Corporation v. General Electric Company

Decision Date22 April 1980
Docket NumberNo. 79-105,CURTISS-WRIGHT,79-105
Citation64 L.Ed.2d 1,446 U.S. 1,100 S.Ct. 1460
PartiesCORPORATION, Petitioner, v. GENERAL ELECTRIC COMPANY
CourtU.S. Supreme Court
Syllabus

Petitioner brought a diversity action in Federal District Court against respondent, seeking damages and reformation with regard to a certain series of contracts between the parties. Various claims were asserted, including a $19 million claim for amounts due on the contracts already performed. Respondent filed counterclaims. The facts as to most of the claims and counterclaims are in dispute, but the sole dispute as to petitioner's claim for the $19 million balance due concerns the application of a release clause in each of the contracts. The District Court granted summary judgment for petitioner for $19 million, plus prejudgment interest at the statutory rate of 6%, notwithstanding the release clause. Petitioner then moved for a certification of this judgment as a final judgment under Federal Rule of Civil Procedure 54(b), which provides that when more than one claim is presented in an action, whether as a claim or counterclaim, a district court may direct the entry of a final judgment as to one or more but fewer than all of the claims upon an express determination that there is no just reason for delay. The court granted the motion and directed entry of final judgment for petitioner after determining that there was "no just reason for delay" and finding, inter alia, that certification would not result in unnecessary appellate review; that the claims finally adjudicated were separate from any of the other claims or counterclaims; that the nature of the claims was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals; that petitioner would suffer severe financial loss from nonpayment of the $19 million judgment because current interest rates were higher than the statutory prejudgment rates; and that the solvency of the parties was not a significant factor since each appeared to be financially sound. Dismissing the case for want of an appealable order, the Court of Appeals held that the District Court had abused its discretion by granting the Rule 54(b) certification, since the possibility of a setoff required that the status quo be maintained unless petitioner could show harsh or unusual circumstances and since no such showing had been made.

Held: The District Court did not abuse its discretion in granting petitioner's motion for certification under Rule 54(b). Pp. 7-13.

(a) In deciding whether there are just reasons to delay an appeal of individual final judgments in a setting such as this, a district court must take into account the interests of sound judicial administration as well as the equities involved. Hence, it was proper for the District Court here to consider such factors as whether the claims under review were separable from the others remaining to be adjudicated and whether the nature of the claims already determined was such that no appellate court would have to decide the same issues more than once even if there were subsequent appeals. The mere presence of nonfrivolous counterclaims does not render a Rule 54(b) certification inappropriate. Pp. 8-9.

(b) The Court of Appeals' holding that the status quo had to be maintained absent a showing by petitioner of harsh or unusual circumstances reflects a misinterpretation of the standard of review for Rule 54(b) certifications and a misperception of the appellate function in such cases. Pp. 9-10.

(c) The proper standard against which a district court's exercise of discretion in granting a Rule 54(b) certification is to be judged is the interest of sound judicial administration. Under this standard, although the court of appeals must scrutinize the district court's evaluation of such factors as the interrelationship of the claims so as to prevent piecemeal appeals, once such juridical concerns have been met, the district court's discretionary judgment should be given substantial deference, and the court of appeals should disturb the district court's assessment of the equities only if it can say that the district judge's conclusion was clearly unreasonable. Pp. 10-11.

(d) The question before the District Court here came down to which of the parties should get the benefit of the difference between the prejudgment and market rates of interest on the debts admittedly owing and adjudged to be due while unrelated claims were litigated. While the possibility of a setoff against the amount respondent owed petitioner was not an insignificant factor, the District Court took this into account when it determined that both litigants appeared to be financially sound, and that petitioner would be able to satisfy a judgment on the counterclaims if any were entered. Pp. 11-12.

3 Cir., 597 F.2d 35, vacated and remanded.

Ralph N. Del Deo, Bernardsville, N.J., for petitioner.

Isaac N. Groner, Washington, D.C., for respondent.

Mr. CHIEF JUSTICE BURGER delivered the opinion of the Court.

Federal Rule of Civil Procedure 54(b) allows a district court dealing with multiple claims or multiple parties to direct the entry of final judgment as to fewer than all of the claims or parties; to do so, the court must make an express determination that there is no just reason for delay. We granted certiorari in order to examine the use of this procedural device. 444 U.S. 823, 100 S.Ct. 43, 62 L.Ed.2d 30 (1979).

I

From 1968 to 1972, respondent General Electric Co. entered into a series of 21 contracts with petitioner Curtiss-Wright Corp. for the manufacture of components designed for use in nuclear powered naval vessels. These contracts had a total value of $215 million.

In 1976, Curtiss-Wright brought a diversity action in the United States District Court for the District of New Jersey, seeking damages and reformation with regard to the 21 contracts. The complaint asserted claims based on alleged fraud misrepresentation, and breach of contract by General Electric. It also sought $19 million from General Electric on the outstanding balance due on the contracts already performed.

General Electric counterclaimed for $1.9 million in costs allegedly incurred as the result of "extraordinary efforts" provided to Curtiss-Wright during performance of the contracts which enabled Curtiss-Wright to avoid a contract default. General Electric also sought, by way of counterclaim, to recover $52 million by which Curtiss-Wright was allegedly unjustly enriched as a result of these "extraordinary efforts."

The facts underlying most of these claims and counterclaims are in dispute. As to Curtiss-Wright's claims for the $19 million balance due, however, the sole dispute concerns the application of a release clause contained in each of the 21 agreements, which states that "Seller . . . agree[s] as a condition precedent to final payment, that the Buyer and the Government . . . are released from all liabilities, obligations and claims arising under or by virtue of this order." App. 103a. When Curtiss-Wright moved for summary judgment on the balance due, General Electric contended that so long as Curtiss-Wright's other claims remained pending, this provision constituted a bar to recovery of the undisputed balance.

The District Court rejected this contention and granted summary judgment for Curtiss-Wright on this otherwise undisputed claim. Applying New York law by which the parties had agreed to be bound, the District Court held that Curtiss-Wright was entitled to payment of the balance due notwithstanding the release clause. The court also ruled that Curtiss-Wright was entitled to prejudgment interest at the New York statutory rate of 6% per annum.

Curtiss-Wright then moved for a certification of the District Court's orders as final judgments under Federal Rule of Civil Procedure 54(b),1 which provides:

"When more than one claim for relief is presented in an action, whether as a claim, counterclaim, cross-claim, or third-party claim, or when multiple parties are involved, the 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, and the order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties."

The court expressly directed entry of final judgment for Curtiss-Wright and made the determination that there was "no just reason for delay" pursuant to Rule 54(b).

The District Court also provided a written statement of reasons supporting its decision to certify the judgment as final. It acknowledged that Rule 54(b) certification was not to be granted as a matter of course, and that this remedy should be reserved for the infrequent harsh case because of the overload in appellate courts which would otherwise result from appeals of an interlocutory nature. The essential inquiry was stated to be "whether, after balancing the competing factors, finality of judgment should be ordered to advance the interests of sound judicial administration and justice to the litigants."

The District Court then went on to identify the relevant factors in the case before it. It found that certification would not result in unnecessary appellate review; that the claims finally adjudicated were separate, distinct, and independent of any of the other claims or counterclaims involved; that review of these adjudicated claims would not be mooted by any future developments in the case; and that the nature of the...

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