Dl Resources, Inc. v. Firstenergy Solutions Corp.

• Decision Date: 16 October 2007
• Docket Number: No. 05-1855.,05-1855.
• Citation: 506 F.3d 209
• Parties: DL RESOURCES, INC. v. FIRSTENERGY SOLUTIONS CORP., Appellant.
• Court: U.S. Court of Appeals — Third Circuit

506 F.3d 209

DL RESOURCES, INC. v. FIRSTENERGY SOLUTIONS CORP., Appellant.

No. 05-1855.

United States Court of Appeals, Third Circuit.

Argued January 23, 2007.

Filed: October 16, 2007.

Richard W. Hosking, Esq., (Argued), Gerard J. Schirato, Esq., Melissa J. Tea, Esq., Kilpatrick & Lockhart Nicholson Graham LLP, Henry W. Oliver, Pittsburgh, PA, for Appellant.

Thomas T. Frampton, Esq., (Argued), Mandi L. Scott, Esq., Stacy F. Vernallis, Esq., Goehring, Rutter & Boehm, Pittsburgh, PA, for Appellee.

Before: SCIRICA, Chief Judge, FUENTES, and CHAGARES, Circuit Judges.

OPINION OF THE COURT

CHAGARES, Circuit Judge.

This dispute arises out of a contract for the purchase of natural gas. When the seller, appellee DL Resources, Inc. (DL Resources), was unable to supply the volume of natural gas to the buyer, appellant FirstEnergy Solutions Corporation (FirstEnergy), to which FirstEnergy believed it was contractually entitled, FirstEnergy withheld payments to DL Resources to offset the costs it incurred by having to purchase natural gas on the open market at higher prices than it would have paid pursuant to the parties' contract. FirstEnergy also informed a potential customer of DL Resources, Mid-American, that it might get involved in litigation with Mid-American if Mid-American entered a contract with DL Resources for natural gas because FirstEnergy believed that, by virtue of its agreement with DL Resources, it was contractually entitled to the gas Mid-American was contemplating purchasing from DL Resources. Mid-American promptly ended its negotiations with DL Resources.

Thereafter, DL Resources initiated this litigation, asserting both contract and tort-based claims against FirstEnergy. The parties filed cross-motions for summary judgment, and the District Court granted summary judgment to DL Resources on several claims. In this appeal, we conclude that the District Court properly granted summary judgment to DL Resources on its contract-based claims. As to DL Resources' claim for prospective advantage/tortious interference with a future contractual relationship, however, we hold that the District Court erred in granting summary judgment sua sponte without notice. Accordingly, we will affirm in part and vacate in part the District Court's decision, and remand for further proceedings consistent with this opinion.

I.

DL Resources finds, extracts, and markets oil and natural gas in western Pennsylvania. Prior to and during 2002, DL Resources acquired leases and/or interests in natural gas deposits in McKean County, Pennsylvania, and began drilling to recover the gas. By May 2002, DL Resources had begun extracting and marketing natural gas from eighty-six wells in McKean County.

On May 15, 2002, DL Resources and FirstEnergy entered into a contract for the sale of natural gas. Under this contract, known as the "Base Gas Purchase Agreement," DL Resources agreed to sell FirstEnergy a supply of natural gas from its gas wells in McKean County. The output from these wells was less than the parties anticipated, and as a result, FirstEnergy had to purchase natural gas on the open market to compensate for this production shortfall. Because the open market price was higher than the price FirstEnergy would have paid for an equivalent amount of natural gas under the parties' contract, FirstEnergy reasoned that it was entitled under the contract to withhold monies from the payments it owed DL Resources to offset these higher procurement costs.

In the summer or fall of 2002, FirstEnergy learned that Mid-American, a potential purchaser of natural gas, was engaged in negotiations with DL Resources to obtain natural gas. Prior to the execution of this contract, and while negotiations between DL Resources and Mid-American were ongoing, Eric Wright, an agent and employee of FirstEnergy, informed Mark Williams, Vice-President of Gas at Mid-American, that FirstEnergy believed it had a contractual right to the output DL Resources was attempting to sell to Mid-American. Wright also informed Williams that FirstEnergy might get involved in litigation with Mid-American if it consummated its deal with DL Resources. Shortly thereafter, Mid-American ended its negotiations with DL Resources.

On February 10, 2003, DL Resources filed the lawsuit underlying this appeal in federal district court. DL Resources' amended complaint alleged the following causes of action: declaratory judgment (Count I), breach of contract (Count II), unjust enrichment (Count III), tortious interference with a contractual relationship (Count V), and prospective advantage/tortious interference with a future contractual relationship (Count VI).¹ Counts I-III resulted from FirstEnergy's withholding of monies to offset procurement costs it incurred in having to purchase natural gas on the open market, while Counts V and VI pertained to FirstEnergy's interference with DL Resources' dealings with Mid-American.

DL Resources and FirstEnergy filed cross-motions for summary judgment. FirstEnergy moved for summary judgment on all claims, while DL Resources moved only for summary judgment on its breach of contract and declaratory judgment claims (Counts I and II). By a memorandum opinion and order entered February 9, 2005, the District Court granted summary judgment in DL Resources' favor with respect to Counts I, II, III, and VI, and granted summary judgment in FirstEnergy's favor with respect to Count V.² The District Court did not, however, calculate the damages to which DL Resources would be entitled with respect to any claim. Notwithstanding this failure, the District Court entered a final judgment order on February 11, 2005, and marked the case closed.

On February 18, 2005, DL Resources filed a motion to amend the judgment pursuant to Fed.R.Civ.P. 54(c) and 59(e), asking the District Court to specify the monetary damages to which DL Resources was entitled as a result of FirstEnergy's breach of the parties' contract and its tortious interference with DL Resources' prospective relationship with Mid-American. On March 11, 2005, while DL Resources' motion to amend the judgment was still pending, FirstEnergy filed a notice of appeal from the District Court's order entered February 11, 2005.

The parties stipulated that DL Resources was entitled to damages in the amount of $2,473,005.35 on its breach of contract claim, which included interest calculated at 6% through November 21, 2005. However, the parties were not able to agree regarding the amount of damages to which DL Resources would be entitled on its tortious interference claim. To determine these damages, the District Court held a bench trial on November 21, 2005, The District Court issued an opinion and an amended judgment order on December 19, 2005 awarding DL Resources $2,384,267.03 on its tortious interference claim in addition to the agreed-upon damages of $2,473,005.35 for breach of contract, for a total damage award of approximately $4.85 million. FirstEnergy did not file a new or amended notice of appeal.

II.

Our analysis must begin with DL Resources' contention that FirstEnergy failed to file a timely notice of appeal. The question whether FirstEnergy's notice of appeal was timely is a question of law over which we exercise plenary review. Lazy Oil Co. v. Witco Corp., 166 F.3d 581, 585-87 (3d Cir.1999).

We have appellate jurisdiction only to hear appeals from final judgments of the district courts and other matters not relevant here. See 28 U.S.C. § 1291. FirstEnergy filed its notice of appeal on March 11, 2005 from the District Court's order entered February 11, 2005. This order determined FirstEnergy's liability but did not fix damages. DL Resources argues that FirstEnergy failed to perfect its appeal because at the time FirstEnergy filed its notice of appeal on March 11, 2005, the District Court's decision was not final for purposes of appellate review. We have recognized that "[a] finding of liability that does not also specify damages is not a final decision." Marsha v. Treadwell, 240 F.3d 184, 190 (3d Cir.2001) (citing Liberty Mut. Ins. Co. v. Wetzel, 424 U.S. 737, 744, 96 S.Ct. 1202, 47 L.Ed.2d 435 (1976)); see Gen. Motors Corp. v. New A.C. Chevrolet, Inc., 263 F.3d 296, 311 n. 3 (3d Cir.2001) ("In general terms, a decision that fixes the parties' liability but leaves damages unspecified is not final, and the adjudication of liability is not immediately appealable."). Accordingly, DL Resources is correct that the order expressly appealed from did not constitute a final and appealable order. This does not end this initial inquiry, however. We must consider whether FirstEnergy's premature notice of appeal "ripened" as a result of events following its filing.

Federal Rule of Appellate Procedure 4(a)(2) provides "[a] notice of appeal filed after the court announces a decision or order — but before the entry of the judgment or order — is treated as filed on the date of and after the entry." The Supreme Court has noted "Rule 4(a)(2) permits a notice of appeal from a nonfinal decision to operate as a notice of appeal from the final judgment only when a district court announces a decision that would be appealable if immediately followed by the entry of judgment." FirsTier Mortg. Co. v. Investors Mortg. Ins. Co., 498 U.S. 269, 276, 111 S.Ct. 648, 112 L.Ed.2d 743 (1991). This rule is plainly inapplicable insofar as FirstEnergy appealed from an order that had been entered and was not final.

After FirstEnergy filed its notice of appeal, DL Resources filed a motion to amend the judgment pursuant to Fed. R.Civ.P. 54(c) and 59(e), seeking to have the District Court specify the monetary damages to which it was entitled. Following a stipulation fixing a portion of the damages and a bench trial to determine the remainder of the damages, the District Court awarded DL Resources a total damage award of approximately $4.85 million via an amended judgment order entered on December 19, 2005. Because FirstEnergy...