Court Opinion

ID: 9002660
Source: CourtListenerOpinion
Date Created: 2022-11-27 13:18:15.132341+00
Date Added: 2024-06-11T17:11:14.049765
License: Public Domain

RALPH B. GUY, Jr., Circuit Judge,
concurring in part and dissenting in part.
I concur in the majority’s affirmance of the dismissal of the claims against the Cyb and accounting defendants.1 However, I respectfully dissent from the majority’s af-firmance of the district court’s decision to retain jurisdiction over the claims against the FOA defendants.
The district court retained jurisdiction over Taylor’s pendent state law claims for more than three months after he withdrew the claim that was the sole basis of federal jurisdiction. By the time Taylor withdrew his federal claim, the case had been on the docket for more than 18 months but had not proceeded beyond discovery. Since our precedents and the principles of federalism require that pendent state law claims be dismissed or remanded when the federal claims are dismissed before trial unless “overwhelming” interests in judicial economy are implicated, I would reverse the district court’s grant of summary judgment and remand the claims against the FOA defendants to state court.
The general rule is that a district court should dismiss pendent state law claims if the federal claims have been dismissed before trial. Gaff v. Federal Deposit Ins. Corp., 814 F.2d 311, 319 (6th Cir.1987); see also Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343, 350 n. 7, 108 S.Ct. 614, 619 n. 7, 98 L.Ed.2d 720 (1988) (recognizing that, in such cases, the balance of interests will usually point toward declining to exercise jurisdiction). However, we have stated that “overwhelming” interests in judicial economy could justify a district court’s decision to retain pendent claims after the federal claims have been dismissed. As-*1290chinger v. Columbus Showcase Co., 934 F.2d 1402, 1412-13 (6th Cir.1991); see also Sarin v. Samaritan Health Ctr., 813 F.2d 755, 759 n. 5 (6th Cir.1987); Province v. Cleveland Press Publishing Co., 787 F.2d 1047, 1054-55 (6th Cir.1986).2
In Province, we upheld the district court’s decision to reach the merits of the state law claims because discovery had closed, a substantial amount of resources had been expended, the predicate factual findings for the federal and state claims were similar, and no “abstruse” state law doctrine was implicated. 787 F.2d at 1055 & n. 11. Similarly, in Aschinger, we found that the similarity of the state and federal claims and the expenditure of time and resources justified the district court’s decision to retain jurisdiction. 934 F.2d at 1413. In Gaff, we held that the district court abused its discretion by retaining pendent jurisdiction after finding that the plaintiffs lacked standing to pursue their federal claim. 814 F.2d at 319.
In these cases, we weighed several factors in order to determine whether an “overwhelming” interest in judicial economy justified a decision to retain jurisdiction: (1) the similarity of the predicate factual findings necessary to resolve the state and federal claims, Aschinger, 934 F.2d at 1412; (2) the amount of resources and time that have been expended, id.; (3) the need to avoid duplicative litigation, Province, 787 F.2d at 1054; and (4) the difficulty or novelty of the state law issues, id. at 1055 n. 11.
Turning to the first factor to be weighed, there is substantial overlap in the predicate factual findings necessary for Taylor’s state and federal claims. All of the claims against the FOA defendants required Taylor to prove that the defendants acted unreasonably in delaying credit. However, the state claims diverged substantially from the dismissed federal claim in that the latter claim required Taylor to prove that racial discrimination played a role in the defendants’ actions.
As to the time and resources expended, the majority points to the fact that discovery had been completed and the case had been in federal court for over 18 months when Taylor withdrew the federal claim. However, it appears that by the time Taylor withdrew his federal claim, the court had done little other than preside over discovery. Unlike Province and As-chinger, the district court in this case did not have to consider the summary judgment motion on the merits until after Taylor had decided to withdraw the federal claim.
The need to avoid duplicative litigation weighs against retaining jurisdiction in this case. Since Taylor could not litigate his claims against the Cybs and the accounting defendants in federal court, he would have to return to state court. Taylor’s claims against those defendants derive from the same set of operative facts as his state law claims against the FOA defendants. Thus, when Taylor attempted to add the Cyb and accounting defendants to his complaint and dismissed his federal claim, the court could have avoided duplicative litigation by remanding the state law claims against the FOA defendants to state court.
Finally, some of Taylor’s state law claims present novel or difficult questions of Michigan law. Two of the claims present the question of whether a prospective borrower has an action in contract, or alternatively in tort, against a lender who acts unreasonably after a loan commitment is made in the absence of a final loan contract. Courts in other jurisdictions have considered this question. See, e.g., Jacques v. First Nat’l Bank, 307 Md. 527, 515 A.2d 756 (1986) (allowing tort action); Teachers Ins. and Annuity Ass’n v. Tribune Co., 670 F.Supp. 491 (S.D.N.Y.1987) (allowing contract action). However, the Michigan courts have not yet done so. Therefore, *1291unlike Province, Taylor’s action did present novel or difficult questions of state law.3
I conclude that the balance of factors weighs against the district court’s continued exercise of pendent jurisdiction after Taylor dismissed his sole federal claim. That conclusion rests on the existence of defendants who could not be brought into federal court, the novelty of Taylor’s state law claims, and, especially, the fact that the district court was not called upon to consider the merits of the pendent claims until several months after the federal claim had been withdrawn. I would reverse the district court’s grant of summary judgment and remand Taylor’s claims against the FOA defendants to state court.

. I would emphasize, however, that this result was mandated by the fact that Taylor's action was filed before December 1, 1990. Lawsuits filed after that date must be analyzed under the "supplemental” jurisdiction statute, 28 U.S.C. § 1367, which provides for pendent party jurisdiction.

. Our statements in this area have not been uniform. Some of our recent decisions appear to state that a district court may never retain jurisdiction over pendent state law claims once the federal claims have been dismissed. See, e.g., Faughender v. City of North Olmsted, 927 F.2d. 909, 917 (6th Cir.1991); Vandiver v. Hardin County Bd. of Educ., 925 F.2d 927, 935 (6th Cir.1991).

. In reaching the merits, the majority avoids these difficult questions of state law by concluding that Taylor failed to show that the FOA defendants caused his proposed acquisition to fail. Instead, the majority concludes that the Cybs and MSF caused the deal to fall through. Taylor concedes that the Cybs and, MSF contributed to the collapse, but argues that the FOA defendants' challenged conduct caused the Cybs to withdraw money from their companies, which in turn caused MSF to back out. The majority does not discuss whether Taylor’s evidence is sufficient to show that the FOA defendants contributed to the collapse; instead, the majority appears to impose a requirement that Taylor prove that the challenged conduct was the ultimate cause of the collapse. Although I would express no opinion on the merits of the summary judgment, I do not agree that causation is so obviously missing from Taylor’s case.