PYCA Industries, Inc. v. Harrison County Waste Water Management District

United States Court of Appeals,

Fifth Circuit.

Nos. 94-60800, 95-60091.

PYCA INDUSTRIES, INC., Plaintiff-Appellee Cross-Appellant,

and

D. Reynolds Company, Inc., doing business as Reynolds Company,
The, Plaintiff,

v.

HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant-
Appellant Cross-Appellee,

and

Owen and White, Inc.; Max Foote Construction Company, Inc.;
Fidelity and Deposit Company of Maryland, Defendants-Appellees.

PYCA INDUSTRIES, INC.; D. Reynolds Company, Inc., doing business
as Reynolds Company, The, Plaintiffs-Appellees.

v.

HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant-
Appellant,

and

Owen and White, Inc.; Max Foote Construction Company, Inc.;
Fidelity and Deposit Company of Maryland, Defendants-Appellees.

May 3, 1996.

Appeals from the United States District Court for the Southern
District of Mississippi.

Before JOLLY, JONES and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:

The central issues of these interlocutory appeals are whether

the Harrison County Wastewater Management District ("the District")

is a citizen for diversity jurisdiction purposes and, if so,

whether under Mississippi law it is a political subdivision of the

1
state entitling it to sovereign immunity from tort claims. Because

we conclude that the District is a person for diversity purposes,

we agree with the district court that it had jurisdiction over the

claims asserted. However, because we also conclude that the

District is a political subdivision of the state, the District is

immune from the tort claims and we accordingly reverse that part of

the judgment of the district court denying tort immunity.

FACTUAL AND PROCEDURAL BACKGROUND

The underlying litigation in this case involves multiple

contract and tort claims among several different parties arising

out of the construction of the West Biloxi Wastewater Treatment

Facility. Appellant Harrison County Wastewater Management District

hired Max Foote Construction Co. ("Foote") as the general

contractor for the project. Owen & White ("O & W") was the project

engineer. Appellee PYCA Industries, Inc. ("PYCA") is an electrical

subcontractor that was awarded a subcontract on the project. In

preparing its bid, PYCA made commitments for the purchase of

certain equipment from electrical equipment suppliers.

While the project was ongoing, PYCA proposed revisions in the

electrical portion of the project that would net substantial

savings to the District. After being initially rejected by O & W,

the District ultimately directed O & W to implement the changes.

These changes decreased the amount of work required and thus the

amount due PYCA. Consequently, the District was entitled to change

order credits. The principle dispute underlying this case is the

amount of these credits.

2
 PYCA believed the credit should be significantly less than the

District. The District, through O & W, arrived at its larger

credit figure by obtaining price quotes from additional electrical

equipment suppliers. PYCA continued to object and refused to

complete its subcontract until the credit dispute was resolved.

Subsequently, the District and O & W allegedly threatened Foote

with termination of the general contract. Foote, in turn,

pressured PYCA. PYCA then complied by completing its part of the

project despite the credit dispute. Later, the District and O & W

required PYCA to provide the cost breakdown of its electrical

equipment. Believing PYCA's suppliers were too high, the District

and O & W increased the amount of the credit due. Apparently, this

forced PYCA to breach its purchase price commitments with its

suppliers.

In August 1991, PYCA sued the District, O & W, Foote, and

Fidelity & Deposit Company of Maryland (Foote's surety under a

labor and materials bond). PYCA alleged breach of contract and

tortious interference with contract claims. In addition, PYCA

included claims for punitive damages.

A flurry of motions to dismiss and for partial summary

judgment ensued below. In an attempt to winnow the issues for

trial, the district court issued several opinions and accompanying

orders, often referencing one another, disposing of these motions.

Because the issues addressed by these various opinions and orders

define the parameters of what is properly before us, it is

necessary to describe them in some detail.

3
 Initially, the District moved to dismiss the claims against it

for lack of diversity jurisdiction. The District's position was

based upon the argument that it was the alter ego of the State of

Mississippi and therefore not a "citizen" for diversity purposes.

On January 18, 1994, the district court issued a 58-page opinion

dealing with, inter alia, the District's motion to dismiss for lack

of jurisdiction. Finding that the District was not the alter ego

of the state, the court denied the motion in a subsequent order

filed February 9th, referencing the January 18th opinion. The

District sought and received certification from the district court

for an interlocutory appeal of this order under both 28 U.S.C. §

1292(b) and Federal Rule of Civil Procedure 54(b). The District

now appeals the court's failure to dismiss for lack of

jurisdiction.

Also on January 18th, the district court issued a 25-page

opinion dealing with Foote and O & W's motion for partial summary

judgment on punitive damages. In an order filed January 31, 1994,

the district court granted Foote's motion, but denied O & W's. In

a subsequent clarification order, filed November 8, 1994, the

district court held that O & W was also immune from punitive

damages. No one sought certification of these two specific orders

for interlocutory appeal. Nonetheless, PYCA cross-appeals on the

propriety of dismissing its punitive damage claims. Foote and O &

W contend in a pending motion that the lack of certification

deprives us of appellate jurisdiction.

In June 1994, the District moved to amend its answer to assert

4
cross-claims against Foote and O & W and counterclaims against PYCA

based upon allegations of possible fraud and conspiracy. This

motion to amend, made nearly three years into the litigation, was

denied by the magistrate judge. On October 3, 1994, the district

court upheld the magistrate judge's denial of the District's motion

to amend. Surprisingly, this order was also certified for

interlocutory appeal under Rule 54(b). The District appeals the

denial of its motion to amend.

Also on October 3, 1994, the district court filed a third

opinion relating primarily to the District's summary judgment

motion based upon sovereign immunity. Finding that the District's

activities were not "governmental," the court concluded that the

Mississippi Sovereign Immunity Act did not apply. Alternatively,

the court concluded that if the Act did apply, the District waived

its immunity to the extent it had general liability insurance.1

Additionally, the court granted the District partial summary

judgment on PYCA's punitive damages claim. These conclusions were

then embodied in an order filed October 31, 1994 that referenced

the court's earlier January 18th and October 3rd opinions. This

order was also certified for interlocutory appeal under both §

1292(b) and Rule 54(b). The District appeals the denial of summary

judgment on the immunity issue; PYCA cross-appeals on the punitive

damage issue.

1
The court also rejected PYCA's argument that retroactive
application of the Act violated its due process rights. This
conclusion forms the basis of PYCA's conditional cross-appeal on
the immunity issue.

5
 To recap, the District appeals the district court's conclusion

that it is a citizen for diversity purposes. It also appeals the

denial of summary judgment on the tort claims based on sovereign

immunity. Furthermore, the District appeals the denial of its

motion to amend. PYCA cross-appeals on the dismissal of its

punitive damage claims against the District, Foote, and O & W. We

examine each of these issues in turn.

DIVERSITY JURISDICTION

As a threshold matter, the District contends that it is the

alter ego of the State of Mississippi and therefore not a citizen

for diversity jurisdiction purposes. In answering this

jurisdictional question, the district court applied the balancing

test of Tradigrain, Inc. v. Mississippi State Port Authority, 701

F.2d 1131 (5th Cir.1983), and concluded that the District was not

the alter ego of the state. On appeal, the District argues that

the Tradigrain analysis only applies if the District's status is

unclear. Because the enabling act for the District created it as

"a public body corporate and politic constituting a political

subdivision of the State of Mississippi," the District argues that

such analysis is inappropriate because its status is clear. See

Senate Bill 2833, Chap. No. 885, Local & Private Laws of the State

of Mississippi, § 4 (1982) (hereinafter "Enabling Act").

Alternatively, if Tradigrain is applied, the District contends that

the balance should tip in favor of it being the alter ego of the

state.

It is well-settled that a state is not a "citizen" for

6
purposes of diversity jurisdiction. Moor v. County of Alameda, 411

U.S. 693, 717, 93 S.Ct. 1785, 1796-97, 36 L.Ed.2d 596 (1973). If

suit is brought against an agency that is the alter ego of the

state, federal jurisdiction is lacking. Tradigrain, 701 F.2d at

1132. However, if the agency is an independent one, separate and

distinct from the state, the district court can properly proceed to

the merits. Id.

In this case, the district court properly applied Tradigrain

analysis. The District's initial contention that Tradigrain does

not apply is meritless. While there is language in Tradigrain that

"[i]f the agency's status is unclear" we look to all available

sources for guidance, see 701 F.2d at 1132, the fact that the

District's enabling legislation describes it as a political

subdivision does not make its status clear. A state statute

characterizing the agency as an arm of the state is only one factor

to consider in the balancing test. McDonald v. Board of

Mississippi Levee Comm'rs, 832 F.2d 901, 906 (5th Cir.1987).

As we described in Tradigrain, there are many factors to

consider in determining whether an agency is the alter ego of the

state including: (1) whether state statutes and case law

characterize the agency as an arm of the state; (2) the source of

entity funding; (3) the degree of local autonomy; (4) whether the

entity is concerned primarily with local, as opposed to statewide

problems; (5) the authority to sue and be sued in its own name;

and (6) the right to hold and use property. See 701 F.2d at 1132;

7
McDonald, 832 F.2d at 906.2 Typically, some factors will suggest

that the agency is a "citizen," while others will suggest that it

is the alter ego of the state. Tradigrain, 701 F.2d at 1133.

This is precisely what occurred when we applied this test to

the Mississippi State Port Authority in Tradigrain. We found some

factors suggested the Port Authority was a citizen. These

included: the authority to sue and be sued in its own name; the

ability to own property and enter into contracts; and wide

discretion in exercising its duties. Id. Against these factors,

many others supported the opposite view. For example, the title to

all Port Authority property vested in the State of Mississippi.

Likewise, while the Authority could issue bonds, they became

general obligations of the state. Additionally, all contracts had

to be awarded pursuant to state law of public contracts. The

Authority made financial reports to the state legislature and was

audited by the state auditor. Id. Most importantly, state law

specifically provided that the Port Authority waived immunity from

suit only to the extent of liability insurance coverage. We

concluded that "[t]he language in the statute strongly suggests

that the legislature considered the Authority an alter ego of the

State." Id. While the Court did not base its holding solely on

this statute, its language, combined with other provisions

2
The McDonald factors are technically a test for Eleventh
Amendment immunity. However, as we specifically stated in
Tradigrain, "the analysis of an agency's status is virtually
identical whether the case involves determination of immunity
under the Eleventh Amendment or a determination of citizenship
for diversity jurisdiction." 701 F.2d at 1132.

8
enumerated above, clearly tipped the balance in favor of finding

the Port Authority as the alter ego of the State of Mississippi.

Id. at 1134.

The application of the same balancing test to the District

yields the opposite conclusion. Notwithstanding the general

language in its enabling act describing the District as a political

subdivision, the remaining Tradigrain factors indicate sufficient

independence from the state for diversity purposes. Initially, the

same characteristics of the Port Authority that implied it was a

citizen are present here. The District has the authority to sue

and be sued in its own name, as well as employ its own counsel.

Enabling Act § 6(a), (l ). The District can own property and enter

into contracts. Id. § 6(e), (o). Like the Port Authority, it has

wide discretion in exercising its duties. Id. § 25.

However, the factors that led us to conclude that the Port

Authority was the alter ego of the state are absent with the

District. For example, title to the Port Authority's property

vested in the state; the District holds all of its property in its

own name. While both the Port Authority and the District raise

funds through bonds, unlike the Port Authority, the District's

bonds are not obligations of the state. Id. § 16. The District,

unlike the Port Authority, is exempt from state purchasing laws and

bid requirements. Id. § 23; see Senate Bill 2851, Chap. No. 940,

Local & Private Laws of the State of Mississippi, § 6(o) (1984)

(amending Enabling Act to include exemption from state laws

regarding competition). Likewise, the District is exempt from the

9
very financial reports to the legislature that the Port Authority

is required to make. Unlike the Port Authority, there is no

special legislation relating to waiver of immunity based on

liability insurance coverage. Finally, the District is concerned

with wastewater treatment in three coastal counties—a local rather

than statewide concern.3 In sum, the very factors that led this

Court in Tradigrain to conclude that the Port Authority was the

alter ego of Mississippi, leads us to the opposite conclusion for

the District. Consequently, the district court did not err in

refusing to dismiss the suit against the District for lack of

diversity jurisdiction.

SOVEREIGN IMMUNITY

The fact that application of Tradigrain vests the federal

courts with jurisdiction over this diversity lawsuit, does not

silence this controversy. Independent of the jurisdictional

challenge, the District contends that as a matter of Mississippi

3
The District contends that Clark v. Tarrant County, 798
F.2d 736 (5th Cir.1986), should be controlling on this issue. In
Clark, after applying the relevant factors we held that the
Tarrant County Adult Probation Department was the alter ego of
the state. We opined that while at first glance the probation
department appeared to address only a local concern, control over
probationers was a statewide problem. Clark, 798 F.2d at 745.
We added that dividing the responsibilities of a state program
into judicial districts was merely an administrative tool. Id.
However, we specifically noted that "no single factor
conclusively show[ed]" that the probation department was the
alter ego of the state. Id. Rather, all of the factors taken as
a whole led us to that conclusion. These additional factors
included: Texas law giving control of probation departments to
district judges who are state elected officials; funding from
the state treasury; inability to sue or be sued in its own name;
and no mention of whether it could hold property in its own name
or not. Id. at 744-45.

10
state law,4 it is entitled to sovereign immunity from all tort

claims. This requires an analysis separate and distinct from

Tradigrain.

In Pruett v. City of Rosedale, 421 So.2d 1046, 1050

(Miss.1982) (en banc), the Mississippi Supreme Court abolished the

judicial doctrine of sovereign immunity. Pruett, however,

specifically provided that its holding would not take effect until

1984. Following Pruett, the Mississippi legislature enacted the

Sovereign Immunity Act of 1984. See Miss.Code Ann. §§ 11-46-1-23

(Supp.1995). The Act mandated that its provisions would not apply

to claims accruing prior to 1985; claims accruing prior to 1985

would be governed by pre-Pruett law.5 Interestingly, the

substantive provisions of the Sovereign Immunity Act did not take

effect until after 1993 because each successive legislature moved

the effective date of the Act forward to the next year and

specifically provided that pre-Pruett law should continue to

control prior to the effective date of the Act. See Presley v.

Mississippi State Highway Comm'n, 608 So.2d 1288, 1292-94

(Miss.1992); Wesley v. Mississippi Transp. Comm'n, 857 F.Supp.

523, 527-30 (S.D.Miss.1994).

Ultimately in Presley, the Mississippi Supreme Court held that

the portion of the Immunity Act requiring courts to apply

4
In this diversity action, it is quite clear, and no one
disputes, that Mississippi state substantive law applies to the
tort claims in this suit.
5
This was contained in § 11-46-6 and has since been
repealed.

11
pre-Pruett law was unconstitutional. Following Presley, the

legislature amended the Act in 1993 to delete the offensive

provision; this Act is currently in force today. See Miss.Code

Ann. §§ 11-46-1—23 (Supp.1995). However, the Mississippi Supreme

Court subsequently held that Presley should only be applied

prospectively. Robinson v. Stewart, 655 So.2d 866, 868 (Miss.1995)

(en banc) ("Presley has no retroactive application.").

Since Presley is not retroactive, the Sovereign Immunity Act

of 1984 as subsequently amended governs during the post-Pruett and

pre-Presley period. Consequently, pre-Pruett sovereign immunity

law, as mandated by the Act, applies. See Mohundro v. Alcorn

County, --- So.2d ----, ----, 1995 WL 598828, at *4 (Miss. Oct. 12,

1995); West v. Combs, 642 So.2d 917, 920 (Miss.1994); Morgan v.

City of Ruleville, 627 So.2d 275, 278-79 (Miss.1993); Wesley, 857

F.Supp. at 528, 530; Newsom v. Stanciel, 850 F.Supp. 507, 515

(N.D.Miss.1994). The cause of action in this lawsuit arose during

this post-Pruett and pre-Presley gap. Thus, the sovereign immunity

issue is controlled by pre-Pruett law.

The district court denied the District's motion for summary

judgment on immunity grounds for two reasons. The first basis was

that the District was not afforded immunity under the specific

provisions of the Act because it was performing proprietary, rather

than governmental functions and that Mississippi would apply a

governmental/proprietary distinction to the District.6 Describing

6
The court actually defined the District out of the Act.
According to the court, the Act defines "political subdivision"
as those body politic or body corporate responsible for

12
this as arguably a "leap in the law," the court offered an

alternative holding. The court concluded that if the District was

a political subdivision under the Act, any immunity provided could

be waived to the extent it had general liability insurance. The

court concluded that it had "reviewed the pertinent insurance

provisions and concludes that a material issue remains whether PYCA

[sic]7 has liability insurance coverage on the claims asserted."

The court also rejected PYCA's argument that retroactive

application of the Act violated its due process rights.

As described above, it is not the substantive provisions of

the Act that govern the sovereign immunity issue in this case.

Rather, it is pre-Pruett law as mandated by the Act that controls.

Pre-Pruett, Mississippi law distinguished between the State and

political subdivisions on the one hand and municipalities on the

other. The State, its agencies and political subdivisions, were

immune from suit unless immunity was waived by statute. Grantham

v. Mississippi Dep't of Corrections, 522 So.2d 219, 222

(Miss.1988). Municipalities, however, were subject to a

governmental/proprietary distinction; there was no immunity for

proprietary functions. See Webb v. Jackson, 583 So.2d 946, 952

(Miss.1991); see also Morgan, 627 So.2d at 279. The Mississippi

governmental activities. The court then conducted the
governmental/proprietary analysis to determine that the District
was not governmental, ergo not a political subdivision entitled
to immunity. See Miss.Code Ann. §§ 11-46-1(i) (defining
political subdivision); 11-46-3 (blanket immunity provision)
(Supp.1995).
7
This should, of course, be the District, not PYCA.

13
Supreme Court has specifically refused to extend the

governmental/proprietary distinction outside of the municipal

context. See Strait v. Pat Harrison Waterway Dist., 523 So.2d 36,

40 (Miss.1988), overruled on other grounds, Churchill v. Pearl

River Basin Dev. Dist., 619 So.2d 900 (Miss.1993); see also

Starnes v. City of Vardaman, 580 So.2d 733, 736 (Miss.1991). But

cf. Womble v. Singing River Hosp., 618 So.2d 1252, 1261 (Miss.1993)

(en banc) (in dicta noting that reexamination of

governmental/proprietary distinction may be in order but declining

to do so because of explicit statutory immunity for the entity at

issue).

The district court improperly applied

governmental/proprietary analysis to the District. The District

was created as a "political subdivision of the State of

Mississippi." Enabling Act, § 4. It is not a municipality.

Consequently, under Mississippi law the governmental/proprietary

distinction is simply not applicable. See Strait, 523 So.2d at 40.

As a political subdivision, the District is immune from tort suit

under pre-Pruett law. Grantham, 522 So.2d at 222.

Despite the authority indicating that the

governmental/proprietary distinction is only used with

municipalities, PYCA nonetheless contends that the distinction

applies to the District on the strength of Anderson v. Jackson

Municipal Airport Authority, 419 So.2d 1010 (Miss.1982) (en banc),

and Thomas v. Hilburn, 654 So.2d 898 (Miss.1995). However, neither

of these cases extend the governmental/proprietary distinction

14
outside the municipal context. In Anderson, the Mississippi

Supreme Court applied the distinction to the Jackson Municipal

Airport Authority, an entity created by the City of Jackson. The

court specifically noted that "the case law from this Court is that

the operation of an airport by a municipality is a proprietary or

corporate activity." Anderson, 419 So.2d at 1010. This holding

does not extend the proprietary distinction outside of the

municipal context. Likewise, Thomas makes no such extension.

Thomas, quoting at length the language of Anderson, applies the

proprietary analysis to the City of Jackson's operation of a garage

and towing service. 654 So.2d at 900-01. This authority only

serves to reinforce that the governmental/proprietary analysis only

applies to municipalities.

While we hold that the District is a political subdivision

cloaked with immunity from tort suit, it could still waive its

immunity to the extent that it purchased liability insurance

coverage for the cause of action at issue. See Churchill, 619

So.2d at 905-06.8 The district court's alternative reason for

denying summary judgment was that there was a material issue about

coverage. Basically, the district court took the position that,

without deciding the issue, there was a "substantial probability"

8
Oddly, pre-Pruett law would hold that immunity is only
waived if insurance was purchased under express statutory
authority. See French v. Pearl River Valley Water Supply Dist.,
394 So.2d 1385, 1388 (Miss.1981). Nonetheless, the Mississippi
Supreme Court abolished this requirement and overruled French in
Churchill. It specifically applied this new rule retroactively
to a post-Pruett and pre-Presley claim. See Churchill, 619 So.2d
at 906.

15
of coverage. The coverage issue, however, is a legal one for the

court to decide conclusively, not conditionally. See Radmann v.

Truck Ins. Exch., 660 So.2d 975, 977 (Miss.1995) (en banc).

PYCA's Third Amended Complaint alleged a cause of action for

"intentional interference with contractual relationship." In this

count, PYCA contends the District "actively interfered with the

performance of the subcontract by asserting contractual rights they

did not have and threatening Max Foote with termination of the

contract if Max Foote did not force PYCA to proceed." Third

Amended Complaint ¶ 28. Additionally, PYCA alleged that the

District intentionally required PYCA to breach its contract with

its electrical suppliers. Id. The basis of these allegations were

"unreasonable demands for furnishing and installing electrical

equipment" and "impossible interpretations of the contract." Id.

¶ 29. As PYCA itself notes in its pleading, these allegations

state an intentional interference with a contract claim.

The general liability insurance policy purchased by the

District does not extend to cover intentional interference with

contract claims. The policy provides coverage in three areas:

bodily injury and property damage, personal and advertising injury,

and medical payments. There are no claims for bodily injury,

property damage, or medical payments at issue. All that could

possibly remain is coverage under "personal and advertising

injury." The policy defines advertising injury as "[o]ral or

written publication of material that slanders or libels a person or

organization or disparages a person's or organization's goods,

16
products or services." However, the policy specifically limits

coverage for advertising injuries to those "committed in the course

of advertising your goods, products, or services." The District's

alleged tortious interference clearly does not fall within this

scope. See Sentry Ins. v. R.J. Weber Co., 2 F.3d 554, 555-57 (5th

Cir.1993).

Likewise, the personal injury coverage does not embrace PYCA's

claim. The policy defines "personal injury" as injury resulting

from: false arrest, detention or imprisonment; malicious

prosecution; wrongful eviction; and violation of right to

privacy. It also includes "[o]ral or written publication of

material that slanders or libels a person or organization or

disparages a person's or organization's goods, products or

services." This language, clearly targeted at libel and slander

actions, is not invoked by the allegations recounted in PYCA's

tortious interference claim. We conclude that PYCA's intentional

interference with contract claim is not subsumed into the policy's

general coverage for personal and advertising injury. As such, the

existence of the general liability insurance policy does not waive

the District's sovereign immunity for this claim.

In sum, the District is a political subdivision of the State

of Mississippi under pre-Pruett law. As a political subdivision,

the District is entitled to sovereign immunity from PYCA's tort

claims. Governmental/proprietary analysis, as used by the district

court, is inapplicable. Furthermore, the District has not waived

its immunity from the interference with contract claim by purchase

17
of general liability insurance because the policy does not provide

coverage for the claim at issue.9

MOTION TO AMEND

The District also appeals the denial of its motion to amend

its pleading to include additional claims of fraud and conspiracy

against Foote, O & W, and PYCA. This motion, raised three years

into the litigation, was denied by the magistrate judge on the

basis of undue delay and dilatory motive. The district court

agreed. The district court, noting that there was "no just reason

for delay," certified this order for interlocutory appeal under

Rule 54(b).

Ordinarily, we review the denial of motion to amend under an

abuse-of-discretion standard. Wimm v. Jack Eckerd Corp., 3 F.3d

137, 139 (5th Cir.1993). The district court concluded that the

District's late-proffered fraud amendments were premised on

dilatory motive and would cause undue delay. The court noted that

the District could have raised a fraud claim in 1991 or 1992, but

did not.10 Furthermore, by its own admission, the District

9
Additionally, we reject PYCA's alternative arguments
supporting the denial of summary judgment. PYCA contends that
there is an exception to sovereign immunity for intentional torts
under Mississippi law. However, PYCA's authority relates to
qualified immunity for government actors, not sovereign immunity
for the state, and is thus distinguishable. See West, 642 So.2d
at 920; Grantham, 522 So.2d at 225. Likewise, PYCA's
conditional cross-appeal that application of the Sovereign
Immunity Act is a violation of due process is meritless. See
Grimes v. Pearl River Valley Water Supply Dist., 930 F.2d 441,
444 (5th Cir.1991).
10
The District was not limited in its discovery during this
period. Consequently, there was no reason why the District could
not have discovered on its own the factual basis underlying the

18
acknowledges that discovery responses received in January 1993

provided it with the underlying facts to support its fraud claim.

Still, there was no attempt to amend until June 1994. This was

after the district court had gone to considerable efforts to winnow

the issues of this complicated case for trial. Nonetheless, we

decline to pass judgment on the district court's decision to deny

the motion to amend.

Rule 54(b) of the Federal Rules of Civil Procedure provides

that "the court may direct entry of a final judgment as to one or

more but fewer than all of the claims ... only upon an express

determination that there is no just reason for delay and upon

express direction for the entry of judgment." The propriety of a

Rule 54(b) certification is reviewable by this Court for abuse of

discretion. Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76

S.Ct. 895, 900-01, 100 L.Ed. 1297 (1956). One of the primary

policies behind requiring a justification for Rule 54(b)

certification is to avoid piecemeal appeals. Ansam Assocs., Inc.

v. Cola Petroleum, Ltd., 760 F.2d 442, 445 (2d Cir.1985). A

district court should grant certification only when there exists

some danger of hardship or injustice through delay which would be

alleviated by immediate appeal; it should not be entered routinely

as a courtesy to counsel. Id.

We conclude that the district court's certification of this

denial of a motion to amend was improper. The district court's

certification articulates no hardship or danger warranting

fraud claim.

19
immediate appeal of this nondispositive motion.11 Furthermore, the

district court's Rule 54(b) certification does not perfect

appealability if the order is not the final determination of a

claim. Lockett v. General Fin. Loan Co. of Downtown, 623 F.2d

1128, 1129 (5th Cir.1980). Denial of leave to amend is ordinarily

not final for purposes of appeal. Id.; Wells v. South Main Bank,

532 F.2d 1005, 1006 (5th Cir.1976); see also Offshore Logistics

Servs., Inc. v. Mutual Marine Office, Inc., 639 F.2d 1168, 1170

(5th Cir.1981). The district court abused its discretion in

certifying this order for immediate appeal and we therefore dismiss

the appeal on this issue.

PUNITIVE DAMAGES

PYCA cross-appeals the district court's orders granting

partial summary judgment for the District, Foote, and O & W on its

punitive damages claims. As to the District, we have concluded

above that it is a political subdivision entitled to sovereign

immunity from tort claims. This, of course, includes any punitive

damage claims arising from the alleged torts. The denial of the

punitive damage claim against the District was therefore proper.

As to Foote and O & W, we dismiss PYCA's appeal for lack of

appellate jurisdiction. While the district court generously

certified many issues and orders to us, the punitive damages

11
The district court itself noted the nondispositive nature
of the motion in its October 3, 1994 order overruling the
District's objections to the magistrate judge's order. The
district court recounted that it reviewed the magistrate judge's
order under a "clearly erroneous or contrary to law" standard as
provided by Federal Rule of Civil Procedure 72(a) relating to
nondispositive matters.

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summary judgments for Foote and O & W are not among them. The

district court certified only: (1) the order filed February 9,

1994, referencing the January 18th opinion discussing jurisdiction;

(2) the order filed October 3, 1994, relating to denial of motion

to amend; and (3) the order filed October 31, 1994, referencing

the October 3rd opinion concerning sovereign immunity and punitive

damages against the District only. Since Foote's summary judgment

stems from an independent order, filed January 31, 1994, that has

not been certified for interlocutory appeal, we grant Foote's

pending motion and dismiss for lack of jurisdiction.12

PYCA's cross-appeal against O & W has a similar fate. While

O & W was initially denied summary judgment on punitive damages in

the same opinion and order granting Foote's, the court subsequently

granted summary judgment to O & W in a motion for clarification.

In this order, filed November 8, 1994, the court found, as a matter

of law, that O & W was an agent of the District and could not be

liable for punitive damages. This order has not been certified for

interlocutory appeal. Consequently, we grant O & W's pending

motion and dismiss the cross-appeal for lack of appellate

jurisdiction.13

12
We reject PYCA's contention that both January 18th
opinions are somehow included in the interlocutory appeal via the
certification order. The certification order specifically
mentions only the February 9th, October 3rd, and October 31st
orders. Foote's partial summary judgment stems from a January
31st order.
13
We also reject PYCA's additional arguments suggesting that
this Court should exercise jurisdiction. The relevant issues
with respect to the District are its status as a citizen and its
claim of sovereign immunity. The relevant issues with respect to

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 CONCLUSION

The district court properly exercised diversity jurisdiction

over this complex commercial lawsuit. However, because we hold

that the District is entitled to sovereign immunity, we DISMISS the

tort claims lodged against the District. In as much as the

District's entitlement to sovereign immunity precludes recovery for

both tort and punitive damages, we AFFIRM that part of the judgment

dismissing punitive damage claims against the District. Further,

the appeal of the order denying the District's motion to amend is

DISMISSED. Finally, we grant Foote and O & W's motion to DISMISS

PYCA's cross-appeal for lack of jurisdiction.

Foote and O & W are not related to the District's issues, but
principally concern contract interpretation and agency. Pendent
appellate jurisdiction is inappropriate because the relevant
issues to Foote and O & W are not inexplicably intertwined with
the issue relevant to the District. See Garner v. Wolfinbarger,
433 F.2d 117, 120 (5th Cir.1970) (counseling against exercise of
pendent appellate jurisdiction even when record is before us and
parties want resolution). Likewise, the collateral order
doctrine is not applicable because the orders granting partial
summary judgment to these parties on the punitive damage issue
would still be reviewable on appeal from a final judgment on the
merits. See Kershaw v. Shalala, 9 F.3d 11, 14 (5th Cir.1993)
(listing prerequisites for collateral review).

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