First Circuit Holds That Declaratory Judgment Is Not Final and Appealable Until A Declaration of Rights Is Entered

In WM Capital Partners 53, LLC v. Barreras, Inc., No. 19-1364 (1st Cir. Sept. 22, 2020), the First Circuit dismisses the appeal of a declaratory judgment where summary judgment was granted, but the district court had not yet entered a declaration.

“Plaintiff-appellee WM Capital Partners 53, LLC (‘WM Capital’) filed this diversity action seeking a declaratory judgment specifying its property rights in a commercial complex in San Juan, Puerto Rico. The district court granted WM Capital’s motion for summary judgment, denied a cross-motion for summary judgment filed by defendant-appellant Barreras, Inc., directed WM Capital to ‘submit a proposed declaration for the Court’s consideration,’ and instructed the Clerk of Court to ‘enter judgment as to all defendants.’ . . . . Pursuant to that instruction, the Clerk of Court issued an order captioned ‘JUDGMENT’ the day after the Opinion issued – and before WM Capital submitted its proposed declaration. The Judgment stated that, ‘pursuant to the Court’s Opinion and Order, . . . [j]udgment is HEREBY ENTERED as to all defendants in favor of plaintiff.’ The same day, Barreras filed a notice of appeal. WM Capital subsequently submitted its proposed declaration, and Barreras filed objections to it. However, the district court declined to take further action and stayed the proceedings pending the outcome of this appeal.”

The First Circuit holds that despite the entry of a final judgment in form, the absence of a declaration renders the judgment non-final. “If a district court chooses to exercise its power pursuant to the [Declaratory Judgment Act], a decision granting summary judgment for a party without an accompanying order declaring the specific rights of the parties will not constitute a ‘final decision’ in declaratory judgment actions.” Here, the district court failed to “address[] whether subrogation entitled WM Capital to the specific rights it sought in its complaint, reiterated in its motion for summary judgment, and set forth explicitly in its proposed declaratory judgment.” Even though the judge’s order and clerk’s entry of judgment “would signify that a final judgment had been reached …  the court’s instruction and nomenclature do not transform the Opinion and Judgment into a final, appealable decision.”

In substance, the First Circuit observes, the district court was not done with the case when judgment was entered. “[T]he district court clearly demonstrated its intent to take further action by directing WM Capital to file a proposed declaration. Consistent with that intent, the parties continued to submit filings to the district court, and the court’s decision to hold those motions in abeyance pending disposition of this appeal underscores that it did not view the Opinion and Judgment from which Barreras appeals as a final declaratory judgment.”