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In re Appointment of Umpire for Hayes Family Trust

United States Court of Appeals, Tenth Circuit

January 4, 2017

IN RE: Appointment of Umpire for HAYES FAMILY TRUST, on Behalf of Itself and All Others Similarly Situated, CLAYTON A. HAYES, co-trustee, Petitioners-Appellants,
v.
STATE FARM FIRE & CASUALTY COMPANY, Respondent - Appellee.

         APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. NO. 5:14-CV-00108-C)

          Jason Waddell, Jason Waddell, PLLC, Oklahoma City, Oklahoma, for Appellants.

          Benjamin G. Kemble (David V. Jones with him on the brief), Jones, Andrews & Ortiz, Oklahoma City, Oklahoma, for Appellee.

          Before TYMKOVICH, Chief Judge, HARTZ and MORITZ, Circuit Judges.

          TYMKOVICH, Chief Judge.

         This appeal arises from a property damage claim filed by the Hayes Family Trust with its insurer, State Farm Fire & Casualty. When the parties could not agree on the amount of loss, Hayes invoked an appraisal process provided by the policy to calculate the loss incurred. The policy establishes a procedure whereby each party selects an impartial appraiser; the appraisers then select an impartial umpire. But if the appraisers are unable to agree on an umpire, the policy grants either party the right to seek appointment of the umpire by the court. After Hayes sought the district court's assistance with the appointment of an umpire, the parties participated in the appraisal process, which resulted in a unanimous award.

         State Farm paid the balance of that award, and Hayes accepted payment. But despite State Farm's payment, at Hayes's request, the district court confirmed the award and entered judgment in favor of Hayes. Hayes promptly moved for an award of prejudgment interest, attorney's fees, and costs under a prevailing party statute. In response, State Farm moved to vacate or amend the judgment. Finding that the parties settled any dispute over the amount of loss, the court agreed with State Farm and vacated its order confirming the appraisal award and the judgment. Hayes now appeals the order vacating judgment in an attempt to recover prejudgment interest, fees, and costs.

         We affirm. Under Oklahoma insurance appraisal law, the appraisal award was not binding on State Farm because it did not invoke the appraisal process. Therefore, State Farm's voluntary payment of the award, and Hayes's acceptance of that payment, settled any dispute over the amount of loss to Hayes's property. Because the parties settled their dispute over the amount of loss, the district court properly vacated its earlier judgment in favor of Hayes. For the same reason, because the court vacated the judgment, Hayes cannot be a "prevailing party" under the Oklahoma Insurance Code's prevailing party statute.

         I. Background

         Hayes filed an insurance claim with State Farm in 2013 after its Oklahoma City commercial property was damaged in a storm. State Farm submitted an estimate to repair or replace the damaged property in the amount of $151, 486. Displeased with the estimate, Hayes sent a certified letter to State Farm invoking a statutorily-mandated appraisal provision in the insurance policy. The provision requires each party to select an impartial appraiser; the appraisers then select an impartial umpire.

         State Farm did not immediately respond to Hayes's letter, so in early 2014 Hayes filed two actions against State Farm in Oklahoma state court-the one at issue here, a petition for the appointment of an umpire, and a second case for breach of contract, bad faith, and negligence.[1] State Farm timely removed both cases to federal district court on the basis of diversity jurisdiction.

         State Farm eventually named its appraiser, but the parties' appraisers were unable to agree on an umpire, so the district court appointed one at Hayes's request. The district court then administratively closed the case, but reserved the parties' right to reopen the case at a later date if needed.[2]

         Both parties participated in the appraisal process, which resulted in a unanimous award in the amount of $347, 254. Hayes again reopened the case and moved to confirm the appraisal award. Before the district court acted on Hayes's motion, however, State Farm paid the balance of the award. And, in a letter accompanying payment, State Farm stated, "We are making this payment in accordance with the Businessowners Coverage Form, CMP-4100 loss settlement provisions. . . . Please be advised State Farm is not waiving any of the policy coverages, limitations, exclusions or provisions, all of which are specifically reserved." App. Vol. 1 at 160. Hayes accepted the payment without reservation.

         Separately, State Farm objected to confirmation, contending its payment settled any dispute over the amount of loss. In addition, State Farm asserted confirmation would be improper in any event because under Oklahoma law, an appraisal award is not binding on the party who did not initiate the appraisal process. Over State Farm's objection, the district court initially confirmed the award and entered judgment in favor of Hayes. The court reasoned that although the award was not binding on State Farm (because it did not initiate the process), State Farm's payment conclusively fixed the amount of loss. And "[b]ecause that amount is entitled to the same effect as a judgment, some judicial endorsement is warranted." App. Vol. 1 at 211.

         Armed with a judgment in its favor, Hayes filed: (1) a motion to amend judgment to include prejudgment interest at the statutory rate of 15%; (2) a motion for $16, 620 in attorney's fees under the Oklahoma Insurance Code's prevailing party provision; and (3) a bill of costs in the amount of $225. For its part, State Farm moved to vacate or amend the judgment under Rules 59(e) and 60(b). State Farm argued the payment and acceptance of the appraisal award was a consummated settlement, abdicating the need for confirmation and judgment.

         Construing State Farm's motion under Rule 59(e), the district court agreed with State Farm and vacated the earlier judgment. The court again acknowledged the appraisal award was not binding on State Farm, but this time it deemed State Farm's voluntary payment "an offer of settlement which was accepted by [Hayes] when it accepted the check." App. Vol. 2 at 189. Because the parties agreed to settle their dispute over the amount of loss, there was no final determination of the parties' rights necessitating the entry of judgment. As such, the district court vacated the order confirming the appraisal award and the judgment and struck Hayes's pending motions for interest, fees, and costs as moot. Hayes timely appealed the court's order.[3]

         II. Analysis

         Hayes challenges the district court's order vacating judgment on both procedural and substantive grounds. In addition, Hayes seeks a determination that it is the prevailing party under the Oklahoma Insurance Code, entitling it to prejudgment interest, attorney's fees, and costs. Before reaching the merits of Hayes's appeal, however, we must address State Farm's contention that we lack appellate jurisdiction because the district court eliminated the only final appealable order when it vacated its earlier judgment.

         A. Appellate Jurisdiction

         State Farm argues that after the district court vacated the judgment, the case returned to its administratively closed status, and an administrative closing order is not an appealable order. We disagree with State Farm's assessment of the finality of the district court's order vacating judgment.

         We have jurisdiction over "final decisions of the district courts of the United States." 28 U.S.C. § 1291. A "final decision" is ordinarily one that "ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Catlin v. United States, 324 U.S. 229, 233 (1945). "[P]ut differently, one by which the district court 'disassociates itself from a case.'" McClendon v. City of Albuquerque, 630 F.3d 1288, 1292 (10th Cir. 2011) (quoting Swint v. Chambers Cty. Comm'n, 514 U.S. 35, 42 (1995)).

         It is true that orders granting relief under Federal Rules of Civil Procedure 59 and 60(b) are generally not final decisions. Id. at 1294. They are not final-and, therefore, not immediately appealable-because "they set aside or undo a judgment and so settle nothing with finality except the fact that more litigation is on the way." Id.; see also 15B Charles Alan Wright, Arthur R. Miller et al., Federal Practice & Procedure § 3916 (3d ed. & Apr. 2016 Update) ("An order that vacates a judgment and sets the stage for further trial court proceedings is not final.").

         But when a ruling resolves and ends the litigation at the district court level, that decision is sufficiently final to maintain an immediate appeal. As we said in McClendon, "To be a final decision in the relevant sense for § 1291, then, it is generally not enough that a decision might seem at one point to 'irretrievably decide' the scope and duration of litigation in the district court; usually it must end that litigation." 630 F.3d at 1295. And this familiar principle applies with equal force to an order vacating judgment that effectively ends the litigation. See Stubblefield v. Windsor Capital Grp., 74 F.3d 990, 995 (10th Cir. 1996) (quoting 7 J. Moore, Federal Practice ¶ 60.30[3], p. 345) (construing Rule 60(b) and observing "as in every other case, such jurisdiction is lacking unless the order granting the Rule 60(b) motion was a 'final decision[] of the district court[]' within the meaning of 28 U.S.C. § 1291 . . . ." (emphasis added)).[4]

         Further, this principle holds notwithstanding the absence of a separate Rule 58 judgment. "Although the absence of a Rule 58 judgment extends the time for appeal . . . a Rule 58 judgment is not necessary for this court to have appellate jurisdiction." Martinez v. City of Chicago, 499 F.3d 721, 726 (7th Cir. 2007); see also Taumoepeau v. Mfrs. & Traders Tr. Co. (In re Taumoepeau), 523 F.3d 1213, 1218 n.5 (10th Cir. 2008); Clough v. Rush, 959 F.2d 182, 185 (10th Cir. 1992). In other words, the losing party can appeal "before the entry of the Rule 58 judgment order if though not embodied in the separate document that Rule 58 requires" the decision is final within the meaning of § 1291. Martinez, 499 F.3d at 726.

         Here, the district court's order vacating judgment (and striking Hayes's pending motions) ended the litigation and effectively disassociated the district court from the case. The district court appointed an umpire as requested, the parties completed the appraisal process, and the court concluded that State Farm's payment of the appraisal award settled any dispute over the amount of loss. Other ...


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