Federal Sav. & Loan Ins. Corp. v. Huff, s. 86-1598

• Citation: 851 F.2d 316
• Decision Date: 05 July 1988
• Docket Number: 86-1599,Nos. 86-1598,s. 86-1598
• Parties: FEDERAL SAVINGS & LOAN INSURANCE CORPORATION, as receiver for North Kansas Savings Association, Plaintiff-Appellant-Cross-Appellee, v. Howard D. HUFF, Donald R. Pierce; William C. Chaffee; Gertrude Erickson; Charles Fleming; Robert F. Johnson; Mark Eaton; John Highland and Pat G. Waggoner, Defendants-Appellees, Fidelity & Deposit Company of Maryland, Defendant-Appellee, Cross-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

Page 316

851 F.2d 316

11 Fed.R.Serv.3d 976

FEDERAL SAVINGS & LOAN INSURANCE CORPORATION, as receiver for North Kansas Savings Association, Plaintiff-Appellant-Cross-Appellee, v. Howard D. HUFF, Donald R. Pierce; William C. Chaffee;

Gertrude Erickson; Charles Fleming; Robert F.

Johnson; Mark Eaton; John Highland and

Pat G. Waggoner, Defendants-Appellees,

Fidelity & Deposit Company of Maryland, Defendant-Appellee,

Cross-Appellant.

Nos. 86-1598, 86-1599.

United States Court of Appeals, Tenth Circuit.

July 5, 1988.

J. Emmett Logan, Morrison, Hecker, Curtis, Kuder & Parrish, Overland Park, Kan., and P. John Owen, Morrison, Hecker, Curtis, Kuder & Parrish, Kansas City, Mo., and Harry W. Quillian, Acting Gen. Counsel, Ralph W. Christy, Deputy Gen. Counsel, William K. Black, Sr. Associate Gen. Counsel, and Dorothy L. Nichols, Trial Atty., Office of the Gen. Counsel, Federal Home Loan Bank Bd., Washington, D.C., for plaintiff-appellant-cross-appellee.

Charles W. Hess, Linde Thompson Langworthy Kohn & Van Dyke, P.C., Overland Park, Kan., for defendants-appellees.

Before HOLLOWAY, McKAY, SEYMOUR, MOORE, ANDERSON, TACHA, BALDOCK, and BRORBY, Circuit Judges.

STEPHEN H. ANDERSON, Circuit Judge.

This is one of three cases ¹ which the court on its own motion has taken en banc for the purpose of reviewing its position on the efficacy of prematurely filed notices of appeal in various circumstances. ² In this civil case the Federal Savings & Loan Insurance Corporation ("FSLIC"), as receiver for a financial institution, brought an action against former officers and directors of the institution, and its bonding company. Counterclaims and cross-claims were filed seeking indemnification and contribution.

On April 2, 1986, the district court, without specifically addressing or dismissing the counterclaims and cross-claims, entered an order granting the defendants' motions to dismiss the action for lack of subject matter jurisdiction 631 F.Supp. 1350. On April 11, 1986, FSLIC filed a notice of appeal. On April 14, 1986, the district court entered an order dismissing all cross-claims and counterclaims. On April 15, 1986, the clerk entered a judgment of dismissal. No prior certification pursuant to Fed.R.Civ.P. 54(b) was obtained, and no further notice of appeal was filed by the FSLIC. The question is whether the notice of appeal filed on April 11, 1986, was effective in conferring jurisdiction on this court under 28 U.S.C. Sec. 1291.

We hold that we have jurisdiction over the appeal in this case. We explained in Lewis v. B.F. Goodrich Co., 850 F.2d 641 (10th Cir.1988), that:

"[W]hen a district court has adjudicated all remaining outstanding claims before this appellate court acts to dismiss the appeal, we will consider the appeal on its merits rather than dismiss for lack of jurisdiction, whether or not a party in the meantime has obtained a Rule 54(b) certification. In such cases generally we will consolidate or companion the earlier appeal with any subsequent appeals arising out of the same district court case.

"When the district court case is still ongoing at the time the appeal reaches this court's attention, two possibilities arise. One is that a belated Rule 54(b) certification has been obtained. In this situation, if the appellant obtains a 54(b) certification after the notice of appeal was filed, we will deem the notice of appeal to ripen as of the date of certification and will accept the jurisdiction pursuant to the savings provision of Fed.R.App.P. 4(a)(2). The other possibility is that no Fed.R.Civ.P. 54(b) certification has been obtained. For this, we hereby adopt the practice of notifying the parties of our observation of the apparent jurisdictional defect and giving them a date certain by which to secure Rule 54(b) certification or an order or judgment explicitly adjudicating all remaining claims. If no certification, or final, dispositive adjudication, is obtained and presented to this appellate court by the specified date, the case will be dismissed summarily for lack of appellate jurisdiction."

Id. at 645-646.

Based on our holding in Lewis, the appeal in this case can be viewed as having ripened when the district court formally dismissed the cross-claims and counterclaims, leaving nothing unadjudicated in the suit. That does not complete our analysis, however.

The position of FSLIC is that the appeal was not premature. It contends that an order dismissing an action for want of subject matter jurisdiction necessarily disposes of counterclaims or cross-claims whether or not they are referred to in the order. ³ Also, it is undisputed that the counterclaims and cross-claims in this case were substantively dependent upon the FSLIC action. FSLIC contends that an order dismissing a complaint is final for purposes of appeal when pending claims depend on the action dismissed, since, as a practical matter, the dependent claims lose their legal footing.

There is some support for FSLIC's argument. In Manufacturers Cas. Ins. Co. v. Arapahoe Drilling Co., 267 F.2d 5 (10th Cir.1959), this court generally addressed the status of counterclaims upon the failure of a complaint, and stated as to the counterclaim in that case:

"So completely was the specific counterclaim related in practical effect to the outcome of plaintiff Campbell's cause of action that it became meaningless upon dismissal of the complaint. A claim for a money judgment, the amount to be determined by reference to a then existing but unliquidated claim made by a stranger, has no existence in law except as it may be contained through specific joinder procedures allowed by and dependent upon the suit of the stranger."

Id. at 8 (emphasis added).

Additionally, this court has on at least one occasion given effect to a notice of appeal filed before the dismissal of dependent claims, although the point there was one of the practical effect of the order appealed from, rather than the legal effect of the dismissal of an action. In Morris v. Uhl & Lopez Engineers, Inc., 442 F.2d 1247 (10th Cir.1971), a decision which we have expressly reaffirmed, with certain modifications, in Lewis, we held that a notice of appeal from an order which failed to deal specifically with dependent claims for indemnity was effective to confer appellate jurisdiction even though no Rule 54(b) certification was obtained. However, even though we noted the practical effect of the order appealed from, we focused on the fact that a subsequent judgment was entered in the case, and spoke of the notice of appeal "ripen[ing] into full effectiveness as to the rendered judgment ..." Id. at 1250 (emphasis added). We stated that:

"[T]his Court properly could refuse at the time to dismiss the appeal on the notice that was filed; that it had the right to continue the notice in effect, to retain jurisdiction of the appeal thereunder in the natural ripening of the judgment into formal finality, and to deal with the merits of the appeal thereon unless intervening elements or events should give defeasance to the effect or application of the notice; ..."

Id. at 1250-51. It is apparent from our expressions in Morris that we regarded the notice of appeal as premature, at least in some respects. Our decision in Frankfort Oil Co. v. Snakard, 279 F.2d 436, 438-39 (10th Cir.), cert. denied, 364 U.S. 920, 81 S.Ct. 283, 5 L.Ed.2d 259 (1960), is generally consistent. We held that a notice of appeal prior to the disposition of all claims, and prior to any Rule 54(b) certification, ripened into full effectiveness upon the filing of a supplemental record establishing the disposition or abandonment of all claims. See also Century Laminating, Ltd. v. Montgomery, 595 F.2d 563, 566 (10th Cir.), cert. granted, 444 U.S. 897, 100 S.Ct. 204, 62 L.Ed. 2d 132, cert. dismissed, 444 U.S. 987, 100 S.Ct. 516, 62 L.Ed.2d 417 (1979) (discussion of Morris ).

There is language in a decision by the Seventh Circuit which is somewhat closer to the mark. In American Family Mut. Ins. Co. v. Jones, 739 F.2d 1259 (7th Cir.1984), the district court granted summary judgment disposing of the main action, but failed specifically to dismiss a pending counterclaim which depended upon the existence of the main cause of action. Shortly thereafter the district court entered a nunc pro tunc judgment amending the initial judgment to comply with Rule 54(b). The appeal followed; thus, there was no question in the case of the effectiveness of the appeal to confer appellate jurisdiction. However, in dicta in a footnote, the appellate court said that the district court's use of Rule 54(b) was unnecessary because the judgment on the main cause effectively disposed of the counterclaim "as a practical matter." Id. at 1262 n. 1. The court also observed that the parties had not briefed the issue, and that the better practice would have been for the district court to dispose of the counterclaim in the original judgment because the counterclaim could not logically survive that judgment.

There are views contrary to the FSLIC position, at least as to the practical effect of an order dismissing a complaint. In Owens v. Aetna Life & Cas. Co., 654 F.2d 218 (3rd Cir.), cert. denied, 454 U.S. 1092, 102 S.Ct. 657, 70 L.Ed.2d 631 (1981), a summary judgment was granted disposing of the entire case, as a practical matter. The judgment failed formally to dismiss a dependent cross-claim for contribution or indemnity. The losing party waited for the district court to enter an additional order dismissing the action, noting withdrawal of the cross-claim, before filing an appeal. The appeal was challenged as being too late because the initial summary judgment had the practical effect of a final adjudication. In denying that motion the Third Circuit said:

"[U]nder Fed.R.Civ.P. 54(b), the July 25 order was a judgment as to 'fewer than all of the claims or parties,' and absent certification, was not appealable until August 13, 1979 when Judge Fisher filed an additional...