NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with
Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Argued December 3, 2010
Decided January 14, 2011
Before
JOEL M. FLAUM, Circuit Judge
ILANA DIAMOND ROVNER, Circuit Judge
TERENCE T. EVANS, Circuit Judge
No. 10‐2044 Appeal from the United States District
Court for the Southern District of
FRONTIER INSURANCE COMPANY Indiana, Indianapolis Division.
IN REHABILITATION,
Plaintiff‐Appellee, No. 1:08‐cv‐00531
v. Sarah Evans Barker,
Judge.
J. ROE HITCHCOCK, et al,
Defendants‐Appellants.
O R D E R
Frontier Insurance Company moved for summary judgment seeking specific
performance and damages against J. Roe Hitchcock, Terry Whitesell, and Timothy Durham
(Indemnitors) to recover on a General Agreement of Indemnity (GAI) the Indemnitors
executed in favor of Frontier. The district judge granted Frontier’s motion with respect to
the specific performance claim finding that “a final judgment on the claim for specific
performance be made under Fed. R. Civ. P. 54(b), there being no just reason for delay.”
Because we find that the requirements of Rule 54(b) have not been met, we dismiss this
No. 10‐2044 Page 2
appeal for lack of jurisdiction.1
In September 1999, the predecessor of CT Acquisition Corp. (CT) purchased Evans
Trailers and John Evans Sales Co., Inc. (Evans Company) under a Stock Purchase
Agreement. The Indemnitors were the principals of CT. The principals of the Evans
Company included Thomas Spencer, Curtis Spencer, and Cameron Evans (the Spencers).
The consideration CT gave the Evans Company for the stock included a promissory
note in the amount of $1.2 million. The Stock Purchase Agreement required that Frontier
secure it with a business buy‐out bond issued in favor of the Spencers. In December 1999,
the parties issued a Surety Bond in favor of the Spencers for $1.2 million. The Surety Bond
provides that “in the event of a default under the [Stock Purchase] Agreement, [Frontier]
shall become liable for the immediate payment to [the Spencers] of a specific sum equal to
the total of all amounts due or to become due under the Agreement which have not been
paid to [the Spencers].”
Frontier required the Indemnitors, as principals of CT, to sign a GAI in favor of
Frontier before issuing the Surety Bond. The relevant sections of the GAI provide that:
1) At all times to indemnify and save the Company free and
harmless of any and all losses, damages, costs and expenses of
whatever kind or nature by reason of the execution of any of
the said bonds including unpaid premiums of the Company.
. . . .
3) Upon written demand from the Company, to deposit with
the Company funds to meet all its liability under said bond or
bonds promptly on request and before it may be required to
make any payment thereunder and that any voucher or other
evidence of payment by the Company of any such loss,
damage, costs and expense shall be prima facie evidence of the
fact and amount of the Undersigned’s liability to the Company
under this Agreement.
1
Two days ago, on January 12, 2011, Frontier filed a “Notice of Entry Pursuant to Circuit Rule
57ʺ indicating that the district court (apparently the case has been reassigned from Judge Barker to
Judge Pratt) is “inclined” to grant a motion to modify the judgment. We have not yet asked the
appellants to state their position on the point raised in the notice. This order, however, moots the matter
as the case will now return to the district court for further proceedings on all issues.
No. 10‐2044 Page 3
Several months later, CT failed and was in default on its obligations under the Stock
Purchase Agreement and promissory note. Furthermore, on October 15, 2001, the Supreme
Court for the State of New York entered an order of rehabilitation against Frontier. Frontier
remains in rehabilitation at this time.
As a result of CT’s default, on September 13, 2002, and despite an injunction in the
order of rehabilitation, the Spencers filed suit against Frontier in the state court of South
Carolina seeking recovery under the Surety Bond. Frontier removed the case to federal
court. The South Carolina district court stayed the Spencer suit, citing the continuing
rehabilitation of Frontier and the Burford abstention doctrine. Burford v. Sun Oil Co.,
319 U.S.
315 (1943). In the spring of 2004, Frontier made a written demand to the Indemnitors under
section 3 of the GAI that they deposit collateral in the amount of $1.2 million to be held by
Frontier as security against any loss, damage, cost or expense Frontier might incur on the
Surety Bond. The Indemnitors refused to comply.
Frontier then brought an action against the Indemnitors in the Southern District of
Indiana in 2004. Frontier asserted that the Indemnitors had an obligation under section 3 of
the GAI to deposit funds to meet its possible liability to the Spencers on the Surety Bond.
By the time the 2004 case was tried on December 22, 2005, the judge in the South Carolina
Spencer suit had lifted the stay, allowing the Spencers to proceed against Frontier on the
Surety Bond, but the case had not been resolved and no liability of Frontier to the Spencers
had been established. In the Southern District of Indiana, then‐district court Judge Tinder
held that the obligation of the Indemnitors to make a deposit under section 3 had not yet
been triggered. In other words, the claim was not yet ripe.
On March 31, 2006, the United States District Court for the District of South Carolina
entered a judgment in favor of the Spencers and against Frontier for $1,559,256.78
($1,328,895 in principal and accrued interest and $230,361.78 in attorney’s fees and costs).
The United States Court of Appeals for the Fourth Circuit affirmed the judgment against
Frontier on August 26, 2008.
On April 23, 2008 Frontier filed this action against the Indemnitors arguing that the
2004 case was now ripe. On March 30, 2010, the new district judge assigned to the case
agreed and entered her order on the parties’ cross‐motions for summary judgment, granting
Frontier’s motion for summary judgment with respect to its claim for specific performance
of the Indemnitors’ obligations to deposit funds. The judge found that the entry of
judgment in the Spencer action created a mature liability which triggered the Indemnitors’
obligation to deposit collateral.
No. 10‐2044 Page 4
The judge’s order states:
A judgment of specific performance in favor of Frontier and
against the defendants will be entered consistent with this
order. Further, the court directs that a final judgment on the
claim for specific performance be made under Fed. R. Civ. P
54(b), there being no just reason for delay.
The judge has not, however, determined how much money the Indemnitors must deposit.
Moreover, the judge retained jurisdiction to address the disposition of any funds deposited
with the court pursuant to its judgment of specific performance and to further adjudicate
the remaining claim of Frontier for indemnity damages. The Indemnitors now appeal.
While the judge clearly used the appropriate language to grant a final order under
Rule 54(b), we do not have jurisdiction to hear the Indemnitors’ appeal at this time. This
court has jurisdiction over appeals from a district judge’s final decision under
28 U.S.C. §
1291. “Generally, an order constitutes a final decision if it ends the litigation and leaves
nothing to be decided in the district court.” United States v. Ettrick Wood Products, Inc.,
916
F.2d 1211, 1216 (7th Cir. 1990). In this case, the judge unquestionably entered an order
granting “final judgment on the claim of specific performance be made under Fed. R. Civ. P.
54(b), there being no just reason for delay.” But the judge did not determine how much
money the Indemnitors must deposit into the account.
The Supreme Court has held that “it is obvious that a final judgment for money
must, at least, determine, or specify the means for determining, the amount” to be awarded.
United States v. F. & M. Schaefer Brewing Co.,
356 U.S. 227, 233 (1958). In Kerr‐McGee Chemical
Corp. v. Lefton Iron & Metal Co., we found that “[r]ule 54(b) does not permit a district court to
send issues of liability to the court of appeals while the amount of damages remains
unresolved.”
570 F.3d 856, 857 (7th Cir. 2009) (citing Liberty Mutual Insurance Co. v. Wetzel,
424 U.S. 737 (1976)); see also Horn v. Transcon Lines, Inc.,
898 F.2d 589, 591 (7th Cir. 1990)
(“Judgments must award relief. . . . A document saying that judgment is entered, but not
saying who is entitled to what from whom, is ineffectual.”).
The Indemnitors argue that Liberty Mutual should not apply here because the issue is
specific performance and not money damages. But in this case that distinction does not
make sense. First, the specific performance here is depositing money into an account to
meet Frontier’s liability on a bond executed in reliance of the GAI. There is no reason to,
and the Indemnitors cite no cases counseling us to, draw a distinction between money
damages and specific performance that requires one party to deposit money into an account
for the other party. Schlehan v. Olympic Worldwide Communications (In re Martin‐Trigona),
763
F.2d 135, 138‐39 (2nd Cir. 1985) (dismissing an appeal of an order granting specific
No. 10‐2044 Page 5
performance—placing proceeds of the sale of real property into an escrow account—but
retaining jurisdiction to determine distribution and other issues). Moreover, the judge did
not determine whether the specific performance she ordered includes pre‐ or post‐judgment
interest. Osterneck v. Ernst & Whinney,
489 U.S. 169, 177 (1989) (quantification of damages
must be completed before the decision is final; thus a district court’s failure to decide
whether to add pre‐judgment interest prevents an appeal). The judge also did not
determine whether the amount to be deposited would be equal to the original judgment
from the Spencer suit or the amount determined after Frontier’s trek through rehabilitation
is completed.
Second, in Horn we added that the principle in Liberty Mutual also applies when
disputes about insurance are the source of the uncertainty about who owes how much
money to whom. 898 F.2d at 591. While this case is not about insurance, but rather an
indemnity agreement, the judge neither determined how much money the Indemnitors
have to deposit into the account, nor whether pre‐ or post‐judgment interest applies. As
with the insurance in dispute in Horn, Liberty Mutual applies to the indemnification
agreement under the GAI.
Furthermore, in Kerr‐McGee we held that just because “a judgment ‘looks final’ does
not make it final and appealable, if the district judge plans to take up additional issues.”
570
F.3d at 857 (emphasis in original). The district court was clear that it wanted to retain
jurisdiction to “address the disposition of any funds received for deposit with the court
under the judgment of specific performance.” Therefore, the judge has not completely
disposed of the issue, and under Kerr‐McGee the judgment is not final and cannot now be
appealed.
Until the judge has determined the amount that the Indemnitors must deposit into
the account and has completely finalized all issues under the specific performance order,
our precedent dictates that the order is not appealable. Accordingly, at this time we do not
reach the issue of whether the Indemnitors must deposit money into the account now or
after Frontier has paid the Spencers. We do note, however, and as Judge Tinder noted in the
2004 case, the convoluted language of the GAI suggests that the Indemnitors must pay
Frontier only after Frontier has actually paid the Spencers.
For these reasons, the appeal is DISMISSED for want of jurisdiction.
