United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued November 3, 2006 Decided June 19, 2007
No. 05-7096
CAMBRIDGE HOLDINGS GROUP, INC., A DELAWARE
CORPORATION,
APPELLANT
v.
FEDERAL INSURANCE COMPANY D/B/A CHUBB GROUP OF
INSURANCE COMPANIES,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 01cv02192)
Kenneth T. Ward argued the cause for appellant. With him
on the briefs was Thomas A. Mauro.
Edward G. Gallagher argued the cause and filed the brief
for appellee.
Before: GARLAND and BROWN, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Circuit Judge GARLAND.
2
GARLAND, Circuit Judge: Cambridge Holdings Group, Inc.
sued Federal Insurance Co. in the United States District Court
for the District of Columbia, asserting breach of contract and
related claims. The district court dismissed the suit for failure
to state a claim upon which relief can be granted, and
Cambridge now appeals. Federal Insurance contends that we
must dismiss the appeal because it is was not filed within the
time permitted by Federal Rule of Appellate Procedure 4(a). To
resolve that issue, we must consider additional provisions of the
Federal Rules that govern the following subissues: the
appealability of an order that does not dismiss all of the named
parties to a complaint; the validity of an attempt to serve process
by mail; and the starting gun of the filing period when an order
is not set forth in a separate document. After exploring the
intricacies of those provisions, we conclude that the instant
appeal was indeed untimely, and we therefore dismiss it.
I
This diversity case arose out of a complicated multiparty
transaction, the details of which are neither in the appellate
record nor relevant to our disposition. Cambridge, a Delaware
corporation with its principal place of business in Washington,
D.C., loaned $2.1 million to three entities that are not parties to
this lawsuit. Part of the loan agreement required a Florida law
firm, Altschul, Landy & Collier, P.A., to hold $1.5 million in
escrow for distribution to the borrowers at a later date. The
escrow arrangement was governed by a separate “Guaranty
Deposit Agreement” signed by Cambridge, the three borrowers,
and the escrow agent, Altschul Landy. The Agreement required
that the escrow account be protected by a “fidelity bond”
payable to Cambridge in the event of misfeasance, malfeasance,
or breach of the Agreement by the law firm. To satisfy this
requirement, Altschul Landy obtained an insurance policy from
the Federal Insurance Company through the company’s agent,
3
Babb, Inc. The policy listed Altschul Landy as the insured party
and Cambridge as the “loss payee.”
Cambridge alleges that, after the $1.5 million was placed in
escrow, Altschul Landy violated the Agreement and
misappropriated the money. Despite repeated demands by
Cambridge, the law firm failed to repay the misappropriated
funds or to submit a claim on the policy to Federal Insurance.
When Cambridge itself sought to make a claim on the policy,
Federal Insurance refused to pay on the ground that only the
insured party could make a claim.
On October 22, 2001, Cambridge sued Federal Insurance,
Babb, and Altschul Landy in the United States District Court for
the District of Columbia. Counts 1 through 4 of the complaint
sought damages from Federal Insurance and Babb on breach of
contract and related theories. Count 5 sought an injunction
requiring Altschul Landy to submit a claim on the insurance
policy.
On July 12, 2004, the district court issued a memorandum
opinion and entered an order in its docket dismissing Counts 1
through 4 for failure to state claims upon which relief can be
granted. See Cambridge Holdings Group, Inc. v. Fed. Ins. Co.,
357 F. Supp. 2d 89, 91 (D.D.C. 2004) (memorandum opinion);
U.S. District Court for the District of Columbia, Docket Report
for Case No. 01-cv-02192. The court did not address the
remaining count, Count 5, which sought injunctive relief solely
against Altschul Landy.
After the court dismissed the claims against Federal
Insurance and Babb, Cambridge’s suit lay dormant. The docket
reflects no activity between the entry of the dismissal on July 12,
2004, and April 28, 2005, when the court sua sponte scheduled
a status hearing for the following month. At that hearing, which
4
was attended by representatives of Cambridge, Federal
Insurance, and Babb (but not Altschul Landy), a dispute arose
as to whether the district court’s July 12, 2004 order was final
and appealable, in light of the failure to dismiss Count 5 of the
complaint. Although the district court ordered briefing on the
question, it never expressly resolved the issue. Instead, on June
20, 2005, the court entered an order dismissing Count 5 for
failure to prosecute and dismissing the case in its entirety. This
disposition was repeated in a separate document, entitled “Final
Judgment,” that was also entered on June 20, 2005.
Cambridge filed a notice of appeal on July 19, 2005.
II
On appeal, Cambridge challenges only the dismissal of its
breach of contract claim against Federal Insurance. In addition
to defending on the merits, Federal Insurance contends that we
must dismiss the appeal because it is untimely.
The time for filing a notice of appeal is governed by Federal
Rule of Appellate Procedure 4(a), which provides that an appeal
from a decision of a district court in a civil case may only be
taken by filing a notice of appeal “within 30 days after the
judgment or order appealed from is entered.” FED. R. APP. P.
4(a)(1)(A); see FED. R. APP. P. 3(a)(1); see also 28 U.S.C. §
2107(a). In this case, the district court’s order dismissing
Cambridge’s breach of contract claim was entered in the docket
on July 12, 2004. Cambridge, however, did not file a notice of
appeal until July 19, 2005 -- 372 days later.
Despite this delay, Cambridge asserts that its notice of
appeal was timely because it was filed within thirty days of the
entry of the district court’s June 20, 2005 judgment, which
dismissed Count 5 and the complaint in its entirety. Cambridge
5
maintains that Rule 4(a)’s clock did not begin to run until the
entry of that later judgment, for two reasons. First, it argues that
the July 12, 2004 order was not an appealable final order
because it did not resolve the litigation as to all parties as
required by Federal Rule of Civil Procedure 54(b). Second,
Cambridge asserts that, even if the July 12, 2004 order was
otherwise appealable, it still did not start the Rule 4(a) clock
because it was not set forth in a “separate document,” as
required by Federal Rule of Civil Procedure 58(a) and Federal
Rule of Appellate Procedure 4(a)(7).
We address these two arguments in Parts III and IV,
respectively.
III
Cambridge’s first contention is that the district court’s July
12, 2004 order was not appealable because it did not dispose of
Count 5 of the complaint, which sought injunctive relief against
Altschul Landy. Generally, the jurisdiction of courts of appeals
is limited to appeals from “final decisions of the district courts.”
28 U.S.C. § 1291; see Outlaw v. Airtech Air Conditioning &
Heating, Inc., 412 F.3d 156, 159 (D.C. Cir. 2005). The finality
of a decision in a case involving multiple claims or multiple
parties is governed in part by Federal Rule of Civil Procedure
54(b), which specifies that a district 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. In the absence of such
determination and direction, any order or other form of
decision, however designated, which adjudicates fewer
than all the claims or the rights and liabilities of fewer
6
than all the parties shall not terminate the action as to
any of the claims or parties . . . .
FED. R. CIV. P. 54(b). The district court’s July 12, 2004 order
indisputably failed to adjudicate Count 5 of the complaint, and
did not make the required “determination and direction.”
Therefore, Cambridge argues, that order was not final, and
hence not appealable, because it adjudicated “fewer than all the
claims [and] the rights and liabilities of fewer than all the
parties.” Id. And if the July 12, 2004 order was unappealable,
it could not have started Rule 4(a)’s limitation on Cambridge’s
time to file a notice of appeal. As a consequence, Cambridge
asserts, the clock did not start until June 20, 2005, when the
district court entered a final, appealable order under Rule 54(b).
Under most circumstances, Cambridge’s analysis would
undoubtedly be correct. In this case, however, Altschul Landy
did not file an answer, enter an appearance, or otherwise
participate in the litigation. Federal Insurance contends that
Altschul Landy was never even served with a summons and
complaint pursuant to Federal Rule of Civil Procedure 4. In
these circumstances, Federal Insurance argues, Altschul Landy
was not one of the “parties” to the litigation within the meaning
of Rule 54(b). If this argument is correct, the district court’s
July 12, 2004 order was final and appealable because it did
decide all of the claims against Federal Insurance and Babb, and
thus fully resolved the rights and liabilities of all the properly
served parties to the lawsuit.
In order to resolve this dispute, we must address two issues.
First, we must determine whether a defendant that has never
been served is a “party” for purposes of Rule 54(b), a question
of first impression in this circuit. Second, because we conclude
that an unserved defendant is not a party, we must determine
whether Altschul Landy was ever served.
7
A
Although the interpretation of the term “parties” in Rule
54(b) is a question of first impression in this circuit, that is
hardly the case elsewhere. To the contrary, our sister circuits
“treat an improperly served defendant as never [having been]
before the district court” for purposes of Rule 54(b). Kane
Enters. v. MacGregor (USA) Inc., 322 F.3d 371, 374 n.1 (5th
Cir. 2003); see 15A CHARLES ALAN WRIGHT & ARTHUR R.
MILLER, FEDERAL PRACTICE AND PROCEDURE § 3914.7 (2d ed.
1992). Eight circuits have expressly adopted this view.1 None
has adopted a contrary interpretation.2
1
See Leonhard v. United States, 633 F.2d 599, 608 (2d Cir. 1980);
Gomez v. Gov’t of the Virgin Islands, 882 F.2d 733, 736 (3d Cir.
1989); Swanson v. Whitmare, No. 88-7506, 1988 WL 60932, at *1
(4th Cir. June 3, 1988); Kane Enters. v. MacGregor (USA) Inc., 322
F.3d 371, 374 n.1 (5th Cir. 2003); Smith v. Bd. of County Comm’rs,
No. 97-3107, 1998 WL 321045, at *1 (6th Cir. June 2, 1998); Young
v. Mount Hawley Ins. Co., 864 F.2d 81, 83 (8th Cir. 1988); Raiser v.
Utah County, 409 F.3d 1243, 1245 n.2 (10th Cir. 2005); Insinga v.
LaBella, 817 F.2d 1469, 1470 (11th Cir. 1987).
2
The First Circuit has noted the issue but thus far has not taken a
position. See Barrett ex rel. Estate of Barrett v. United States, 462
F.3d 28, 33 (1st Cir. 2006). The Seventh and Ninth Circuits have
generally adopted the approach of the other circuits, but with different
qualifications. Whatever their wisdom, those qualifications would not
affect the outcome of this case, and we therefore take no position on
them. The Seventh Circuit has thus far applied the other circuits’
approach only when two conditions have been met: First, “an attempt
by the plaintiff to serve the complaint on the unserved defendant
would be untimely under FED. R. CIV. P. 4(m),” and second, “any new
complaint against the unserved defendant would be barred by the
statute of limitations.” Manley v. City of Chicago, 236 F.3d 392, 395
(7th Cir. 2001). Both conditions are met here. See FED. R. CIV. P.
4(m) (requiring service within 120 days after the filing of the
8
At oral argument, Cambridge conceded that the position
adopted by the other circuits is correct, see Oral Arg. Recording
at 1:50, and we now join them in holding that defendants that
have not been subject to effective service are not “parties”
within the meaning of Rule 54(b). As a consequence, we also
hold that a district court order disposing of all claims against all
properly served defendants satisfies the requirements of Rule
54(b), even if claims against those not properly served remain
unresolved.
This position not only has the virtue of consistency with our
sister circuits, but also reflects the soundest interpretation of
Rule 54(b). The rule was enacted to codify “[t]he historic rule
in the federal courts” prohibiting “piecemeal disposition of
litigation” by preventing an appeal in a case where litigation
before the district court is ongoing. See FED. R. CIV. P. 54
advisory committee’s notes to 1946 amendment. The failure to
dispose of a claim against a served party renders an order
unappealable because such a claim will necessarily involve
further action by the parties or the district court. By contrast,
when a district court dismisses a suit as to all served defendants
and only an unserved defendant remains, there is generally no
reason to anticipate additional proceedings before the district
court. Indeed, unless the procedural requirements of effective
service of process have been satisfied, the court lacks personal
jurisdiction to act with respect to that defendant at all. See Omni
complaint); D.C. CODE § 12-301(7) (three-year statute of limitations
for contract actions). The Ninth Circuit has qualified the other
circuits’ approach by holding that an order disposing of all claims only
against served parties is not final if “it is clear from the course of
proceedings that further adjudication is contemplated” by the district
court. Disabled Rights Action Comm. v. Las Vegas Events, Inc., 375
F.3d 861, 871-72 (9th Cir. 2003). In the instant case, there is no such
indication in the district court record.
9
Capital Int’l, Ltd. v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 104
(1987); Gorman v. Ameritrade Holding Corp., 293 F.3d 506,
514 (D.C. Cir. 2002).
B
The application of Rule 54(b) to this appeal therefore
depends on whether Altschul Landy was made a party to the suit
through valid service of process. The relevant rule for this case
is Federal Rule of Civil Procedure 4(h), which provides two
methods for effecting service: “by delivering a copy of the
summons and of the complaint to an officer, a managing or
general agent, or to any other agent authorized by appointment
or by law to receive service of process,” FED. R. CIV. P. 4(h)(1);
or by complying with “the law of the state in which the district
court is located, or in which service is effected, for the service
of a summons upon the defendant in an action brought in the
courts of general jurisdiction of the State,” FED. R. CIV. P.
4(e)(1) (cross-referenced by Rule 4(h)(1)).
Cambridge does not contend that it effected service on
Altschul Landy by either of these methods. Instead, it relies
solely on another provision of Rule 4, asserting that “[t]he Law
Firm was served by mail as authorized by the Federal Rules of
Civil Procedure 4(c)(2)(C)(ii).” Appellant’s Reply Br. 1
(emphasis omitted). In support, Cambridge cites a letter to its
counsel from Joseph Altschul, who was at one time a member
of Altschul Landy. The letter, dated November 19, 2001, states
in relevant part:
On Friday, November 16, 2001, I received by
Fedex your November 15, 2001 and October 22, 2001
letters, together with a notice and complaint against
[Federal Insurance], Babb, Inc., and Altschul, Landy &
Collier, P.A.
10
Please be advised that I resigned from Altschul,
Landy & Collier, P.A. earlier this year and do not have
the authority to speak on behalf of the firm, which is
being wound-up by Nancy S. Landy.
Joint Appendix tab 4, exhibit B. Cambridge argues that this
letter is sufficient to establish service because it “clearly
acknowledges receipt of the complaint, and through the
reference to the ‘notice’ of October 22, 2001, of the summons.”
Appellant’s Reply Br. 1. According to Cambridge, “[s]ervice
under Rule 4(c)(2)(C)(ii) is complete when the recipient receives
the complaint and summons and has actual notice of the pending
lawsuit,” and “[s]uch service need not be officially
acknowledged in any particular form.” Id. (emphasis added).
This argument has a number of shortcomings, not the least
of which is that the letter upon which it relies establishes only
that Joseph Altschul had notice of the pending lawsuit. It does
not establish that the law firm had notice, since the letter stated
that Altschul was no longer a member of the firm and was
without authority to speak on its behalf.
But the more significant defect in Cambridge’s argument is
that there is no “Rule 4(c)(2)(C)(ii)” in the relevant version of
the Federal Rules of Civil Procedure. That provision was
deleted in the 1993 amendments to the rule, and was replaced
with a new provision, subsection 4(d). See FED. R. CIV. P. 4(d)
advisory committee’s notes to the 1993 amendments. As
amended, Rule 4(d) forecloses Cambridge’s contention that
federal “service by mail” is complete whenever a defendant
acknowledges actual receipt of the summons and complaint. In
fact, Rule 4(d) is not a rule about “service by mail” at all, but
rather a rule about “waiver of service.” The rule permits a
plaintiff to use the mail to “notify . . . a defendant of the
commencement of the action and request that the defendant
11
waive service of a summons.” FED. R. CIV. P. 4(d)(2). If the
defendant returns a waiver, the rule provides that “the action
shall proceed . . . as if a summons and complaint had been
served at the time of filing the waiver.” FED. R. CIV. P. 4(d)(4).
But if the defendant does not waive, the rule does not suggest
that service is nonetheless effective. To the contrary, the rule
provides that, “[i]f a defendant . . . fails to comply with a request
for waiver . . . , the court shall impose the costs subsequently
incurred in effecting service on the defendant.” FED. R. CIV. P.
4(d)(2) (emphasis added). And Rule 4(h), referenced above,
lists the two ways in which such service may be effected where
“a waiver of service has not been obtained.” FED. R. CIV. P.
4(h); see also FED. R. CIV. P. app. Form 1A (form for requesting
a waiver of service, advising the recipient that “[i]f you do not
return the signed waiver . . . , [the plaintiff] will take appropriate
steps to effect formal service in a manner authorized by the
Federal Rules” (emphasis added)). Indeed, the Advisory
Committee notes make clear that one of the purposes of the
1993 amendment was to prevent precisely the mistake that
Cambridge made here:
The former text described this process as service-by-
mail. This language misled some plaintiffs into
thinking that service could be effected by mail without
the affirmative cooperation of the defendant. It is more
accurate to describe the communication sent to the
defendant as a request for a waiver of formal service.
FED. R. CIV. P. 4(d) advisory committee’s notes to 1993
amendments (citation omitted).
Relying on the Second Circuit’s decision in Morse v. Elmira
Country Club, 752 F.2d 35, 41 (2d Cir. 1984), Cambridge insists
that service by mail is effective under Rule 4, regardless of
whether the defendant returns a waiver, as long as the defendant
12
receives actual notice of the lawsuit. Appellant’s Reply Br. 1.
But Cambridge’s reliance on Morse has two fatal flaws. First,
the Second Circuit decided Morse prior to the 1993 amendment
to Rule 4, and based its decision on since-deleted language from
the former subsection (c)(2)(C)(ii). See Morse, 752 F.2d at 36
& n.1. Second, even before the 1993 amendment, this court had
expressly declined to follow Morse. See Combs v. Nick Garin
Trucking, 825 F.2d 437, 446-47 (D.C. Cir. 1987). We therefore
reiterate that, under Rule 4(d), waiver of service is not effective
unless the defendant returns a waiver.
Cambridge does not contend that Altschul Landy ever
returned a waiver of service, and concedes that there is no
indication in the record that it did. See Oral Arg. Recording at
5:50. We therefore find that Cambridge did not obtain a valid
waiver of service under Rule 4(d). And because Cambridge
does not claim that it served Altschul Landy by any other means
authorized by Rule 4, we conclude that the law firm was never
properly served and therefore was not a “party” within the
meaning of Rule 54(b).3 Accordingly, the district court’s July
12, 2004 order was a final judgment within the meaning of that
3
When the inevitability of this outcome became clear during oral
argument, Cambridge responded in its rebuttal -- creatively, but
belatedly -- that in sending the complaint to Joseph Altschul in
November, 2001, it was not actually seeking a waiver of service under
Rule 4(d). Instead, Cambridge said, it was accomplishing personal
service by a private process server: to wit, the Federal Express
delivery person. See Oral Arg. Recording at 30:50. We decline to
consider this novel and unlikely theory, both because it came too late,
see Ark Las Vegas Rest. Corp. v. NLRB, 334 F.3d 99, 108 n.4 (D.C.
Cir. 2003) (holding that contentions first raised in oral argument are
waived), and because it is inconsistent with the theory of federal mail
service advanced in Cambridge’s briefs.
13
rule, because it fully resolved the litigation as to all parties to the
lawsuit.4
IV
Cambridge’s remaining argument is that, even if the district
court’s July 12, 2004 order was a final and appealable judgment,
it did not start the limitations period fixed by Rule 4(a) of the
Federal Rules of Appellate Procedure because it was not set
forth in a separate document, as required by Rule 58 of the
Federal Rules of Civil Procedure. This argument is also without
merit.
Rule 58(a)(1) states: “Every judgment and amended
judgment must be set forth on a separate document.” FED. R.
CIV. P. 58(a)(1). Cambridge notes that the district court’s July
12, 2004 order dismissing its claims against Federal Insurance
was not set forth in a separate document. It then cites this
court’s opinion in Pack v. Burns International Security Service,
130 F.3d 1071 (D.C. Cir. 1997), which held that, when a district
court fails to comply with Rule 58’s separate document
requirement, “‘[a]n appellant may . . . safely wait until a
conforming judgment has been entered and file an appeal at that
time.’” Appellant’s Br. 18 (quoting Pack, 130 F.3d at 1072).
Because the district court did not issue a “conforming judgment”
4
Some courts have held that a judgment that does not resolve a
claim against one of several defendants is not appealable under Rule
54(b) if the effectiveness of service on that defendant is uncertain. See
Swanson, 1988 WL 60932, at *1; Patchick v. Kensington, 743 F.2d
675, 677 (9th Cir. 1984). Although Cambridge insists that its service
was effective, we have concluded that its only method of service was
ineffective as a matter of law. We therefore need not decide how we
would address a case in which there is factual uncertainty as to
whether a party was properly served.
14
in a separate document until June 20, 2005, and because
Cambridge filed its notice of appeal within thirty days of the
entry of that document, Cambridge contends that its appeal was
timely.
Once again, Cambridge has apparently been consulting an
outdated copy of the Federal Rules. In 2002, Rule 4 of the
appellate rules and Rule 58 of the civil rules were amended to
“ensure that parties will not be given forever to appeal . . . when
a court fails to set forth a judgment or order on a separate
document in violation of FED. R. CIV. P. 58(a)(1).” FED. R. APP.
P. 4(a)(7) advisory committee’s notes to 2002 amendments.
Rule 4(a)(7) now states:
A judgment or order is entered for purposes of this
Rule 4(a) . . . when the judgment or order is entered in
the civil docket . . . and when the earlier of these
events occurs: the judgment or order is set forth on a
separate document, or 150 days have run from entry of
the judgment or order in the civil docket . . . .
FED. R. APP. P. 4(a)(7)(A) (emphasis added); see also FED. R.
CIV. P. 58(b) (reflecting a corresponding amendment). Thus,
when a district court enters an order that would otherwise
constitute a final judgment, but fails to set it forth in a separate
document as required by Rule 58, the Rule 4(a) clock begins to
run 150 days after the order is entered in the docket. See
Outlaw, 412 F.3d at 162-63.
In this case, there is no dispute that the district court’s order
dismissing Cambridge’s claims against Federal Insurance was
entered in the civil docket on July 12, 2004. See U.S. District
Court for the District of Columbia, Docket Report for Case No.
01-cv-02192. Pursuant to amended Rule 4(a)(7)(A), it was
therefore entered for purposes of Rule 4(a) 150 days later -- on
15
December 9, 2004 -- notwithstanding the lack of a separate
document. When confronted with the amended rule at oral
argument, counsel for Cambridge conceded as much. See Oral
Arg. Recording at 1:35. Accordingly, Rule 4(a)’s thirty-day
period ran out in January 2005 -- six months before Cambridge
filed its notice of appeal on July 19, 2005.
V
For the foregoing reasons, we conclude that Cambridge’s
appeal was untimely, and it is therefore
Dismissed.