Janavaras v. National Farmers Union Property, 890133

• Decision Date: 20 December 1989
• Docket Number: No. 890133,890133
• Parties: Mark JANAVARAS and Katina Janavaras, individually and Mark Janavaras and Katina Janavaras d/b/a Kosmos Department Store, and the National Bank of Harvey, Plaintiffs and Appellants, v. NATIONAL FARMERS UNION PROPERTY and Casualty Company, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 578

449 N.W.2d 578

Mark JANAVARAS and Katina Janavaras, individually and Mark Janavaras and Katina Janavaras d/b/a Kosmos Department Store, and the National Bank of Harvey, Plaintiffs and Appellants, v. NATIONAL FARMERS UNION PROPERTY and Casualty Company Defendant and Appellee.

Civ. No. 890133.

Supreme Court of North Dakota.

Dec. 20, 1989.

Zuger, Kirmis, Bolinske & Smith, Bismarck, for plaintiffs and appellants; argued by Robert V. Bolinske and Daniel S. Kuntz.

Steven A. Storslee (argued), of Fleck, Mather, Strutz & Mayer, P.C., Bismarck, and David S. Evinger (argued) and Terrence R. Joy (no appearance), of Robins, Kaplan, Miller & Ciresi, Minneapolis, Minn., for defendant and appellee.

LEVINE, Justice.

Mark Janavaras, Katina Janavaras, and the National Bank of Harvey appeal from a partial summary judgment dismissing some of their claims against National Farmers Union Property and Casualty Company ["National"]. We conclude that the trial court improvidently certified the judgment as final pursuant to Rule 54(b), N.D.R.Civ.P., and accordingly we dismiss the appeal.

On July 30, 1986, fire destroyed the Janavarases' department store in Harvey, North Dakota. The building and contents were insured by National. The Bank held a mortgage on the building and had a security interest in the store's inventory.

National denied coverage, asserting that the Janavarases had either deliberately set the fire themselves or had someone else set it, and that the Janavarases had misrepresented their loss history in the insurance application. Pursuant to a loss payable clause in the insurance contract, National paid the Bank the amount of its mortgage interest but refused to pay the Bank for its security interest in the inventory.

The Janavarases and the Bank commenced this action seeking full coverage for the loss and alleging bad faith in denial of claims and in delaying payment to the Bank on its mortgage claim. National answered, asserting that the fire was intentionally set by the Janavarases or someone acting on their behalf, that the Janavarases concealed or misrepresented their true loss history in the application for insurance, that the policy afforded no coverage to the Bank for its security interest in personal property, and that there had been no bad faith in denial of coverage or delay in payment of the Bank's claim. On motions for summary judgment, the trial court dismissed the claims of bad faith relating to National's denial of coverage and determined that the loss payable clause in the policy applied only to real estate mortgages and did not provide coverage for the Bank's interest in personal property. The court specifically refused to enter a Rule 54(b) certification of this partial summary judgment.

Despite the lack of a Rule 54(b) certification, the Janavarases and the Bank filed a notice of appeal. We granted National's motion to dismiss that attempted appeal.

While the first appeal was pending, the Janavarases and the Bank requested reconsideration of the denial of Rule 54(b) certification. After a hearing, the trial court reversed itself and certified the judgment as final pursuant to Rule 54(b). The Janavarases and the Bank filed a second notice of appeal. National has again moved for dismissal of the appeal, asserting that the Rule 54(b) certification was improvidently granted.

Rule 54(b) is clearly applicable to this partial summary judgment, which does not adjudicate all of the claims against all of the parties. ¹ Although the trial court determined that there was no just reason for delay in directing entry of judgment and delineated the reasons for its decision, that does not end appellate inquiry. We are not bound by the trial court's determination, but will review the certification to determine if the court abused its discretion. Peterson v. Zerr, 443 N.W.2d 293, 296-297 (N.D.1989); Union State Bank v. Woell, 357 N.W.2d 234, 236 (N.D.1984).

The trial court cited the following reasons for issuing the Rule 54(b) certification:

(1) "[T]he Court's principal justification is that all of the valid issues of this case should be tried together rather than by a bifurcated trial or retrial following appellate reversal."

(2) "The Supreme Court might as well tell counsel and the trial court what issues there are for trial here."

(3) "[W]ell, frankly, the real reason is to provide the appeal. That appeal then can proceed as to those issues." ²

Essentially, the trial court's reasoning expresses concern over the potential of a duplicative second trial and invites this court to render an advisory opinion.

We have recently held that, because it can always be said that a second trial may be required if a district court is ultimately reversed on issues decided on summary judgment before trial, the hope or belief that immediate appellate review might avoid the possibility of two trials is not, absent unusual and compelling circumstances, a sufficient reason for granting Rule 54(b) certification. Club Broadway, Inc. v. Broadway Park, 443 N.W.2d 919, 921 (N.D.1989); Peterson v. Zerr, supra, 443 N.W.2d at 299-300. In order to demonstrate unusual and compelling circumstances, there must be a showing of out-of-the-ordinary circumstances or cognizable, unusual hardships to the litigants that will arise if resolution of the issues on appeal is deferred. Club Broadway, Inc. v. Broadway Park, supra, 443 N.W.2d at 922; Peterson v. Zerr, supra, 443 N.W.2d at 299. The burden is upon the party requesting Rule 54(b) certification to establish that it will suffer unusual prejudice or hardship if certification is denied. Union State Bank v. Woell, supra, 357 N.W.2d at 239. The trial court did not delineate any unusual and compelling circumstances which set this case apart from other cases generally, ³ nor did the parties present evidence or argument at the hearing before the trial court demonstrating unusual and compelling circumstances. ⁴ Under the circumstances in this case, the possibility of a second duplicative trial was not a relevant factor supporting certification. ⁵

Similarly, the trial court's suggestion that we "might as well tell counsel and the trial court what issues there are for trial here" is a clear invitation to render an advisory opinion, which does not support the court's decision to grant Rule 54(b) certification. We have often noted that we are without authority to render advisory opinions. See, e.g., City of Minot v. Central Avenue News, Inc., 325 N.W.2d 243, 244 (N.D.1982). Rule 54(b) certification may not be used to circumvent that restriction. Buurman v. Central Valley School District, 371 N.W.2d 146, 148 (N.D.1985).

While improperly relying upon these factors in determining the Rule 54(b) question, the trial court apparently overlooked policy factors which weigh heavily against certification in this case. We have outlined the following non-inclusive list of factors for trial courts to consider in assessing a request for Rule 54(b) certification:

" '(1) the relationship between the adjudicated and unadjudicated claims; (2) the possibility that the need for review might or might not be mooted by future developments in the district court; (3) the possibility that the reviewing court might be obliged to consider the same issue a second time; (4) the presence or absence of a claim or counterclaim which could result in setoff against the judgment sought to be made final; (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of trial, frivolity of competing claims, expense, and the like.' " Union State Bank v. Woell, supra, 357 N.W.2d at 238 [quoting Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 364 (3d Cir.1975) ].

Assessment of the first two factors in light of the facts in this case militate against an immediate appeal.

The adjudicated and unadjudicated claims presented in this case arise from the same series of transactions and occurrences, are logically related legally and factually, and are closely intertwined. See Union State Bank v. Woell, supra, 357 N.W.2d at 238. The Janavarases and the Bank contend that a second appeal after trial is a foregone conclusion. Presented with a similar situation, we stated in Peterson v. Zerr, supra, 443 N.W.2d at 298-299:

" 'It is uneconomical for an appellate court to review facts on an appeal following a Rule 54(b) certification that it is likely to be forced to consider again when another appeal is brought after the district court renders its decision on the remaining claims or as to the remaining parties.' 10 Wright, Miller & Kane, supra, Sec. 2659, at pp. 103-104 [Footnote omitted.] The fact that it is likely an appeal will be taken after an unadjudicated claim is decided which involves the same factual situation as that involved in the Rule 54(b) certified appeal clearly militates against granting certification. See Union State Bank v. Woell, supra, 357 N.W.2d at 239."

There is also the possibility that the primary issue raised on appeal, dismissal of the Janavarases' bad faith claims, may be mooted by the result of the trial on the remaining claims. It is axiomatic that if the jury determines that the Janavarases intentionally destroyed the building in contravention of the policy, thereby abrogating coverage, there can be no bad faith in denying coverage. "[T]he possibility that a need for review might be mooted by future developments in the trial court 'is a distinct argument of substantial weight supporting the normal postponement of review until the entire case shall be decided.' " Peterson v. Zerr, supra, 443 N.W.2d at 298 [quoting Panichella v. Pennsylvania Railroad Co., 252 F.2d 452, 455 (3d Cir.1958), cert. denied, 361 U.S. 932, 80 S.Ct. 370, 4 L.Ed.2d 353 (1960) ]. See also Buurman v. Central Valley School District, supra, 371 N.W.2d at 149; Spiegel v. Trustees of Tufts College, 843 F.2d 38, 45 (1st Cir.1988); Brunswick Corp. v. Sheridan, 582 F.2d 175, 184-185...