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Odc Communications Corp. v. Wenruth Investments

decided: July 23, 1987.

ODC COMMUNICATIONS CORP., PLAINTIFF-APPELLEE,
v.
WENRUTH INVESTMENTS, ET AL., DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division, No. IP 86-392-C, Sarah Evans Barker, Judge.

Coffey and Manion, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Per Curiam

Wenruth Investments ("Wenruth"), appeals the district court's order of partial summary judgment in favor of ODC Communications ("ODC") on the issue of the right to prejudgment possession of a cable TV system installed at an apartment complex that Wenruth bought at a foreclosure sale. The district court expressly directed the entry of the partial summary judgment under Federal Rule of Civil Procedure 54(b) on the determination that there was "no just reason for delay." Because the claims remaining in the action before the district court are not separable from the claim on which partial summary judgment was granted for the purposes of Rule 54(b) we do not have appellate jurisdiction, and therefore dismiss the appeal.

I

While the factual history behind this litigation is somewhat involved, we detail only that portion necessary to determine our jurisdiction. The right to possession of a cable TV system in the apartment complex and its ownership lie at the heart of this dispute. The system was originally installed by Concepts Consulting, Inc., in an apartment complex at that time apparently owned (in the equitable sense) by Lawrence Realty Investors, Inc. Lawrence Realty was the mortgagor on a purchase money mortgage for the apartment complex. At the time of the installation of the cable TV system, Lawrence Realty and Concepts entered into an agreement regarding Concepts' ownership that purported to retain ownership of the system in Concepts. Lawrence Realty later defaulted on its mortgage and the apartment complex was eventually sold at a foreclosure sale to Wenruth. In the meantime Concepts evidently assigned its rights regarding the cable TV system to ODC.

Wenruth believed that it had bought the cable TV system as part of the apartment property at the foreclosure sale. ODC had a different view of the matter; it contends that it retained ownership of the system as the successor to Concepts. ODC thereupon filed an action against Wenruth in state court to regain possession of the TV system under Indiana's replevin statute. See Ind. Code Ann. §§ 34-1-9.1-1 to 34-1-9.1-13, 34-1-27-1 (Burns 1986). ODC also claimed damages for the system's detention under the replevin statute, id. § 34-1-27-1, see, e.g., Northern Indiana Slurry Seal, Inc. v. K & K Truck Sales, 167 Ind. App. 440, 338 N.E.2d 704 (1975), Lou Leventhal Auto Co. v. Munns, 164 Ind. App. 368, 328 N.E.2d 734 (1975), and in addition filed a count claiming damages for an alleged conversion of the system by Wenruth, see Ind. Code Ann. §§ 34-4-30-1, 35-43-4-3 (Burns 1986). Wenruth filed a motion in state court and removed the action to federal district court on the basis of diversity jurisdiction,*fn1 and filed counterclaims alleging that it owned the cable TV system and claiming slander of its title to the apartment complex and damages for an alleged conversion of the system by ODC.

ODC filed a motion for an expedited hearing to determine prejudgment possession, apparently in general accord with the Indiana replevin statute's provision allowing a replevin plaintiff to request immediate, prejudgment delivery of the property by affidavit. Id. § 34-1-9.1-2; see Fed. R. Civ. P. 64. The district court set a hearing date and directed the defendant to appear to show cause why a prejudgment possession order should not issue under Indiana's procedural requirements. Id. § 34-1-9.1-3. At the hearing the parties and the district court all explicitly stated their understanding that the hearing was being held only to determine prejudgment possession under the Indiana replevin procedures, id. §§ 34-1-9.1-5, 34-1-9.1-6; see Fed. R. Civ. P. 64, and not to decide the ultimate issues of possession and ownership. Both sides presented documents and witnesses in support of their arguments relating to prejudgment possession, and both parties based their claims to the right of possession on claims of ownership. At the end of the hearing the district court asked the parties to file proposed "findings of fact and conclusions of law."

During the briefing period Wenruth filed a motion for summary judgment under Federal Rule of Civil Procedure 56, apparently requesting summary judgment on all claims, along with its responsive brief to ODC's brief in support of its affidavit for immediate delivery of the property. In its reply brief ODC argued for the denial of summary judgment for Wenruth and urged the district court to adopt ODC's proposed findings of fact and conclusions of law.

Upon the conclusion of this briefing schedule the district court decided both the question of prejudgment possession under Indiana's replevin statute, see Ind. Code Ann. § 34-1-9.1-5, and Wenruth's motion for summary judgment. The court denied the motion for summary judgment in Wenruth's behalf and instead entered a "Partial Summary Judgment" in "favor of plaintiff on Count II of the Complaint to the extent that that claim seeks the immediate return and complete possession of the subject property." The district court observed that "the remaining claims of both parties (conversion and slander of title as well as the respective prayers for attorneys fees) are reserved for later consideration and disposition by the court" (parenthetical expression in original). In its order the district court directed that the cable TV system be removed from Wenruth's apartment complex by ODC or its authorized agent but that execution of the order not occur until after ten days from the date of the entry of the order under Federal Rule of Civil Procedure 62. The trial court also expressly determined that there was "no just reason for delay" and certified the partial summary judgment as a "final partial judgment as to the replevin claims" under Rule 54(b). Wenruth appeals that judgment.

II

A certification under Rule 54(b) must satisfy three prerequisites for the appellate court to obtain jurisdiction.*fn2 The claim certified must be separate from the remaining claims, and the judgment entered on the certified claim must be final under 28 U.S.C. § 1291. Finally, the district court must expressly determine that there is "no just reason for delay." E.g., Curtiss-Wright Corp. v. General Electric Corp., 446 U.S. 1, 7-8, 100 S. Ct. 1460, 1464-65, 64 L. Ed. 2d 1 (1980); Federal Deposit Insurance Co. v. Elefant, 790 F.2d 661, 664-65 (7th Cir. 1986); National Metalcrafters v. McNeil, 784 F.2d 817, 820-21 (7th Cir.), cert. denied, 107 S. Ct. 403 (1986); Stearns v. Consolidated Management, 747 F.2d 1105, 1108 (7th Cir. 1984). We review the first two prerequisites on a de novo standard, but review the determination regarding "no just reason for delay" on an abuse of discretion standard. E.g., Curtiss-Wright, 464 U.S. at 7-8, 100 S. Ct. at 1464-65; Stearns, 747 F.2d at 1108.

We have recently noted that "'claim' under Rule 54(b) is defined with a view to avoiding double appellate review of the same issues." Elefant, 790 F.2d at 664. We have recognized that while claims with some factual overlap may still be separate for the purposes of Rule 54(b) "claims are not separate for Rule 54(b) purposes if the facts they depend on are largely the same, or stated otherwise, if the only factual differences are minor." E.g., Minority Police Officers Association v. City of South Bend, 721 F.2d 197, 201 (7th Cir. 1983). In applying this test we consider whether separate recovery is possible on the claims and whether the claims would violate the prohibition against splitting claims if they were brought separately; in other words, "mere variations of legal theories do not constitute separate claims." Stearns, 747 F.2d at 1108-09; Minority Police Officers, 721 F.2d at 200; Local P-171 v. Thompson Farms Co., 642 F.2d 1065, 1070-71 (7th Cir. 1981). In a Rule 54(b) inquiry counterclaims are evaluated as any other claim would be. E.g., Curtiss-Wright, 446 U.S. at 9, 100 S. Ct. at 1465; National Metalcrafters, 784 F.2d at 821.

In many settings we have had occasion to note the difficulty of applying this test. E.g., Elefant, 790 F.2d at 664; Stearns, 747 F.2d at 1108-09; A/S Apothekernes Laboratorium for Specialpraeparater v. I.M.C Chemical Group, 725 F.2d 1140, 1141-42 (7th Cir. 1984); Jack Walters & Sons Corp. v. Morton Building, Inc., 737 F.2d 698, 701-02 (7th Cir.), cert. denied, 469 U.S. 1018, 105 S. Ct. 432, 83 L. Ed. 2d 359 (1984); Local P-171, 642 F.2d at 1070-71. No such difficulty faces us today; there is a substantial factual overlap between the partial summary judgment determination on prejudgment possession and the remaining conversion counterclaim. Wenruth's counterclaim for conversion rests on its assertion that it owns the cable TV system. The partial summary judgment determines the ownership of that system, at least for the purposes of prejudgment possession, and probably also decides that issue for purposes of a later trial pursuant to Rule 56(d). The factual overlap regarding the issue of ownership is thus complete -- it is essential to a determination of both claims. To take jurisdiction here would vitiate "the most important purpose behind Rule 54(b)'s limitations -- to spare the court of appeals from relearning the facts of a case on successive appeals." Jack Walters & Sons, 737 F.2d at 702; see also, e.g., Elefant, 790 F.2d at 664; Minority Police Officers, 721 F.2d at 200. In addition, the counterclaim in this case is compulsory and the relief requested is in part the same. On the one hand, ODC has asked for possession of the TV system on the theory that it owns the system; on the other, Wenruth has counterclaimed for conversion of its property, and thus implicitly prayed for continued possession, on the theory that it owns the property. The certification under Rule 54(b) was thus improper in this case because the claim certified was not a separate "claim of relief" from the other claims in the action.

While the relationship between the counterclaim and the claim certified under Rule 54(b) alone prevents our assumption of jurisdiction under that rule, we also note that the facts necessary to determine the counterclaim for slander of title also significantly overlap the claim for immediate possession decided in the partial summary judgment. The publication of true facts is a defense to the slander of title action, and if it is true that ODC owns the cable TV system, it cannot ...


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