Opinion
Civil Action No. 2:05-CV-02829-LDD.
January 25, 2006
MEMORANDUM OPINION
Presently before the Court are plaintiff's motion for entry of judgment pursuant to Rule 54(b) (Doc. No. 35), defendants' opposition thereto (Doc. No. 36), and plaintiff's reply memorandum in support of its motion (Doc. No. 39). For the following reasons, this Court grants plaintiff's motion (Doc. No. 35), but stays execution of the Rule 54(b) judgment pending the filing and resolution of defendant's motion for a stay pursuant to Rule 62(h).
Rule 54(b) permits a court, when adjudicating a case involving multiple claims or parties, to direct the entry of a "final judgment" as to one or more, but fewer than all, claims or parties "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). The Third Circuit has commanded district courts to consider the following, non-exhaustive list of factors in making a determination as to whether there is "no just reason for delay": (1) the relationship between the adjudicated and non-adjudicated claims; (2) the possibility that the need for review might be mooted by future developments; (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 that could result in set-off against the judgment sought to be made final; and (5) miscellaneous factors such as delay, economic and solvency considerations, shortening the time of the trial, frivolity of competing claims, expense and the like. See In re Diet Drugs Products Liability Litigation, 401 F.3d, 143, 164 (3d Cir. 2005) (concurrence); Allis-Chalmers Corp. v. Philadelphia Electric Co., 521 F.2d 360, 363 (3d Cir. 1975). The burden of demonstrating that these factors weigh in favor of Rule 54(b) certification falls on the party seeking certification. See, e.g., Anthuis v. Colt Indus. Operating Corp., 971 F.2d 999, 1003-1004 (3d Cir. 1992).
Neither party suggests that this Court's grant of summary judgment on plaintiff's breach of contract claims lacks "finality" within the meaning of Rule 54(b). See Waldorf v. Shuta, 142 F.3d 601, 608 (3d Cir. 1998) (noting two-prong nature of standard). Instead, both parties address the second-prong of the Rule 54(b) standard — whether "no just reason for delay" exists for certification.
This Court finds that plaintiff has met its burden of showing the propriety of Rule 54(b) certification. The Court agrees that plaintiff's non-adjudicated claims, which involve promissory estoppel, misrepresentation, and tortious interference theories of liability, are not intertwined on a factual or legal basis with plaintiff's breach of contract claims. See, e.g., Gerardi v. Pelullo, 16 F.3d 1363, 1372 (3d Cir. 1994) (vacating district court's Rule 54(b) certification in part because of the "potential interlock between the factual circumstances" underlying the adjudicated claims, from which an appeal was sought, and the non-adjudicated claims). Nor have defendants contested plaintiff's assertion that defendants' counterclaim is legally and factually unrelated to the adjudicated claims. Furthermore, plaintiff has provided reports questioning the financial solvency of defendants, including recent news articles indicating that Dana Corporation suffered a loss of $1.3 billion in the third quarter of 2005 due to unfavorable, industry-wide conditions. (See Plaintiff's January 17, 2006 Correspondence); see, e.g., Curtiss-Wright Corp. v. General Electric, 446 U.S. 1, 13 (1980) (suggesting that Rule 54(b) certification is appropriate when defendant's precarious financial condition might impair plaintiff's ability to collect judgment at later date). Perhaps more importantly, because plaintiff seeks certification not for the purpose of appeal, but, instead, to collect the full amount of the final judgment, and because defendant has conceded liability and damages as to plaintiff's breach of contract claims, many of the administrative considerations that weigh against Rule 54(b) certification, such as the fear of redundant piecemeal appellate review, are simply inapplicable. (See Pl. Br., at 3; Def. Answers to Pl. Req. For Admissions, attached as Ex. D-E to Pl. Mot. For SJ.; Invoices, attached as Ex. A-B to Pl. Mot. For SJ.); see Johnson v. Orr, 897 F.2d 128, 131 (3d Cir. 1990) ("The basic purpose of Rule 54(b) "is to avoid the possible injustice of a delay in entering judgment on a distinctly separate claim or as to fewer than all of the parties until the final adjudication of the entire case by making an immediate appeal available) (quoting 10 C. Wright, A. Miller, M. Kane, Federal Practice and Procedure, § 2654 (2d ed. 1983)). Finally, the mere presence of defendants' counterclaim, which, if successful, would serve functionally as a set-off against any judgment plaintiff receives, "does not render Rule 54(b) certification inappropriate." Id. at 9 (reasoning that Rule 54(b) would "lose much of its utility" if presence of potentially valid counterclaims could defeat Rule 54(b) certification).
Plaintiff concedes that it can no longer pursue its unjust enrichment claims. (See Pl. Br., at 3).
Defendants' concession of liability as the outset of discovery as to the value of delivered, but unpaid products works against delaying Rule 54(b) certification on a fairness level, too.
In this instance, defendants' counterclaim, valued at $222,000, is less than the amount of plaintiff's judgment against defendants on the breach of contract claims, which is nearly $300,000. (See Def. Mot. For Stay, at ¶ 4).
Nonetheless, although a weighing of administrative and equitable considerations present "no just reason for delay" within the meaning of Rule 54(b), this Court also acknowledges the validity of defendants' concern regarding plaintiff's financial capacity to satisfy a judgment on defendant's counterclaim, to the extent it is successful. See Curtiss-Wright Corp., 446 U.S. at 12 (noting that plaintiff's threat of insolvency weighs against Rule 54(b) certification when it casts doubt upon plaintiff's capacity to pay judgment upon successful counterclaim). Indeed, defendant presents evidence challenging plaintiff's solvency, such as testimony from plaintiff's last remaining employee that plaintiff is in the process of selling its assets, copies of plaintiff's monthly financial statements indicating massive losses in net operating income, and plaintiff's admission that the business has ceased operations. (See Deposition of James Crotty, attached as Ex. A to Def. Br.; Financial Statements, attached as Ex. B to Def. Br.; Deposition of Raymond Perelman, attached as Ex. E to Def. Br., at 65; Compl., at ¶¶ 58-59). In other words, defendants fear that, to the extent plaintiff collects a judgment prior to the resolution of defendants' counterclaim, plaintiff either will lack the necessary assets to satisfy a judgment or will no longer exist as a solvent corporate identity. Consequently, to accommodate defendants' substantial concern, this Court will stay execution of the judgment pending the filing and resolution of a motion to stay pursuant to Rule 62(h). See Fed.R.Civ.P. 62(h) (permitting court to stay enforcement of a partial "final judgment" until the entry of subsequent judgments, so long as the partial "final judgment" was entered under the conditions stated in Rule 54(b)); see Reiter, 507 U.S. at 270-271 (noting that when plaintiff is trustee of bankrupt company, and threat exists that defendant may become insolvent, Rule 62(h) allows a court to protect both parties by "entering separate judgment for the carrier [bankrupt company], but staying enforcement on condition that the shipper [defendant] deposit the amount of the judgment with the court"); Curtiss-Wright Corp., 446 U.S. at 13 (noting availability of Rule 62(h) to control for considerations of economic duress and solvency in determining Rule 54(b) certification).
Although this Court acknowledges the validity of defendants' concern regarding plaintiff's inability to pay a counterclaim judgment, this concern alone does not preclude a Rule 54(b) entry of judgment. Indeed, the Supreme Court has noted that the insolvency of plaintiff is not "an absolute bar" to Rule 54(b) certification. See Reiter v. Cooper, 507 U.S. 258, 270 (1993).
Plaintiff concedes that a stay of enforcement of the judgment may be appropriate upon the posting of full security by defendants. (See Pl. Reply Br., at 3).
In summary, this Court grants plaintiff's motion for the entry of judgment pursuant to Rule 54(b). However, the Court stays the execution of this judgment pending the filing and resolution of defendants' motion for a stay of execution of the judgment pursuant to Rule 62(h). Defendants' motion should specifically address both the circumstances that militate in favor of a stay and the relevant conditions of the stay, such as the amount of security that should be posted.
An appropriate Order follows.
ORDER
AND NOW, this 25th day of January 2005, upon consideration of plaintiff's motion for entry of judgment pursuant to Rule 54(b) (Doc. No. 35), defendants' opposition to plaintiff's motion (Doc. No. 36), plaintiff's reply memorandum in support of its motion (Doc. No. 39), plaintiff's submission of interest calculations in accordance with this Court's December 28, 2005 Order, and defendants' failure to challenge these calculations, it is hereby ORDERED as follows:
1. Pursuant to Rule 54(b), the Clerk of Court shall enter judgment on plaintiff's breach of contract claim (Count I) in favor of plaintiff and against defendant Dana Canada Corporation in the amount of $247,938.51.
2. Pursuant to Rule 54(b), the Clerk of Court shall enter judgment on plaintiff's breach of contract claim (Count II) in favor of plaintiff and against defendant Dana Corporation in the amount of $39,382.46.
3. By Friday, February 3, 2006, defendants shall file a motion to stay proceedings to enforce the judgment pursuant to Rule 62(h). The motion shall address both the circumstances that militate in favor of a stay and the pertinent conditions of the stay, such as the amount of security that should be posted.
4. The collection of this final judgment is stayed pending defendants' decision to file a motion to stay pursuant to Rule 62(h) and the resolution of this motion.
This includes the pre-judgment interest ($1054.35) from December 29, 2005 until January 24, 2006 ($39.05 per day x 27 days).
This includes the pre-judgment interest ($166.86) from December 29, 2005 until January 24, 2006 ($6.18 per day × 27 days).