Source: http://openjurist.org/996/f2d/928
Timestamp: 2013-12-11 13:59:57
Document Index: 110671756

Matched Legal Cases: ['§ 1367', '§ 500', '§ 1332', '§ 500', '§ 1291', '§ 1332', '§ 1332']

996 F2d 928 Krueger v. S Cartwright | OpenJurist
996 F. 2d 928 - Krueger v. S Cartwright	Home996 f2d 928 krueger v. s cartwright
996 F2d 928 Krueger v. S Cartwright 996 F.2d 928
26 Fed.R.Serv.3d 214
Patricia M. KRUEGER, Plaintiff-Appellee,andAmerican States Insurance Company, Intervening Plaintiff-Appellant,v.James S. CARTWRIGHT, Defendant-Appellee.
No. 92-2433.
Argued Dec. 2, 1992.Decided June 24, 1993.
Bruce C. Conybeare, John C. Johnson (argued), H. Kevin Haight, St. Joseph, MI, for Patricia M. Krueger.
James M. Straub (argued), John M. Donahue, Straub, Seaman & Allen, St. Joseph, MI, for American States Ins. Co.
This diversity case requires us to examine joinder under Federal Rule of Civil Procedure 19 in light of the recently enacted supplemental jurisdiction statute, 28 U.S.C. § 1367. The facts, briefly stated, are these. Patricia Krueger, a Michigan resident, was injured when the car in which she was a passenger left the road in Pleasant Township, Indiana, struck a telephone pole, and rolled over. The driver and owner of the car was James Cartwright, an Indiana resident. At the time of the accident, Ms. Krueger was insured under a Michigan no-fault insurance policy issued by American States Insurance Company, which is incorporated in Indiana, the state of its principal place of business. Pursuant to the Michigan No-Fault Act, Mich.Comp.Laws § 500.3101 et seq. (1991), and the terms of the insurance contract, American States paid to Ms. Krueger certain first party economic loss benefits totalling $19,268.25. These benefits covered medical expenses, lost wages, and replacement services.
On November 26, 1991, Ms. Krueger sued Cartwright in federal court in Indiana, claiming damages for her non-economic losses under Michigan law as well as for economic losses in excess of those compensable under that state's No-Fault Act. Federal jurisdiction was predicated on diversity of citizenship, 28 U.S.C. § 1332. The plaintiff reached a settlement agreement with Cartwright and his insurance carrier, State Farm Insurance Company, for $75,000 on December 20. American States learned of the proposed settlement and notified the plaintiff's counsel that it intended to assert a statutory lien, pursuant to Mich.Comp.Laws § 500.3116, against any recovery for the amount of no-fault benefits American States had paid, or would in the future pay, to Ms. Krueger.1
On January 24, 1992, Ms. Krueger filed a motion asking the district court to approve her settlement with Cartwright and to reject her insurer's lien, asserting that the settlement covered only non-economic losses and specifically excluded any claim for economic loss damages compensable under the Michigan No-Fault Act. On March 11, American States filed a motion requesting the district court to join it as a party-plaintiff under Federal Rule of Civil Procedure 19(a) and to validate its lien in the amount of $19,268.25. According to the company, it was subrogated to the rights of its insured by dint of the no-fault benefits paid to her,2 and was entitled to reimbursement from any recovery because the Release and Settlement Agreement between Ms. Krueger and Cartwright covered economic as well as non-economic losses. American States also asserted an independent state claim against Cartwright for the amount of benefits previously paid to Ms. Krueger.
After a motion hearing on April 17, the district court ruled that the settlement agreement expressly covered only non-economic damages and was otherwise valid. A month later, the court issued an order granting American States' motion to intervene but denying the validity of its lien, granting Ms. Krueger's motion to approve the consent judgment in the amount of $75,000, and dismissing American States' state claim against Cartwright for want of jurisdiction. A judgment dismissing the case was entered on May 19. American States filed a timely appeal, and we have jurisdiction based on 28 U.S.C. § 1291.
This case begins and ends with the issue of jurisdiction. Courts in the federal system are obliged to police the statutory and constitutional limitations on their subject matter jurisdiction. Kanzelberger v. Kanzelberger, 782 F.2d 774, 777 (7th Cir.1986). "An appellate federal court must satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review." Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct. 162, 165, 79 L.Ed. 338 (1934). When it appears from the record that diversity jurisdiction under 28 U.S.C. § 1332 may have been lacking, it is the duty of the court of appeals to raise and consider the issue sua sponte. See id.; Hiley v. United States, 807 F.2d 623, 626 (7th Cir.1986). In so doing, we assess diversity of citizenship at the time the complaint is filed, Freeport-McMoRAN, Inc. v. KK N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 860, 112 L.Ed.2d 951 (1991) (per curiam); Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 549, 6 L.Ed. 154 (1824); American National Bank and Trust Company of Chicago v. Bailey, 750 F.2d 577, 582 (7th Cir.1984), cert. denied, 471 U.S. 1100, 105 S.Ct. 2324, 85 L.Ed.2d 842 (1985), confining our inquiry to the citizenship of the named parties. F. & H.R. Farman-Farmaian Consulting Engineers Firm v. Harza Engineering Company, 882 F.2d 281, 284 (7th Cir.1989), cert. denied, 497 U.S. 1038, 110 S.Ct. 3301, 111 L.Ed.2d 809 (1990).
Under the rule of complete diversity, if there are residents of the same state on both sides of a lawsuit, the suit cannot be maintained under the diversity jurisdiction even when there is also a nonresident party. Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806). See also Owen Equipment and Erection Company v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402, 57 L.Ed.2d 274 (1978); City of Indianapolis v. Chase National Bank of City of New York, 314 U.S. 63, 69, 62 S.Ct. 15, 17, 86 L.Ed. 47 (1941). This rule applies fully to parties joined under Rule 19. Freeman v. Northwest Acceptance Corporation, 754 F.2d 553, 555 (5th Cir.1985). Thus, in a diversity case, while the nature of the interest sought to be enforced is determined by state substantive law, Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 822, 82 L.Ed. 1188 (1938), the issues of joinder and whether or not the court should proceed in the absence of an interested party are matters of federal law. Provident Tradesmens Bank & Trust Company v. Patterson, 390 U.S. 102, 125 n. 22, 88 S.Ct. 733, 746 n. 22, 19 L.Ed.2d 936 (1968).
Under the general diversity statute, a corporation such as American States is deemed to be a citizen of any state in which it has been incorporated and of the state where it has its principal place of business. 28 U.S.C. § 1332(c)(1). This circuit defines principal place of business as the place where the corporation has its nerve center. Kanzelberger, 782 F.2d at 777. In its brief to this court, as wel