Court Opinion

ID: 5141517
Source: CourtListenerOpinion
Date Created: 2021-12-30 01:00:25.594769+00
Date Added: 2024-06-11T08:24:29.524398
License: Public Domain

Case: 21-40282    Document: 00516148438         Page: 1    Date Filed: 12/29/2021

          United States Court of Appeals
               for the Fifth Circuit                                  United States Court of Appeals
                                                                               Fifth Circuit

                                                                             FILED
                                No. 21-40282                          December 29, 2021
                                                                        Lyle W. Cayce
                                                                             Clerk
   Mario A. Velazquez,

                                                          Plaintiff—Appellant,

                                    versus

   Ruben De La Rose Martinez

                                                                    Defendant,

   Benteler Automotive Corporation; Benteler
   Automotive-Mexico,

                                             Third Party Plaintiffs—Appellants,

                                    versus

   Allied Plastics, Incorporated; Packaging Concepts &
   Design, L.L.C.; Forming Technologies, L.L.C.,

                                             Third Party Defendants—Appellees.

                 Appeal from the United States District Court
                     for the Southern District of Texas
                              No. 5:20-CV-215
Case: 21-40282        Document: 00516148438              Page: 2      Date Filed: 12/29/2021

                                         No. 21-40282

   Before Wiener, Graves, and Ho, Circuit Judges.
   James E. Graves Jr., Circuit Judge:*
           Defendants and third-party plaintiffs Benteler Automotive and
   Benteler Mexico (“Benteler Defendants”) seek to appeal the district court’s
   grant of summary judgment on their indemnity claims under Texas product
   liability law. This case arose after plaintiff Mario Velasquez1, a U.S. customs
   official, was injured while inspecting a trailer carrying a “termo” holding the
   Benteler Defendants’ products, mainly rear axles. Velasquez alleges that
   defective design or construction of the termo caused his injury, and he asserts
   Texas tort claims against the Benteler Defendants. Because the Benteler
   Defendants did not design or manufacture the termo, they filed a third-party
   claim for indemnification under Chapter 82 of the Texas Product Liability
   Act against third-party defendants and appellees Allied Plastics, Inc.;
   Packaging Concepts & Design, L.L.C.; and Forming Technologies, L.L.C.
   (“Third-Party Defendants”). See TEX. CIV. PRAC. & REM. § 82.002(a). The
   district court held that the Benteler Defendants are not entitled to
   indemnification under § 82.002(a) because the Third-Party Defendants are
   not “sellers” under Texas law, a conclusion the Benteler Defendants
   challenge on appeal.
           But first, we must examine our jurisdiction. See Nat’l Football League
   Players Ass’n v. Nat’l Football League, 874 F.3d 222, 225 (5th Cir. 2017)
   (“[W]e must examine jurisdiction whenever [it] appears fairly in doubt.”
   (citation and quotation marks omitted)). That is because, after granting
   summary judgment to the Third-Party Defendants, the district court severed

           *
            Pursuant to 5th Circuit Rule 47.5, the court has determined that this
   opinion should not be published and is not precedent except under the limited
   circumstances set forth in 5th Circuit Rule 47.5.4.
           1
            The caption for this appeal and the complaint below indicates that the plaintiff’s
   last name is spelled “Velazquez,” but the plaintiff appears to spell his name “Velasquez.”
   Although he uses both spellings in his briefing, he generally uses “Velasquez.”

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Case: 21-40282      Document: 00516148438          Page: 3   Date Filed: 12/29/2021

                                    No. 21-40282

   the Benteler Defendants’ third-party indemnification claim under rule 21, on
   the Third-Party Defendants’ unopposed motion, to facilitate immediate
   appeal. The district court then opened a new case and directed all the briefing
   and orders on the third-party claims be filed in the new case’s docket. The
   court eventually entered final judgment, allowing the parties to appeal.
   Velasquez’ underlying claims against the Benteler Defendants remain
   pending, and that action is stayed pending the results of this appeal. The
   wrinkle, though, is that Benteler Automotive, a Delaware corporation with
   its principal place of business in Michigan, is not diverse from Forming
   Technologies, one of the Third-Party Defendants, which is a limited liability
   corporation whose members all live in Michigan.
          It is true that the district court had removal jurisdiction over the
   underlying case (No. 5:16-CV-238) between Velasquez and the Benteler
   Defendants under 28 U.S.C. §§ 1332 and 1441. When the district court
   entered summary judgment on the third-party claims on December 15, 2020,
   it had supplemental jurisdiction over those claims. Diversity existed between
   Velasquez and the Benteler Defendants: Velasquez is a citizen of Texas;
   Benteler Automotive is a Delaware corporation with its principal place of
   business in Michigan; Benteler Mexico is a Mexican corporation; and the
   amount in controversy exceeded $75,000. See 28 U.S.C. § 1332. And the
   parties are correct that complete diversity need not exist between a third-
   party claimant and a third-party defendant, so long as the district court has
   subject-matter jurisdiction over the underlying suit. Molett v. Penrod Drilling
   Co., 872 F.2d 1221, 1227 (5th Cir. 1989) (“Diversity jurisdiction may be
   approached from two angles: by analyzing diversity in plaintiffs’ original
   claims or in the claims asserted by Gearench against third-party defendants
   including Columbus-McKinnon. Diversity at either level will suffice to
   maintain federal jurisdiction.”); Fawvor v. Texaco, Inc., 546 F.2d 636, 638
   (5th Cir. 1977) (“Rule 14 of the Federal Rules of Civil Procedure governs

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Case: 21-40282       Document: 00516148438           Page: 4    Date Filed: 12/29/2021

                                      No. 21-40282

   third-party practice. Under this rule, where there is diversity between the
   plaintiff and the defendant, the defendant may implead a third-party of the
   same citizenship as the plaintiff.”).
          The district court therefore had supplemental jurisdiction over the
   Benteler Defendants’ third-party claim on the original docket. See Revere
   Copper & Brass Inc. v. Aetna Cas. & Sur. Co., 426 F.2d 709, 715 (5th Cir. 1970)
   (“An impleader action under Rule 14(a) is considered ancillary even though
   such an action does not, as a general rule, directly involve the aggregate of
   operative facts upon which the original claim is based, but arises out of that
   claim in the sense that the impleader action, such as the action for indemnity
   here brought by Aetna against Fuller, would not exist without the threat of
   liability arising out of the original claim.”).
          But that supplemental jurisdiction ceased once the district court
   severed the third-party claim. When a claim is severed, it becomes an entirely
   new and independent case. See, e.g., Gaffney v. Riverboat Servs. of Ind., 451
   F.3d 424, 441 (7th Cir. 2006) (“As a general matter, Rule 21 severance
   creates two discrete, independent actions, which then proceed as separate
   suits for the purpose of finality and appealability.”); E.S. v. Indep. Sch. Dist.,
   135 F.3d 566, 568 (8th Cir. 1998) (“When a single claim is severed from a
   lawsuit, it proceeds as a discrete, independent action[.]”); United States v.
   O’Neil, 709 F.2d 361, 368 (5th Cir. 1983) (“Severance under Rule 21 creates
   two separate actions or suits where previously there was but one.”). A
   severed action must have an independent jurisdictional basis. Honeywell Int’l,
   Inc. v. Phillips Petrol. Co., 415 F.3d 429, 431–32 (5th Cir. 2005). As the Ninth
   Circuit explained when applying Honeywell to conclude that it lacked
   jurisdiction over a severed and transferred case, the severed action “can no
   longer rely on the supplemental jurisdiction afforded by 28 U.S.C. § 1367(a),
   for there is nothing left to supplement.” Herklotz v. Parkinson, 848 F.3d 894,
   898 (9th Cir. 2017).

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                                    No. 21-40282

          The parties acknowledge these principles but ask that we ignore the
   district court’s explicit use of rule 21 and instead treat the severance as a
   certification for immediate appeal under rule 54(b). See FED. R. CIV. P. 54(b)
   (“When an action presents more than one claim for relief—whether as a
   claim, counterclaim, crossclaim, or third-party claim—or when multiple
   parties are involved, the court may direct entry of a final judgment as to one
   or more, but fewer than all, claims or parties only if the court expressly
   determines that there is no just reason for delay.”). However, there is no
   language in the order from which we might reasonably infer that the district
   court meant to do anything other than sever the case. Whatever the district
   court intended, the parties point to no authority that would allow us to ignore
   the plain language in the district court’s order solely to decide a case over
   which we lack jurisdiction.
          Accordingly, we DISMISS this appeal for lack of jurisdiction. We
   offer no opinion on this appeal’s merits or on what actions the district court
   or the parties should take on the third-party claims after this dismissal.

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