Source: https://law.justia.com/cases/federal/appellate-courts/F2/558/417/165284/
Timestamp: 2018-11-17 17:03:54
Document Index: 751461321

Matched Legal Cases: ['§ 14', '§ 1442', '§ 1332', '§ 1266', '§ 1343', '§ 1983']

Geraldine Kroger, Administratrix of the Estate of James D.kroger, Deceased, Appellee, v. Owen Equipment & Erection Company, a Nebraska Corporation, Appellant, 558 F.2d 417 (8th Cir. 1977) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Eighth Circuit › 1977 › Geraldine Kroger, Administratrix of the Estate of James D.kroger, Deceased, Appellee, v. Owen Equipm...
Geraldine Kroger, Administratrix of the Estate of James D.kroger, Deceased, Appellee, v. Owen Equipment & Erection Company, a Nebraska Corporation, Appellant, 558 F.2d 417 (8th Cir. 1977)
US Court of Appeals for the Eighth Circuit - 558 F.2d 417 (8th Cir. 1977)
Submitted Nov. 10, 1976. Decided June 21, 1977. Rehearing and Rehearing En Banc Denied Aug. 16, 1977
The court and the plaintiff were taken by surprise because of defendant's pleadings. Plaintiff's amended complaint, filed on November 9, 1973, some two years prior to trial, had unequivocally charged that "Owen Equipment and Erection Co. is a Nebraska corporation with its principal place of business in Nebraska." Defendant had not denied this outright. It had utilized a qualified general denial. It "(a)dmit(ted) that Owen Equipment and Erection Company is a corporation organized and existing under the Laws of the State of Nebraska," and "(d)enie(d) each and every other allegation contained in said Amended Complaint * * * ." This form of answer was in violation of Fed. R. Civ. P. 8(b) which provides that "(w)hen a pleader intends in good faith to deny only a part or a qualification of an averment, he shall specify so much of it as is true and material and deny only the remainder."1 Thus, defendant's admission of part of an averment and denial of the balance in a qualified general denial clearly does not meet the requirements of the Rule quoted. Nor, as also required by Rule 8(b), does it fairly meet the substance of the averment denied.
The law in Nebraska is that an independent basis of jurisdiction need not exist in order for plaintiff to assert a claim against a third party defendant. See Union Bank & Trust Co. v. St. Paul Fire & Marine Ins. Co., 38 F.R.D. 486 (D. Neb. 1965); Olson v. United States, 38 F.R.D. 489 (D. Neb. 1965). Although this view was once the minority view, this Court believes it is correct.Properly read, United Mine Workers (v. Gibbs, 383 U.S. 715 (86 S. Ct. 1130, 16 L. Ed. 2d 218) (1966)), reemphasizes the fundamental principle that a federal court has jurisdictional power to adjudicate the whole case, i. e., all claims, state or federal, which derive from a common nucleus of operative facts . . . (S)ince there is jurisdictional power to hear the whole case, the question is one of trial court discretion whether to exercise that jurisdiction, considering all the factors of economy and convenience in the context of federalism. 3 Moore's Federal Practice § 14.27(1), 14-569 to 14-570.
Modern analysis starts with the landmark decision in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966).8 In this case, the plaintiff, a mining superintendent and hauling contractor, was prevented from the performance of his contract by a local union which had forcibly prevented the opening of the mine. Suit was brought in the federal court alleging violation of section 303 of the Labor Management Relations Act,9 to which was joined a state claim for malicious interference with contract rights. Plaintiff prevailed on both claims, but upon motion for judgment n. o. v. the federal claim was held non-actionable and judgment entered on the state claim, with affirmation by the Court of Appeals following.10
The Supreme Court affirmed the assumption of jurisdiction over the pendent state claim.11 The significance of the Gibbs case for our purposes lies in its discarding of the test established in Hurn v. Oursler, 289 U.S. 238, 246, 53 S. Ct. 586, 589, 77 L. Ed. 1148 (1933), for pendent jurisdiction, under which pendent jurisdiction was present when "two distinct grounds in support of a single cause of action12 (were) alleged, one only of which present(ed) a federal question," but not "where two separate and distinct causes of action (were) alleged, one only of which (was) federal in character." In place of the Hurn test, the Court held that pendent jurisdiction is present whenever the state and federal claims "derive from a common nucleus of operative fact" to the degree that a plaintiff would "ordinarily be expected to try them all in one judicial proceeding."13 If, the Court continued, the state claim is so related to the federal claim that there is "but one constitutional 'case'," there is power to exercise pendent jurisdiction and it is "unnecessarily grudging" to limit the availability of pendent jurisdiction more narrowly than is constitutionally required.14
Owen, as noted supra, was impleaded by OPPD as a third-party defendant pursuant to Fed. R. Civ. P. 14(a).15 The provisions of Rule 14(a) governing third-party practice are extremely broad, permitting the third-party defendant to assert against the plaintiff "any claim * * * arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff," and the plaintiff to assert against the third-party defendant "any claim * * * arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff."
A situation similar in principle and with similar results in the retention of jurisdiction is found in Murphy v. Kodz, 351 F.2d 163 (9th Cir. 1965). There the plaintiff's decedent was killed in a mid-air collision, plaintiff bringing action in state court against one Shupe and other parties. Mr. Shupe, alleging that he was an officer of the Forest Service acting in his official capacity at the time of the accident, had the case removed to the District Court, pursuant to 28 U.S.C. § 1442(a) (1). No head of federal jurisdiction was alleged as to the remaining defendants. The trial resulted in a judgment in favor of Shupe, but the jury was unable to agree on the liability of the other defendants. As to them, a new trial resulted in plaintiff's favor, whereupon defendants moved to remand the case to the state court, arguing that the federal court had lost further jurisdiction of the case upon entry of the judgment for Shupe, who was the sole party entitled to invoke that court's jurisdiction.
I do not believe that the holding in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966), can be said to authorize the exercise of jurisdiction over a claim made by a plaintiff against an impleaded third-party defendant without diversity between the parties. In Gibbs, the district court already possessed subject matter jurisdiction over a federal claim between the two parties, so it was appropriate and within the federal court's judicial power to resolve a state claim appended to the federal claim. Here, the threshold question is whether ancillary jurisdiction supports Kroger's claim even though she has no claim against Owen with an independent jurisdictional basis.
I believe that the Supreme Court's pronouncements in Aldinger v. Howard, 427 U.S. 1, 96 S. Ct. 2413, 49 L. Ed. 2d 276 (1976), and cases such as American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S. Ct. 534, 95 L. Ed. 702 (1951), require that we dismiss the case for want of jurisdiction.
From a purely factual point of view, it is one thing to authorize two parties, already present in federal court by virtue of a case over which the court has jurisdiction, to litigate in addition to their federal claim a state-law claim over which there is no independent basis of federal jurisdiction. But it is quite another thing to permit a plaintiff, who has asserted a claim against one defendant with respect to which there is federal jurisdiction, to implead an entirely different defendant on the basis of a state-law claim over which there is no independent basis of federal jurisdiction, simply because his claim against the first defendant and his claim against the second defendant "derive from a common nucleus of operative fact." (Gibbs, 383 U.S. at 725, 86 S. Ct. 1130). True, the same considerations of judicial economy would be served insofar as plaintiff's claims "are such that he would ordinarily be expected to try them all in one judicial proceeding . . . ." Ibid. But the addition of a completely new party would run counter to the well-established principle that federal courts, as opposed to state trial courts of general jurisdiction, are courts of limited jurisdiction marked out by Congress. We think there is much sense in the observation of Judge Sobeloff, writing for the Court of Appeals in Kenrose Mfg. Co. v. Fred Whitaker Co., 512 F.2d 890, 894 (CA 4 1972):
(427 U.S. at 14-15, 96 S. Ct. at 2420 (emphasis added).)The situation is the same here. That the same facts may have been involved in Kroger's claim against Owen as those in Kroger's claim against the Omaha Public Power District is not by itself sufficient basis for ancillary or pendent jurisdiction over the claim against Owen. Had Kroger wished to sue both Owen and the Power District in a single forum, she could have done so in a state court. See Fawvor v. Texaco, Inc., 546 F.2d 636, 640-41, 643 (5th Cir. 1977). Aldinger's reliance on Kenrose Mfg. Co. v. Fred Whitaker Co., supra, 512 F.2d 890, which also involved an attempt by a plaintiff in a diversity case to assert state law claims against a nondiverse third-party defendant is especially instructive.
Before it can be concluded that such jurisdiction exists, a federal court must satisfy itself not only that Art. III permits it, but that Congress in the statutes conferring jurisdiction has not expressly or by implication negated its existence. (Id. at 18, 96 S. Ct. at 2422.)
As Aldinger makes clear, 427 U.S. at 15-16, 96 S. Ct. 2413, United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966), explicates the federal courts' power under article III in the face of congressional silence. See also Comment, Aldinger v. Howard and Pendent Jurisdiction, 77 Colum. L. Rev. 127, 128-30, 140-42 (1977). Gibbs does not deal with the issue before us, for here the Congress expressly limits by statute, 28 U.S.C. § 1332, the parties to which diversity jurisdiction extends.
Since Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L. Ed. 435 (1806), it has been the rule that general diversity jurisdiction over a state law claim requires complete diversity between plaintiffs and defendants. The parties to this claim do not satisfy this requirement. Congress has commanded that diversity jurisdiction not extend to claims involving parties such as these. See Fawvor v. Texaco, Inc., supra, 546 F.2d at 638-39; Comment, supra, 77 Colum. L. Rev. at 147.41 As Judge Smith correctly observes, supra at 422 and 423 n. 25, citing Fawvor v. Texaco, Inc., supra, 546 F.2d 636, and Kenrose Mfg. Co. v. Fred Whitaker Co., supra, 512 F.2d 890, the majority of federal courts support the view that an independent basis of jurisdiction is necessary to support a plaintiff's action against a third-party defendant. It also appears that we are the first court of appeals to rule to the contrary. In addition to the cases cited by the majority, see Saalfrank v. O'Daniel, 533 F.2d 325 (6th Cir.), cert. denied sub nom. Saalfrank v. Parkview Mem. Hosp., 429 U.S. 922, 97 S. Ct. 319, 50 L. Ed. 2d 289 (1976); Rosario v. American Export-Isbrandtsen Lines, Inc., 531 F.2d 1227, 1233 & n.17 (3d Cir.), cert. denied sub nom. Rosario v. United States, 429 U.S. 857, 97 S. Ct. 156, 50 L. Ed. 2d 135 (1976). Thus, I would conclude that Congress did not intend that federal courts take jurisdiction over a plaintiff's claim against a third-party defendant, in the absence of independent jurisdictional grounds.
I agree with Judge Smith's critical comments relating to Owen's concealment of the facts concerning diversity until well into the trial. However, it is well settled that a party cannot by his conduct be precluded through laches, waiver, or estoppel from raising a lack of federal subject matter jurisdiction. See, e. g., American Fire & Cas. Co. v. Finn, 341 U.S. 6, 71 S. Ct. 534, 95 L. Ed. 702 (1951) (party who removed case to federal court, and successfully resisted plaintiff's attempts to have it remanded, can raise want of jurisdiction after verdict for plaintiff); Mitchell v. Maurer, 293 U.S. 237, 55 S. Ct. 162, 79 L. Ed. 338 (1934) (party never raised lack of jurisdiction in any court); Mansfield, C. & L. M. Ry. v. Swan, 111 U.S. 379, 4 S. Ct. 510, 28 L. Ed. 462 (1884) (same as Finn, supra) . That counsel for defendant played fast and loose with the court calls for sanctions by the court against the responsible parties, not the exercise of jurisdiction which the federal court does not otherwise possess. See Mansfield, C. & L. M. Ry. v. Swan, supra, 111 U.S. at 386-89, 4 S. Ct. 510; Basso v. Utah Power & Light Co., 495 F.2d 906, 910 (10th Cir. 1974); Page v. Wright, 116 F.2d 449, 454-55 (7th Cir. 1940).
In sum, while I disagree with the majority's disposition of this appeal, I emphatically agree that a drastic remedy is necessary to deter other litigants from engaging in concealment and delay in presenting known jurisdictional facts to the court by the party in possession of those facts in order to obtain an advantage in the conduct of litigation at the expense, not only of the opposing party, but of the court itself. Such conduct substantially hinders the proper and efficient administration of justice and wastes the time of judges, court personnel, and juries in the already overburdened federal courts. This dissenter suggests that such sanctions may be a more appropriate remedy for the abuse practiced in this case than opening the door to even more diversity cases than those already competing for judicial attention on the crowded dockets of the federal courts, particularly when state courts can dispose of all the state law claims involved in such cases. See Ayoub v. Helm's Express, Inc., 300 F. Supp. 473 (W.D. Pa. 1969).
See Kirby v. Turner-Day & Woolworth Handle Co., 50 F. Supp. 469, 470 (E.D. Tenn. 1943); 2A Moore's Federal Practice P 8.23, at 1828 (2d ed. 1975) (hereafter "Moore's "); 5 C. Wright & A. Miller, Federal Practice and Procedure § 1266, at 284 (1969) (hereafter "Wright & Miller ")
We cannot for a moment believe that defendant's counsel was denying in good faith that his client was a New Jersey corporation. We think the only fair interpretation of the pleading in this case is that the denial does not run to the allegation of defendant's citizenship. Therefore, that allegation must be deemed to be admitted. Fed. R. Civ. P. 8(d).
United Mine Workers v. Gibbs, 383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966)
Differentiations of many kinds may be made between the doctrines of ancillary and pendent jurisdiction. As to the utility thereof, see Aldinger v. Howard, 427 U.S. 1, 13, 96 S. Ct. 2413, 2419, 49 L. Ed. 2d 276 (1976):
The historical development of both of these doctrines, which had disparate origins, may be found in Comment, Pendent and Ancillary Jurisdiction: Towards a Synthesis of Two Doctrines, 22 U.C.L.A.L.Rev. 1263, 1265-70 (1975) (and cases and articles therein cited); Note, The Evolution and Scope of the Doctrine of Pendent Jurisdiction in the Federal Courts, 62 Colum. L. Rev. 1018 (1962); Note, Rule 14 Claims and Ancillary Jurisdiction, 57 Va. L. Rev. 265, 267-72 (1971).
For a discussion of Gibbs, see Note, UMW v. Gibbs and Pendent Jurisdiction, 81 Harv. L. Rev. 657 (1968)
This phraseology had caused much difficulty in the lower courts due to the metaphysical nature of "cause of action." See Gibbs, supra, 383 U.S. at 722-24, 86 S. Ct. 1130; Note, The Evolution and Scope of the Doctrine of Pendent Jurisdiction in the Federal Courts, supra note 7, at 1029-30. (Footnote ours.)
383 U.S. at 725, 86 S. Ct. at 1138
Id. at 725, 86 S. Ct. 1130
Fed. R. Civ. P. 82 provides:
See Revere Copper & Brass Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709 (5th Cir. 1970), but note comments thereon in Fawvor v. Texaco, Inc., 546 F.2d 636, 642 (5th Cir. 1977); Mayer Paving & Asphalt Co. v. General Dynamics Corp., 486 F.2d 763, 772 (7th Cir. 1973), cert. denied, 414 U.S. 1146, 94 S. Ct. 899, 39 L. Ed. 2d 102 (1974) (adopting the reasoning of the Fifth Circuit in Revere Copper) ; L & E Co. v. U. S. A. ex rel. Kaiser Gypsum Co., 351 F.2d 880, 882 (9th Cir. 1965)
See, e. g., Fawvor v. Texaco, Inc., supra note 18. But see, e. g., Morgan v. Serro Travel Trailer Co., 69 F.R.D. 697 (D. Kan. 1975) (holding that plaintiff, in appropriate cases, may assert a claim against third-party defendant without there being an independent basis of jurisdiction). The cases pro and con on whether independent jurisdictional grounds are required for plaintiff to assert a claim against third-party defendant are gathered in Fawvor, supra, 546 F.2d at 639 n. 7, and in Note, Rule 14(a) and Ancillary Jurisdiction: Plaintiff's Claim Against Non-Diverse Third-Party Defendant, 33 Wash. & Lee L.Rev. 796, 798-99 nn. 10-12 (1976)
But see L & E Co. v. U. S. A. ex rel. Kaiser Gypsum Co., 351 F.2d 880, 882 (9th Cir. 1965); Olson v. United States, 38 F.R.D. 489 (D. Neb. 1965); Myer v. Lyford, 2 F.R.D. 507 (M.D. Pa. 1942); Sklar v. Hayes, 1 F.R.D. 594, 596 (E.D. Pa. 1941)
383 U.S. at 726, 86 S. Ct. at 1139 (footnote omitted)
"Under the (Federal Rules of Civil Procedure), the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties, and remedies is strongly encouraged." Gibbs, supra, 383 U.S. at 724, 86 S. Ct. at 1138 (footnote omitted)
Owen contends that the recent Supreme Court decision, Aldinger v. Howard, 427 U.S. 1, 96 S. Ct. 2413, 49 L. Ed. 2d 276 (1976), supports its contention that the District Court was without power to exercise jurisdiction over Kroger's direct claim against it. We disagree.
Id. at 17-18 n. 12, 96 S. Ct. at 2422. The Aldinger court carefully limited its decision to the context of claims brought under 28 U.S.C. § 1343(3) and 42 U.S.C. § 1983:
Id. at 18, 96 S. Ct. at 2422 (emphasis added).
Aldinger, supra, 427 U.S. at 18, 96 S. Ct. at 2422
383 U.S. at 726, 86 S. Ct. at 1139
See Di Frischia v. New York Cent. R.R., 279 F.2d 141 (3d Cir. 1960); Klee v. Pittsburgh & W.Va. Ry., 22 F.R.D. 252 (W.D. Pa. 1958)
However, the instant case is governed by a different line of authority that is equally well recognized. In Young v. Handwork, 7 Cir., 1949, 179 F.2d 70, 16 A.L.R.2d 825, certiorari denied 1950, 339 U.S. 949, 70 S. Ct. 804, 805, 94 L. Ed. 1363, we have a similar state of facts, for after raising the question of lack of diversity in its answer the defendants omitted such question from their amended motion and in open court admitted the facts in plaintiff's complaint. Following determination by the court on the merits, the defendant once again attempted to raise the issue, but the court denied leave to file the amendment and the action was sustained by the court of appeals. Similarly, in the instant case the defendant had its opportunity to have the issue heard and to present its position but chose to admit the allegations of plaintiff's complaint. Thereafter it fully participated in the appropriate discovery and pretrial procedures preparatory to trial of the action on the merits. Having done so, a further attempt to amend its answer to return to its previous defense of lack of diversity could certainly not be made as of right. Allowance of such an amendment under the circumstances would be an abuse of discretion. Cf. Klee v. Pittsburgh & West Virginia Railway Co., D.C.W.D. Pa. 1958, 22 F.R.D. 252. A defendant may not play fast and loose with the judicial machinery and deceive the courts.
At the present time and throughout the history of the federal judicial system, it has been possible for either party to raise, or for the court on its motion to consider, a question of jurisdiction over the subject matter at any stage in the course of litigation. See, e. g., Mansfield, Coldwater & Lake Mich. Ry. v. Swan, 111 U.S. 379 (4 S. Ct. 510, 28 L. Ed. 462) (1884). Even the party who has invoked jurisdiction may subsequently challenge it if the result of a trial on the merits is unfavorable. See, e. g., American Fire and Cas. Co. v. Finn, 341 U.S. 6 (71 S. Ct. 534, 95 L. Ed. 702) (1951). And a wily defendant may conceal a known jurisdictional defect until the period of the statute of limitations has run, then obtain dismissal, and achieve total immunity from suit. Some decisions indicate that he may even do this by controverting jurisdictional facts previously alleged or admitted. E. g., Page v. Wright, 116 F.2d 449 (7th Cir. 1940) (Ramsey v. Mellon Nat'l Bank & Trust Co., 350 F.2d 874 (3d Cir. 1965)). But see Di Frischia v. New York Cent. R.R., 279 F.2d 141 (3d Cir. 1960).
Cardozo, A Ministry of Justice, 35 Harv. L. Rev. 113, 121 (1921).
Appellee relies also on Nepstad v. Lambert, 235 Minn. 1, 50 N.W.2d 614 (1951), citing Smith, Scope of the Business: The Borrowed Servant Problem, 38 Mich. L. Rev. 1222 (1940), commented upon in 28 Ohio St. L.J. 550, 553-57 (1967)
A congressional intent to negate pendent jurisdiction cannot be inferred from the majority of jurisdictional statutes, which are intended as affirmative grants of jurisdiction only. Some jurisdictional statutes, however, evince a congressional decision that certain claims should not be heard in federal court. The federal question and diversity statutes, in particular, require that the claims exceed $10,000, and, in the diversity statute, that the parties be of diverse citizenship. The policies which called for the exclusion of claims not meeting these requirements also seem to demand that they not be heard through the exercise of pendent jurisdiction. Since Congress excluded these claims from federal jurisdiction, their adjudication through pendent jurisdiction seems clearly to frustrate congressional intent. (77 Colum. L. Rev. at 147 (footnotes omitted).)