Opinion ID: 3029917
Heading Depth: 2
Heading Rank: 1

Heading: Jurisdiction over ASTM’s appeal

Text: Preliminarily, we address the threshold question of whether we have jurisdiction over this appeal. See Am. Motorists Ins. Co. v. Levolor Lorentzen, Inc., 879 F.2d 1165, 1169 (3d Cir. 1989) (noting “we have the responsibility to satisfy ourselves of our jurisdiction”); Thermice Corp. v. Vistron Corp., 832 F.2d 248, 251 (3d Cir. 1987). Because we questioned our jurisdiction, we directed the parties to provide letter briefs addressing whether the district court’s failure to quantify its award of attorney’s fees in this action, as distinguished from in 15 the underlying Armor Shield litigation, precludes us from exercising jurisdiction. We asked for these briefs by reason of our opinion in Beckwith Machinery Co. v. Travelers Indemnity Co., 815 F.2d 286 (3d Cir. 1987), dealing with our jurisdiction over an appeal of an attorney’s fees award before the district court had determined its amount. The parties have filed these briefs agreeing that we have jurisdiction over this entire appeal, and we agree with them that we have jurisdiction but only to a limited extent. Surprisingly, Beckwith was our first case addressing the question of whether a district court order awarding, but not yet quantifying, attorney’s fees is a final order from which an appeal may be taken when the fee award results from the underlying cause of action, rather than as a collateral matter. In Beckwith, the plaintiff stated a claim for breach of contract against the defendant insurer based on the insurer’s decision to withdraw its defense of the plaintiff in an underlying action. After finding in the plaintiff’s favor, the district court entered judgment on his behalf for, among other things, his attorney’s fees and costs in the underlying action. The district court similarly awarded the plaintiff attorney’s fees and costs for the breach of contract litigation against the insurer, i.e., in the case before it. Notably, however, the district court did not quantify either of these awards. On the insurer’s subsequent appeal, after outlining the relevant case law, we ruled that “when the award of attorney’s fees arises out of and is part of the claimant’s cause of action and is not separately authorized by a statute providing for such an award, an order does not become final until the attorney’s fees are quantified.” Id. at 290. We further observed that, although not at issue, to the extent the district court similarly had not quantified the attorney’s fee award for the breach of contract litigation against the insurer, it “should be regarded no differently than the award of attorney’s fees in the [underlying] litigation inasmuch as both were incurred as a direct consequence and result of [defendant’s] breach of the insurance contract, and both constitute a part of the damages due [plaintiff].” Id. at 292. Thus, we dismissed the insurer’s appeal in Beckwith. 16 But the Supreme Court’s decision in Budinich v. Becton Dickinson & Co., 486 U.S. 196, 108 S.Ct. 1717 (1988), promptly cast doubt on the latter observation. In Budinich, the court entered judgment for the plaintiff in an employment compensation action on a jury verdict for an amount considerably less than he had sought. The plaintiff filed timely new trial motions as well as a motion for attorney’s fees. The district court subsequently denied the new trial motions on May 14, 1984, but found that the plaintiff was entitled to attorney’s fees, though it did not then fix the fee award. Subsequently, however, the district court entered a final order on August 1, 1984, determining the amount of those fees. Thereafter, the plaintiff appealed from the district court’s post-trial orders in their entirety. Although affirming the attorney’s fees award, the Court of Appeals for the Tenth Circuit granted defendant’s motion to dismiss the appeal as to all other issues on the ground that the judgment was final and immediately appealable upon entry of the May 14, 1984 order, and the plaintiff’s appeal was not timely because the plaintiff did not file it within 30 days of that order. In ensuing proceedings, the Supreme Court affirmed, finding that “[a]s a general matter, at least, we think it indisputable that a claim for attorney’s fees is not part of the merits of the action to which the fees pertain. Such an award does not remedy the injury giving rise to the action, and indeed is often available to the party defending against the action.”14 Budinich, 486 U.S. at 200, 108 S.Ct. at 1721. The Court added, “[c]ourts and litigants are best served by the bright-line rule, which accords with traditional understanding, that a decision on the merits is a ‘final decision’ for purposes of § 1291 whether or not there remains for adjudication a request for attorney’s fees attributable to the case.” Id. at 202-03, 108 S.Ct. at 1722. Since the Supreme Court’s ruling in Budinich, we have 14 On appeal, the Supreme Court framed the question presented as follows: “[W]hether a decision on the merits is a ‘final decision’ as a matter of federal law under § 1291 when the recoverability or amount of attorney’s fees for the litigation remains to be determined.” Budinich, 486 U.S. at 199, 108 S.Ct. at 1720. 17 on several occasions applied its rationale, starting with Frangos v. Doering Equipment Corp., 860 F.2d 70 (3d Cir. 1988). In Frangos, defendants Doering Equipment (“Doering”) and Logan Equipment (“Logan”) settled a suit filed by a worker who had been injured in a fall from a manlift. Thereafter, Doering and Logan pursued a claim for indemnity or contribution against Parker-Hannifin Corporation (“Parker”), a named defendant in the underlying suit. Although the district court granted Parker’s motion for a directed verdict as to some of Doering’s and Logan’s claims at the close of their case, Doering and Logan ultimately obtained a jury verdict in the amount of $52,000 on the remaining claims. Parker subsequently filed a motion for a judgment notwithstanding the verdict and for a new trial while, still later, Doering and Logan filed a petition for attorney’s fees. The court dismissed Parker’s post-trial motions, but concluded Doering and Logan were entitled to attorney’s fees, albeit to the extent they related only to their defense in the underlying action. Parker then appealed. Significantly, at the time of the appeal the district court had not yet determined the fees to which Doering and Logan were entitled. Although Doering and Logan argued that the court’s “failure to quantify attorneys’ fees render[ed] all aspects of the case unappealable,” Frangos, 860 F.2d at 72, we disagreed, citing Budinich for the proposition that “a decision on the merits is a ‘final decision’ as a matter of federal law under § 1291 [even] when the recoverability or amount of attorney’s fees for the litigation remains to be determined.” Id. (internal quotations and citation omitted). Accordingly, we found that although that portion of the appeal dealing with Doering’s and Logan’s attorney’s fees must be dismissed, we nonetheless had jurisdiction over the appeal from the underlying judgment. Id. The next case in which we dealt with a similar appealability issue at length was Vargas v. Hudson County Board of Elections, 949 F.2d 665 (3d Cir. 1991). In Vargas, a plaintiff class filed a complaint against Gerald McCann, a candidate for mayor, and members of his campaign staff (the “McCann defendants”), among others, alleging that the McCann defendants had engaged in a conspiracy to prevent them from voting in a mayoral election. After the National Union Fire 18 Insurance Company (“National Union”) refused to defend or indemnify the McCann defendants, they joined National Union as a third-party defendant to the litigation. The district court subsequently granted summary judgment against National Union, declaring it owed coverage to the McCann defendants. Soon thereafter, the McCann defendants settled the class action. On April 24, 1990, the district court, finding the settlement to be in good faith, directed National Union to indemnify the McCann defendants for both the settlement amounts and “any attorneys’ fees award which may be made in favor of [class] plaintiffs and/or plaintiffs’ attorneys against the [McCann] defendants.” Vargas, 949 F.2d at 667 (internal quotations omitted). Additionally, the district court ordered National Union to reimburse the McCann defendants for their own attorney’s fees. Finally, on December 13, 1990, the district court entered an attorney’s fees and expense award in favor of the plaintiff class (i.e., fixed the attorney’s fees and expenses due the class plaintiffs). Approximately one month later, on January 11, 1991, National Union filed its notice of appeal, which the McCann defendants and class plaintiffs moved to dismiss on timeliness grounds as to all orders other than that of December 13, 1990. We denied the motion as we concluded that there had not been an appealable order until the district court quantified the amount of attorney’s fees which the McCann defendants owed the plaintiffs (and thus for which National Union was liable). In reaching the result we explained: The monetary claim presented by the McCann defendants in this case against National Union consisted of two elements-the damages that they were required to pay the class plaintiffs and the attorneys’ fees that the McCann defendants were required to pay the class plaintiffs. The McCann defendants[’] total obligation to the class plaintiffs, and hence their total claim for damages against National Union, was not determined until the amount of the class action counsel fees had been set. 19 Id. at 670. Additionally, we noted it was “critical to recognize that the relevant claim for fees here was not that made by the McCann defendants pursuant to state statute to recover for representation in this case against National Union” which was, by contrast, “clearly” a Budinich claim. Id. at 669 (“Essentially, Budinich concluded that an award of counsel fees to the prevailing party is not a part of the judgment, but rather is due because of the judgment.”). Following Vargas, we again addressed the attorney’s fees finality issue in Ragan v. Tri-County Excavating, Inc., 62 F.3d 501 (3d Cir. 1995). There, defendant-appellant Hartford Fire Insurance Co. (“Hartford”) served as the surety on a labor and material payment bond purchased by Mele Construction Co., Inc. (“Mele”). Hartford’s bond required prospective claimants not in “direct contract” with Mele to give written notice of their claims to Hartford within 90 days after they ceased work. Plaintiffs-appellees, the International Union of Operating Engineers, Local 542 and Michael J. Ragan, its administrator of “fringe benefit” funds (together, “Local 542”), had a collective bargaining agreement with and did work for Tri-County Excavating, Inc. (“Tri-County”), a corporation that three daughters of John Mele, president of Mele, owned, on a job for Mele. Hartford subsequently rejected a claim for fringe benefits Local 542 made 120 days after it ceased work because Local 542 was not in “direct contract” with Mele, and thus Hartford’s bond required Local 542 to give notice of its claim within 90 days of the last labor performed. Local 542 then sued Tri-County and Hartford. Following a bench trial, the district court rejected Hartford’s untimeliness argument, and entered judgment in favor of Local 542. In so doing, the district court awarded Local 542 its reasonable attorney’s fees, although it did not quantify their amount until nearly a year later. On Hartford’s subsequent appeal, taken before the district court quantified the fees, when addressing the basis for our jurisdiction, we noted that the district court premised its fee award on a provision in the agreement between Local 542 and Tri-County. Accordingly, we ruled, “[b]ecause the attorney fees awarded in this case were part of the contractual damages sought by Local 542, the district court’s 20 delay in quantifying the amount of such fees until February 13, 1995 rendered the earlier order non-final for purposes of appeal.”15 Ragan, 62 F.3d at 505. Most recently we attempted to reconcile Budinich and Ragan in Gleason v. Norwest Mortgage, Inc., 243 F.3d 130 (3d Cir. 2001). In Gleason, the litigants stipulated to a final judgment order under Federal Rule of Civil Procedure 54(b), where the district court stated that all claims were resolved through judgment, settlement, or mootness, except that each party’s claim for contractual attorney’s fees and costs remained outstanding. Citing to Budinich, we first acknowledged that “[w]hen an outstanding claim for attorneys’ fees is by a statutory prevailing party, the unresolved issue of those fees does not prevent judgment on the merits from being final.” Gleason, 243 F.3d at 137. Citing to Ragan, however, we added that “when attorneys’ fees are part of the contractual damages at issue on the merits, a District Court’s order delaying quantifying the amount of such fees is non-final for purposes of appeal.” Id. Noting the claim for attorney’s fees in Gleason was predicated not on a statutory prevailing party provision but on a contractual obligation to pay attorney’s fees “to the prevailing party in whose favor judgment is entered,” we found “[f]or all practical purposes” there was “no difference under these circumstances, for § 1291 finality purposes, between payment of attorneys’ fees to a prevailing party under statute and payment of attorneys’ fees under the contract to a ‘prevailing party.’” Id. at 137-38. Accordingly, we concluded, given the attorney’s fees provided for were “not an integral part of the contractual relief sought[,] the issue of which party prevailed in the litigation on the merits is collateral to the substantive issues on appeal and does not prevent judgment on the merits from being final.” Id. at 138. Applying the foregoing precedents to this appeal, we conclude that we have jurisdiction over the appeal insofar as it is from the order providing for defendants’ indemnification for 15 The earlier order became final when the court entered the February 13, 1995 order. Consequently, we then had jurisdiction over the appeal from the earlier order. Ragan, 62 F.3d at 505-06. 21 settlement costs and attorney’s fees incurred in the Armor Shield litigation, sums that the district court has quantified. It is true that, like the plaintiffs in Ragan, defendants included their request for attorney’s fees with respect to this indemnification litigation in their respective answers to ASTM’s complaint, citing ASTM Bylaw No. 10.1 in support of their request. Notably, however, inasmuch as this request was expressly “not an integral part of the contractual relief sought, the issue of which party prevailed in the litigation on the merits is collateral to the substantive issues on appeal and does not prevent judgment on the merits from being final.” Gleason, 243 F.3d at 138. Put another way, the substantive issues on appeal plainly center on defendants’ request for indemnification in the Armor Shield litigation, rather than on their request for attorney’s fees with respect to enforcing ASTM’s indemnification obligations in this litigation as it pertains to that litigation. See Vargas, 949 F.2d at 670 (finding “[t]he McCann defendants[’] total obligation to the class plaintiffs, and hence their total claim for damages against National Union, was not determined until the amount of the class action counsel fees had been set.”). Accordingly, we have jurisdiction over this appeal to the extent that it relates to defendants’ indemnification request for settlement costs and attorney’s fees in the Armor Shield litigation, but, for the reasons outlined above and for the reasons we discuss in section IVG, infra, relating to pendent jurisdiction, we do not have jurisdiction over this appeal to the extent that it relates to the unquantified attorney’s fees in this litigation. Therefore, we will entertain the appeal on the merits with respect to defendants’ indemnification request for settlement costs and attorney’s fees in the Armor Shield litigation, but will dismiss the appeal to the extent that it relates to attorney’s fees and costs in this litigation.