International Minerals & Chemical Corp. v. Avon Products, Inc., 73734

• Citation: 817 S.W.2d 903
• Decision Date: 16 October 1991
• Docket Number: No. 73734,73734
• Court: United States State Supreme Court of Missouri
• Parties: INTERNATIONAL MINERALS & CHEMICAL CORPORATION, Respondent, Mallinckrodt, Inc., Respondent, v. AVON PRODUCTS, INC., Appellant.

Page 903

817 S.W.2d 903

INTERNATIONAL MINERALS & CHEMICAL CORPORATION, Respondent Mallinckrodt, Inc., Respondent, v. AVON PRODUCTS, INC., Appellant.

No. 73734.

Supreme Court of Missouri En Banc.

Oct. 16, 1991.

Dissenting Opinion Nov. 19, 1991.

Frank N. Gunlach, Thomas Cummings, Jordan B. Cherrick, St. Louis, for appellant.

William G. Guerri, W. Stanley Walch, Michael J. Morris, St. Louis, for respondents.

BLACKMAR, Judge.

On February 28, 1986, Avon Products, Inc. sold all of the stock of a wholly-owned subsidiary, Mallinckrodt, Inc., to International Minerals and Chemical Corporation for a price of $675,000,000 cash. Avon undertook to indemnify International against contingent liabilities of Mallinckrodt. A pending patent suit by E.I. DuPont de Nemours & Company was specifically listed in a schedule of such liabilities known to Avon at the time of closing. The trial court's decree, entered in January of 1987, was not substantially unfavorable, but the judgment on appeal was disastrous to Mallinckrodt, producing a situation in which one of its most profitable products could be marketed only if it paid DuPont substantial damages and a large continuing royalty. Mallinckrodt settled the suit with the consent of Avon, with Avon seeking to preserve certain rights in its letter of consent.

Mallinckrodt filed suit seeking indemnity for the DuPont settlement and other liabilities not here material. The trial court, after a series of procedural skirmishes, entered a partial summary judgment finding that Avon was liable under the indemnity clause but leaving damages for later determination. The court on its own initiative found, pursuant to Rule 74.01(b), that there was no just reason for delay in entering judgment on this claim, and Avon appealed. The Court of Appeals, Eastern District, dismissed the appeal, finding that the trial court lacked the authority to enter an appealable judgment. We granted transfer to consider the scope of Rule 74.01(b), and now assume jurisdiction of the entire appeal. We determine that appellate jurisdiction is present, affirm the partial judgment of the trial court, and remand for further proceedings.

1. Appealability

Both parties disagree with the jurisdictional ruling of the court of appeals and urge us to consider the merits of the appeal. Their consent is not enough. We must determine for ourselves whether appellate jurisdiction is present. Once we make this essential finding, however, the parties' consent or acquiescence may operate to eliminate or to waive procedural problems which fall short of being jurisdictional.

The plaintiffs initially filed a petition for declaratory judgment of liability for indemnity. This petition was dismissed by Circuit Judge Robert G. Dowd, Jr., with leave to amend, on the basis that there was an adequate remedy at law rendering declaratory relief unnecessary. The plaintiffs then filed an amended petition in five counts. Count I sought a declaratory judgment of liability. Counts II, III and IV sought declaratory relief involving other unrelated claims for indemnification. Count V was an action for damages for breach of the indemnity contract. In the musical chair operation of the 22nd Judicial Circuit the case passed to Judge Ryan, who dismissed the portions of the prayers seeking declaratory relief. The case was then assigned to Judge McBride.

The plaintiffs filed a motion for summary judgment as to liability. The parties adduced voluminous depositions, affidavits and exhibits. The trial court sustained this motion, by an order specifying as follows:

The Court enters its order and judgment herein granting plaintiffs' motion for partial summary judgment on liability with respect to Count I only, and sua sponte, pursuant to Supreme Court Rule 74.01(b) and Hampton Foods, Inc. v. Wetterau Finance, 780 S.W.2d 79 (Mo.App.1989), designates its order and judgment final for purposes of appeal, and expressly determines that there is no just reason for delay in the appeal of its order and judgment.

The court of appeals, in a thorough and scholarly opinion, concluded that a judgment of this kind, adjudging liability only and not ruling the issue of damages, could not constitute a final and appealable judgment because, by leaving damages for future determination, it did not finally determine any discrete segment of the case. The opinion cited numerous federal authorities construing Rule 54(b), FRCP. The tenor of these holdings is that a trial judge cannot enter an appealable judgment which determines only the issue of liability, leaving the question of damages for future determination. There are indications that the federal cases are not unvarying in this holding, but we need not pursue the point. Federal authorities are of interest but not controlling. In contrast to some of our other procedural rules, Rule 74.01(b) does not borrow substantially from the federal model. It reads as follows:

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 enter a 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. In the absence of such determination, any order or other form of decision, however designated, that 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.

We believe that our rule allows the trial court more discretion than would apparently be permitted under some of the federal authorities cited. In Speck v. Union Electric Co., 731 S.W.2d 16 (Mo. banc 1987), the trial court designated its judgment dismissing the case against one of several defendants as final for purposes of appeal, under our prior Rule 81.06. ¹ We sustained appellate jurisdiction even though the court of appeals had found that a judgment terminating the case as to one party only could not be appealable. The convenience of permitting an immediate appeal was apparent because, in the context of Missouri Pacific Railway Co. v. Whitehead & Kales, 566 S.W.2d 466 (Mo. banc 1978), it is important to know which defendants will remain in the case. We upheld the discretion of the trial court in its designation of finality under the rule then in force.

To the same effect is Spires v. Edgar, 513 S.W.2d 372 (Mo. banc 1974), in which the trial court dismissed a petition as to one of three defendants, and the plaintiff appealed. The trial court designated the dismissal order as final under then Rule 81.06. The Court found appealability, rejecting a much narrower construction of Rule 81.06 advocated in a dissenting opinion. ²

In Dotson v. E.W. Bacharach, Inc., 325 S.W.2d 737 (Mo.1959), the Court dismissed an appeal from a judgment dismissing a counterclaim, solely because the judgment did not include the required language of finality prescribed by Rule 81.06. The Court reviewed the history of Rule 81.06, and suggested that the judgment might be modified to include the required language. The holding is particularly significant because, as the opinion pointed out, the counterclaim from which appeal was sought was a compulsory counterclaim. The opinion suggests that that circumstance would not interpose any theory of completeness as a bar to appealability.

In Landoll v. Dovell, 752 S.W.2d 323 (Mo. banc 1988), the trial court had entered a judgment determining paternity, and also assessed support pendente lite. Our specific holding was that this latter order was not authorized in a paternity action, because, for want of statutory basis, support in a paternity action could only be awarded by a final judgment. We suggested that Rule 74.01(b) provided an appropriate vehicle for appealing a judgment declaring paternity prior to the resolution of monetary issues, if the trial judge makes the appropriate determination. The determination of paternity is a matter which could be the subject of a separate judgment, and so could be the subject of a 74.01(b) appeal.

In St. Louis Firefighters Association v. City of St. Louis, 637 S.W.2d 128 (Mo.App.1982), a suit was brought to determine the rights of firefighters under the charter amendment which required that they receive the same compensation and benefits as were paid to police officers. The trial court issued a partial summary judgment, allowing some of the items claimed by the firefighters but rejecting other claims. The monetary aspects of the judgment were not ruled. The court designated this order as final under Rule 81.06, and the court of appeals affirmed on the merits. As the court of appeals observed in the case now before us, the issue of jurisdiction over the appeal was not argued by the parties in that case and was not discussed by the court. The court of appeals, however, is keenly aware of its responsibility for determining whether it has jurisdiction, ³ and its disposition of this case on the merits is probative of the general understanding of the scope of Rule 81.06.

So here a determination of liability is a matter that can be the subject of an independent judgment. The trial court's judgment, however labeled, is essentially a declaratory judgment determining liability. This is an appropriate judgment capable of standing alone. Whether declaratory relief is unnecessary because of the availability of an action for damages is a question for the discretion of the trial court. We notice that all of the claimed damages had not accrued at the time the trial court entered partial summary judgment, and this circumstance favors the trial court's election to proceed as it did. ⁴ So long as the case remains in the circuit court a prior...