No Federal Appellate Jurisdiction Where District Court Decides Who Gets The Money But Not How Much

Richard Magley gave security interests to secure a number of loans. The Small Business Administration was guarantor of some of the loans, including two advanced by Cadleway Properties and Ossian Bank. The SBA removed the entire dispute to federal court. Cadleway and Ossian both claimed to be the beneficiary of a guaranty of a loan on a certain property. On summary judgment, the federal district court ruled that the bank was the beneficiary. The district court did not rule how much money, if anything, Ossian was entitled to receive.

The appellate court ruled that the dispute between Cadleway and Ossian was not “sufficiently discrete” to create an appealable interlocutory order. Here’s the court’s explanation:

. . . [T]he district judge has not specified who is entitled to what relief.
Cadleway did not begin this litigation in quest of a declaratory
judgment about ownership; it wants money from
Magley. So does the Bank. Does Magley owe any money
on this guaranty? The district court has not decided. It has
held so far that whatever Magley owes goes to the Bank
rather than Cadleway, but it has not decided whether
Magley owes even 1¢; for all we can tell, the lenders may
collect in full from other sources and never draw on the
guaranty . . . If Magley does owe something, the amount may be disputed
and another appeal will be required. That’s why
a decision that resolves a dispute about liability while
leaving relief to be determined cannot be appealed under
Rule 54(b).

The appeal was dismissed for lack of jurisdiction. The opinion also contains discussion about the propriety of continuing district court jurisdiction in view of SBA settlements, thus eliminating a federal question. Click here for the opinion, Cadleway Properties v. Ossian State Bank, No. 06-2033 (2/15/07).