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Fireman's Fund Insurance Co. v. Joseph J. Biafore Inc.

decided: November 24, 1975.



Hastie, Van Dusen and Hunter, Circuit Judges.

Author: Van Dusen


VAN DUSEN, Circuit Judge.

This action is based on a May 19, 1965, General Indemnity Agreement entered into between the plaintiff-appellee, Fireman's Fund Insurance Company (Fireman's), and Bethlehem Concrete Corporation, as well as the defendants-appellants, Joseph and Helen Biafore, President and Secretary-Treasurer, respectively, of the corporate defendants-appellants, Joseph J. Biafore, Inc. and Bidi, Inc. Plaintiff executed certain performance, and labor and material, bonds as surety for Bethlehem Concrete Corporation, principal, in three construction contracts at the request of defendants and Bethlehem Concrete. The above agreement of May 19, 1965, indemnified plaintiff against all liability, loss, costs, damages, fees of attorneys and other expenses it might incur in consequence of the execution of said bonds.

Subsequent to entering into the agreement, plaintiff learned that Bethlehem Concrete was financially unsound. Plaintiff then set up reserves in the amount of $25,000 and, pursuant to the Indemnity Agreement, directed defendants to deposit a like sum. Defendants did not comply. Thereafter, on August 1, 1966, Bethlehem Concrete executed an assignment of certain accounts receivable and certain assets to plaintiff.

On August 9, 1966, plaintiff filed financing statements with the Secretary of the Commonwealth of Pennsylvania and the Recorder of Deeds of Northampton County. Thereafter, tax liens were filed against Bethlehem Concrete by the Commonwealth and by the Federal Government. Upon the filing of the federal tax lien, Bethlehem Concrete ceased performance of its contracts. Pursuant to its obligation under the Indemnity Agreement, defendants completed work contracted by Bethlehem Concrete under the above construction contracts.

On July 27, 1967, Bethlehem Concrete was adjudicated a bankrupt. At the bankruptcy proceedings, the referee entered an order invalidating plaintiff's security interest in the accounts receivable and equipment of Bethlehem Concrete by reason of its failure to perfect such security interest by properly filing a financing statement with the Prothonotary of Northampton County, rather than the Recorder of Deeds, as required by 12A P.S. § 9-401(1)(c). This order was affirmed by the district court, In the Matter of Bethlehem Concrete Corporation, 306 F. Supp. 1047 (E.D. Pa. 1969).

As a result of the failure of Bethlehem Concrete to perform its contracts and make payment for labor and materials, Fireman's paid claims in the amount of $45,868.70. Plaintiff commenced this diversity action against defendants to recover on the Indemnity Agreement in March 1973.

Fireman's motion for summary judgment was granted by the district court on November 1, 1974. The Memorandum and Order were silent as to the amount of damages, including interest, to be awarded plaintiff. See Fireman's Fund Insurance Co. v. Joseph J. Biafore, Inc., 385 F. Supp. 616 (E.D. Pa. 1974).*fn1 On February 5, 1975, the district court entered an order decreeing that plaintiff shall recover from defendants the sum of $60,839.97, consisting of $41,938.31 as principal and $18,901.66 as interest. Notice of appeal was filed with the district court on February 27, 1975. Thereafter plaintiff moved this court to dismiss the appeal.


Initially plaintiff contends that its motion to dismiss the appeal must be granted because the February 27, 1975, notice of appeal did not constitute a timely challenge to the November 1, 1974, district court order,*fn2 which plaintiff contends was a final order under 28 U.S.C. § 1291. The above-mentioned order contained this language:

". . . IT IS ORDERED that the plaintiff's motion for summary judgment is GRANTED with leave to counsel to submit such further order as may be required."

Because we have concluded that the November 1, 1974, order was not a final order under 28 U.S.C. § 1291 and that the district court order of February 5, 1975,*fn3 was a final, appealable order, we will deny the motion to dismiss the appeal.

Plaintiff contends that because a contract cause of action is the basis of the suit and only the computation of interest at 6% was involved, the calculation of the damages was only a matter of mathematical computation, citing 9 Moore's Federal Practice PP110.06-110.15 and cases such as Gillespie v. United States Steel Corp., 379 U.S. 148, 152, 13 L. Ed. 2d 199, 85 S. Ct. 308 (1964), and Pioche Mines Consolidated, Inc. v. Fidelity-Philadelphia Trust Co., 191 F.2d 399 (9th Cir. 1951). On the other hand, defendants rely on cases such as Cobbledick v. United States, 309 U.S. 323, 84 L. Ed. 783, 60 S. Ct. 540 (1940); Catlin v. United States, 324 U.S. 229, 89 L. Ed. 911, 65 S. Ct. 631 (1945); and City of Louisa v. Levi, 140 F.2d 512, 514 (6th Cir. 1944). The record shows that after entry of the November 1, 1974, judgment order, plaintiff filed a motion to enter judgment,*fn4 and such motion was opposed by defendants, who filed an answer and memorandum*fn5 regarding the amount of interest to which plaintiff was entitled. It was only after the submission of a reply*fn6 by plaintiff-appellee to defendants-appellants' memorandum that the district court entered the February 5, 1975, order determining that plaintiff shall recover a total of $60,839.97, consisting of ...

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