# UnitedStates C ou rt o f App eals For th e First C ircuit

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]Of the Tenth Circ u i t C o u rt of Appeals, sitting by * designation. -2- Before Torruella, Circuit Judge, Baldock , Senior Circuit Judge,

* and Lipez, Circuit Judge.
Humberto Guzmán-Rodríguez, w ith whom Nelson N.CórdovaMorales and Guzmán Ro d r íguez Law Office were on brief for appellant. L u i s A . O l i v e r, w ith whom José Luis Ramírez-Coll and Fiddler González & Rodríguez P S C were on brief for appellee Newport Bonding.

January 9, 2008-3-

BALDOCK, Senior Circuit Judge. This interlocutory appeal comes before u s via Fed. R. Civ. P. 54(b) certificatio n . I n the underlying diversity action, movantappellee Newport Bonding (appellee Newport) issued a prejudgment surety bond on behalf of defen d ant Puerto Ven Quarry (defendant PVQ). After de f e ndant PVQ declared bankruptcy, the district court issued an order declaring theprejudgment bond null. Plaintiff-appellant Veronica LeeBarnes (appellant Lee-Barnes) sought immediate appeal, and the district court certified its ru l i n g pursuant to Fed. R. Civ. P. 54(b). We hold t h a t , in so doing, the district court abu sed 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 r e count only those underlying and procedural facts material to resolving the instant ap p e a l (i.e., those facts related to appellate jurisdiction). Appellant Lee-Barnes

sue dto recover monies she invested with defendants after several business ventures faile d . S ee 28 U.S.C. § 1332. Concerned that defend a n t s might not be able to satisfy a future judgment entered in he r favor, appellant Lee-BarnesPuerto Rico law provides for prejudgment attachment 1 or, alternatively, the posting of a surety bon d . See P.R. Laws An n . t i t. 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 th e c o urse of an action, all remedies providing for seizure of person or property for the pur p o s e of securing satisfaction of the judgment ultimately to be entered in t he action are available under the circumstances and in the manner provided by the law of the state in which the d istrict court is held, existing at the time the remedy is sought . . . . Fed. R. Civ. P. 64. -4- sought prejudgment attachment of defendant s’ property. To 1avoid attachment, defendants proposed, and appellant LeeBa r n e s a g r e e d , t h a t d e f e n d a n t P V Q w o u l do b t a i n a $ 2 0 0 , 0 00 surety bond. Accordingly, defendant PVQ posted a bond issue d b y 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, findi n g d e fendant PVQ entitled to an automa t i c stay, but not the eight other defendants. Accordingly, the district court dismissed, without prejudice, all claims against defend a nt PVQ. The district court a l s o entered a partial judgment, in light of defendant PVQ’s bankruptcy proceedings, which provided in relevant part:

Thi s d i smissal will not affect in any manner-5-

Plaintiff's pending claims against [defendant PVQ]. Upon the conclusion of the bankruptcy proceedings, P l a i n tiff may file a petition to reinstate the proceedings in this case. Plaintiff's petition for reinstatement shall not be deemed a new filing. Rather, [ h e r] petition will be effective nunc pro tunc to the date o f 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 it s C h apter 11 bankruptcy to a C h a p t e r 7 b a n k r u p t c y . T h e C h a p t e r 7 T r u s t e e ( T r ustee) 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 c o u r t

- ordered response, appellee Newport asserted t h a t the dismissal of appellant Lee-Barnes’s claims against defendant PVQ voided the prejudgment bond (i.e., after the principal obli g ation that the bond secured ceased to exist, the bond — which appellee Newport deems an accessory ob l i g a tion — likewise was invalid). The district court agreed and entered an opinion and order declaring the bond null. On appellant Lee-Barn e s’s motion, the district court later entered an orde r and partial judgment certifying the earlier opinion and order as immediately appea l able under Fed. R. Civ. P. 54(b). Appellant Lee-Barnes appeals, contending that the district court’s ruling con s t ituted reversible error because,-6-

regardless of defendant PVQ’s bankruptcy and dismissal without pre j u d i c e from the case, the bond — which she conte n d s i s a j o i n t a n ds e v e r a l o b l i g a t i o n —r e m a i n e dv a lid and enforceable. II.
“Because f e deral courts are powerless to act in the absenc e o f 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). H e r e , a ppellant Lee-Barnes asserts t hat appellate jurisdiction exists pu r s u ant to: (1) the district court’s Rule 54(b)

c e r t ification; and (2) in any event, the collateral-order doctri n e . We disagree. See ITV Direct, Inc. v. Healthy Solutions, L.L.C., 445 F.3d 6 6 , 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 “ t wo part process for evaluating the appropriateness of certification under Rule 54(b).”-7-

State Street Bank & Trust Co. v. Brockrim, Inc., 8 7 F.3d 1487, 1489 (1 s t Cir. 1996). “First, we determine whether th e d i s t r i c t c o u r t a c t i o n u n d e r l y i n gt h e j u d g m e n t h a dt he ‘requ i s i t e a s p e c t s o f f i n a l i t y . ’ ” I d . ( q u o t i n g D a r r 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 a t l e a st one claim.” Id. (emphasis a dded). This determination is “governed by 28 U.S.C. § 1 2 9 1.” Id. “A final decision under § 1291 is one t h a t ‘ ends the litigation on the merits and le a v e s n o t h i n gm o r e f o r t h e c o u r t t o d o b u t e x e c u t e t he judgment.’” Id. at 1490 (quoting Digital Eq u i p. Corp. v. Desktop Direct , I n c ., 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 i s n ot a party to the underlying action within t h e m e aning of Rule 54(b). See id. at 1490 n.1. Appe l l e e Newport never formally intervened in the proceeding. Indeed, in asking the district court to declare the bond nul l , appellee Newport maintained it was simply making a “special appearance.” In so doing, appellee Newport submitted that it was neit h e r “ submitting itself to the [district court’s] jurisdiction” nor “waiving any of its legal defenses.” See Lee-Barnes, No. 03-2358 SEC / G A G (Doc.Because the district court’s order d o e s not espouse 2 the requisite “aspects of finality,” “we need not proceed to the second step of jurisd i c tional analysis under Rule 54(b).” See id. at 1490. We n o t e , however, that the district court ’ s o r der fails to satisfy those strictures as well. At step two of the Rule 54(b) analy s i s , “we review the suff i ciency of the district court’s assessments of 1) any interrelationship or overlap among the vari ous legal and factual issues involved and 2) any equities and efficiencies implica t ed by the requested piecemeal review.” Id. Appellant Lee-Barnes has no t d emonstrated that she will incur any material harm if interlocutory review is denied. (c o ntinu e d ...) -8- 132: Mot. in Compliance with Order). Appellee Ne w p o rt’s subsequent involvement in the underlying proceeding was strictly limited to the via b ility of the bond it issued on defendant PVQ’s behalf.

Nor d i dthe district court’s order dispose of a claim in the R u l e 54(b) sense. Rule 54(b) expressly limits certificat i o n u nder its provision to, inter alia, instances in which “more than one claim for relief is pre s e n t e d in an action.” See F e d . R. Civ. P. 54(b) (emphasis added). Rather t h a n r esolving 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 no t g o further. Put simply, the Rule 54(b) certification issued in this case constituted an abuse of discretion. See State Street Bank & Trust, 2(

. . . continued) 2 To the contrary, we can a s s ess the district court’s order nullifying the bond equally well if and when final j u d g ment is entered in appellant Lee-Barnes’s fa v o r . See Spiegel v. Trs. o f T u f t s C o l l e g e , 8 4 3 F . 2 d3 8 , 4 5 ( 1 s t C i r . 1 9 88) (noting that the possibility that the need for an a p p e al might become moot is considered “a major neg a t i v e in the Rule 54(b) equation”). -9- Co., 445 F.3d at 1489 (“The [ d]istrict [c]ourt cannot, in the exercise of its d i s c r etion, treat as ‘final’ that which is not ‘final’ within the meaning of 28 U.S.C. § 1291.”).

B.
Whether the instant a p p e al falls within the collateralorder doctrine presents a closer question. “Generally speaking, appeals are permitted only from final judgments of the district c o u rt.” 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 ex p l a ined, 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 d e c i s i o n ’ r u l e l a i dd o w n b yC o n g r e s s i n § 1 2 9 1 , but as aCompare Will, 5 4 6 U.S. at 349 (delineating three 3 requirements an order must meet to fall w i t h in Cohen), with Esp i n a l

- D o m i n g u e z , 3 5 2 F . 3 da t 4 9 7 ( a d d i n g , a s a f ourth requi r e ment, 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”). -10- 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 o f t h e action, and [3] be effectively unreviewable on appeal from a final judgment.” I d . These 3 conjunctive “conditions are s t r i n gent . . . and unless they are kept so, the underlying d o c t r i ne will overpower the substantial finality interest s § 1291 is meant to further . . . .” Id.; see also Gul f s t r e am Aerospace Corp. v. Mayaca m a s C o r p . , 4 8 5 U . S . 2 7 1 , 2 7 6 ( 1 9 8 8 ) ( “ I f t h e o r d e r 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. Q u i n t ana-Aguayo, 235 F.3d 682, 684 (1st Cir. 2000). As t he Supreme Court recently stated in Will v. Hallock: [W]e have not mentioned applying the collateral order doc t r ine recently without emphasizing its modest scope. And we have meant what we have said; although the Court has been asked m a n y t imes to expand the ‘small class’ of collaterally appealable ord e r s , w e h a v e i n s t e a dk e p t i t n a r r o wa nd-11-

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 adv a n c e dby the ordinary operation of final judgment principles. ’ ” Gill v. Gulfstream P a r k R acing Assoc., Inc., 399 F.3d 391, 399 (1st Cir. 2005) (quoting Digital Equip. Corp., 511 U.S . a t 879); see also Lauro Lines s.r. l . v . C hasser, 490 U.S. 495, 502 (1989) (Scalia, J., concu r r i ng) (“The importance of the right a s s e r t ed has always been a significant part of our collateral order doctrine.”). In the in s tant matter, the issue o n a p p e a l

— i
. e . , w h e t h e r t h e d i s t r i c t c o u r t e r r e din deeming the surety bond void — simply does not “rise to the leve l of importance needed for recognition under [the collateral-order doctrine].” See Digital Equip. C o r p . , 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 d istinguishable from Cohen. U n l i k e the ruling at bar, the Cohen district court order — which the Supreme Court held to be immediately-12-

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 C o h e n, 337 U.S. at 545- 46 & n.1. No r c a n the issue presented for immediate appeal here be consid e r e d“weightier than the societal interests advanced by the o r d i n a ry 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 equate s t his factor – “perhaps the [doctrine’s] most elemental” – with “urgency” or “irreparable harm. ” E s pinal-Dominguez, 352 F.3d at 496-97. Here, appellant Lee-B a r nes has not made the requisite “showing of irreparable harm” (i. e . , t hat “the postponement of appellate review” will effectively render the issue unreviewable). Rhode Island, 378 F.3d at 28. Obtaining a final judgment ag a i n s t defendant PVQ is a prerequisite to appellant Lee-Barnes collecting on the bond. In other words, even i f w e reversed the district court’s order declaring the bond null a t 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-Ba r n e s prevails in the underlying proceeding she will “ h a v e ample opportunity to-13-

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 jud g m e n t ,” it does not meet the “urgency” requirement proscribed by the collateral-order doctrine. Cf. S wift & Co. Packers v. Compania Colombiana del Caribe, S.A., 3 3 9 U.S. 684, 688-89 (1950) (order vacating attachment on foreign vessel in admiralty proceeding was immediately appealab l e because it could not be effectively reviewed after entry of final judgement). Hence, the d istrict 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 c ollateralorder d o c trine does not apply. See Van Cauweberghe v. Biard, 486 U.S. 517, 524 (1988); Gulfstream Aerospace Corp., 4 8 5 U .S. at 276; see generally Quintana-Aguayo, 235 F.3d at 684 (collateral-order doctrine only permits immediate appeal “in limited circu m s t ances when the important goal of the final judgment rule – the effective, efficient administration of just i c e – is not undermined or is counterbalanced by other weighty goals”). Lacking any basis-14-

for appellate ju r i s diction, we must dismiss the instant interlocutory appeal.

III. For the foregoing reasons, we v acate the district court’s underlying Rule 54(b) certification and di s m i s s the instant appeal for want of appellate jurisdiction.