United States Court of Appeals
For the First Circuit
No. 06-2581
VERONICA LEE-BARNES,
Plaintiff, Appellant,
v.
PUERTO VEN QUARRY CORPORATION,
Defendant, Appellee,
KCIRE CORP.; ERICK RODRÍGUEZ-TORO;
MARISOL RODRÍGUEZ-CENTENO; CONJUGAL PARTNERSHIP
RODRÍGUEZ-RODRÍGUEZ; ATLANTE CORP.; KCIRE INVESTMENT AND
DEVELOPMENT CORP.; ONITRAM BUILDERS CORP.;
ENVIRONMENTAL POWER OF PUERTO RICO, INC.,
Defendants,
NOREEN WISCOVITCH RENTAS,
Trustee,
NEWPORT BONDING,
Movant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Gustavo A. Gelpí, U.S. District Judge]
Before
Torruella, Circuit Judge,
Baldock * , Senior Circuit Judge,
and Lipez, Circuit Judge.
Humberto Guzmán-Rodríguez, w ith whom Nelson N.Córdova-
Morales and Guzmán Rodríguez Law Office were on brief for
appellant.
Luis A. Oliver, w ith whom José Luis Ramírez-Coll and
Fiddler González & Rodríguez PSC were on brief for appellee
Newport Bonding.
January 9, 2008
*
Of the Tenth Circuit Court of Appeals, sitting by
designation.
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BALDOCK, Senior Circuit Judge. This interlocutory
appeal comes before us via Fed. R. Civ. P. 54(b)
certification. In the underlying diversity action, movant-
appellee Newport Bonding (appellee Newport) issued a
prejudgment surety bond on behalf of defendant Puerto Ven
Quarry (defendant PVQ). After defendant PVQ declared
bankruptcy, the district court issued an order declaring the
prejudgment bond null. Plaintiff-appellant Veronica Lee-
Barnes (appellant Lee-Barnes) sought immediate appeal, and
the district court certified its ruling pursuant to Fed. R.
Civ. P. 54(b). We hold that, in so doing, the district
court abused its discretion and, accordingly, vacate its
Rule 54(b) certification. Further, because we conclude that
the collateral-order doctrine is inapplicable, we dismiss
the instant appeal for want of appellate jurisdiction.
I.
We recount only those underlying and procedural facts
material to resolving the instant appeal (i.e., those facts
related to appellate jurisdiction). Appellant Lee-Barnes
sued to recover monies she invested with defendants after
several business ventures failed. See 28 U.S.C. § 1332.
Concerned that defendants might not be able to satisfy a
future judgment entered in her favor, appellant Lee-Barnes
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sought prejudgment attachment of defendants’ property. 1 To
avoid attachment, defendants proposed, and appellant Lee-
Barnes agreed, that defendant PVQ would obtain a $200,000
surety bond. Accordingly, defendant PVQ posted a bond
issued by appellee Newport, which the district court
eventually approved.
Subsequently, defendant PVQ filed for Chapter 11
bankruptcy and moved to stay appellant Lee-Barnes’s lawsuit.
The district court denied the motion, finding defendant PVQ
entitled to an automatic stay, but not the eight other
defendants. Accordingly, the district court dismissed,
without prejudice, all claims against defendant PVQ. The
district court also entered a partial judgment, in light of
defendant PVQ’s bankruptcy proceedings, which provided in
relevant part:
This dismissal will not affect in any manner
1
Puerto Rico law provides for prejudgment attachment
or, alternatively, the posting of a surety bond. See P.R.
Laws Ann. tit. 32(A), App. III, Rules 56.1, 56.3. The
Federal Rules of Civil Procedure, in turn, provide that:
At the commencement of and during the course
of an action, all remedies providing for seizure of
person or property for the purpose of securing
satisfaction of the judgment ultimately to be
entered in the action are available under the
circumstances and in the manner provided by the law
of the state in which the district court is held,
existing at the time the remedy is sought . . . .
Fed. R. Civ. P. 64.
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Plaintiff's pending claims against [defendant PVQ].
Upon the conclusion of the bankruptcy proceedings,
Plaintiff may file a petition to reinstate the
proceedings in this case. Plaintiff's petition for
reinstatement shall not be deemed a new filing.
Rather, [her] petition will be effective nunc pro
tunc to the date of the original filing. Partial
Judgment is hereby entered accordingly.
Lee-Barnes v. Puerto Ven Quarry Corp., No. 03-2358(SEC),
(D.P.R. filed Dec. 23, 2003) (Doc. 72: Partial J.).
Defendant PVQ later converted its Chapter 11 bankruptcy
to a Chapter 7 bankruptcy. The Chapter 7 Trustee (Trustee)
moved the district court to compel appellee Newport to
respond to several issues related to the bond, as it related
to defendant PVQ’s bankruptcy estate. In its court-ordered
response, appellee Newport asserted that the dismissal of
appellant Lee-Barnes’s claims against defendant PVQ voided
the prejudgment bond (i.e., after the principal obligation
that the bond secured ceased to exist, the bond — which
appellee Newport deems an accessory obligation — likewise
was invalid).
The district court agreed and entered an opinion and
order declaring the bond null. On appellant Lee-Barnes’s
motion, the district court later entered an order and
partial judgment certifying the earlier opinion and order as
immediately appealable under Fed. R. Civ. P. 54(b).
Appellant Lee-Barnes appeals, contending that the district
court’s ruling constituted reversible error because,
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regardless of defendant PVQ’s bankruptcy and dismissal
without prejudice from the case, the bond — which she
contends is a joint and several obligation — remained valid
and enforceable.
II.
“Because federal courts are powerless to act in the
absence of subject matter jurisdiction, we have an
unflagging obligation to notice jurisdictional defects” and
to verify that appellate jurisdiction lies before addressing
the merits of any appeal. See Espinal-Dominguez v. Puerto
Rico, 352 F.3d 490, 495 (1st Cir. 2003). Here, appellant
Lee-Barnes asserts that appellate jurisdiction exists
pursuant to: (1) the district court’s Rule 54(b)
certification; and (2) in any event, the collateral-order
doctrine. We disagree. See ITV Direct, Inc. v. Healthy
Solutions, L.L.C., 445 F.3d 66, 72 (1st Cir. 2006) (“[W]e
review decisions to grant or deny 54(b) certifications under
an abuse of discretion standard.”); Rhode Island v. U.S.
Envtl. Prot. Agency, 378 F.3d 19, 28 (1st Cir. 2004)
(collateral-order doctrine only applies to district court
orders that meet the doctrine’s stringent requirements).
A.
This Court employs a “two part process for evaluating
the appropriateness of certification under Rule 54(b).”
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State Street Bank & Trust Co. v. Brockrim, Inc., 87 F.3d
1487, 1489 (1st Cir. 1996). “First, we determine whether
the district court action underlying the judgment had the
‘requisite aspects of finality.’” Id. (quoting Darr v.
Muratore, 8 F.3d 854, 862 (1st Cir. 1993)). Rule 54(b)
finality requires that a judgment “dispose of all the rights
and liabilities of at least one party as to at least one
claim.” Id. (emphasis added). This determination is
“governed by 28 U.S.C. § 1291.” Id. “A final decision
under § 1291 is one that ‘ends the litigation on the merits
and leaves nothing more for the court to do but execute the
judgment.’” Id. at 1490 (quoting Digital Equip. Corp. v.
Desktop Direct, Inc., 511 U.S. 863, 867 (1994)). We review
the first part of the Rule 54(b) analysis de novo. Id. at
1489.
Here, appellee Newport is not a party to the underlying
action within the meaning of Rule 54(b). See id. at 1490
n.1. Appellee Newport never formally intervened in the
proceeding. Indeed, in asking the district court to declare
the bond null, appellee Newport maintained it was simply
making a “special appearance.” In so doing, appellee
Newport submitted that it was neither “submitting itself to
the [district court’s] jurisdiction” nor “waiving any of its
legal defenses.” See Lee-Barnes, No. 03-2358 SEC/GAG (Doc.
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132: Mot. in Compliance with Order). Appellee Newport’s
subsequent involvement in the underlying proceeding was
strictly limited to the viability of the bond it issued on
defendant PVQ’s behalf.
Nor did the district court’s order dispose of a claim
in the Rule 54(b) sense. Rule 54(b) expressly limits
certification under its provision to, inter alia, instances
in which “more than one claim for relief is presented in an
action.” See Fed. R. Civ. P. 54(b) (emphasis added).
Rather than resolving a cause of action set forth in a
pleading, the district court’s order exclusively pertained
to the validity of the bond. Because the district court’s
order fails to meet either Rule 54(b)’s “party” or “claim”
requirement, our analysis need not go further. Put simply,
the Rule 54(b) certification issued in this case constituted
an abuse of discretion. 2 See State Street Bank & Trust,
2
Because the district court’s order does not espouse
the requisite “aspects of finality,” “we need not proceed to
the second step of jurisdictional analysis under Rule
54(b).” See id. at 1490. We note, however, that the
district court’s order fails to satisfy those strictures as
well.
At step two of the Rule 54(b) analysis, “we review the
sufficiency of the district court’s assessments of 1) any
interrelationship or overlap among the various legal and
factual issues involved and 2) any equities and efficiencies
implicated by the requested piecemeal review.” Id.
Appellant Lee-Barnes has not demonstrated that she will
incur any material harm if interlocutory review is denied.
(continued...)
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Co., 445 F.3d at 1489 (“The [d]istrict [c]ourt cannot, in
the exercise of its discretion, treat as ‘final’ that which
is not ‘final’ within the meaning of 28 U.S.C. § 1291.”).
B.
Whether the instant appeal falls within the collateral-
order doctrine presents a closer question. “Generally
speaking, appeals are permitted only from final judgments of
the district court.” Asociación de Subscripción Conjunta
del Seguro de Responsibilidad Obligatorio v. Flores Galarza,
484 F.3d 1, 13 (1st Cir. 2007) (citing 28 U.S.C. § 1291).
As the Supreme Court recently explained, however, our 28
U.S.C. § 1291 authority extends “appellate jurisdiction over
a narrow class of decisions” that – although they do not end
the underlying proceeding – fall within the collateral-order
doctrine. Will v. Hallock, 546 U.S. 345, 347 (2006).
“The collateral order doctrine, identified with Cohen
[v. Beneficial Indus. Loan Corp., 337 U.S. 541 (1949)] . . .
is best understood not as an exception to the ‘final
decision’ rule laid down by Congress in § 1291, but as a
2
(...continued)
To the contrary, we can assess the district court’s order
nullifying the bond equally well if and when final judgment
is entered in appellant Lee-Barnes’s favor. See Spiegel v.
Trs. of Tufts College, 843 F.2d 38, 45 (1st Cir. 1988)
(noting that the possibility that the need for an appeal
might become moot is considered “a major negative in the
Rule 54(b) equation”).
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practical construction of it.” Will, 546 U.S. at 349. For
the collateral-order doctrine to apply, a district court
order must: “[1] conclusively determine the disputed
question, [2] resolve an important issue completely separate
from the merits of the action, and [3] be effectively
unreviewable on appeal from a final judgment.” 3 Id. These
conjunctive “conditions are stringent . . . and unless they
are kept so, the underlying doctrine will overpower the
substantial finality interests § 1291 is meant to further
. . . .” Id.; see also Gulfstream Aerospace Corp. v.
Mayacamas Corp., 485 U.S. 271, 276 (1988) (“If the order at
issue fails to satisfy any one of [Cohen’s] requirements, it
is not appealable under the collateral-order [doctrine].”).
Notably, “[t]he doctrine is applied narrowly and interpreted
strictly.” United States v. Quintana-Aguayo, 235 F.3d 682,
684 (1st Cir. 2000). As the Supreme Court recently stated
in Will v. Hallock:
[W]e have not mentioned applying the collateral
order doctrine recently without emphasizing its
modest scope. And we have meant what we have said;
although the Court has been asked many times to
expand the ‘small class’ of collaterally appealable
orders, we have instead kept it narrow and
3
Compare Will, 546 U.S. at 349 (delineating three
requirements an order must meet to fall within Cohen), with
Espinal-Dominguez, 352 F.3d at 497 (adding, as a fourth
requirement, that the order involve an “important and
unsettled question of controlling law, not merely a question
of the proper exercise of the trial court's discretion”).
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selective in its membership.
Will, 546 U.S. at 349 (emphasis added).
Turning to the doctrine’s “important issue” requirement,
“[t]he Supreme Court has explained that ‘important’ in the
Cohen collateral order doctrine sense means ‘being weightier
than the societal interests advanced by the ordinary
operation of final judgment principles.’” Gill v.
Gulfstream Park Racing Assoc., Inc., 399 F.3d 391, 399 (1st
Cir. 2005) (quoting Digital Equip. Corp., 511 U.S. at 879);
see also Lauro Lines s.r.l. v. Chasser, 490 U.S. 495, 502
(1989) (Scalia, J., concurring) (“The importance of the
right asserted has always been a significant part of our
collateral order doctrine.”). In the instant matter, the
issue on appeal — i.e., whether the district court erred in
deeming the surety bond void — simply does not “rise to the
level of importance needed for recognition under [the
collateral-order doctrine].” See Digital Equip. Corp., 511
U.S. at 878.
The issue presented in this case is highly unlikely to
affect, or even be consequential to, anyone aside from the
parties. This makes our situation readily distinguishable
from Cohen. Unlike the ruling at bar, the Cohen district
court order — which the Supreme Court held to be immediately
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appealable — refused to apply a newly enacted state statute,
which entitled any defendant corporation, in certain
shareholder derivative actions, to require complainant
shareholders to post security. See Cohen, 337 U.S. at 545-
46 & n.1. Nor can the issue presented for immediate appeal
here be considered “weightier than the societal interests
advanced by the ordinary operation of final judgment
principles.” See Digital Equip. Corp., 511 U.S. at 879.
As to the collateral-order doctrine’s third requirement,
the First Circuit equates this factor – “perhaps the
[doctrine’s] most elemental” – with “urgency” or
“irreparable harm.” Espinal-Dominguez, 352 F.3d at 496-97.
Here, appellant Lee-Barnes has not made the requisite
“showing of irreparable harm” (i.e., that “the postponement
of appellate review” will effectively render the issue
unreviewable). Rhode Island, 378 F.3d at 28.
Obtaining a final judgment against defendant PVQ is a
prerequisite to appellant Lee-Barnes collecting on the bond.
In other words, even if we reversed the district court’s
order declaring the bond null at this juncture, appellant
Lee-Barnes could not collect on the bond until entry of
final judgment, regardless of defendant PVQ’s bankruptcy
status. Hence, if appellant Lee-Barnes prevails in the
underlying proceeding she will “have ample opportunity to
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test the propriety” of the district court’s ruling declaring
the bond null. See Espinal-Dominguez, 352 F.3d at 497.
Thus, because appellant Lee-Barnes’s interest is “fully
vindicable on appeal from final judgment,” it does not meet
the “urgency” requirement proscribed by the collateral-order
doctrine. Cf. Swift & Co. Packers v. Compania Colombiana
del Caribe, S.A., 339 U.S. 684, 688-89 (1950) (order
vacating attachment on foreign vessel in admiralty
proceeding was immediately appealable because it could not
be effectively reviewed after entry of final judgement).
Hence, the district court’s order does not comport with
either the collateral-order doctrine’s second or third
requirements. The district court’s order, quite simply:
(1) does not present a sufficiently important issue to
warrant immediate review; and (2) is “effectively reviewable
on appeal from final judgment.” As such, the collateral-
order doctrine does not apply. See Van Cauweberghe v.
Biard, 486 U.S. 517, 524 (1988); Gulfstream Aerospace Corp.,
485 U.S. at 276; see generally Quintana-Aguayo, 235 F.3d at
684 (collateral-order doctrine only permits immediate appeal
“in limited circumstances when the important goal of the
final judgment rule – the effective, efficient
administration of justice – is not undermined or is
counterbalanced by other weighty goals”). Lacking any basis
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for appellate jurisdiction, we must dismiss the instant
interlocutory appeal.
III.
For the foregoing reasons, we vacate the district
court’s underlying Rule 54(b) certification and dismiss the
instant appeal for want of appellate jurisdiction.
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