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]

 
 Of the Tenth Circuit Court of Appeals, sitting by *

designation.

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Before

Torruella, Circuit Judge, 

Baldock , Senior Circuit Judge, *

and Lipez, Circuit Judge.

 

Humberto Guzmán-Rodríguez, with whom Nelson N.CórdovaMorales and Guzmán Rodríguez Law Office were on brief for

appellant.

Luis A. Oliver, with whom José Luis Ramírez-Coll and

Fiddler González & Rodríguez PSC were on brief for appellee

Newport Bonding.

 

January 9, 2008

 
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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, movantappellee 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 LeeBarnes (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
 Puerto Rico law provides for prejudgment attachment 1

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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sought prejudgment attachment of defendants’ property. To 1

avoid attachment, defendants proposed, and appellant LeeBarnes 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
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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.
 Because the district court’s order does not espouse 2

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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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. See State Street Bank & Trust, 2
(...continued) 2

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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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 collateralorder 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
 Compare Will, 546 U.S. at 349 (delineating three 3

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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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.” Id. These 3

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
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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 collateralorder 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.