Summary
granting a Rule 54(b) motion and denying a stay of enforcement
Summary of this case from Ambac Assurance Corp. v. Adelanto Pub. Util. Auth.Opinion
No. 02 Civ. 2628 (RWS).
October 12, 2004
OCHS GOLDBERG, LLP, New York, NY, Attorneys for Plaintiff, MITCHELL D. GOLDBERG, ESQ., Of Counsel.
PATTERSON, BELKNAP, WEBB TYLER, New York, NY, Attorneys for Defendant, KENNETH J. KING, ESQ., WALTER M. LUERS, ESQ., Of Counsel.
OPINION
Following the partial grant of summary judgment to defendant Compaq Computer Corporation ("Compaq") with respect to Compaq's counterclaims against plaintiff Computech International, Inc. ("CTI") and the dismissal of CTI's claim for breach of contract in an opinion and order dated May 21, 2004, see Computech Int'l, Inc. v. Compaq Computer Corp., No. 02 Civ. 2628 (RWS), 2004 WL 1126320 (S.D.N.Y. May 21, 2004) (the "Opinion"), Compaq has moved for entry of judgment as to the counterclaims pursuant to Rule 54(b) of the Federal Rules of Civil Procedure. CTI has opposed Compaq's motion and has moved to stay the enforcement of any judgment entered pursuant to Rule 54(b) pending a trial in this action, pursuant to Rule 62(h) of the Federal Rules of Civil Procedure. Compaq, in turn, has opposed CTI's cross-motion and itself requested that if CTI's cross-motion is granted, CTI be directed to deposit the full amount of the judgment along with interest with the Clerk of Court. For the reasons set forth below, Compaq's Rule 54(b) motion is granted and CTI's Rule 62(h) cross-motion is denied, rendering moot Compaq's remaining request.
Compaq's Rule 54(b) Motion Is Granted
Rule 54(b), Fed.R.Civ.P., provides in relevant part that:
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 direct the entry of a final 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 and upon an express direction for the entry of judgment.
Fed.R.Civ.P. 54(b). Thus, to enter judgment pursuant to Rule 54(b),
(1) multiple claims or multiple parties must be present, (2) at least one claim, or the rights and liabilities of at least one party, must finally be decided within the meaning of 28 U.S.C. § 1291, and (3) the district court must make "an express determination that there is no just reason for delay" and expressly direct the clerk to enter judgment.Ginett v. Computer Task Group, Inc., 962 F.2d 1085, 1091 (2d Cir. 1992) (quoting Rule 54(b)) (emphasis in original). The first two factors identified in Ginett "address the issue of whether rule 54(b) applies at all to the circumstances of the case."Id. A claim is deemed finally decided "[i]f the decision `ends the litigation [of that claim] on the merits and leaves nothing for the court to do but execute the judgment' entered on that claim." Id. at 1092 (quoting Coopers Lybrand v. Livesay, 437 U.S. 463, 467 (1978)) (second alteration in original);accord Ellis v. Israel, 12 F.3d 21, 23 (2d Cir. 1993).
Once the application of Rule 54(b) to the circumstances of the case has been established, the question of whether to direct entry of judgment is committed to the sound discretion of the district court, see Ginett, 962 F.2d at 1092, although it "must be considered in light of the goal of judicial economy as served by the `historic federal policy against piecemeal appeals.'" O'Bert ex rel. Estate of O'Bert v. Vargo, 331 F.3d 29, 41 (2d Cir. 2003) (quoting Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 8 (1980)) (internal quotation marks omitted). "[I]t does not suffice for the district court to announce its determination that `there is no just cause for delay' in conclusory form. Rather, its certification must be accompanied by a reasoned, even if brief, explanation of its conclusion." Id.; see also Harriscom Svenska AB v. Harris Corp., 947 F.2d 627, 629 (2d Cir. 1991); Hudson River Sloop Clearwater, Inc. v. Dep't of Navy, 891 F.2d 414, 419 (2d Cir. 1989).
In reaching a reasoned conclusion, "[t]he proper guiding star, as the Supreme Court has emphasized, is `the interest of sound judicial administration.'" Ginnett, 962 F.2d at 1095 (quotingCurtiss-Wright, 446 U.S. at 8). "[N]ow that the garden-variety civil complaint often involves multiple claims and/or multiple parties, we cannot, as the Supreme Court has recognized, hide behind the old `infrequent harsh case' chestnut" previously used to limit the application of Rule 54(b). Id. With the interest of sound judicial administration as the goal,
Only those claims "inherently inseparable" from or "inextricably interrelated" to each other are inappropriate for rule 54(b) certification. When the claims are "separable" or "extricable" from each other, there is generally no reason to disturb the district court's exercise of its discretion.Ginett, 962 F.2d at 1096; see, e.g., Hudson River Sloop Clearwater, 891 F.2d at 418 (concluding that the certification of a judgment on certain claims was proper where the claims "involve a unique factual scenario . . . and raise legal issues wholly distinct from those that remain for trial" and "any subsequent appeals on the remaining claims . . . will involve questions of fact and law entirely distinct" from those at stake in the certified claims).
It is undisputed that multiple claims are at stake in this litigation and that the grant of summary judgment on Compaq's counterclaims qualifies as a final decision for purposes of Rule 54(b). CTI argues that entry of judgment pursuant to Rule 54(b) should be denied, however, because the issues underlying Compaq's counterclaims are inextricably intertwined with CTI's claims for fraud and libel against Compaq.
The Opinion sets forth both the grant of summary judgment in Compaq's favor on Compaq's counterclaims and the dismissal of CTI's contract claim against Compaq. Although the fact of this dismissal is noted in Compaq's motion papers, Compaq has not specified that it is seeking entry of judgment as to CTI's contract claim. Accordingly, Compaq's Rule 54(b) motion will be treated as addressing only the entry of judgment as to Compaq's counterclaims.
As set forth in the Opinion, while disputes as to genuine issues of material fact preclude summary judgment on CTI's libel and fraud claims, the material facts concerning Compaq's counterclaims are not in dispute. See Computech Int'l, 2004 WL 1126320, at *10-12.
Moreover, as noted in the Opinion, the factual and legal issues raised by CTI's fraud and libel claims are unrelated to Compaq's counterclaims. CTI's fraud and libel claims "are not related to whether CTI owes Compaq money for goods CTI admits it received and resold." Id. at *12. CTI's fraud claim "seeks damages based on Compaq's alleged misrepresentations to CTI that Compaq would enter into an agreement with CTI that properly characterized the nature of the relationship between Compaq and CTI." Id. at *7. CTI's trade libel claim relates to an e-mail sent by a Compaq employee in which the Compaq employee stated that CTI was engaged in impermissible marketing activities and directed the e-mail's recipients not to purchase Compaq products from CTI. See id. at *4, *11. Compaq's counterclaims, on the other hand, relate to goods sold to CTI by Compaq and delivered for which CTI has not paid, and there is no identity of elements of proof among CTI's claims and Compaq's counterclaims.
The fact that CTI has refused to pay Compaq for the goods in question based on CTI's belief that its "claim for damages exceeded the amount of Compaq's unpaid invoices of $594,075.53 for goods sold and delivered," id. at *5, does not render the claims inseparable or establish that their facts are intertwined. Likewise, CTI's contention that it would have paid the invoices due to Compaq if not for Compaq's allegedly wrongful acts is irrelevant. The mere interrelatedness of claims does not connote their inseparability. As the Court of Appeals for this circuit explained in Ginett, if the interrelatedness present in multi-party and multi-claim cases were sufficient to render claims inextricably interwoven, then "every multiparty case (and virtually every multiclaim case) would elude the entry of a rule 54(b) judgment, and rule 54(b) would be meaningless." Ginett, 962 F.2d at 1095-96. CTI's unsupported speculation that, should an appeal be taken from a judgment on the counterclaims, the Court of Appeals will be called upon to determine issues "vital" to CTI's claims against Compaq (Pl. Opp. Mem. at 4) does not compel a different result.
CTI further argues that it may have claims for damages against Compaq that would offset any judgment entered in Compaq's favor. This argument was previously raised by CTI in opposition to Compaq's motion for summary judgment. In that context it was held that,
Summary judgment may be granted on [Compaq's counterclaims] notwithstanding any purported claim CTI might have. "Offset claims do not bar summary judgment on promissory notes or other payment obligations, unless such obligations and the offset claims involve contractually `dependent' promises." Pereira v. Cogan, 267 B.R. 500, 507 (Bankr. S.D.N.Y. 2001); see also Greenblatt v. Prescription Plan Servs. Corp., 783 F. Supp. 814, 823 (S.D.N.Y. 1992) ("[W]here a counterclaim presents an independent, unliquidated claim and presents no issue of fact as to the plaintiff's claim, the entry of summary judgment on plaintiff's claim is not only proper but is required.") (internal quotation marks and citation omitted). As in Greenblatt, CTI's claims are not related to whether CTI owes Compaq money for goods CTI admits it received and resold.Computech Int'l, 2004 WL 1126320, at *12. CTI now asserts that "[t]he possibility of offsets provides sufficient reason to deny entry of a partial final judgment." Bowne of New York City, Inc. v. AmBase Corp., 161 F.R.D. 270, 274 (S.D.N.Y. 1995). Although such a possibility may warrant denial of a Rule 54(b) motion in other contexts, CTI's reliance on Bowne is misplaced, as the court in Bowne granted certification of judgment notwithstanding the possibility of offset damages, ordering the judgment-creditor to deposit the amount of the judgment with the Clerk of Court. See id.; see also Curtiss-Wright, 446 U.S. at 11-13 (upholding the district court's grant of a Rule 54(b) motion and concluding that the district court appropriately took the possibility of offset damages into account when it determined that both litigants appeared to be in financially sound condition and that the litigant against which the offset claims had been brought would be able to satisfy a judgment should one be entered at a later date).
CTI's reliance on Elevator Motors Corp. v. Leistritz Aktiengesellschaft, No. 88 Civ. 0005, 1990 WL 127596 (E.D.N.Y. Aug. 21, 1990), is likewise misplaced. The court in Elevator Motors denied a Rule 54(b) motion where the plaintiff sought to recover a substantially greater judgment against the defendant than the amount of the defendant's claims, terming the entry and execution of a judgment against the plaintiff under those circumstances a possible "exercise in futility." Elevator Motors, 1990 WL 127596, at *4. Elevator Motors involved the purchase by the plaintiff of certain elevator equipment from the defendant which equipment the plaintiff later claimed was defective and for which the plaintiff refused to pay, although all or substantially all of the equipment had been resold. The plaintiff's claim for a breach of contract and the defendant's counterclaim for payment thus were inextricably related, unlike the situation here where the grounds for the potential setoff bear no relation to the substance of Compaq's counterclaims.
CTI's remaining argument against entry of judgment under Rule 54(b) is that the Court may take into account whether a delay in entering judgment will cause financial hardship to either party. CTI does not claim that it will suffer any financial hardship as a result of entry of judgment on Compaq's counterclaims; rather, it argues that Compaq, as a "multi-million dollar company, with global operations" will not be in danger of ceasing its operations if entry of judgment is stayed until the close of trial. (Pl. Opp. Mem. at 5-6.) The fact that neither party is or will become insolvent "renders that factor neutral in a proper weighing of the equities involved." Curtiss-Wright, 446 U.S. at 12 13 n. 3 (noting that "valid considerations of economic duress and solvency . . . do not affect the juridical considerations involved in a Rule 54(b) determination" and can be provided for by reference to Rule 62(h), Fed.R.Civ.P., "without preventing Rule 54(b) certification"). If anything, CTI's allegations of Compaq's solvency suggest that CTI's concerns regarding potential offset damages are unwarranted, as there is no reason to believe that Compaq will be unable to pay any such damages should judgment on CTI's remaining claims be entered in CTI's favor.
The interests of sound judicial administration would be served by the certification of the judgment in Compaq's favor. Compaq has been awaiting payment of a substantial sum overdue since July 28, 2001, and no just reason for the delay of the entry of final judgment on Compaq's counterclaims has been presented here in view of the wholly distinct nature of Compaq's counterclaims as compared with CTI's remaining claims, the absence of any allegation that Compaq will be unable to satisfy any potential judgment on CTI's remaining claims should judgment be granted in CTI's favor, and the passage of more than three years since the amount owed to Compaq by CTI became due.
Accordingly, the Clerk of Court is directed to enter judgment pursuant to Rule 54(b), Fed.R.Civ.P., on Compaq's counterclaims against CTI in accordance with this opinion and order and for the reasons set forth in the opinion and order of this Court dated May 21, 2004. This judgment shall be entered in the amount of $594,075.53, with pre-judgment interest on that amount to be calculated from July 28, 2001, the first day after the amount owed by CTI was due to Compaq and thus the first day upon which a cause of action existed with respect to the amount overdue.
CTI's Rule 62(h) Motion Is Denied
CTI argues that, in the event Compaq's Rule 54(b) motion is granted, any judgment entered should be stayed pending the trial in this action, pursuant to Rule 62(h), Fed.R.Civ.P.
Rule 62(h) provides that,
When a court has ordered a final judgment under the conditions stated in Rule 54(b), the court may stay enforcement of that judgment until the entering of a subsequent judgment or judgments and may prescribe such conditions as are necessary to secure the benefit thereof to the party in whose favor the judgment is entered.
Fed.R.Civ.P. 62(h). Whether a stay shall be granted pursuant to Rule 62(h) is a matter within the sound discretion of the court, as evidence by the use of the permissive "may."
CTI argues that it is appropriate to stay entry of any judgment on Compaq's counterclaims because it would be "inequitable to permit Compaq to enforce its judgment at this juncture, when CTI may have claims in excess of that judgment at the conclusion of the trial herein." (Pl. Opp. Mem. at 7-8.) As set forth above, CTI has alleged that Compaq is not in danger of becoming insolvent, and thus there is no basis for concluding here that CTI would be unable to collect any damages that CTI may have in excess of the amount of the judgment on Compaq's counterclaims. Moreover, CTI has tendered no allegations or information demonstrating that its own solvency would be affected by enforcement of the judgment on Compaq's counterclaims, such as might suggest the need to balance the equities. Consequently, although the entry of orders staying enforcement of a Rule 54(b) judgment may be, as CTI contends, routine, CTI has established no grounds for such a stay here, and its motion is denied, rendering Compaq's remaining request concerning the conditions of any such stay moot.
Conclusion
For the reasons set forth herein, Compaq's motion for entry of judgment pursuant to Rule 54(b), Fed.R.Civ.P., is granted, and CTI's cross-motion for stay of the enforcement of any such judgment pursuant to Rule 62(h), Fed.R.Civ.P., is denied. The Clerk of Court is directed to enter judgment pursuant to Rule 54(b) on Compaq's counterclaims against CTI in accordance with this opinion and order and for the reasons set forth in the opinion and order of this Court dated May 21, 2004. This judgment shall be entered in the amount of $594,075.53, with pre-judgment interest on that amount to be calculated from July 28, 2001.
It is so ordered.