United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

Nos. 98-3968 & 98-3969 

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Orion Financial Corp. of South Dakota, *

a South Dakota corporation, *

*

Plaintiff-Appellee/ *

Cross-Appellant, *

* Appeals from the United States

v. * District Court for the

* District of South Dakota.

American Foods Group, Inc., *

a Delaware corporation, *

*

Defendant-Appellant/ *

Cross-Appellee. *

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Submitted: January 3, 2000

Filed: January 13, 2000 

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Before WOLLMAN, Chief Judge, LAY and BOWMAN, Circuit Judges.

___________

LAY, Circuit Judge.

The agreement at the heart of this dispute provided that Orion Financial Corp.

of South Dakota (Orion) would assist American Foods Group, Inc. (American Foods)

in procuring financing in the form of grants and loans and, in exchange, Orion would

be compensated for its services. The compensation was to be in the form of a base fee

plus percentages of the financing obtained during the term of the agreement. These
1Suit was originally filed in South Dakota state court but was subsequently

removed to the United States District Court for the District of South Dakota.

2The Honorable Charles B. Kornmann, United States District Judge for the

District of South Dakota, presiding.

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percentages were known as success fees and the agreement capped the amount

recoverable through these fees at $350,000. In October of 1994, Orion sent American

Foods a letter invoice requesting payment for services. American Foods paid a portion

of the requested payment. The parties then terminated the relationship under the

agreement. Subsequently, Orion demanded payment in a sum equal to the amount

remaining under the agreement’s success fee cap. The parties, however, disputed the

amount owing.

Orion brought this suit on June 12, 1995, alleging breach of contract by

American Foods and seeking damages in the sum of $255,500 plus interest and

collection costs.1 On July 13, 1995, American Foods filed its answer and a

counterclaim alleging it had overpaid Orion by $33,250. On April 2, 1997, Orion

moved for summary judgment on the complaint and counterclaim. The district court2

entered a partial summary judgment on January 12, 1998, granting Orion damages in

the sum of $231,318 plus prejudgment interest in the amount of $32,820.81. Due to

American Foods’ earlier payments and the parties’ agreed upon cap on recovery, the

partial summary judgment left only $24,182 available to Orion as success fees.

Recognizing this, and in order to make the issue immediately appealable, the parties

entered into two stipulations. The stipulations provided for an additional money

judgment and the entry of final judgment. Specifically, the first stipulation, dated

March 1998, addressed the relevant date of a $3 million accommodation and the proper

characterization of five capital leases. The second stipulation, dated April 1998,

addressed the amount of attorney’s fees at stake and whether or not such fees were

reasonable. Incorporating the prior partial summary judgment and the stipulations, the

district court entered judgment against American Foods on October 22, 1998.
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The parties now disagree as to the meaning of these stipulations and their legal

import to this appeal and any subsequent litigation. According to American Foods, the

stipulations were intended to operate such that if this court affirmed the district court’s

ruling on the original partial summary judgment, American Foods would agree to be

bound by the stipulations and this matter would be closed. However, if this court

overturned those rulings adverse to American Foods, the stipulations would become

null and void and the entire matter would be remanded for a full and fair hearing on the

merits. Orion disagrees with this interpretation of the stipulations and urges that all

legal issues have been decided and that there are no factual disputes remaining. 

The parties’ briefs best articulate their views on the stipulations. For example,

American Foods explicitly concedes that the stipulations were entered into solely to

obtain an appeal: “[t]he stipulation of the parties removed this issue [the date of the

relevant accommodation] solely for the purpose of allowing the matters decided in the

original order to proceed to appeal,” American Foods’ Corrected Reply Br. at 15, and

“[t]he parties’ April, 1998 stipulation dealt with this issue [the attorney’s fees] only in

order to allow this matter to proceed to appeal.” Id. at 19. Yet, despite recognizing

the existence of the stipulations, American Foods consistently maintains in its briefs

that there are material issues of fact outstanding and that all issues, including those

stipulated to, should be remanded for a full hearing.

In effect, what the parties attempt to do is to agree upon a judgment for the

purposes of appealability and then the parties (at least American Foods) attempt to

challenge that judgment on both issues of fact and law that were never raised before the

district court. This not only violates the final judgment rule but contravenes the basic

principle that one cannot raise issues on appeal that have not been raised before the

district court. Although we accept the stipulations in good faith, we nevertheless find

that this approach plays fast and loose with the limited appellate resources that we

have. We also appreciate that Orion disagrees with American Foods’ analysis and

argues that the stipulations are final and cannot now be factually or legally attacked on
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appeal. We doubt, however, if counsel for American Foods was so gullible as to enter

into such an agreement. More importantly, we cannot read the stipulation with that

understanding.

Courts of appeals have jurisdiction over “all final decisions of the district

courts.” 28 U.S.C. § 1291 (emphasis added). “The finality requirement . . . embodies

a strong congressional policy against piecemeal reviews, and against obstructing or

impeding an ongoing judicial proceeding by interlocutory appeals.” United States v.

Nixon, 418 U.S. 683, 690 (1974). In cases involving multiple claims or parties, Federal

Rule of Civil Procedure 54(b) allows a court to enter 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.” Fed. R. Civ. P. 54(b). The sole purpose of a Rule 54(b) order is to provide

an opportunity to appeal claims affecting some but not all of the parties or some but not

all of the issues. Another avenue to appeal is 28 U.S.C. § 1292(b), which allows a

district court to certify an order if it “involves a controlling question of law as to which

there is substantial ground for difference of opinion and that an immediate appeal from

the order may materially advance the ultimate termination of the litigation . . . .” 28

U.S.C. § 1292(b). 

In this case, the parties have not attempted to proceed in accordance with either

Rule 54(b) or § 1292(b). As is detailed above and evidenced by the briefs, the parties

have a basic disagreement as to the meaning of the stipulations and their effect upon

this appeal and subsequent litigation. We feel this case falls within the prohibitive

scope of Cheng v. Commissioner Internal Revenue Service, 878 F.2d 306 (9th Cir.

1989). The parties in Cheng entered into a stipulation following entry of a partial

summary judgment in order to obtain an appealable final order. The stipulation

provided for entry of a final order but noted that Cheng “is not conceding the remaining

undecided issues and should a decision be entered in favor of [Cheng] on appeal and

the case remanded . . . [he] will, on remand, be permitted to present additional evidence
3The Ninth Circuit distinguished Cheng in the case of Horn v. Berdon, Inc.

Defined Benefit Pension Plan, 938 F.2d 125 (9th Cir. 1991). In Horn, the parties

stipulated to dismiss the defendant’s counterclaim without prejudice and the appellate

court found jurisdiction. This is similar to our recent case, Great Rivers Cooperative

of Southeastern Iowa v. Farmland Indus., Inc., Nos. 98-2527, 98-2528, 1999 WL

1191459 (8th Cir. 1999), in which this court refused to follow Cheng. In Great Rivers,

this court held that a dismissal of certain claims without prejudice does not necessarily

defeat the rule of finality as to the remaining claims. A close reading of Cheng,

however, demonstrates that it is distinguishable from Great Rivers and Horn. In Cheng

the court observed: “[a] plaintiff may voluntarily dismiss the remainder of his claim(s)

after a partial summary judgment has been entered against him and then appeal the

partial summary judgment.” Cheng, 878 F.2d at 311. However, the court noted that

Cheng had not taken this path and had instead elected to retain his undecided claim and

defenses in case of a favorable outcome on appeal. 

We feel the present case is most closely aligned with Cheng.

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and arguments . . . .” Id. at 308. The Ninth Circuit held that the order following the

stipulation did not conclusively end the litigation on the merits because the stipulation

allowed for the resurrection of stipulated claims depending upon the outcome of the

initial appeal. Consequently, the court dismissed the appeal for lack of jurisdiction.3

In the present case the parties wish to challenge on appeal issues that are still

within the lawsuit and, if successful, challenge them again in further litigation. This

approach defeats the very purpose of finality and Rule 54(b). Consequently it is clear

that the order is not final and that only a partial judgment has been rendered from the

previous proceedings. Under the circumstances the court has no alternative other than

to dismiss the appeal as lacking finality in the judgment. 

The claims and cross-claims are hereby ordered dismissed without prejudice to

the parties so that the district court may enter a final judgment on all issues. Finality
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of judgment is required and is a prerequisite under the Federal Rules of Civil

Procedure.

Appeal dismissed without prejudice. Each party to pay own costs.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.