A split decision of the Court of Appeals Tuesday provides a warning to litigators: If you plan to take immediate appeal from an order that is final as to some but not all claims or parties under Rule 54(b), you need to speak up and have the certification of “no just reason for delay” included in the order itself. A subsequent order retroactively certifying the earlier order will not satisfy Rule 54(b), the Court of Appeals held today.
In Branch Banking & Trust v. Peacock Farm, the Court dismissed the appeal of a defendant for the second time for failing to comply with the rules governing the appealability of interlocutory orders. BB&T had sued the defendants under a commercial loan. After settling with the borrower and one of the guarantors, BB&T obtained summary judgment against the other guarantor, Lynch, for more than $3 million. However, Lynch had asserted cross-claims against the borrower and other guarantor for indemnity and contribution that had not yet been resolved.
The borrower attempted to appeal from the interlocutory summary judgment order in 2012. The Court of Appeals dismissed that appeal in 2013, explaining that because the trial court had not certified the judgment for appeal pursuant to Rule 54(b), nor had Lynch identified a substantial right that would be lost absent immediate review, the Court did not have jurisdiction to consider the appeal.
On remand, Lynch tried to fix the jurisdictional failing from his first appeal by obtaining a second order from the trial court (entered in 2014) certifying the 2012 summary judgment order for immediate appeal under Rule 54(b). Lynch then appealed again.
Despite the trial court’s retrospective certification, Judge Davis, writing for the majority, determined that the Court of Appeals still lacked appellate jurisdiction because the certification was not in the original judgment but in a separate order, citing the language of Rule 54(b) that a judgment may be final as to fewer than all of the claims “only if there is no just reason for delay and it is so determined in the judgment.” Thus, the Court concluded that a separate order cannot confer appellate jurisdiction on the Court of Appeals. Judge Tyson, in dissent, disagreed with this conclusion, noting that Rule 54(b) further provides that ‘in the absence of entry of such a final judgment, any order or other form of decision is subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties.”
This opinion answers a key procedural question about Rule 54(b) certifications. In short, for an order to be properly subject to immediate appeal under Rule 54(b), the order itself must contain the certification that there is no just reason for delay. A subsequent order purporting to certify an earlier order is not sufficient.
The opinion raises several unanswered questions, however. Can a party move to amend a judgment (perhaps under Rule 59(e)) to add a certification to the original order? If so, does a party’s time within which it may appeal run from the date the original order is entered or the date the amended order is entered? For the time being, it appears the safest route is to ensure that the order, when it is entered originally, contains the necessary certification. In Superior Court, this might be accomplished by request made in open court at a hearing on the partially dispositive motion, or in the communications that follow when the trial court asks one party to draft the order and the other to comment on it. In Business Court, neither of those may be an option, suggesting that a party opposing a motion that, if granted, may lead to a Rule 54(b) order should consider including a request for certification (however awkward that may be) in the brief opposing the motion.
Let us know if you have any practical suggestions on how to move forward in light of this precedent.