Morden et al v. XL Specialty Insurance

Filing 115

MEMORANDUM DECISION AND ORDER denying 113 Motion for Entry of Judgment under Rule 54(b), but in the alternative granting Rule 54(B) Certification. Signed by Judge Clark Waddoups on 4/6/17 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION

JAMES MORDEN, et al.,
Plaintiffs,
v.

MEMORANDUM DECISION AND
ORDER DENYING MOTION FOR
RULE 54(b) CERTIFICATION
BUT IN THE ALTERNATIVE
GRANTING RULE 54(b)
CERTIFICATION

XL SPECIALTY INSURANCE CO.,
Case No. 2:14-cv-00224
Defendant.
Judge Clark Waddoups

Plaintiffs James, Jenalyn, and Wade Morden (collectively, the Mordens) and Defendant
XL Specialty Insurance Company (XL Specialty) have jointly moved the court to certify its
August 1, 2016 Judgment, (Dkt. No. 93), as a final appealable judgment pursuant to Federal Rule
of Civil Procedure 54(b). (Dkt. No. 113.) On August 1, 2016, the court entered judgment in favor
of XL Specialty on the Mordens’ bad faith and breach of fiduciary duty claims and in favor of
the Mordens on XL Specialty’s counterclaim for declaratory judgment related to the interrelated
wrongful acts provision of the insurance policy. (Dkt. No. 93.) The court also granted Defendant
XL Specialty’s motion to voluntarily dismiss its remaining counterclaim on policy coverage
without prejudice because it was “moot” in the absence of the bad faith claims or an underlying
contract claim, and denied the Mordens’ motion to amend the complaint to add a contract claim.
(Dkt. No. 92.)
Upon consideration of the motion and the posture of this case, the court DENIES the
parties’ motion for Rule 54(b) certification. Though the parties may find it more expedient to
obtain Rule 54(b) certification, (Dkt. No. 113, p. 4), the court has an obligation to determine
whether certification under Rule 54(b) is proper. Unless such certification is proper, granting the

stipulated motion would simply allow the parties to stipulate to appellate jurisdiction, which the
parties may not do. Upon review of the facts and application of the Rule and applicable
precedents, the court finds the case is ripe for appellate review without Rule 54(b) certification.
Federal Rule of Civil Procedure 54(b) provides:
When 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.
The Tenth Circuit has cautioned that “Rule 54(b) entries are not to be made routinely.” Okla.
Turnpike Auth. v. Bruner, 259 F.3d 1236, 1242 (10th Cir. 2001) (quoting Great American
Trading Corp. v. I.C.P. Cocoa, Inc., 629 F.2d 1282, 1286 (7th Cir. 1980)). “The 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.’” Bruner, 259 F.3d at 1241 (quoting 10 Charles A.
Wright et al., Federal Practice and Procedure: Civil 2d § 2654 at 33 (1982)). In the
circumstances of this case, the court finds Rule 54(b) is not on point because the court’s
judgment “conclusively ruled on all claims presented by the parties to the case.” Id. at 1242.
The court dismissed without prejudice XL Specialty’s counterclaim seeking a declaration
that there is no coverage under the policy. That dismissal, however, did not leave any viable
claims unresolved. Once the court precluded the Mordens from amending the complaint to assert
a contract claim under the insurance policy, there was no continuing “actual and justiciable
controversy” between XL Specialty and the Mordens. (See Dkt. No. 12, p. 21 (describing XL
Specialty’s counterclaim).) Based on their theory of the case, the Mordens argued they were not
required to plead or pursue any underlying contract claim. The court rejected that argument and
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denied leave to amend the complaint and denied a motion to alter the judgment. Thus, the court
precluded the Mordens from attempting to further litigate their contract claim after summary
judgment on their original theory of the case. Upon resolution of the motions and entry of the
court’s order, the Mordens are “effectively excluded from federal court under the present
circumstances,” Jackson v. Volvo Trucks N. Am., Inc., 462 F.3d 1234, 1238 (10th Cir. 2006), and
all claims asserted in this case are resolved by the court’s judgment. Absent an ongoing
unresolved dispute as to coverage under the policy, the “actual controversy” forming the basis of
XL Specialty’s counterclaim for declaratory relief ceased to exist. See 28 U.S.C. § 2201(a)
(stating courts may declare the rights of parties in cases of “actual controversy”); Columbian Fin.
Corp. v. BancInsure, Inc., 650 F.3d 1372, 1376 & 1383 (10th Cir. 2011) (noting the Declaratory
Judgment Act’s “actual controversy” language refers to the types of cases and controversies
justiciable under Article III, and finding no “declaratory-judgment action in federal court to
construe the coverage of a liability-insurance policy in which the insured has failed to identify a
specific claim or potential claim against it”).
The facts of the present case fall squarely under the rationale and holding of Jackson. In
that case, the plaintiff asserted a number of state law causes of action sounding in contract and
tort. Plaintiff also asserted a claim for civil conspiracy. The trial court granted summary
judgment against the plaintiff on some of the claims and the parties stipulated to dismissal of the
remaining claims with prejudice. The civil conspiracy claim, however, was dismissed without
prejudice. On appeal the issue was whether the parties had appealed a “final” judgment
necessary for the appellate court to exercise jurisdiction. The court cited the general rule stated in
Heimann v. Snead, 133 F.3d 767 (10th Cir. 1998), that “a party cannot obtain appellate
jurisdiction where the district court has dismissed at least one claim without prejudice . . . .”
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Jackson, 462 F.3d at 1238. Nonetheless, the Court concluded it had jurisdiction because civil
conspiracy requires as an essential element an underlying tort case. Because the underlying tort
claims had been dismissed with prejudice, the plaintiff was “barred from further litigation on the
conspiracy claim.” Id. Thus, the Court concluded the case fell within the exception to the
general rule, citing Amazon, Inc. v. Dirt Camp, Inc. 273 F.3d 1271, 1275 (10th Cir. 2000). This
case falls within the same exception. Once the Mordens’ claims had been dismissed with
prejudice, there was no actual and justiciable controversy to support the counterclaim for
declaratory judgment. XL Specialty’s counterclaim on policy coverage is no longer viable.
Accordingly, the court finds that no further certification of its judgment is needed and the case is
ripe for appellate review.
In the alternative, should it be determined that Jackson does not apply to the facts of this
case, the court finds that the requirements of Rule 54(b) have been met and that final judgment
has been and should be entered on the claims on which the court has ruled. The court finds that
there is no just reason for delay.
DATED this 6th day of April, 2017.
BY THE COURT:

____________________________________
Clark Waddoups
United States District Judge

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