Metro Transp. Co. v. North Star Reinsurance Co., ROKEBY-JOHNSON

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Citation912 F.2d 672
Docket NumberNo. 89-2009,Nos. 89-2008 and 89-2009,ROKEBY-JOHNSON,A,Nos. 89-2007 and 89-2008,No. 89-2008,Nos. 89-2007 and 89-2009,No. 89-2007,Nos. 89-2007,89-2007,s. 89-2008 and 89-2009,89-2008,s. 89-2007 and 89-2009,89-2009,s. 89-2007 and 89-2008,s. 89-2007
PartiesMETRO TRANSPORTATION CO., t/a Yellow Cab Company, Official Creditors' Committee, Pennsylvania Public Utility Commission v. NORTH STAR REINSURANCE CO., Underwriters at Lloyd's of London, Northwestern National Insurance Company v. REPUBLIC HOGG ROBINSON OF PENNSYLVANIA, INC., f/k/a The Wirkman Company, H & W Underwriters. Appeal of Henry Ralph, as Representative Underwriter of Those underwriters Subscribing to Certificate # 272, 1489, improperly designated as Underwriters at Lloyd's of London, Appellant inppellee inAppeal of NORTHWESTERN NATIONAL INSURANCE COMPANY, Appellant inppellee inAppeal of NORTH STAR REINSURANCE COMPANY, Appellant inppellee into 89-2009.
Decision Date10 October 1990

Glenn C. Equi (argued), Lori A. Kradzinski, Harvey, Pennington, Herting & Renneisen, Ltd., Philadelphia, Pa., James A. McGuire, III, Mendes & Mount, New York City, for Henry Ralph Rokeby-Johnson, appellant in No. 89-2007 and appellee in Nos. 89-2008 and 89-2009.

Richard M. Jordan (argued), Michael N. Onufrak, White and Williams, Philadelphia, Pa., for Northwestern Nat. Ins. Co. appellant in No. 89-2008, appellee in Nos. 89-2007 and 89-2009.

Andrew C. Hecker, Jr. (argued), Hecker, Brown, Sherry and Johnson, Philadelphia, Pa., for North Star Reinsurance Co. appellant in No. 89-2009, appellee in Nos. 89-2007 and 89-2008.

Kevin W. Walsh (argued), Adelman, Lavine, Gold and Levin, Philadelphia, Pa., for Metro Transp. Co., appellee in Nos. 89-2007, 89-2008 and 89-2009.

William G. Downey (argued), James H. Pickering, Clark, Ladner, Fortenbaugh & Young, Philadelphia, Pa., for The Official Committee of Unsecured Creditors, appellee in Nos. 89-2007, 89-2008 and 89-2009.

John F. Povilaitis, Chief Counsel, H. Kirk House, Deputy Chief Counsel, Alan Kohler (argued), Asst. Counsel, Pennsylvania Public Utility Com'n, Harrisburg, Pa., for Pennsylvania Public Utility Com'n appellees in Nos. 89-2007, 89-2008 and 89-2009.

Before BECKER, GREENBERG and GARTH, Circuit Judges.


GARTH, Circuit Judge:

Metro Transportation Company ("Metro"), a taxi company in Philadelphia that has filed in bankruptcy under Chapter 11 of the Bankruptcy Code (11 U.S.C. Sec. 1101 et seq.) brought this action for declaratory judgment in the Eastern District of Pennsylvania to determine whether the liability for third party claims against Metro must be borne by the bankrupt debtor or by three insurance companies ("Insurance Companies"), Underwriters at Lloyd's of London, Henry Ralph Rokeby-Johnson as representative ("Lloyd's"), North Star Reinsurance Corp. ("North Star"), and Northwestern National Insurance Company ("Northwestern") under certain automobile insurance contracts. 1

The Official Committee of Unsecured Creditors of Metro ("Unsecured Creditors") and the Pennsylvania Public Utility Commission ("PUC"), were granted leave to proceed as intervenor-plaintiffs in this action. Metro, the insurance companies, PUC and the Unsecured Creditors all filed motions for summary judgment. The district court granted summary judgment in favor of Metro and PUC, and held the insurance companies liable for assorted claims.


In every appeal we must first be satisfied that this court has appellate jurisdiction. Indeed, the Supreme Court has admonished the courts of appeals that this must be a threshold inquiry, particularly if jurisdiction is not apparent. Goodyear Atomic Corporation v. Miller, 486 U.S. 174, 108 S.Ct. 1704, 100 L.Ed.2d 158 (1988) ("Although neither party contests our appellate jurisdiction over this case, we must independently determine as a threshold matter that we have jurisdiction"); See also Baldwin County Welcome Center v. Brown, 466 U.S. 147, 104 S.Ct. 1723, 80 L.Ed.2d 196 (1984); Brown Shoe Co. v. United States, 370 U.S. 294, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962). Where counsel has not satisfied us that jurisdiction is present, we are obliged to raise that issue on our own initiative. Such is the case here.


At oral argument we raised questions concerning the statutory bases for our jurisdiction, the applicability of Fed.R.Civ.Proc. 54(b) to bankruptcy proceedings and whether the order from which the present appeals were taken was final. We also questioned whether the certification by the district court pursuant to Rule 54(b) if applicable, complied with the mandate of Allis-Chalmers v. Philadelphia Electric Co, 521 F.2d 360 (3rd Cir.1975).

To resolve these questions, we sought supplemental briefing from the parties. Essentially we sought to determine if we could exercise jurisdiction over an appeal based upon the well established rules codified in 28 U.S.C. Secs. 1291-1292, or if our jurisdiction over a bankruptcy appeal is governed by 28 U.S.C. Sec. 158(d), 2 or both.


In the present appeal, we are reviewing a district court ruling where no bankruptcy court has ever ruled on the relevant issue, and therefore no appeal has been taken under 28 U.S.C. Sec. 158(a) from the bankruptcy court to the district court and then to this court under Sec. 158(d). As we observed in note 1 supra, jurisdiction in this case was transferred without a ruling of the bankruptcy court to the district court prior to trial. Thereafter the issue of liability was decided solely by the district court under its bankruptcy powers pursuant to 28 U.S.C. Sec. 1334 3 and not as a result of an appeal under Sec. 158(a).

As we stated in U.S. v. Nicolet, Inc., 857 F.2d 202, 204 (3d Cir.1988):

Here, however, no bankruptcy judge's order was challenged; the original order appealed from was entered by the district court. Consequently section 158(d) is not an available predicate for jurisdiction.

This result illustrates the gap existing in the procedure Congress created to govern bankruptcy appeals. Section 158(a) grants the district courts appellate authority over rulings entered by bankruptcy judges. Additional review in the courts of appeals of the district judges' appellate disposition is then explicitly authorized in section 158(d). However, no provision addresses the courts of appeals' authority to review orders entered by the district court in their non-appellate bankruptcy role. Therefore, the only available review of original orders entered by the district court lies under the general appeal provision, 28 U.S.C. Sec. 1291.

Similar analyses can be found in In re Bishop, 856 F.2d 78 (9th Cir.1988) and In re Louisiana World Exposition, 832 F.2d 1391 (5th Cir.1987).

Although this case arises under Sec. 1291 rather than Sec. 158(d), "we have consistently considered finality in a more pragmatic and less technical way in bankruptcy cases than in other situations." In re Amatex, 755 F.2d 1034, 1039 (3rd Cir.1985). In Nicolet as well, we held that "in the bankruptcy setting present in this case, our section 1291 jurisdiction mirrors that under section 158(d)." We recently reaffirmed, in In re Pruitt, 910 F.2d 1160 (3rd Cir.1990) that in the bankruptcy context the concept of finality should be viewed functionally. See at 1165. "Nonetheless," we warned, "our relaxed view of bankruptcy orders cannot import appellate jurisdiction without some vestige of finality." Id.

Accordingly, to vest jurisdiction in this court where the district court has not disposed of all parties and issues, and absent an appealable injunctive order under 28 U.S.C. Sec. 1292(a), either certification under 28 U.S.C. Sec. 1292(b) must be granted by the district court and by this court, or a Rule 54(b) certification complying with Allis-Chalmers must be ordered, or, in the bankruptcy context, we must be satisfied that the particular adversarial dispute has been resolved to a sufficient degree of finality. 4


In Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 363 (3d Cir.1975) we insisted that the district court provide us with reasons adequate to support a Rule 54(b) certification.

A proper exercise of discretion under Rule 54(b) requires the district court to do more than just recite the 54(b) formula of "no just reason for delay." The court should clearly articulate the reasons and factors underlying its decision to grant 54(b) certification. "... It is essential ... that a reviewing court have some basis for distinguishing between well-reasoned conclusions arrived at after a comprehensive consideration of all relevant factors, and mere boiler-plate approval phrased in appropriate language but unsupported by evaluation of the facts or analysis of the law...." Protective Committee v. Anderson, 390 U.S. 414, 434, 88 S.Ct. 1157, 1168, 20 L.Ed.2d 1 (1968).

We are not alone in establishing these requirements for a Rule 54(b) order. Since Allis-Chalmers, other courts of appeals have adopted this requirement; Pahlavi v. Palandjian, 744 F.2d 902 (1st Cir.1984); Arlinghaus v. Ritenour, 543 F.2d 461 (2d Cir.1976); Rothenberg v. Security Management Co., Inc., 617 F.2d 1149 (5th Cir.1980); Solomon v. Aetna Life Insurance Co., 782 F.2d 58 (6th Cir.1986); United States General, Inc., v. Albert, 792 F.2d 678 (7th Cir.1986); Hayden v. McDonald, 719 F.2d 266 (8th Cir.1983).


When this matter first came before us on appeal, the district court had certified its order under Rule 54(b), but without articulating any reason for its certification. As a result, rather than returning jurisdiction to the district court, we ordered a partial remand to provide the district court with an opportunity to comply with our Allis-Chalmers mandate. On remand, however, the district court declined to recertify the issue under Rule 54(b). Instead, it ordered

that the Interlocutory Orders involve a controlling question of law as to which there is substantial ground for difference of opinion and that an...

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