United States Court of Appeals,
Fifth Circuit.
Nos. 94-60800, 95-60091.
PYCA INDUSTRIES, INC., Plaintiff-Appellee Cross-Appellant,
and
D. Reynolds Company, Inc., doing business as Reynolds Company, The, Plaintiff,
v.
HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant- Appellant Cross-Appellee,
Owen and White, Inc.; Max Foote Construction Company, Inc.; Fidelity and Deposit Company of Maryland, Defendants-Appellees.
PYCA INDUSTRIES, INC.; D. Reynolds Company, Inc., doing business as Reynolds Company, The, Plaintiffs-Appellees.
HARRISON COUNTY WASTE WATER MANAGEMENT DISTRICT, Defendant- Appellant,
Owen and White, Inc.; Max Foote Construction Company, Inc.; Fidelity and Deposit Company of Maryland, Defendants-Appellees.
May 3, 1996.
Appeals from the United States District Court for the Southern District of Mississippi.
Before JOLLY, JONES and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
The central issues of these interlocutory appeals are whether
the Harrison County Wastewater Management District ("the District")
is a citizen for diversity jurisdiction purposes and, if so,
whether under Mississippi law it is a political subdivision of the
1 state entitling it to sovereign immunity from tort claims. Because
we conclude that the District is a person for diversity purposes,
we agree with the district court that it had jurisdiction over the
claims asserted. However, because we also conclude that the
District is a political subdivision of the state, the District is
immune from the tort claims and we accordingly reverse that part of
the judgment of the district court denying tort immunity.
FACTUAL AND PROCEDURAL BACKGROUND
The underlying litigation in this case involves multiple
contract and tort claims among several different parties arising
out of the construction of the West Biloxi Wastewater Treatment
Facility. Appellant Harrison County Wastewater Management District
hired Max Foote Construction Co. ("Foote") as the general
contractor for the project. Owen & White ("O & W") was the project
engineer. Appellee PYCA Industries, Inc. ("PYCA") is an electrical
subcontractor that was awarded a subcontract on the project. In
preparing its bid, PYCA made commitments for the purchase of
certain equipment from electrical equipment suppliers.
While the project was ongoing, PYCA proposed revisions in the
electrical portion of the project that would net substantial
savings to the District. After being initially rejected by O & W,
the District ultimately directed O & W to implement the changes.
These changes decreased the amount of work required and thus the
amount due PYCA. Consequently, the District was entitled to change
order credits. The principle dispute underlying this case is the
amount of these credits.
2 PYCA believed the credit should be significantly less than the
District. The District, through O & W, arrived at its larger
credit figure by obtaining price quotes from additional electrical
equipment suppliers. PYCA continued to object and refused to
complete its subcontract until the credit dispute was resolved.
Subsequently, the District and O & W allegedly threatened Foote
with termination of the general contract. Foote, in turn,
pressured PYCA. PYCA then complied by completing its part of the
project despite the credit dispute. Later, the District and O & W
required PYCA to provide the cost breakdown of its electrical
equipment. Believing PYCA's suppliers were too high, the District
and O & W increased the amount of the credit due. Apparently, this
forced PYCA to breach its purchase price commitments with its
suppliers.
In August 1991, PYCA sued the District, O & W, Foote, and
Fidelity & Deposit Company of Maryland (Foote's surety under a
labor and materials bond). PYCA alleged breach of contract and
tortious interference with contract claims. In addition, PYCA
included claims for punitive damages.
A flurry of motions to dismiss and for partial summary
judgment ensued below. In an attempt to winnow the issues for
trial, the district court issued several opinions and accompanying
orders, often referencing one another, disposing of these motions.
Because the issues addressed by these various opinions and orders
define the parameters of what is properly before us, it is
necessary to describe them in some detail.
3 Initially, the District moved to dismiss the claims against it
for lack of diversity jurisdiction. The District's position was
based upon the argument that it was the alter ego of the State of
Mississippi and therefore not a "citizen" for diversity purposes.
On January 18, 1994, the district court issued a 58-page opinion
dealing with, inter alia, the District's motion to dismiss for lack
of jurisdiction. Finding that the District was not the alter ego
of the state, the court denied the motion in a subsequent order
filed February 9th, referencing the January 18th opinion. The
District sought and received certification from the district court
for an interlocutory appeal of this order under both 28 U.S.C. §
1292(b) and Federal Rule of Civil Procedure 54(b). The District
now appeals the court's failure to dismiss for lack of
jurisdiction.
Also on January 18th, the district court issued a 25-page
opinion dealing with Foote and O & W's motion for partial summary
judgment on punitive damages. In an order filed January 31, 1994,
the district court granted Foote's motion, but denied O & W's. In
a subsequent clarification order, filed November 8, 1994, the
district court held that O & W was also immune from punitive
damages. No one sought certification of these two specific orders
for interlocutory appeal. Nonetheless, PYCA cross-appeals on the
propriety of dismissing its punitive damage claims. Foote and O &
W contend in a pending motion that the lack of certification
deprives us of appellate jurisdiction.
In June 1994, the District moved to amend its answer to assert
4 cross-claims against Foote and O & W and counterclaims against PYCA
based upon allegations of possible fraud and conspiracy. This
motion to amend, made nearly three years into the litigation, was
denied by the magistrate judge. On October 3, 1994, the district
court upheld the magistrate judge's denial of the District's motion
to amend. Surprisingly, this order was also certified for
interlocutory appeal under Rule 54(b). The District appeals the
denial of its motion to amend.
Also on October 3, 1994, the district court filed a third
opinion relating primarily to the District's summary judgment
motion based upon sovereign immunity. Finding that the District's
activities were not "governmental," the court concluded that the
Mississippi Sovereign Immunity Act did not apply. Alternatively,
the court concluded that if the Act did apply, the District waived
its immunity to the extent it had general liability insurance.1
Additionally, the court granted the District partial summary
judgment on PYCA's punitive damages claim. These conclusions were
then embodied in an order filed October 31, 1994 that referenced
the court's earlier January 18th and October 3rd opinions. This
order was also certified for interlocutory appeal under both §
1292(b) and Rule 54(b). The District appeals the denial of summary
judgment on the immunity issue; PYCA cross-appeals on the punitive
damage issue.
1 The court also rejected PYCA's argument that retroactive application of the Act violated its due process rights. This conclusion forms the basis of PYCA's conditional cross-appeal on the immunity issue.
5 To recap, the District appeals the district court's conclusion
that it is a citizen for diversity purposes. It also appeals the
denial of summary judgment on the tort claims based on sovereign
immunity. Furthermore, the District appeals the denial of its
motion to amend. PYCA cross-appeals on the dismissal of its
punitive damage claims against the District, Foote, and O & W. We
examine each of these issues in turn.
DIVERSITY JURISDICTION
As a threshold matter, the District contends that it is the
alter ego of the State of Mississippi and therefore not a citizen
for diversity jurisdiction purposes. In answering this
jurisdictional question, the district court applied the balancing
test of Tradigrain, Inc. v. Mississippi State Port Authority, 701
F.2d 1131 (5th Cir.1983), and concluded that the District was not
the alter ego of the state. On appeal, the District argues that
the Tradigrain analysis only applies if the District's status is
unclear. Because the enabling act for the District created it as
"a public body corporate and politic constituting a political
subdivision of the State of Mississippi," the District argues that
such analysis is inappropriate because its status is clear. See
Senate Bill 2833, Chap. No. 885, Local & Private Laws of the State
of Mississippi, § 4 (1982) (hereinafter "Enabling Act").
Alternatively, if Tradigrain is applied, the District contends that
the balance should tip in favor of it being the alter ego of the
state.
It is well-settled that a state is not a "citizen" for
6 purposes of diversity jurisdiction. Moor v. County of Alameda, 411
U.S. 693, 717, 93 S.Ct. 1785, 1796-97, 36 L.Ed.2d 596 (1973). If
suit is brought against an agency that is the alter ego of the
state, federal jurisdiction is lacking. Tradigrain, 701 F.2d at
1132. However, if the agency is an independent one, separate and
distinct from the state, the district court can properly proceed to
the merits. Id.
In this case, the district court properly applied Tradigrain
analysis. The District's initial contention that Tradigrain does
not apply is meritless. While there is language in Tradigrain that
"[i]f the agency's status is unclear" we look to all available
sources for guidance, see 701 F.2d at 1132, the fact that the
District's enabling legislation describes it as a political
subdivision does not make its status clear. A state statute
characterizing the agency as an arm of the state is only one factor
to consider in the balancing test. McDonald v. Board of
Mississippi Levee Comm'rs, 832 F.2d 901, 906 (5th Cir.1987).
As we described in Tradigrain, there are many factors to
consider in determining whether an agency is the alter ego of the
state including: (1) whether state statutes and case law
characterize the agency as an arm of the state; (2) the source of
entity funding; (3) the degree of local autonomy; (4) whether the
entity is concerned primarily with local, as opposed to statewide
problems; (5) the authority to sue and be sued in its own name;
and (6) the right to hold and use property. See 701 F.2d at 1132;
7 McDonald, 832 F.2d at 906.2 Typically, some factors will suggest
that the agency is a "citizen," while others will suggest that it
is the alter ego of the state. Tradigrain, 701 F.2d at 1133.
This is precisely what occurred when we applied this test to
the Mississippi State Port Authority in Tradigrain. We found some
factors suggested the Port Authority was a citizen. These
included: the authority to sue and be sued in its own name; the
ability to own property and enter into contracts; and wide
discretion in exercising its duties. Id. Against these factors,
many others supported the opposite view. For example, the title to
all Port Authority property vested in the State of Mississippi.
Likewise, while the Authority could issue bonds, they became
general obligations of the state. Additionally, all contracts had
to be awarded pursuant to state law of public contracts. The
Authority made financial reports to the state legislature and was
audited by the state auditor. Id. Most importantly, state law
specifically provided that the Port Authority waived immunity from
suit only to the extent of liability insurance coverage. We
concluded that "[t]he language in the statute strongly suggests
that the legislature considered the Authority an alter ego of the
State." Id. While the Court did not base its holding solely on
this statute, its language, combined with other provisions
2 The McDonald factors are technically a test for Eleventh Amendment immunity. However, as we specifically stated in Tradigrain, "the analysis of an agency's status is virtually identical whether the case involves determination of immunity under the Eleventh Amendment or a determination of citizenship for diversity jurisdiction." 701 F.2d at 1132.
8 enumerated above, clearly tipped the balance in favor of finding
the Port Authority as the alter ego of the State of Mississippi.
Id. at 1134.
The application of the same balancing test to the District
yields the opposite conclusion. Notwithstanding the general
language in its enabling act describing the District as a political
subdivision, the remaining Tradigrain factors indicate sufficient
independence from the state for diversity purposes. Initially, the
same characteristics of the Port Authority that implied it was a
citizen are present here. The District has the authority to sue
and be sued in its own name, as well as employ its own counsel.
Enabling Act § 6(a), (l ). The District can own property and enter
into contracts. Id. § 6(e), (o). Like the Port Authority, it has
wide discretion in exercising its duties. Id. § 25.
However, the factors that led us to conclude that the Port
Authority was the alter ego of the state are absent with the
District. For example, title to the Port Authority's property
vested in the state; the District holds all of its property in its
own name. While both the Port Authority and the District raise
funds through bonds, unlike the Port Authority, the District's
bonds are not obligations of the state. Id. § 16. The District,
unlike the Port Authority, is exempt from state purchasing laws and
bid requirements. Id. § 23; see Senate Bill 2851, Chap. No. 940,
Local & Private Laws of the State of Mississippi, § 6(o) (1984)
(amending Enabling Act to include exemption from state laws
regarding competition). Likewise, the District is exempt from the
9 very financial reports to the legislature that the Port Authority
is required to make. Unlike the Port Authority, there is no
special legislation relating to waiver of immunity based on
liability insurance coverage. Finally, the District is concerned
with wastewater treatment in three coastal counties—a local rather
than statewide concern.3 In sum, the very factors that led this
Court in Tradigrain to conclude that the Port Authority was the
alter ego of Mississippi, leads us to the opposite conclusion for
the District. Consequently, the district court did not err in
refusing to dismiss the suit against the District for lack of
diversity jurisdiction.
SOVEREIGN IMMUNITY
The fact that application of Tradigrain vests the federal
courts with jurisdiction over this diversity lawsuit, does not
silence this controversy. Independent of the jurisdictional
challenge, the District contends that as a matter of Mississippi
3 The District contends that Clark v. Tarrant County, 798 F.2d 736 (5th Cir.1986), should be controlling on this issue. In Clark, after applying the relevant factors we held that the Tarrant County Adult Probation Department was the alter ego of the state. We opined that while at first glance the probation department appeared to address only a local concern, control over probationers was a statewide problem. Clark, 798 F.2d at 745. We added that dividing the responsibilities of a state program into judicial districts was merely an administrative tool. Id. However, we specifically noted that "no single factor conclusively show[ed]" that the probation department was the alter ego of the state. Id. Rather, all of the factors taken as a whole led us to that conclusion. These additional factors included: Texas law giving control of probation departments to district judges who are state elected officials; funding from the state treasury; inability to sue or be sued in its own name; and no mention of whether it could hold property in its own name or not. Id. at 744-45.
10 state law,4 it is entitled to sovereign immunity from all tort
claims. This requires an analysis separate and distinct from
Tradigrain.
In Pruett v. City of Rosedale, 421 So.2d 1046, 1050
(Miss.1982) (en banc), the Mississippi Supreme Court abolished the
judicial doctrine of sovereign immunity. Pruett, however,
specifically provided that its holding would not take effect until
1984. Following Pruett, the Mississippi legislature enacted the
Sovereign Immunity Act of 1984. See Miss.Code Ann. §§ 11-46-1-23
(Supp.1995). The Act mandated that its provisions would not apply
to claims accruing prior to 1985; claims accruing prior to 1985
would be governed by pre-Pruett law.5 Interestingly, the
substantive provisions of the Sovereign Immunity Act did not take
effect until after 1993 because each successive legislature moved
the effective date of the Act forward to the next year and
specifically provided that pre-Pruett law should continue to
control prior to the effective date of the Act. See Presley v.
Mississippi State Highway Comm'n, 608 So.2d 1288, 1292-94
(Miss.1992); Wesley v. Mississippi Transp. Comm'n, 857 F.Supp.
523, 527-30 (S.D.Miss.1994).
Ultimately in Presley, the Mississippi Supreme Court held that
the portion of the Immunity Act requiring courts to apply
4 In this diversity action, it is quite clear, and no one disputes, that Mississippi state substantive law applies to the tort claims in this suit. 5 This was contained in § 11-46-6 and has since been repealed.
11 pre-Pruett law was unconstitutional. Following Presley, the
legislature amended the Act in 1993 to delete the offensive
provision; this Act is currently in force today. See Miss.Code
Ann. §§ 11-46-1—23 (Supp.1995). However, the Mississippi Supreme
Court subsequently held that Presley should only be applied
prospectively. Robinson v. Stewart, 655 So.2d 866, 868 (Miss.1995)
(en banc) ("Presley has no retroactive application.").
Since Presley is not retroactive, the Sovereign Immunity Act
of 1984 as subsequently amended governs during the post-Pruett and
pre-Presley period. Consequently, pre-Pruett sovereign immunity
law, as mandated by the Act, applies. See Mohundro v. Alcorn
County, --- So.2d ----, ----, 1995 WL 598828, at *4 (Miss. Oct. 12,
1995); West v. Combs, 642 So.2d 917, 920 (Miss.1994); Morgan v.
City of Ruleville, 627 So.2d 275, 278-79 (Miss.1993); Wesley, 857
F.Supp. at 528, 530; Newsom v. Stanciel, 850 F.Supp. 507, 515
(N.D.Miss.1994). The cause of action in this lawsuit arose during
this post-Pruett and pre-Presley gap. Thus, the sovereign immunity
issue is controlled by pre-Pruett law.
The district court denied the District's motion for summary
judgment on immunity grounds for two reasons. The first basis was
that the District was not afforded immunity under the specific
provisions of the Act because it was performing proprietary, rather
than governmental functions and that Mississippi would apply a
governmental/proprietary distinction to the District.6 Describing
6 The court actually defined the District out of the Act. According to the court, the Act defines "political subdivision" as those body politic or body corporate responsible for
12 this as arguably a "leap in the law," the court offered an
alternative holding. The court concluded that if the District was
a political subdivision under the Act, any immunity provided could
be waived to the extent it had general liability insurance. The
court concluded that it had "reviewed the pertinent insurance
provisions and concludes that a material issue remains whether PYCA
[sic]7 has liability insurance coverage on the claims asserted."
The court also rejected PYCA's argument that retroactive
application of the Act violated its due process rights.
As described above, it is not the substantive provisions of
the Act that govern the sovereign immunity issue in this case.
Rather, it is pre-Pruett law as mandated by the Act that controls.
Pre-Pruett, Mississippi law distinguished between the State and
political subdivisions on the one hand and municipalities on the
other. The State, its agencies and political subdivisions, were
immune from suit unless immunity was waived by statute. Grantham
v. Mississippi Dep't of Corrections, 522 So.2d 219, 222
(Miss.1988). Municipalities, however, were subject to a
governmental/proprietary distinction; there was no immunity for
proprietary functions. See Webb v. Jackson, 583 So.2d 946, 952
(Miss.1991); see also Morgan, 627 So.2d at 279. The Mississippi
governmental activities. The court then conducted the governmental/proprietary analysis to determine that the District was not governmental, ergo not a political subdivision entitled to immunity. See Miss.Code Ann. §§ 11-46-1(i) (defining political subdivision); 11-46-3 (blanket immunity provision) (Supp.1995). 7 This should, of course, be the District, not PYCA.
13 Supreme Court has specifically refused to extend the
governmental/proprietary distinction outside of the municipal
context. See Strait v. Pat Harrison Waterway Dist., 523 So.2d 36,
40 (Miss.1988), overruled on other grounds, Churchill v. Pearl
River Basin Dev. Dist., 619 So.2d 900 (Miss.1993); see also
Starnes v. City of Vardaman, 580 So.2d 733, 736 (Miss.1991). But
cf. Womble v. Singing River Hosp., 618 So.2d 1252, 1261 (Miss.1993)
(en banc) (in dicta noting that reexamination of
governmental/proprietary distinction may be in order but declining
to do so because of explicit statutory immunity for the entity at
issue).
The district court improperly applied
governmental/proprietary analysis to the District. The District
was created as a "political subdivision of the State of
Mississippi." Enabling Act, § 4. It is not a municipality.
Consequently, under Mississippi law the governmental/proprietary
distinction is simply not applicable. See Strait, 523 So.2d at 40.
As a political subdivision, the District is immune from tort suit
under pre-Pruett law. Grantham, 522 So.2d at 222.
Despite the authority indicating that the
governmental/proprietary distinction is only used with
municipalities, PYCA nonetheless contends that the distinction
applies to the District on the strength of Anderson v. Jackson
Municipal Airport Authority, 419 So.2d 1010 (Miss.1982) (en banc),
and Thomas v. Hilburn, 654 So.2d 898 (Miss.1995). However, neither
of these cases extend the governmental/proprietary distinction
14 outside the municipal context. In Anderson, the Mississippi
Supreme Court applied the distinction to the Jackson Municipal
Airport Authority, an entity created by the City of Jackson. The
court specifically noted that "the case law from this Court is that
the operation of an airport by a municipality is a proprietary or
corporate activity." Anderson, 419 So.2d at 1010. This holding
does not extend the proprietary distinction outside of the
municipal context. Likewise, Thomas makes no such extension.
Thomas, quoting at length the language of Anderson, applies the
proprietary analysis to the City of Jackson's operation of a garage
and towing service. 654 So.2d at 900-01. This authority only
serves to reinforce that the governmental/proprietary analysis only
applies to municipalities.
While we hold that the District is a political subdivision
cloaked with immunity from tort suit, it could still waive its
immunity to the extent that it purchased liability insurance
coverage for the cause of action at issue. See Churchill, 619
So.2d at 905-06.8 The district court's alternative reason for
denying summary judgment was that there was a material issue about
coverage. Basically, the district court took the position that,
without deciding the issue, there was a "substantial probability"
8 Oddly, pre-Pruett law would hold that immunity is only waived if insurance was purchased under express statutory authority. See French v. Pearl River Valley Water Supply Dist., 394 So.2d 1385, 1388 (Miss.1981). Nonetheless, the Mississippi Supreme Court abolished this requirement and overruled French in Churchill. It specifically applied this new rule retroactively to a post-Pruett and pre-Presley claim. See Churchill, 619 So.2d at 906.
15 of coverage. The coverage issue, however, is a legal one for the
court to decide conclusively, not conditionally. See Radmann v.
Truck Ins. Exch., 660 So.2d 975, 977 (Miss.1995) (en banc).
PYCA's Third Amended Complaint alleged a cause of action for
"intentional interference with contractual relationship." In this
count, PYCA contends the District "actively interfered with the
performance of the subcontract by asserting contractual rights they
did not have and threatening Max Foote with termination of the
contract if Max Foote did not force PYCA to proceed." Third
Amended Complaint ¶ 28. Additionally, PYCA alleged that the
District intentionally required PYCA to breach its contract with
its electrical suppliers. Id. The basis of these allegations were
"unreasonable demands for furnishing and installing electrical
equipment" and "impossible interpretations of the contract." Id.
¶ 29. As PYCA itself notes in its pleading, these allegations
state an intentional interference with a contract claim.
The general liability insurance policy purchased by the
District does not extend to cover intentional interference with
contract claims. The policy provides coverage in three areas:
bodily injury and property damage, personal and advertising injury,
and medical payments. There are no claims for bodily injury,
property damage, or medical payments at issue. All that could
possibly remain is coverage under "personal and advertising
injury." The policy defines advertising injury as "[o]ral or
written publication of material that slanders or libels a person or
organization or disparages a person's or organization's goods,
16 products or services." However, the policy specifically limits
coverage for advertising injuries to those "committed in the course
of advertising your goods, products, or services." The District's
alleged tortious interference clearly does not fall within this
scope. See Sentry Ins. v. R.J. Weber Co., 2 F.3d 554, 555-57 (5th
Cir.1993).
Likewise, the personal injury coverage does not embrace PYCA's
claim. The policy defines "personal injury" as injury resulting
from: false arrest, detention or imprisonment; malicious
prosecution; wrongful eviction; and violation of right to
privacy. It also includes "[o]ral or written publication of
material that slanders or libels a person or organization or
disparages a person's or organization's goods, products or
services." This language, clearly targeted at libel and slander
actions, is not invoked by the allegations recounted in PYCA's
tortious interference claim. We conclude that PYCA's intentional
interference with contract claim is not subsumed into the policy's
general coverage for personal and advertising injury. As such, the
existence of the general liability insurance policy does not waive
the District's sovereign immunity for this claim.
In sum, the District is a political subdivision of the State
of Mississippi under pre-Pruett law. As a political subdivision,
the District is entitled to sovereign immunity from PYCA's tort
claims. Governmental/proprietary analysis, as used by the district
court, is inapplicable. Furthermore, the District has not waived
its immunity from the interference with contract claim by purchase
17 of general liability insurance because the policy does not provide
coverage for the claim at issue.9
MOTION TO AMEND
The District also appeals the denial of its motion to amend
its pleading to include additional claims of fraud and conspiracy
against Foote, O & W, and PYCA. This motion, raised three years
into the litigation, was denied by the magistrate judge on the
basis of undue delay and dilatory motive. The district court
agreed. The district court, noting that there was "no just reason
for delay," certified this order for interlocutory appeal under
Rule 54(b).
Ordinarily, we review the denial of motion to amend under an
abuse-of-discretion standard. Wimm v. Jack Eckerd Corp., 3 F.3d
137, 139 (5th Cir.1993). The district court concluded that the
District's late-proffered fraud amendments were premised on
dilatory motive and would cause undue delay. The court noted that
the District could have raised a fraud claim in 1991 or 1992, but
did not.10 Furthermore, by its own admission, the District
9 Additionally, we reject PYCA's alternative arguments supporting the denial of summary judgment. PYCA contends that there is an exception to sovereign immunity for intentional torts under Mississippi law. However, PYCA's authority relates to qualified immunity for government actors, not sovereign immunity for the state, and is thus distinguishable. See West, 642 So.2d at 920; Grantham, 522 So.2d at 225. Likewise, PYCA's conditional cross-appeal that application of the Sovereign Immunity Act is a violation of due process is meritless. See Grimes v. Pearl River Valley Water Supply Dist., 930 F.2d 441, 444 (5th Cir.1991). 10 The District was not limited in its discovery during this period. Consequently, there was no reason why the District could not have discovered on its own the factual basis underlying the
18 acknowledges that discovery responses received in January 1993
provided it with the underlying facts to support its fraud claim.
Still, there was no attempt to amend until June 1994. This was
after the district court had gone to considerable efforts to winnow
the issues of this complicated case for trial. Nonetheless, we
decline to pass judgment on the district court's decision to deny
the motion to amend.
Rule 54(b) of the Federal Rules of Civil Procedure provides
that "the court may direct entry of a final judgment as to one or
more but fewer than all of the claims ... only upon an express
determination that there is no just reason for delay and upon
express direction for the entry of judgment." The propriety of a
Rule 54(b) certification is reviewable by this Court for abuse of
discretion. Sears, Roebuck & Co. v. Mackey, 351 U.S. 427, 437, 76
S.Ct. 895, 900-01, 100 L.Ed. 1297 (1956). One of the primary
policies behind requiring a justification for Rule 54(b)
certification is to avoid piecemeal appeals. Ansam Assocs., Inc.
v. Cola Petroleum, Ltd., 760 F.2d 442, 445 (2d Cir.1985). A
district court should grant certification only when there exists
some danger of hardship or injustice through delay which would be
alleviated by immediate appeal; it should not be entered routinely
as a courtesy to counsel. Id.
We conclude that the district court's certification of this
denial of a motion to amend was improper. The district court's
certification articulates no hardship or danger warranting
fraud claim.
19 immediate appeal of this nondispositive motion.11 Furthermore, the
district court's Rule 54(b) certification does not perfect
appealability if the order is not the final determination of a
claim. Lockett v. General Fin. Loan Co. of Downtown, 623 F.2d
1128, 1129 (5th Cir.1980). Denial of leave to amend is ordinarily
not final for purposes of appeal. Id.; Wells v. South Main Bank,
532 F.2d 1005, 1006 (5th Cir.1976); see also Offshore Logistics
Servs., Inc. v. Mutual Marine Office, Inc., 639 F.2d 1168, 1170
(5th Cir.1981). The district court abused its discretion in
certifying this order for immediate appeal and we therefore dismiss
the appeal on this issue.
PUNITIVE DAMAGES
PYCA cross-appeals the district court's orders granting
partial summary judgment for the District, Foote, and O & W on its
punitive damages claims. As to the District, we have concluded
above that it is a political subdivision entitled to sovereign
immunity from tort claims. This, of course, includes any punitive
damage claims arising from the alleged torts. The denial of the
punitive damage claim against the District was therefore proper.
As to Foote and O & W, we dismiss PYCA's appeal for lack of
appellate jurisdiction. While the district court generously
certified many issues and orders to us, the punitive damages
11 The district court itself noted the nondispositive nature of the motion in its October 3, 1994 order overruling the District's objections to the magistrate judge's order. The district court recounted that it reviewed the magistrate judge's order under a "clearly erroneous or contrary to law" standard as provided by Federal Rule of Civil Procedure 72(a) relating to nondispositive matters.
20 summary judgments for Foote and O & W are not among them. The
district court certified only: (1) the order filed February 9,
1994, referencing the January 18th opinion discussing jurisdiction;
(2) the order filed October 3, 1994, relating to denial of motion
to amend; and (3) the order filed October 31, 1994, referencing
the October 3rd opinion concerning sovereign immunity and punitive
damages against the District only. Since Foote's summary judgment
stems from an independent order, filed January 31, 1994, that has
not been certified for interlocutory appeal, we grant Foote's
pending motion and dismiss for lack of jurisdiction.12
PYCA's cross-appeal against O & W has a similar fate. While
O & W was initially denied summary judgment on punitive damages in
the same opinion and order granting Foote's, the court subsequently
granted summary judgment to O & W in a motion for clarification.
In this order, filed November 8, 1994, the court found, as a matter
of law, that O & W was an agent of the District and could not be
liable for punitive damages. This order has not been certified for
interlocutory appeal. Consequently, we grant O & W's pending
motion and dismiss the cross-appeal for lack of appellate
jurisdiction.13
12 We reject PYCA's contention that both January 18th opinions are somehow included in the interlocutory appeal via the certification order. The certification order specifically mentions only the February 9th, October 3rd, and October 31st orders. Foote's partial summary judgment stems from a January 31st order. 13 We also reject PYCA's additional arguments suggesting that this Court should exercise jurisdiction. The relevant issues with respect to the District are its status as a citizen and its claim of sovereign immunity. The relevant issues with respect to
21 CONCLUSION
The district court properly exercised diversity jurisdiction
over this complex commercial lawsuit. However, because we hold
that the District is entitled to sovereign immunity, we DISMISS the
tort claims lodged against the District. In as much as the
District's entitlement to sovereign immunity precludes recovery for
both tort and punitive damages, we AFFIRM that part of the judgment
dismissing punitive damage claims against the District. Further,
the appeal of the order denying the District's motion to amend is
DISMISSED. Finally, we grant Foote and O & W's motion to DISMISS
PYCA's cross-appeal for lack of jurisdiction.
Foote and O & W are not related to the District's issues, but principally concern contract interpretation and agency. Pendent appellate jurisdiction is inappropriate because the relevant issues to Foote and O & W are not inexplicably intertwined with the issue relevant to the District. See Garner v. Wolfinbarger, 433 F.2d 117, 120 (5th Cir.1970) (counseling against exercise of pendent appellate jurisdiction even when record is before us and parties want resolution). Likewise, the collateral order doctrine is not applicable because the orders granting partial summary judgment to these parties on the punitive damage issue would still be reviewable on appeal from a final judgment on the merits. See Kershaw v. Shalala, 9 F.3d 11, 14 (5th Cir.1993) (listing prerequisites for collateral review).