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Sammons v. Economou

United States Court of Appeals, Fifth Circuit

October 10, 2019

GEORGE ECONOMOU, Chairman of the Board and CEO for Dryships, Incorporated; DRYSHIPS, INCORPORATED, A Corporation Incorporated, Defendants - Appellees

          Appeal from the United States District Court for the Western District of Texas

          Before DAVIS, GRAVES, and HIGGINSON, Circuit Judges.


         This case involves the appeal of two district court orders. The first requires that appellant Michael Sammons pay $26, 726 in costs under Federal Rule of Civil Procedure 41(d), [1] and the second administratively closes the case pending such payment. Because these orders are not final judgments, they do not fall within any exception to the final judgment rule, and mandamus relief is inappropriate in this case, we DISMISS for lack of jurisdiction.


         On July 3, 2017, appellant Michael Sammons filed a complaint in the High Court of the Republic of the Marshall Islands (RMI court) asserting direct claims against appellees for breach of fiduciary duties, fraud, and unjust enrichment, as well as a derivative claim on behalf of DryShips, Inc. against George Economou. On February 2, 2018, the RMI court stated that "it was inclined to grant [appellees'] motions to dismiss." Before the motions were granted, however, Mr. Sammons filed "Plaintiff's Motion for Voluntary Dissal (sic) Without Prejudice," which amounted to a Federal Rule of Civil Procedure 41(a)(1)(A) notice of dismissal without prejudice. The RMI court acknowledged the dismissal but found that Mr. Sammons engaged in "gamesmanship" and "wasted the Court's time and resources." Appellants then filed this action in the Western District of Texas on February 27, 2018 based on similar allegations. On March 14, 2018, Mr. Economou and DryShips, Inc. moved for reimbursement of costs incurred in the action before the RMI court pursuant to Fed.R.Civ.P. 41(d) and a stay of the case pending payment.[2] The district court granted the costs motion in part and administratively closed the case pending payment, prompting this appeal.


         Appellants urge three separate grounds for jurisdiction. First, that this is a direct appeal from a final judgment; second, that the collateral order doctrine should apply; and third, that a writ of mandamus is appropriate. We address each in turn.

         Direct Appeal from a Final Judgment

         The appellants first allege that this is a direct appeal from a final judgment because "[a] case which has been 'administratively closed' . . . pending occurrence of an event which will never occur . . . is the functional equivalent of a dismissal over which an appellate court can exercise review." Under 28 U.S.C. § 1291, "a final judgment is normally deemed not to have occurred until there has been a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment." Henry v. Lake Charles Am. Press, L.L.C., 566 F.3d 164, 171 (5th Cir. 2009) (cleaned up). "We have held that . . . an administrative closure is the functional equivalent of a stay and a stay will not support appellate jurisdiction under 28 U.S.C. § 1291." Int'l Ass'n of Machinists & Aerospace Workers Local Lodge 2121 AFL-CIO v. Goodrich Corp., 410 F.3d 204, 209 (5th Cir. 2005) (citing Mire v. Full Spectrum Lending, Inc., 389 F.3d 163, 167 (5th Cir. 2004)). Since the district court has yet to address the merits of appellants' claims, the orders below do not amount to a final judgment in the case.

         Collateral Order Doctrine

         Appellants also invoke the collateral order doctrine as a basis for jurisdiction. We have jurisdiction under 28 U.S.C. § 1291 pursuant to the collateral order doctrine when an order: (1) "conclusively determine[s] the disputed question;" (2) "resolve[s] an important issue completely separate from the merits of the action;" and (3) is "effectively unreviewable on appeal from a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 468 (1978). The orders at issue in this case fail to meet the third requirement.

         We have previously held that other, similar interim fee orders are not effectively unreviewable following a final judgment. See, e.g., Netsphere, Inc. v. Baron, 799 F.3d 327, 335 (5th Cir. 2015) (receiver fees); Campanioni v. Barr, 962 F.2d 461, 463 (5th Cir. 1992) (Criminal Justice Act fees); Ruiz v. Estelle, 609 F.2d 118, 119 (5th Cir. 1980) (attorneys' fees). This is so because the recipients of the fees can pay them back if the appellants win their appeal following a final judgment. See Netsphere, Inc., 799 F.3d at 336 ("[T]here are no allegations-and certainly no proof-that the receiver or its counsel would be unable to pay back the awards if [appellant] prevails.").[3]

         There are at least two exceptions to this pre-final judgment fee rule. First, a pre-final judgment fee award is reviewable if "mere payment of the fees would make them unrecoverable." Netsphere, Inc., 799 F.3d at 335-36; see S.E.C. v. Forex Asset Mgmt. L.L.C., 242 F.3d 325, 330 (5th Cir. 2001). For example, in Forex Asset Mgmt. L.L.C., we found that a decision by the district court to approve a receiver's distribution plan was reviewable because "the assets from the receivership [would] be distributed, and likely unrecoverable, long before the action . . . [would be] subject to appellate review." 242 F.3d at 330. Here, there is no allegation that the costs awarded will be unrecoverable upon successful ...

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