In Allis-Chalmers the court stressed that certification should be the exception rather than the rule, and delineated illustrative factors governing the trial court's discretion in certifying a judgment as final under 54(b). The court ruled: In the absence of unusual or harsh circumstances, 14 we believe that the presence of a counterclaim, which could result in a set-off against any amounts due and owing to the plaintiff, weighs heavily against the grant of 54(b) certification.
Appellee subcontractor entered into several contracts with appellant contractor for work on a government project. Appellant refused to pay, and appellee brought suit alleging fraud and misrepresentation that made appellee incur overruns. Appellant, on the other hand, counterclaimed for costs due to appellee’s non-performance. The trial court found in appellee's favor, order appellant to pay damages, and certified its judgment as a final order under Fed. R. Civ. P. 54(b). Appellant challenged the trial court's final judgment ruling, arguing that it was improper to certify its decision, since it had a counterclaim pending against appellee.
Did the trial court improperly certify the judgment as final under Rule 54(b) due to the presence of appellant’s coounterclaim?
The court held that under court precedent, when there was a counterclaim, that could setoff any amounts owed to the other party, it weighed heavily against final certification under R. 54(b). The court determined that it was improper for the trial court to certify its ruling for final judgment solely because it was unfair that appellee would be without the funds, while appellant could earn interest on the amount owed. The court reversed the trial court, and remanded for the trial court to vacate its final judgment.