Arbitration Award between Plaintiff and One of Two Defendants Properly Reduced to Judgment under Rule 54(b) Despite Existence of Unresolved Litigation against Second Defendant — 54(b) Factors

The City terminated its contractor (MCI) in MCI Constructors, LLC v. City of Greensboro, 2010 U.S. App. LEXIS 13495 (4th Cir. July 1, 2010), and the contractor sued both the city and the engineering firm (Hazen and Sawyer). The contractor and the city elected to arbitrate their dispute rather than litigate it in the court action; the city won; and it successfully moved the District Court to reduce the award to judgment under Rule 54(b):

We turn first to MCI and National Union's argument that the district court erred in certifying the judgment as final under Federal Rule of Civil Procedure 54(b). We review the district court's Rule 54(b) certification for abuse of discretion.... In doing so, we recognize that our role is "not to reweigh the equities or reassess the facts but to make sure that the conclusions derived from those weighings and assessments are juridically sound and supported by the record." Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 10 (1980).

Federal Rule of Civil Procedure 54(b) provides that "[w]hen an action presents more than one claim for relief — whether as a claim, counterclaim, crossclaim, or third-party claim — or when multiple parties are involved, the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay." Fed. R. Civ. P. 54(b). "The task which the district court must follow to effectuate a Rule 54(b) certification involves two steps." *** "First, the district court must determine whether the judgment is final." *** A judgment "must be 'final' in the sense that it is 'an ultimate disposition of an individual claim entered in the course of a multiple claims action.'" Curtiss-Wright, 446 U.S. at 7 (quoting Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 436 (1956)). "Second, the district court must determine whether there is no just reason for the delay in the entry of judgment." *** In determining whether there is no just reason for delay in the entry of judgment, factors the district court should consider, if applicable, include:

(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 a set-off 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.

[Citation omitted.]

[Footnote 3] On this factor [no. 4], the Supreme Court has explained "that counterclaims, whether compulsory or permissive, present no special problems for Rule 54(b) determinations; counterclaims are not to be evaluated differently from other claims." Curtiss-Wright Corp., 446 U.S. at 9. Like other claims, the Court has explained, "their significance for Rule 54(b) purposes turns on their interrelationship with the claims on which certification is sought." Id.

MCI and National Union argue that because "[t]he record . . . is replete with examples of [Hazen and Sawyer]'s failure to monitor and control the completion costs, resulting in costs that the City never should have incurred and that MCI should not be called upon to pay," the district court erred in entering a Rule 54(b) certification.... Instead, they contend, the district court should have held in abeyance the motion to certify the judgment as final pending the resolution of MCI's claims against Hazen and Sawyer, particularly since "both MCI and the City agree that the responsibility for improperly certified charges of the completion contractors must fall upon [Hazen and Sawyer]." *** In essence, they argue that there was a just reason for delaying the entry of judgment here.

Our review of the record supports the conclusion that there was no just reason for delaying the entry of judgment here. First, "[a]lthough the present matter and the Hazen [and] Sawyer litigation arise out of a common set of facts, i.e., the circumstances surrounding City's termination of MCI's performance under the Contract," *** the relationship between the adjudicated and unadjudicated claims was severed by virtue of the parties' own admissions, such that the results of the arbitration have no binding or preclusive effect on the litigation of the remaining claims against Hazen and Sawyer. The parties represented to the district court that "[u]pon conclusion of the arbitration, all matters . . . set for trial w[ould] be moot," and that "[f]urther proceedings involving Hazen [and] Sawyer c[ould] take place at that time." J.A. 2621; see also J.A. 2628 ("Defendant Hazen [and] Sawyer . . . has already consented to bifurcation of issues involving it until after the resolution of certain claims between MCI and the City, which will now be resolved through arbitration instead of litigation in this Court."). Second, MCI and National Union point to nothing in the record, nor are we able to find anything, to suggest that review of the issues here might be mooted by future developments in the district court. On the contrary, "the possibility that [we] might be obliged to consider the same issue[s] [explored here] a second time," *** is unlikely because all that remains to be resolved is whether the arbitration awards are valid, and Hazen and Sawyer was not a party to the arbitration agreement and did not participate in the arbitration proceedings. Third, MCI and National Union have not identified the presence or absence of a pending claim or counterclaim which could result in a set-off against the judgment made final by the district court. Finally, we do not believe any "miscellaneous factors such as delay, economic and solvency considerations, . . . frivolity of competing claims, expense, and the like" change the analysis here.

Share this article:

Facebook
Twitter
LinkedIn
Email

Recent Posts

Archives