Title Outlaw v. Airtech Air Conditioning & Heating
Argued April 5, 2005 Decided June 24, 2005
Subject Judicial Restraint
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United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued April 5, 2005 Decided June 24, 2005
No. 04-7059
PHYLLIS J. OUTLAW,
APPELLANT
v.
AIRTECH AIR CONDITIONING AND HEATING, INC. AND
GDS ASSOCIATES,
APPELLEES
Appeal from the United States District Court
for the District of Columbia
(No. 02cv00570)
Michael K. Guss, pro hac vice, argued the cause for
appellant. On the brief was Phyllis J. Outlaw, pro se.
Robert R. Bowie, Jr., pro hac vice, argued the cause for
appellee Airtech Air Conditioning and Heating, Inc. On the
brief was Matthew G. Hjortsberg.
Before: EDWARDS, ROGERS, and ROBERTS, Circuit Judges.
Opinion for the court filed by Circuit Judge ROBERTS.
ROBERTS, Circuit Judge: Plaintiff's notice of appeal in this
case was premature, filed while claims were still pending against
one of three defendants. The district court subsequently
2
dismissed the remaining claims without prejudice in an effort to
cure the lack of an appealable final order, but no new notice of
appeal was filed. Federal Rule of Appellate Procedure 4(a)(2)
specifies that a premature notice of appeal may be effective upon
entry of judgment in certain circumstances. In FirsTier Mort-
gage Co. v. Investors Mortgage Ins. Co., 498 U.S. 269, 276
(1991), the Supreme Court explained that Rule 4(a)(2) applied
when a notice of appeal sought review of a nonfinal decision that
"would be appealable if immediately followed by the entry of
judgment." Here the nonfinal decision would have been
appealable if followed by entry of judgment under Federal Rule
of Civil Procedure 54(b), and accordingly we conclude that we
have appellate jurisdiction.
On the merits, we affirm the district court's grant of
summary judgment for the defendants.
I.
In March 2000, Phyllis Outlaw wanted to renovate the
Washington, D.C. building she had recently purchased. To this
end, she first hired GDS Associates to draw up the architectural
plans required to secure construction permits -- plans that
included renovations of the building's heating, ventilation, and
air conditioning ("HVAC") system. Outlaw then retained J.B.
Builders as the general contractor responsible for "achiev ing
Substantial Completion of the entire Work." J.B. Builders
Contract, art. 3.1. J.B. Builders in turn subcontracted furnishing
and installing the HVAC system to Airtech Air Conditioning and
Heating, Inc.
On April 28, 2000, GDS secured the first construction
permit, and work began. As each phase of the project was
completed, J.B. Builders would receive a cash draw, and another
firm retained by Outlaw -- Home Consulting Plus -- would
inspect the project. Outlaw was a very hands-on owner, ordering
several changes to the original plans, involving herself in
3
selecting construction materials, and attending to other details
usually handled by a general contractor. As work progressed on
the building, relations between Outlaw and her hires deterio-
rated. On June 22, 2000, Outlaw ended her relationship with
GDS because of its purported failure to secure permits in a
timely fashion. Work on the building continued, but Outlaw and
J.B. Builders also had a falling out, this one over construction
delays and the amount of payment due. They parted ways in
November 2000, and soon thereafter Outlaw offered to pay
Airtech the balance owed to it by J.B. Builders, in exchange for
Airtech completing work on the HVAC system. Airtech
declined, explaining it was bound contractually only to J.B.
Builders. Outlaw then hired another firm to finish the work in
Airtech's stead.
Outlaw alleges that after moving into the building, she
discovered that the new HVAC system did not work properly.
Having released J.B. Builders from any liability in a September
2001 settlement agreement, in March 2002 Outlaw sued GDS,
Home Consulting, and Airtech in the Superior Court of the
District of Columbia, alleging breach of contract and seeking
$100,000 in damages. The defendants removed the case to the
District Court for the District of Columbia on the basis of
diversity.
In April 2003, that court stayed proceedings against Home
Consulting, pending the conclusion of binding arbitration
pursuant to its contract with Outlaw. On March 30, 2004, the
court granted summary judgment in favor of Airtech and GDS,
and requested a status report from Outlaw and Home Consulting
on the progress of their arbitration. On April 26, 2004, however,
Outlaw filed a notice of appeal seeking review of the summary
judgment order. On April 30, she filed the requested status
report with the district court, informing the court that the notice
of appeal had been filed and stating that " o nce the appeal is
ruled upon, the Plaintiff and Home Consulting may engage in
4
arbitration depending upon the Court's ruling." The district
court promptly perceived that this building renovation dispute
was about to become a federal appellate jurisdiction one as well,
given the general rule that only orders disposing of all claims
against all parties are final and appealable. Accordingly, on May
6, 2004, the district court sua sponte dismissed the pending
claims against Home Consulting without prejudice, noting that
" o therwise, there may be some question whether the Court's
summary judgment Order represents a final judgment that may
be appealed at this time. See Fed.R.Civ.P. 54(b)." Order of May
6, 2004, at 2. Outlaw did not file a new notice of appeal.
The parties' briefs on appeal did not raise any question
concerning our jurisdiction. Shortly before oral argument, we
directed " t he parties to be prepared to discuss whether this
court has appellate jurisdiction, given the apparently premature
filing of the notice of appeal. See FirsTier Mortgage Co. v.
Investors Mortgage Ins. Co., 498 U.S. 269 (1991); Holland v.
Williams Mountain Coal Co., 2004 WL 2713122 (D.C. Cir.
Nov. 23, 2004)."
II.
"Jurisdiction is, of necessity, the first issue for an Article III
court." Tuck v. Pan Am. Health Org., 668 F.2d 547, 549 (D.C.
Cir. 1981). The timely filing of a notice of appeal is "mandatory
and jurisdictional," Budinich v. Becton Dickinson & Co., 486
U.S. 196, 203 (1988); United States v. Robinson, 361 U.S. 220,
224 (1960), and accordingly we are required to address any
questions on the issue, even in the absence of objection from the
parties.
Our jurisdiction under 28 U.S.C. § 1291 generally extends
only to final district court orders. See DSMC Inc. v. Convera
Corp., 349 F.3d 679, 682 (D.C. Cir. 2003). The order from
which Outlaw purported to appeal -- the district court's grant
of summary judgment -- was not an appealable final order
5
because the claims against Home Consulting were still pending
at the time of its issuance. "It is elementary that a grant of
summary judgment as to some parties in a multi-party litigation
does not constitute a final order unless the requirements of
Fed.R.Civ.P. 54(b) are met." Brookens v. White, 795 F.2d 178,
179 (D.C. Cir. 1986) (per curiam). The district court did not
make the required determination or direct the entry of judgment
under Rule 54(b), so Outlaw's notice of appeal was plainly
premature.
Federal Rule of Appellate Procedure 4(a)(2) addresses such
premature notices of appeal. It provides that " a notice of
appeal filed after the court announces a decision or order -- but
before the entry of the judgment or order -- is treated as filed on
the date of and after the entry." The Supreme Court considered
Rule 4(a)(2) in FirsTier. In that case, the notice of appeal was
filed after the district judge announced from the bench that he
was granting summary judgment on all claims, but before the
judge entered findings of fact and conclusions of law. The
Supreme Court concluded that Rule 4(a)(2) operated to make the
premature appeal effective after the subsequent entry of final
judgment.
The Court explained that the rule "was intended to protect
the unskilled litigant who files a notice of appeal from a decision
that he reasonably but mistakenly believes to be a final judg-
ment, while failing to file a notice of appeal from the actual final
judgment." 498 U.S. at 276. The Rule would not rescue a
notice of appeal "from a clearly interlocutory decision -- such
as a discovery ruling or a sanction under Rule 11," because a
"belief that such a decision is a final judgment would not be
reasonable." Id. The Court then concluded that "Rule 4(a)(2)
permits a notice of appeal from a nonfinal decision to operate as
a notice of appeal from the final judgment only when a district
court announces a decision that would be appealable if immedi-
ately followed by the entry of judgment." Id. In such cases, the
6
Court explained, "a litigant's confusion is understandable, and
permitting the notice of appeal to become effective when
judgment is entered does not catch the appellees by surprise."
Id.
Deciding whether we had appellate jurisdiction here would
have been easy prior to FirsTier. We had a line of precedent
dating back at least to Sacks v. Rothberg, 845 F.2d 1098, 1099
(D.C. Cir. 1988), in which we held that "an appeal taken
prematurely effectively ripens and secures appellate jurisdiction
when the district court's judgment becomes final prior to
disposition of the appeal." We have regularly relied on that line
of authority subsequent to FirsTier, see, e.g., Alegria v. District
of Columbia, 391 F.3d 262, 264 (D.C. Cir. 2004); United States
v. Real Property Identified as Parcel 03179-005R, No. 04-5217,
2004 WL 1859778 (D.C. Cir. Aug. 19, 2004); Cebula v. Bush,
No. 91-5385, 1993 WL 45836 (D.C. Cir. Feb. 16, 1993), but in
no case have we addressed its continuing validity in light of
FirsTier. This state of affairs is not unique to our court, given
that, prior to FirsTier, many circuits had a broader understanding
of when a premature notice of appeal could become effective.
See, e.g., Alcorn County v. U.S. Interstate Supplies, Inc., 731
F.2d 1160, 116566 (5th Cir.1984); Cape May Greene, Inc. v.
Warren, 698 F.2d 179, 18485 (3d Cir.1983); Baker v. Limber,
647 F.2d 912, 916 (9th Cir.1981); Merchants & Planters Bank
of Newport v. Smith, 516 F.2d 355, 356 n.3 (8th Cir.1975). We
agree with decisions concluding that those prior lines of prece-
dent must be limited in light of FirsTier.1 See United States v.
Cooper, 135 F.3d 960, 963 (5th Cir. 1998) ("we recognize that
in light of FirsTier, this expansive view of appellate jurisdiction
1 Because this part of our opinion rejects a prior statement of
circuit precedent, it has been considered separately and approved by
the full court. See Irons v. Diamond, 670 F.2d 265, 268 n.11 (D.C.
Cir. 1981).
7
cannot survive"); Serine v. Peterson, 989 F.2d 371, 372 (9th Cir.
1993).2
The reach of Rule 4(a)(2) after FirsTier, however, remains
somewhat unclear. Asking whether a decision is one that an
unskilled litigant "reasonably but mistakenly believes to be a
final judgment" is a rather imprecise guide for a jurisdictional
rule. FirsTier, 498 U.S. at 276. The examples that the Court
gave of situations in which Rule 4(a)(2) would not save a
2 In Lazy Oil Co. v. Witco Corp., 166 F.3d 581, 58687 (3d Cir.
1999), the Third Circuit noted that some courts were revisiting their
precedents in light of FirsTier, but declined to join the enterprise,
holding that its precedent similar to Sacks was not overruled by
FirsTier. We do not see how a broader notion of when a notice of
appeal filed before entry of judgment may be effective can survive the
Supreme Court's narrower construction of the specific appellate rule
governing such notices of appeal, without rendering the rule largely
if not entirely superfluous. See FirsTier, 498 U.S. at 276 ("Rule
4(a)(2) permits a notice of appeal from a nonfinal decision to operate
as a notice of appeal from the final judgment only when a district
court announces a decision that would be appealable if immediately
followed by the entry of judgment") (emphasis added; other emphasis
deleted). See also United States v. Hansen, 795 F.2d 35, 38 (7th Cir.
1986) ("Rule 4(a)(2) defines the circumstances in which a premature
notice of appeal can be effective, and the circumstances of this case
are not among them."). The Lazy Oil court noted that Rule 4(a)(4),
added after FirsTier, provides that a notice of appeal that is filed after
judgment but is premature because filed before disposition of
post-judgment motions becomes effective upon denial of the motions,
and concluded " t hus, in a number of factual situations, a premature
notice of appeal will become effective at a later date." 116 F.3d at
587. The fact that there is a rule governing pre-judgment premature
notices of appeal and another rule governing post-judgment premature
notices of appeal hardly means that courts are at liberty to fashion
additional doctrines saving premature notices of appeal that are not
saved under the rules, as construed by the Supreme Court.
8
premature appeal -- clearly interlocutory decisions such as
discovery rulings, see id. -- and the counterexamples of
situations in which the Rule would -- orders dismissing a
complaint without actually dismissing the action, see id. at 275
-- leave a vast middle ground of uncertainty. Still, the Court's
articulation of its test for applying Rule 4(a)(2) provides some
direction. The Rule is effective when there is a notice of appeal
from a "nonfinal decision" that "would be appealable if immedi-
ately followed by the entry of judgment." Id. at 276. The
Federal Rules of Civil Procedure define a "judgment" as a
"decree and any order from which an appeal lies." Fed. R. Civ.
P. 54(a). An appeal generally does not lie from a "nonfinal
decision," so the Court's test would seem to be satisfied only
when the hypothetical entry of judgment somehow makes the
"nonfinal decision" from which an appeal was noted final and
therefore appealable. That was presumably the case in FirsTier
itself, where it appears that the district court's announced
intention to consider and enter written findings and conclusions
to support its oral ruling was the only thing that made its oral
decision "nonfinal." Had the district court instead entered
judgment immediately after its oral ruling, that would have
rendered the decision final and appealable.
Simple entry of judgment would not have had the same
effect here. Outlaw's claims against Home Consulting were still
pending, and entering judgment alone would not have affected
the aspect of the March 30 order rendering it nonfinal and
nonappealable. See Holland v. Williams Mountain Coal Co.,
No. 04-7092, 2004 WL 2713122 (D.C. Cir. Nov. 23, 2004) (per
curiam) (denying appellate jurisdiction under FirsTier when
amount of fee award remained to be established); Kennedy v.
Applause, Inc., 90 F.3d 1477, 1483 (9th Cir. 1996) (same).
Entry of judgment pursuant to Federal Rule of Civil
Procedure 54(b), however, would have made the March 30 order
appealable. FirsTier did not present a situation implicating Rule
9
54(b)'s provision for entry of judgment on fewer than all claims
or against fewer than all parties. Neither did any of the cases
discussed in FirsTier. " B ut nothing in FirsTier indicates that
its holding does not apply to such judgments," In re Bryson, 406
F.3d 284, 288 (4th Cir. 2005), and several circuits have con-
cluded that FirsTier's reference to decisions that "would be
appealable if immediately followed by the entry of judgment"
encompasses "entry of judgment" pursuant to Rule 54(b), see,
e.g., Bryson, 406 F.3d at 28789; Swope v. Columbian Chemi-
cals Co., 281 F.3d 185, 19192 (5th Cir. 2002); Good v. Ohio
Edison Co., 104 F.3d 93, 9596 (6th Cir. 1997); Clausen v. Sea-
3, Inc., 21 F.3d 1181, 118687 (1st Cir. 1994). Cf. Tidler v. Eli
Lilly & Co., 824 F.2d 84 (D.C. Cir. 1987) (per curiam) (holding,
prior to FirsTier, that premature notice of appeal was effective
after entry of Rule 54(b) judgment).
Here the district court did not enter judgment pursuant to
Rule 54(b). The court cited the Rule, but it appears to have
referenced the last sentence, by way of explaining why the
March 30, 2004 order was not a final judgment. See Fed. R.
Civ. P. 54(b) ("In the absence of the required determination
and direction, any order or other form of decision, however
designated, which adjudicates fewer than all the claims or the
rights and liabilities of fewer than all the parties shall not
terminate the action as to any of the claims or parties, and the
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."). Instead of entering
judgment under Rule 54(b), the district court dismissed the
remaining claims without prejudice.
Under the test articulated in FirsTier, however, that should
not doom the appeal. That test asks hypothetically whether the
"nonfinal decision" from which an appeal was noted "would be
appealable if immediately followed by the entry of judgment."
498 U.S. at 276 (latter emphasis added). The analysis was
10
hypothetical in FirsTier itself; the oral decision in that case was
not in fact immediately followed by entry of judgment but
instead by written findings of fact and conclusions of law, and
only then by entry of judgment. See id. at 272. There must at
some point prior to consideration of the appeal actually have
been a final appealable judgment of some sort entered; Rule
4(a)(2) by its terms makes a premature notice effective "on the
date of and after the entry of judgment ." Although the
hypothetical judgment in FirsTier was identical to the kind of
judgment eventually entered, nothing in FirsTier requires that
the hypothetical judgment considered in applying its test be the
same type as the one actually entered. See Bryson, 406 F.3d at
28790; Barrett v. Atlantic Richfield Co., 95 F.3d 375, 37879
(5th Cir. 1996). So Outlaw's premature notice of appeal is
treated, under Rule 4(a)(2) and FirsTier, as if filed on the date of
and after entry of judgment in this case.
With the May 6 order, all pending claims against all parties
were resolved. Under Federal Rule of Civil Procedure 54(a), the
May 6 order accordingly constitutes a "judgment" for purposes
of the rules. Fed. R. Civ. P. 54(a) (" `Judgment' as used in these
rules includes . . . any order from which an appeal lies."). See
United States v. Haynes, 158 F.3d 1327, 1329 (D.C. Cir. 1998).
Civil Rule 58(a)(1) provides that " e very judgment . . .
must be set forth on a separate document," but the separate
document rule is often ignored and was in this case. Prior to
December 1, 2002, that oversight would have saved Outlaw's
appeal without the need to consider Appellate Rule 4(a)(2): her
time to appeal runs from the entry of judgment, and thus would
not even begin to run until the district court clerk entered the
separate document required by Rule 58. See United States v.
Indrelunas, 411 U.S. 216, 221 (1973) (per curiam); Haynes, 158
F.3d at 132930. Our dismissal of her appeal at most would
only have temporarily postponed our ability to reach the merits,
because on remand the district court would simply enter the
11
separate document required by Rule 58, allowing Outlaw then to
file a timely appeal. Indeed, because such paper shuffling serves
"no practical purpose," Bankers Trust Co. v. Mallis, 435 U.S.
381, 385 (1978), our cases have held that we could have taken
jurisdiction directly and dispensed with the detour to the district
court. See Haynes, 158 F.3d at 1331; Pack v. Burns Int'l Sec.
Serv., 130 F.3d 1071, 107273 (D.C. Cir. 1997).
The rules were changed in 2002, however, precisely to
address the problem that a failure to comply with the separate
document rule meant that the time to appeal never expired
because it never began to run. Civil Rule 58(b) was amended to
provide that, if Rule 58(a)(1) requires that a judgment be set
forth on a separate document (as it does here), the judgment is
considered entered when it is entered on the docket and (1) set
forth on a separate document, or (2) 150 days have run after
entry on the docket, whichever is earlier. Appellate Rule 4(a)(7)
was correspondingly amended to adopt the same test for
determining when the time to appeal begins to run. The purpose
of these changes was to "ensure that parties will not be given
forever to appeal . . . when a court fails to set forth a judgment
or order on a separate document in violation of Fed. R. Civ .P.
58(a)(1)." Fed. R. App. P. 4, advisory committee notes (2002
amendments). See 16A Wright, Miller, Cooper, & Schiltz,
Federal Practice and Procedure § 3950.2, at 26 (3d ed. Supp.
2005); TDK Electronics Corp. v. Draiman, 321 F.3d 677, 679
(7th Cir. 2003).
Accordingly, judgment is considered entered in this case, for
purposes of determining the time to appeal, 150 days after entry
of the May 6 order. Fed. R. App. P. 4(a)(7)(A)(ii). Outlaw's
time to appeal began to run on October 4, 2004 (applying
Federal Rule of Civil Procedure 6), and under Appellate Rule
4(a)(2) her premature notice of appeal is treated as filed on that
date. Accordingly, we turn (at last) to the merits of Outlaw's
appeal.
12
III.
A. We first address Outlaw's contention that the district
court improperly granted summary judgment for GDS. In the
proceedings below, Outlaw relied on two sources besides her
own testimony to support her claim that the HVAC system was
deficient. First, she presented a report from a September 6, 2001
District of Columbia inspection that revealed a gas line running
through the air conditioning unit, a code violation the report said
"causes serious concern." Outlaw v. Airtech Air Conditioning
& Heating, Inc., No. 02-0570, slip op. at 6 (D.D.C. Mar. 30,
2004). Second, Outlaw submitted a report from a November 23,
2001 evaluation by a certified home inspector she had retained.
As the district court noted, the report "presents a litany of
shortcomings in the design and installation of the HVAC
system," but also "cites no specific code violations" and
concludes "that the cooling differentials all met accepted
industry standards as of the time of inspection." Id. (internal
quotation marks omitted). Based on this record, the court held
that Outlaw had provided no evidence linking GDS's design
plans to the alleged defects in the HVAC system, and that she
had not identified any code provision that the design violated.
Outlaw gives us no reason to reverse the district court's
conclusions. Neither evaluation produced by Outlaw addressed
the designs GDS submitted, and she has not made any other kind
of demonstration indicating how GDS's plans were a cause in
fact of the alleged deficiencies, let alone a proximate cause.
Outlaw only directs our attention to a host of out-of-District
decisions, none of which excuses her from having to raise some
material fact that reasonably could be read as attributing breach
to GDS. When there is a construction defect, the architect is one
of the usual suspects, but GDS's proximity to the problem and
Outlaw's accusation alone are not enough to survive summary
judgment.
Nor do we disturb the district court's rejection of Outlaw's
13
argument that GDS breached by failing to secure the permits in
a timely fashion. The court reasoned that the contract did not
stipulate a time for securing the permits, and that any nonperfor-
mance by GDS after June 22, 2000, was excused because
Outlaw repudiated their contract. Outlaw challenges these
conclusions only by arguing that the trier of fact should have
answered these questions. Any dispute about the facts surround-
ing the June 22 separation would be a question for a jury, but
there are none at issue. Indeed, Outlaw did not allege with any
particularity how GDS's performance was unsatisfactory in light
of the contract or course of dealing. If anything, the evidence
runs against Outlaw's claim of breach: soon after she hired
another architect, the District issued a second, apparently final,
permit authorizing "alterations to exiting sic building per
plans" that were submitted on March 27, 2000, when GDS was
still in Outlaw's employ. Outlaw, slip. op. at 3 n.2. The only
question was the legal significance of the facts on the record, a
question of law for a judge, notwithstanding Outlaw's desire to
have a jury make those determinations.
B. The district court granted summary judgment for Airtech
because its agreement with J.B. Builders created no duty on the
part of Airtech to Outlaw. The district court reached this
conclusion based on the traditional contract law rule that, absent
any indication to the contrary in an agreement, property owners
are not intended or third-party beneficiaries of contracts between
contractors and subcontractors. See Restatement (Second) of
Contracts § 302 cmt. e. & illus. 19 (1981); 9 Corbin on Con-
tracts § 779D (Interim ed. 2002); see also Pierce Assocs., Inc. v.
Nemours Found., 865 F.2d 530, 53536 (3d Cir. 1988).
Outlaw does not dispute that District of Columbia courts,
whose substantive law we follow in this diversity case, look to
the Restatement " i n the absence of any current well-developed
doctrine in their jurisdiction." Ellis v. James V. Hurson
Assocs., Inc., 565 A.2d 615, 618 (D.C. 1989). Instead, Outlaw
14
contends there is District of Columbia precedent on point --
Western Union Tel. Co. v. Massman Constr. Co., 402 A.2d 1275
(D.C. 1979) -- and that it is in her favor. In that case, a con-
struction firm entered into a contract with the transit authority to
build part of a subway system. A telegraph company that had
not signed the contract, but whose lines were damaged by the
construction, was able to recover from the construction firm on
that contract as a third-party beneficiary. Id. at 1277.
This case is readily distinguishable from Western Union.
Essential to the holding in Western Union was language in the
contract affording the plaintiff telegraph company an active role
in the project and specifically assigning the defendant construc-
tion company the responsibility to repair any damage it caused
to the plaintiff's telegraph lines. See id. These provisions
conferred on the plaintiff the status of a third-party beneficiary
and took the case outside the traditional rule applied by the
district court. Outlaw can invoke no such exception here. The
form contract between Airtech and J.B. Builders contemplates
no role for Outlaw and cannot be read as creating specific rights
for her; beyond allowing the "Owner" to "keep any and all parts"
and bearing a signature line "Owner/General Contractor" (here
signed by J.B. Builders), the form contract does not refer to an
owner at all, let alone Outlaw in particular. See Airtech Contract
at 12. Nor did the course of dealing make Outlaw a third-party
beneficiary. She played no role in J.B. Builders' choice of
Airtech as a subcontractor and, although Outlaw vigorously
involved herself in the construction project, Airtech did not
acquiesce in her efforts to step into J.B. Builders' shoes.
The judgment of the district court is
Affirmed.
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