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Failure To Include “Magic Words” In Rule 54(b) Certified Order Not Necessarily Fatal

Under Civil Procedure Rule 54(b), a trial court “may enter a final judgment as to [fewer] than all the claims [ ] only if there is no just reason for delay and it is so determined in the judgment.” N.C. R. Civ. P. 54(b) (emphasis added).

Some opinions suggest that failing to include the “magic words” that there is “no just reason for delay” in the Rule 54(b) certification order renders the certification jurisdictionally defective. See Tridyn Indus., Inc. v. Am. Mut. Ins. Co., 296 N.C. 486, 490, 251 S.E.2d 443, 447 (1979) (“Rule 54(b) permits the trial judge by determining in such a judgment that ‘there is no just reason for delay’ to release it for immediate appeal before the litigation is complete as to all claims or all parties.”); Branch Banking & Tr. Co. v. Peacock Farm, Inc., 241 N.C. App. 213, 218, 772 S.E.2d 495, 499 (2015) (inclusion of appropriate language in Rule 54(b) “order itself” would have supported Rule 54(b) review), aff’d for the reason stated in the majority opinion, 368 N.C. 478, 478, 780 S.E.2d 553, 553 (2015) (per curiam); Brown v. Brown, 77 N.C. App. 206, 208, 334 S.E.2d 506, 508 (1985) (“Rule 54(b) expressly requires that this determination be stated in the judgment itself.”).

However, IO Moonwalkers, Inc. v. Banc of America Merchant Services, LLC (issued earlier this month) held that “a certification that expressly references Rule 54(b) is sufficient to confer jurisdiction if the ‘no just reason for delay’ language is omitted due to inadvertence.”  Judge Dietz relied on Oestreicher v. American National Stores, Inc., 290 N.C. 118, 129, 225 S.E.2d 797, 804–05 (1976), which states:

From a practical standpoint, it seems to us that justice requires that the appeal be allowed despite the fact that the trial judge failed to enter the words “there is no just reason for delay” in his judgment. This omission could have very well been an inadvertence on the part of the trial judge. He certainly intended that plaintiff be permitted to appeal, or otherwise he would not have entered the appeal entries on account of the language of Rule 54(b) and would have required plaintiff to seek certiorari.

Judge Dietz noted that the trial court’s order in IO Moonwalkers expressly referenced Rule 54(b). The transcript also indicated that the trial court “intended to make the necessary finding concerning ‘no just reason for delay’ but inadvertently failed to do so.”

In a concurring opinion, Judge Dillon expressed his view that the Rule 54 certification was inadequate under Peacock Farm.  He characterized the Oestreicher language as dicta because the Supreme Court ultimately exercised appellate jurisdiction “based on its own determination that the partial summary judgment order affected a substantial right”—and not Rule 54(b).

The theory behind Judge Dietz’s opinion is that form should not be elevated over substance. Because a trial court judge is not expected to be an appellate practice specialist, why should the inadvertent omission of “magic words” prevail when the intent to certify the case for immediate appellate review is clear?

But to Judge Dillon’s point, did the counter-charm philosophy prevail in Peacock Farm?

Which judge has the stronger argument? Let us know your thoughts in the comments below!

–Beth Scherer

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