (holding that a lack of articulated reasoning is not a jurisdictional defect if the basis for the district court's decision is “otherwise apparent”). But see Morrison–Knudsen Co. v. Archer, 655 F.2d 962, 965 (9th Cir.1981) (requiring the district court to set out specific findings for a valid certification).

We agree with those courts that have concluded that it is a preferred practice for the district court to provide a written explanation for the certification decision. The failure to provide such articulated reasons, however, is not by itself an abuse of the district court's discretion. This is so because the record might otherwise disclose why the certification was appropriate. See Bank of Lincolnwood, 622 F.2d at 948–49.

We turn then to the record here to determine whether the record supports the certification. We review the record through the lens of the abuse-of-discretion standard of review. T.A. Schifsky & Sons, Inc. v. Bahr Constr., LLC, 773 N.W.2d 783, 786–87 (Minn.2009) (reviewing a district court's decision to certify an order pursuant to Rule 54.02 for an abuse of discretion).

B.

Contractors Edge argues that the district court abused its discretion in this case because there are “no substantial and compelling reasons” in the record that would justify an immediate appeal of the October 2012 order. The City responds that the district court's certification was reasonable because, as reflected in the record, the two claims were independent of one another and the breach of contract claim was the substantive claim, which warranted immediate review. We agree with Contractors Edge that the record does not provide a basis for certification.

A district court has discretion to “allow a piecemeal appeal if the parties or claims are clearly separable and no prejudice would result from appeal.” Novus Equities Corp. v. EM–TY P'ship, 381 N.W.2d 426, 428 (Minn.1986) (citation omitted) (internal quotation marks omitted). When deciding whether to certify, the district court should “weigh[ ] the overall policy against piecemeal appeals against whatever exigencies the case at hand may present.” Panichella v. Pa. R.R., 252 F.2d 452, 455 (3d Cir.1958). District courts should not routinely certify an order pursuant to Rule 54.02, but should do so only in appropriate cases. See T.A. Schifsky & Sons, 773 N.W.2d at 789 n. 6.

One such appropriate case is when a district court certifies an order based on the possibility of hardship that could result from a delayed appeal. See Novus Equities Corp., 381 N.W.2d at 428. For example, in Novus Equities Corp., we upheld a Rule 54.02 certification, noting that the possibility of a substantial loss of interest on a judgment if the appeal were delayed was a permissible basis for an immediate appeal. Id.

Administrative concerns, such as the parties' desire to adjudicate one claim fully before deciding whether to continue to trial on another, may also support a certification. See, e.g., Cold Metal Process Co. v. United Eng'g & Foundry Co., 351 U.S. 445, 450 n. 5, 76 S.Ct. 904, 100 L.Ed. 1311 (1956). Other factors considered by federal courts in certifying pursuant to Fed.R.Civ.P. 54(b) include expense, delay, shortening the length of a trial, frivolity of competing claims, and the possibility that another claim or counterclaim could offset the judgment. See Allis–Chalmers Corp. v. Phila....

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