Court Opinion

ID: 2970981
Source: CourtListenerOpinion
Date Created: 2015-09-22 16:26:17.636082+00
Date Added: 2024-06-11T11:43:32.965154
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                Pursuant to Sixth Circuit Rule 206                         2    Hudson v. Coleman et al.                    No. 01-1653
        ELECTRONIC CITATION: 2003 FED App. 0367P (6th Cir.)
                    File Name: 03a0367p.06                                                     _________________
                                                                                                    COUNSEL
UNITED STATES COURT OF APPEALS
                                                                           ARGUED: David J. Nickola, NICKOLA & NICKOLA,
                  FOR THE SIXTH CIRCUIT                                    Flint, Michigan, for Appellant. Patrick L. Rose, Lansing,
                    _________________                                      Michigan, for Appellees. ON BRIEF: David J. Nickola,
                                                                           NICKOLA & NICKOLA, Flint, Michigan, for Appellant.
 MARGO HUDSON,                     X                                       Patrick L. Rose, Lansing, Michigan, for Appellees.
         Plaintiff-Appellant,       -
                                    -                                        FORESTER, D. J., delivered the opinion of the court, in
                                    -  No. 01-1653                         which BATCHELDER, J., joined. MOORE, J. (pp. 15-21),
            v.                      -                                      delivered a separate dissenting opinion.
                                     >
                                    ,                                                          _________________
 BRYAN COLEMAN; ERIC                -
 RODGERS ,                          -                                                              OPINION
        Defendants-Appellees, -                                                                _________________
                                    -
 CITY OF FLINT ,                    -                                        FORESTER, District Judge. Plaintiff appeals the district
           Garnishee-Appellee. -                                           court’s order granting the City of Flint’s (“City”) motion to
                                    -                                      quash Plaintiff’s garnishment action against the City. For the
                                   N                                       following reasons, we AFFIRM the judgment of the district
       Appeal from the United States District Court                        court.
      for the Eastern District of Michigan at Detroit.                     I.   FACTUAL AND PROCEDURAL BACKGROUND
    No. 97-71145—Denise Page Hood, District Judge.
                                                                             Plaintiff filed an action in state court asserting state and
                  Argued: December 12, 2002                                federal causes of action against Officers Bryan Coleman, Eric
                                                                           Rodgers, and the City of Flint arising from the Officers’ theft
             Decided and Filed: October 14, 2003                           of Hudson’s Cocker Spaniel, “Brandy.” The City removed
                                                                           the action to the Eastern District of Michigan based on
  Before: BATCHELDER and MOORE, Circuit Judges;                            Plaintiff’s 42 U.S.C. §§ 1983 and 1985 claims.
           FORESTER, Chief District Judge.*
                                                                              The facts giving rise to this dispute are undisputed and
                                                                           merit only a brief discussion before turning to the
                                                                           determinative legal issue of subject matter jurisdiction.
                                                                           Hudson reported that her car had been stolen with her dog
    *
      The Honorable Karl S. Forester, Chief United States District Judge   inside the car. Officers Coleman and Rodgers responded to
for the Eastern District of Kentucky, sitting by designation.              a radio call to investigate Hudson’s missing vehicle and dog.

                                   1
No. 01-1653                         Hudson v. Coleman et al.             3    4        Hudson v. Coleman et al.                     No. 01-1653

The Officers located the stolen vehicle and proceeded to take                     claim and to appear for and represent the Employee in
the dog from the car and ultimately to Officer Coleman’s                          the action.
house. The Officers then lied by reporting that they did not                         The Employer may compromise, settle and pay such
find a dog inside the car. The truth concerning the theft of the                  claim before or after the commencement of any civil
would-be “$300,000 Cocker Spaniel1” finally surfaced five                         action. Whenever any judgment for damages, excluding
months later during an internal police department                                 punitive damages, is awarded against an Employee as the
investigation in which the Officers admitted to stealing the                      result of any civil action for personal injuries or property
dog. The Cocker Spaniel was returned to Hudson and the                            damage caused by the Employee while in the course of
Officers faced discipline by the Police Department.                               his employment, and while acting within the scope of his
                                                                                  authority, the Employer will indemnify the employee or
  After the district court granted the City’s motion for                          will pay, settle, or compromise the judgment. The Chief
summary judgment dismissing it from the case, Hudson and                          Legal Officer will make the selection of the attorney or
the Officers entered into a consent judgment whereby                              attorneys to represent the Employee in any particular
Coleman would pay $200,000 and Rodgers would pay                                  case, and allow the Employee to object to the selection if
$100,000 in settlement of Hudson’s claims. In an effort to                        he has cause to do so.
collect upon the consent judgment against Coleman and
Rodgers, Hudson filed writs of garnishment against the City.                    Pursuant to the above indemnity agreement, the City
Hudson asserted that the City would be liable to pay the                      provided the Officers with legal counsel during the course of
consent judgment because of an indemnity agreement                            the proceedings. There is no evidence in the record indicating
between the City and the Police Officers Union.                               that the City’s liability under the indemnification agreement
                                                                              has been established, or, more specifically, whether the
   The indemnification agreement under which Hudson                           Officers were acting within the scope of their employment
attempts to collect the consent judgment from the City                        and authority when they stole the dog. By the time Hudson
provides:                                                                     instituted the garnishment proceeding against the City, the
                                                                              Officers each had paid $12,500 to Hudson in partial
    Whenever any claim is made or any civil action is                         satisfaction of their debts.
  commenced against an Employee for injuries to persons
  or property caused by negligence or other acts of the                         The City filed a motion to quash the garnishment on the
  Employee while in the course of his employment, and                         basis of several theories, including lack of subject matter
  while acting within the scope of his authority, the                         jurisdiction. After the Magistrate Judge2 filed a report and
  Employer will pay for or engage in or furnish the                           recommendation concluding that the court lacked jurisdiction,
  services of an Attorney to advise the Employee as to the                    the district court adopted the report and recommendation and
                                                                              granted the City’s motion to quash. Hudson timely filed a
                                                                              notice of appeal.
    1
      Officers Colem an and R odgers agreed to p ay $300,0 00 to settle
Plaintiff’s claims arising from th e Officers’ theft of the dog. As will be        2
discussed, the legal issue presented is whether the federal courts have             W e commend Magistrate Judge Paul J. Komives for a thorough and
jurisdiction to determine whether the City is liable for this de bt in        well-reasoned repo rt and recommendation, m uch of which has been
Plaintiff’s garnishment actio n against the City.                             ado pted in this opinion.
No. 01-1653                    Hudson v. Coleman et al.        5    6     Hudson v. Coleman et al.                     No. 01-1653

II. ANALYSIS                                                        degrees, factually interdependent; and (2) to enable a court to
                                                                    function successfully, that is, to manage its proceedings,
   We review de novo a district court’s determination of            vindicate its authority, and effectuate its decrees.’” Peacock,
subject matter jurisdiction. See, e.g., Greater Detroit             516 U.S. at 354 (quoting Kokkomen v. Guardian Life Ins. Co.,
Resource Recovery Authority v. EPA, 916 F.2d 317, 319 (6th          511 U.S. 375, 379-80 (1994) (citations omitted)). The first
Cir. 1990). As an initial observation, it is well established       category of ancillary jurisdiction identified above has largely
that federal courts are courts of limited jurisdiction,             been codified in the supplemental jurisdiction statute, 28
possessing only that power authorized by the Constitution and       U.S.C. § 1367. The second category of ancillary jurisdiction
statute, see Willy v. Coastal Corp., 503 U.S. 131 (1992);           is generally referred to as “ancillary enforcement
Bender v. Williamsport Area School Dist., 475 U.S. 534, 541         jurisdiction.”
(1986), which is not to be expanded by judicial decree,
American Fire & Casualty Co. v. Finn, 341 U.S. 6 (1951).               In Peacock, the plaintiff obtained a federal court judgment
Accordingly, “[i]t is to be presumed that a cause lies outside      against a corporation pursuant to the Employee Retirement
this limited jurisdiction, and the burden of establishing the       Income Security Act of 1974 (ERISA), 88 Stat. 832, as
contrary rests upon the party asserting jurisdiction.” Id (citing   amended, 29 U.S.C. § 1001 et seq. After efforts to collect on
Turner v. Bank of N. Am., 4 U.S. (4 Dall.) 8, 11 (1799);            the judgment failed, the plaintiff filed a second suit seeking to
McNutt v. General Motors Acceptance Corp., 298 U.S. 178,            hold Peacock, an officer and shareholder of the corporation,
182-183 (1936)).                                                    personally liable under a piercing of the corporate veil theory.
                                                                    The Supreme Court determined that it was without an
  The district court found that it lacked jurisdiction over the     independent jurisdictional basis for the suit because ERISA
garnishment, primarily because the action attempts to hold the      does not authorize a veil-piercing action. In addition, the
City, a third party, liable for payment of a judgment on an         Court rejected the plaintiff’s argument that the federal courts
independent legal theory, the indemnity agreement, which            had ancillary enforcement jurisdiction over the second suit.
would require separate analysis and possible discovery
concerning the City’s defenses to liability. As set forth             The Court began its analysis by emphasizing that it has
above, the City was dismissed from the action on September          “reserved the use of ancillary jurisdiction in subsequent
30, 1998. The Officers then settled with the Plaintiff and a        proceedings for the exercise of a federal court’s inherent
consent judgment was entered on February 29, 2000. It was           power to enforce its judgments.” Peacock, 516 U.S. at 356.
not until June 30, 2000, that the Plaintiff served writs of         The Court further explained that, “[i]n defining that power,
garnishment on the City relying upon Fed. R. Civ. P. 69.            we have approved the exercise of ancillary jurisdiction over
                                                                    a broad range of supplementary proceedings involving third
  The jurisdictional analysis in this garnishment action begins     parties to assist in the protection and enforcement of federal
with a consideration of Peacock v. Thomas, 516 U.S. 349             judgments–including attachment, mandamus, garnishment,
(1996), and its discussion of ancillary subject matter              and the prejudgment avoidance of fraudulent conveyances.”
jurisdiction. As a starting point, it is necessary to understand    Id. (citations omitted).
that there are two situations in which a court may exercise
ancillary jurisdiction over a claim otherwise not within the          Nevertheless, Peacock concluded that it was without
jurisdiction of the court: “‘(1) to permit disposition by a         ancillary jurisdiction to entertain plaintiff’s second suit. The
single court of claims that are, in varying respects and            Court cautioned that the recognition of ancillary
No. 01-1653                   Hudson v. Coleman et al.          7   8        Hudson v. Coleman et al.                          No. 01-1653

supplementary proceedings has not extended beyond attempts              ancillary jurisdiction over [plaintiff’s] claims in this
to execute, or guarantee the eventual executability of a federal        subsequent proceeding.
judgment. More specifically, the Court has “never authorized
the exercise of ancillary jurisdiction in a subsequent lawsuit      Peacock, 516 U.S. at 255.3
to impose an obligation to pay an existing federal judgment
on a person not already liable for that judgment.” Id. at 357.        Just as in Peacock, there is no rationale to support
The Court further explained that                                    exercising ancillary jurisdiction over Plaintiff’s state law
                                                                    indemnity claim against the City. The indemnity claim was
  [i]n determining the reach of the federal courts’ ancillary       not asserted until after the City was dismissed and the case
  jurisdiction, we have cautioned against the exercise of           against the individual defendants was settled. Accordingly,
  jurisdiction over proceedings that are “‘entirely new and         there are no factually intertwined issues to resolve and neither
  original,”’ or where “the relief [sought is] of a different       the convenience of the litigants nor considerations of judicial
  kind or on a different principle” than that of the prior          economy justify the exercise of ancillary jurisdiction over
  decree.                                                           Plaintiff’s state law indemnity claim.

Id. at 358 (citations omitted).                                       Turning to the purported ancillary “enforcement” grounds
                                                                    for jurisdiction, we find that a proper reading of Peacock
  Peacock concluded that the federal courts were without            dictates that the federal courts are without jurisdiction to
ancillary enforcement jurisdiction because plaintiff’s action       entertain this garnishment action. The precise issue presented
was “founded not only upon different facts than the ERISA           by the Plaintiff in actuality is whether the fact that the
suit, but also upon entirely new theories of liability.” Id.        garnishment action is proceeding under the same case number
                                                                    as the original action, rather than in a second lawsuit,
  Here, it is undisputed that Plaintiff’s indemnity claim does      sufficiently distinguishes the case from Peacock.
not raise a federal question and that the parties are not
diverse. Accordingly, the Court is without independent                 Peacock explained that ancillary jurisdiction is
subject matter jurisdiction over the “writs of garnishment.”        inappropriate in two distinct proceedings, only one of which
Peacock’s analysis controls regarding exercise of the first         involves a subsequent lawsuit. First, the Court indicated that
category of ancillary jurisdiction, i.e., “ordinary” ancillary      ancillary jurisdiction is inappropriate in “proceedings that are
jurisdiction. According to Peacock:                                 entirely new and original.” Peacock, 516 U.S. at 358
                                                                    (internal quotation and citation omitted). Assuming without
  The basis of the doctrine of ancillary jurisdiction is the
  practical need “to protect legal rights or effectively to
  resolve an entire, logically entwined lawsuit. [Owen                   3
  Equipment & Erection Co. v.] Kroger, [437 U.S. 365,                     The Plaintiff attempts to distinguish Peacock on the basis that it
  377 (1978)]. But once judgment was entered in the                 involved a separate suit and the case at bar involves writs of garnishment
                                                                    against the non-party City proceeding under the same case number as the
  original suit, the ability to resolve simultaneously              original suit. This distinction has no bearing on “ordinary” ancillary
  factually intertwined issues vanished. As in Kroger,              jurisdiction analysis, as such jurisdiction is discretionary with the Court
  “neither the convenience of litigants nor considerations          and contemplates proceedings under the same ca se numb er in any e vent.
  of judicial economy” can justify the extension of                 See 28 U.S.C. § 1367. The “separate suit” issue and its bearing on
                                                                    ancillary enforcement jurisdiction is discussed infra at pp. 7-13.
No. 01-1653                    Hudson v. Coleman et al.        9    10       Hudson v. Coleman et al.                          No. 01-1653

deciding that the garnishment action falls outside this first       range of supplementary proceedings involving third parties to
precept, the action is squarely prohibited by the second            assist in the protection and enforcement of federal
category identified in Peacock “where ‘the relief [sought is]       judgments–including attachment, mandamus, garnishment,
of a different kind or on a different principle’ than that of the   and the prejudgment avoidance of fraudulent conveyances.”
prior decree.” Id. (quoting Dugas v. American Surety Co.,           Peacock, 516 U.S. at 356 (emphasis added) (citations
300 U.S 414, 428 (1937)) (alteration in original).                  omitted). The Supreme Court’s acknowledgment of the fact
                                                                    that garnishment sometimes falls within ancillary jurisdiction
   Plaintiff’s garnishment claim seeks to impose liability on       is obviously not imprimatur for all garnishment actions
the City, a third party not a party to the consent judgment, on     arising from previous factually similar underlying federal
the basis of the indemnity agreement, a legal theory entirely       claims to proceed in federal court.4 The type of garnishment
independent from that in the original action. As stated above,      proceeding referred to in Peacock does not contemplate
there is no evidence in the record indicating that the City’s       making the garnishee personally liable on the judgment based
liability under the indemnification agreement has been              on some independent legal theory as Hudson seeks to do in
established, or, more specifically, whether the Officers were       this case. Instead, the typical garnishment proceeding
acting within the scope of their employment or authority            referenced in Peacock contemplates the garnishee’s paying
when they stole the dog. In fact, the City was not served with      the judgment creditor/garnishing party directly for funds, such
the writs of garnishment until one year and nine months after       as a salary, owed by the garnishee to the defendant in the
being dismissed from the lawsuit. At this stage, there has          underlying action. Cf. Sandlin v. Corporate Interiors, Inc.,
simply been no interpretation of the indemnity clause in the        972 F.2d 1212, 1216-17 (10th Cir. 1992) (applying H.C.
labor agreement between the City and the Police Officer’s           Cook Co. v. Beecher, 217 U.S. 497 (1910), a case with
union. The City has not been adjudged liable to indemnify           renewed vitality post-Peacock); Merrell v. Miller, No. 91-
the Officers’ settlement with the Plaintiff, in that there remain   493-A, 1998 WL 329264, at *2 (E.D. Va. June 8, 1998)
substantial questions regarding the interpretation of the labor     (noting that Peacock prohibits “efforts, unsupported by an
agreement, e.g., whether each Officer was acting “while in the      independent basis for federal jurisdiction, to establish a new
course of his employment” and “within the scope of his              defendant’s personal liability for an existing judgment.”).
authority.” The interpretation of the indemnity provision
presents unresolved issues such as whether each Officers’             Michigan law apparently acknowledges the above
conduct giving rise to the suit constituted a frolic or a mere      distinction in the forms of garnishment by labeling the typical
detour from duty.                                                   form of garnishment as “periodic” and the type garnishment
                                                                    sought by Hudson as “non-periodic.” To be sure, Hudson is
  In sum, the relief sought by the Plaintiff is based upon a        not requesting that any wages owed by the City to the
vastly different principle than that of the prior consent decree.   Officers be paid by the City to Hudson. Instead, Hudson
We find Hudson’s reading of Peacock far too narrow and
conclude that she has not carried her burden of demonstrating
that this suit falls within either category of ancillary
                                                                         4
jurisdiction.                                                             Likewise, Fed. R. Civ. P. 69(a), providing supplementary
                                                                    proceedings in aid of executing a judgment, does not purport to confer
  Hudson relies upon the statement in Peacock that “we have         ancillary subject matter jurisdiction for all garnishment proceedings
approved the exercise of ancillary jurisdiction over a broad        arising out of a common nucleus of fact to the original federal proceeding.
                                                                    Instead , Peacock explains the limits of federal ancillary jurisdiction.
No. 01-1653                         Hudson v. Coleman et al.           11     12   Hudson v. Coleman et al.                    No. 01-1653

seeks to hold the City individually liable under the indemnity                Fed. R. Civ. P. 69 for an indemnification action against the
clause for the full amount of the Officers’ settlement. The                   City of Chicago after the City was dismissed from the original
state form used by Hudson is labeled “non-periodic” request                   lawsuit. Yang involved police officer defendants who, after
and writ for garnishment and Hudson’s attorney has mailed a                   responding to a break-in at Yang’s store, proceeded to
letter to the City on July 10, 2000, indicating the belief that               continue the looting started by the original thieves. After
the City is responsible for payment of the entire judgment                    Yang objected to the officers’ looting, the officers drove for
under the indemnity clause. As stated above, the type                         two blocks with Yang hanging on to the car door. One officer
garnishment sought by Hudson contemplates making the third                    eventually pulled his gun and punched Yang before fleeing
party City, a non-party to the consent judgment, personally                   the scene.
liable on the consent judgment entered into by the Officers
based on the independent legal theory of the indemnification                    The Yang district court entered judgment against the
agreement. The City’s liability under the newly presented                     officers and dismissed the action against the City. Yang then
indemnity principle is far from established; thus, the issues to              sought indemnification from the City on the basis of Illinois’
be litigated under the indemnity agreement deprive the Court                  indemnification statute, 745 ILCS 10/9-102, providing in
of ancillary jurisdiction. See Peacock, 516 U.S. at 358; see                  pertinent part that a local public entity must pay any tort
also, Travelers Indemnity Co. of Ill. v. Hash Management,                     judgment against an employee “while acting within the scope
Inc., 173 F.R.D. 150, 153 (M.D.N.C. 1997) (“However, if the                   of his employment.” The district court dismissed the
proceedings are entirely new and original or seek relief                      indemnification petition on the basis of the Peacock decision.
different in kind, on a different principle, or to impose
liability on persons not already bound by the previous action                   The Seventh Circuit held that the federal courts had
and judgment, the moving party must be able to assert an                      jurisdiction over the indemnification petition because the
independent basis for federal jurisdiction over the controversy               petition was not a separate lawsuit and involved the same core
with the third party.”).                                                      of operative facts as the original action. According to Yang,
                                                                              “a Rule 69 garnishment proceeding to collect a judgment
  Hudson also relies on Yang v. City of Chicago5, 137 F.3d                    from a third person not party to the original suit is within a
522 (7th Cir. 1998), permitting ancillary jurisdiction under                  court’s ancillary jurisdiction, providing the additional
                                                                              proceeding does not inject so many new issues that it is
                                                                              functionally a separate case.” Yang, 137 F.3d at 526. (internal
    5
      Yang relies on the pre vious S eventh Circuit decision of Argento v.
                                                                              quotation omitted). Yang concluded that interpreting the
Village of Melrose Park, 838 F.2d 1483 (7th Cir. 1988). The Supreme           scope of employment issue in order to resolve the indemnity
Court in Peacock implied that Arg ento and its progeny were on the wrong      question did not inject so many new issues into the action as
side of a circuit split. See Peacock, 516 U.S. at 532 n.2; see also Yang,     to make it functionally a separate case. The Seventh Circuit
137 F.3d at 526. Arg ento, predating Peacock, permits ancillary               then proceeded to resolve the scope of employment issue by
jurisdiction “when the plaintiff is proceeding in his original suit rather
than by means of a new suit.” Yang, 137 F.3d at 526 (citations omitted).
                                                                              concluding that under Illinois law the officer was acting
This jurisdictional analysis based upon “original suit” versus “new suit”     within the scope of his employment when he pulled the gun
labeling is irreconcilable with Peacock’s more sub stantive analysis          on Yang. Id. at 525.
prohibiting jurisdiction “where ‘the relief [sought is] of a different kind
or on a d ifferent principle’ than that of the prior decree.” Peacock, 516      As an initial matter, Yang acknowledges that whether the
U.S. at 358 (quoting Du gas v. American Surety Co., 300 U.S. 414, 428         garnishment arises by way of a separate action or under the
(1937)) (alteration in original).
No. 01-1653                          Hudson v. Coleman et al.             13     14    Hudson v. Coleman et al.                     No. 01-1653

same case number as the original action is far from                              ancillary jurisdiction. It is inappropriate for a Court to decide
determinative of ancillary jurisdiction. Instead, Yang focuses                   legitimate scope of employment and/or scope of authority
on whether the garnishment injects sufficient new issues as to                   questions without the benefit of fact-finding and briefing.
make the garnishment functionally separate, thus destroying
ancillary jurisdiction.     Yang’s “functionally separate”                          Our determination in this action overrules Childress v.
subjective framework is fact-specific and can be interpreted                     Williams, 121 F. Supp.2d 1094 (E.D. Mich. 2000). Childress
as facially consistent with the Supreme Court’s                                  attempts to distinguish the disputed application of the
pronouncement that ancillary jurisdiction is inappropriate in                    indemnity agreement from Peacock’s ambit by stating:
“proceedings that are entirely new and original” and in
proceedings “where ‘the relief [sought is] of a different kind                     [I]f all the prerequisites of the indemnification agreement
or on a different principle’ than that of the prior decree.”                       were met, the City would be liable for indemnification at
Peacock, 516 U.S. at 358 (internal quotation omitted)                              the time the judgment was rendered against the defendant
(quoting Dugas v. American Surety Co., 300 U.S 414, 428                            Williams . . . . Because Defendant Williams may have a
(1937)) (alteration in original).                                                  right to collect from the City, so too may plaintiff.

   We disagree with Yang’s application of the “functionally                      Childress, 121 F. Supp.2d at 1096 (emphasis added).
separate” framework6 in deciding the indemnification issue
and hold that legitimate, unresolved disputes concerning                           Instead, as we have set forth above, the very contingencies
whether conduct occurs within the scope of employment or                         identified in Childress (“if,” “would be,” and “may”) require
authority deprives a federal court of ancillary jurisdiction in                  sufficient fact-finding and legal analysis to distinguish the
a garnishment action pursuant to Peacock. As stated, the City                    garnishment proceeding from the original action, rendering
of Flint’s liability under the newly presented indemnity                         the federal courts without ancillary jurisdiction.
principle is far from established; thus, the issues to be
litigated under the indemnity agreement deprive the Court of                     III. CONCLUSION
                                                                                   Based upon the above, we AFFIRM the district court’s
                                                                                 order granting the City of Flint’s motion to quash Plaintiff
    6                                                                            Hudson’s garnishment action.
       W e acknowledge that the Peacock framework for denying ancillary
jurisdiction “where ‘the relief [sought is] of a different kind or on a
different principle’ than that of the prior decree” permits a certain degree
of subjectivity in decision mak ing. Perhap s Yang can be explained on this
basis in that the litigation resulted in a more than six year saga due in part
to delays by the City, including multiple reviews by the Seventh Circuit.
Yang involved a remand with directions that the case be reassigned to a
different district judge due to inordinate delays. See Yang, 137 F.3d at
527. In addition, the Court expressed, “Yang has waited long enough for
this lawsuit to come to an end.” Id. at 527. We regret the inconvenience
and delay that may be associated with a separate state court garnishment
proceeding; howe ver, as stated ea rlier, it is well-established that we must
presume that a cause of action lies outside the limited federal jurisdiction
when prese nted with a subjective choice or close call concerning the
existence of jurisdiction.
No. 01-1653                      Hudson v. Coleman et al.          15    16       Hudson v. Coleman et al.                            No. 01-1653

                        _______________                                  Federal Rule of Civil Procedure 69(a) (“Rule 69(a)") and
                                                                         Mich. Comp. Laws § 600.4011(1).2 The district court found
                           DISSENT                                       that it lacked subject matter jurisdiction over the garnishment
                        _______________                                  action because the garnishment action seeks “to hold the City,
                                                                         a third party, liable for payment of a judgment on an
  KAREN NELSON MOORE, Circuit Judge, dissenting. I                       independent legal theory, the indemnity agreement, which
respectfully dissent from the majority’s conclusion that the             would require separate analysis and possible discovery
district court lacks subject matter jurisdiction over Plaintiff-         concerning the City’s defenses to liability.” Majority Op. at
Appellant, Margo Hudson’s (“Hudson”), garnishment action                 5. The majority affirms the district court’s order quashing
against Defendant-Appellee, the City of Flint (“City”).                  Hudson’s garnishment action based upon the same reasoning
Contrary to the majority, I conclude that Hudson’s                       employed by the district court.
garnishment action is merely a post-judgment proceeding
following her prior § 1983 action against Defendants-
Appellees, Bryan Coleman and Eric Rodgers (collectively
“police officers”), and that the garnishment action will not                  2
inject so many new issues as to become a functionally                           Rule 69 directs district courts to emp loy the procedures for
separate lawsuit. I further conclude that Hudson is merely               executing judgments of the state in which the district court sits. See Fed.
                                                                         R. Civ. P. 69(a). Rule 6 9(a) pro vides:
seeking to collect her judgment, rather than to impose liability              The procedure on execution, in p roceedings supp lementary to
upon someone not otherwise liable for the judgment.                           and in aid of a judgment, and in proceedings on and in aid of
Therefore, the doctrine of ancillary jurisdiction gives the                   execution shall be in accordance with the practice and procedure
district court subject matter jurisdiction over the garnishment               of the state in which the district court is held, existing at the time
action. For the following reasons, I would REVERSE the                        the remedy is sought, except that any statute of the United States
                                                                              governs to the extent that it is applicable.
district court’s order granting the City’s motion to quash               Id.
Hudson’s garnishment action and REMAND for further                            The Michigan garnishment statute allows a prevailing plaintiff to
proceedings.                                                             seek a writ of ga rnishment against an obligation owe d to the de fendant,
                                                                         if the ob ligor is sub ject to p erson al jurisdiction in M ichigan. See Mich.
   As discussed in the majority opinion, Hudson brought                  Com p. Laws § 600.4011 (1). Section 6 00.40 11(1 ) provide s:
§§ 1983, 1985, and state law claims against the police officers               [T]he court has po wer by garnishment to app ly the follow ing
                                                                              property or obligation, or both, to the satisfaction of a claim
arising from the police officers’ theft of Hudson’s dog.1 On                  evidenced by contract, judgment of this state, or foreign
February 29, 2000, Hudson and the police officers entered                     judgment, whether or no t the state has jurisdiction over the
into a consent judgment, whereby the police officers agreed                   person against whom the claim is asserted:
to pay $300,000 in settlement of Hudson’s claims. Then, on                          (a) Personal property belonging to the person against
June 30, 2000, Hudson, seeking to collect the consent                                    whom the claim is asserted but which is in the
                                                                                         possession or control of a third person if the third
judgment, filed writs of garnishment on the City pursuant to                             perso n is subject to the judicial jurisdiction of the
                                                                                         state and the pe rsona l prop erty to be app lied is
                                                                                         within the boundaries of this state.
    1
                                                                                    (b) An obligation owed to the perso n against whom
      Hudson named the City as a d efendant in her com plaint, but the                   the claim is asserted if the obligor is subject to the
district court granted summary judgment in favor of the City on                          judicial jurisdiction of the state.
September 30, 1998.                                                      Id.
No. 01-1653                    Hudson v. Coleman et al.       17    18       Hudson v. Coleman et al.                          No. 01-1653

   Contrary to the majority, I would hold that the doctrine of      379-80 (1994)). The Court held that Thomas’s veil-piercing
ancillary jurisdiction gives the district court subject matter      claim did not involve the first accepted usage of ancillary
jurisdiction over the garnishment action. Unlike the majority,      jurisdiction, as Thomas brought his veil-piercing claim in a
I conclude that the Supreme Court’s holding in Peacock v.           subsequent lawsuit, and thus “the ability to resolve
Thomas, 516 U.S. 349 (1996), does not prohibit this use of          simultaneously factually intertwined issues vanished.” Id. at
ancillary jurisdiction. Instead, I conclude that the Seventh        355. The Court further held that Thomas’s veil-piercing
Circuit’s reasoning in Yang v. City of Chicago, 137 F.3d 522        claim did not involve the second accepted usage of ancillary
(7th Cir. 1998), cert. denied, 525 U.S. 1140 (1999), and the        jurisdiction because, although ancillary jurisdiction may be
Eastern District of Michigan’s reasoning in Childress v.            used to enforce judgments, the Court has “never authorized
Williams, 121 F. Supp. 2d 1094 (E.D. Mich. 2000), correctly         the exercise of ancillary jurisdiction in a subsequent lawsuit
analyze Peacock’s effect on the doctrine of ancillary               to impose an obligation to pay an existing federal judgment
jurisdiction in Rule 69 proceedings.                                on a person not already liable for that judgment.” Id. at 357.
   In Peacock, Thomas had been awarded a judgment of                   In Yang, a post-Peacock decision, the Seventh Circuit held
$187,628.93 by the district court in his ERISA class action         that the doctrine of ancillary jurisdiction gave the district
against Tru-Tech, his former employer. Peacock, 516 U.S. at         court subject matter jurisdiction over Yang’s Rule 69
351. The district court had found that Tru-Tech breached its        garnishment action. Yang, 137 F.3d at 526. Yang had been
fiduciary duties in administering the corporation’s pension         awarded a substantial monetary judgment in his §§ 1983 and
benefits plan, but the district court had also explicitly ruled     1985 actions against two police officers. Id. at 522-23.
that Peacock, an officer and shareholder of Tru-Tech, was not       Approximately three months later, “Yang filed a petition for
a fiduciary. Id. Unable to obtain the money from Tru-Tech,          indemnification and writ of execution, seeking
Thomas sued Peacock in federal court alleging various               indemnification of [his judgments against the officers] from
theories, including a veil-piercing claim under ERISA. Id. at       the City of Chicago pursuant to 745 ILCS 10*9-102. Section
352.                                                                9-102 directs a municipality to indemnify a tort judgment
                                                                    entered against an employee if the employee’s misconduct
   The Supreme Court held that ERISA does not authorize             was within the scope of his employment.” Id. at 524. The
veil-piercing claims; therefore, ERISA did not provide a basis      court held that “a Rule 69 garnishment proceeding to collect
for federal jurisdiction over Thomas’s veil-piercing claim. Id.     a judgment from a third person not party to the original suit
at 353. The Court further held that the doctrine of ancillary       is within a court’s ancillary jurisdiction, providing ‘the
jurisdiction did not apply to Thomas’s veil-piercing claim,         additional proceeding does not inject so many new issues that
and as a result, the district court lacked subject matter           it is functionally a separate case.’” Id. at 526 (quotations
jurisdiction over Thomas’s action against Peacock. Id. at           omitted).3 The court concluded that Yang’s garnishment
355-59. In so holding, the Court stated that “a federal court
may exercise ancillary jurisdiction ‘(1) to permit disposition
by a single court of claims that are, in varying respects and            3
                                                                          This holding is not inconsistent with the T enth C ircuit’s view in
degrees, factually interdependent; and (2) to enable a court to     San dlin v. Corporate Interiors, Inc., 972 F.2d 12 12, 1217 (10th Cir.
function successfully, that is, to manage its proceedings,          1992), a pre-Peacock decision, in which the court he ld that the district
vindicate its authority, and effectuate its decrees.’” Id. at 354   court lacked subject matter jurisdiction over the plaintiff’s subsequent
                                                                    veil-piercing claim because the claim involved new parties, new issues,
(quoting Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375,          and new theories o f liability. The Tenth Circuit explicitly noted that the
No. 01-1653                         Hudson v. Coleman et al.     19   20       Hudson v. Coleman et al.                         No. 01-1653

action fell within the district court’s ancillary jurisdiction        jurisdiction—protecting judgments.4 In fact, the courts in
because the only new issue raised in the action was whether           both Yang and Childress relied upon the following passage
the officers were acting within the scope of their employment         from Peacock to support their holdings: “we have approved
when they violated Yang’s constitutional rights. See id. The          the exercise of ancillary jurisdiction over a broad range of
Yang court further distinguished Peacock by noting that the           supplementary proceedings involving third parties to assist in
plaintiff in Yang was not trying to impose liability for a            the protection and enforcement of federal judgments —
money judgment on a person not otherwise liable for the               including attachment, mandamus, garnishment, and the
judgment, because if the officers were acting within the scope        prejudgment avoidance of fraudulent conveyances.” Peacock,
of their employment, the city would be liable for their               516 U.S. at 356 (cited in Yang, 137 F.3d at 525; Childress,
judgment. Id. at 525 n.1. Similarly, in Childress, the Eastern        121 F. Supp. 2d at 1096).5
District of Michigan held that the doctrine of ancillary
jurisdiction gave it subject matter jurisdiction over                    I find the reasoning of the courts in Yang and Childress
Childress’s Rule 69 garnishment proceeding because the only           both convincing and applicable to the present case. Here,
new issue raised in the proceeding was whether the officer            Hudson entered into a consent judgment with the police
was acting within the scope of his employment when he                 officers for $300,000. Hudson then brought a garnishment
violated Childress’s constitutional rights. Childress, 121 F.         proceeding against the City pursuant to Rule 69 seeking to
Supp. 2d at 1096.                                                     collect from the City in accordance with City’s
                                                                      indemnification agreement with the police officers. Hudson’s
  The courts in both Yang and Childress reasoned that the             Rule 69 proceeding was a post-judgment proceeding, not a
Rule 69 garnishment actions were not separate lawsuits                separate lawsuit. The factual issues in the garnishment
because they were post-judgment proceedings, and because              proceedings will overlap substantially with those in Hudson’s
the factual issues in the garnishment actions would overlap           underlying §§ 1983, 1985, and state-law claims; therefore, the
substantially with the factual issues in the underlying claims.       Rule 69 proceeding will not inject so many new issues as to
See Yang, 137 F.3d at 526; Childress, 121 F. Supp. 2d at              become a functionally separate lawsuit. Unlike the plaintiff
1096. Thus, the garnishment actions involved the first                in Peacock, Hudson is not seeking to impose liability on the
accepted use of ancillary jurisdiction—resolving factually            City for post-judgment conduct; rather, the City’s potential
interdependent claims in a single proceeding. The courts in           liability arose when the police officers committed the conduct
both Yang and Childress also reasoned that the district court’s
exercise of ancillary jurisdiction over the Rule 69
garnishment proceeding was necessary to effectuate the
district court’s prior judgment. Yang, 137 F.3d at 526;                    4
                                                                            Federal courts have exercised ancillary jurisdiction in supplemental
Childress, 121 F. Supp. 2d at 1096-97. Thus, the garnishment          proceedings to effectuate jud gments for over one hundred years. See Root
actions involved the second accepted usage of ancillary               v. Woolwo rth, 150 U.S. 401, 410-11 (1893). Peacock did no t strip federal
                                                                      courts of subject matter jurisdiction over proceedings to effectuate
                                                                      judgments. Peacock v. Thomas, 516 U.S. 349 , 356 (1996 ).

                                                                           5
                                                                            Furthermore, in a footnote in Peacock, the Supreme Court explicitly
                                                                      stated that a Rule 69 (a) proceeding was an effective me chan ism for a
                                                                      district court to use in effectuating its judgment. Pea cock, 516 U.S. at
plaintiff was not bringing a tradition al indemnity claim. Id.        359 n.7.
No. 01-1653                          Hudson v. Coleman et al.            21

underlying Hudson’s initial § 1983 action.6 The only new
factual issue involved in the Rule 69 garnishment proceeding
will be whether the police officers were acting within the
scope of their employment.7 This is the exact same factual
issue that both the Seventh Circuit and the Eastern District of
Michigan found insufficient to render the Rule 69
garnishment proceedings separate, subsequent lawsuits.
Additionally, the Rule 69 garnishment proceeding is
necessary to enable the district court to effectuate its prior
judgment against the police officers. Requiring a separate
state-court lawsuit to enforce a federal-court judgment would
compromise the federal interests that were resolved in the
initial federal-court proceedings and would impose an
unnecessary burden on state courts. Childress, 121 F. Supp.
2d at 1097. I respectfully dissent.

    6
      For the sam e reason, the City canno t be con sidered a party that is
not otherwise liable, because if the police officers were acting within the
scope of their employment, the City would be liable for the police
officers’ cond uct.

    7
      The indemnification agreement between the City and the Flint
Police Officers Association provides, in pertinent part:
     W henever any judgment for damages, excluding punitive
     dama ges, is awarded against an Employee as the result of any
     civil action for personal injuries or property damage caused by
     the Employee while in the course of his emp loyment, and while
     acting within the scope of his authority, the E mplo yer will
     indem nify the employee or will pay, settle, or comprom ise the
     judgment.
Joint App endix at 512 (P ls.’ Br. in O pp’n to the C ity of Flint’s M ot. to
Quash Ga rnishment, Ex. A).