Court Opinion

ID: 2966859
Source: CourtListenerOpinion
Date Created: 2015-09-22 01:20:01.893513+00
Date Added: 2024-06-11T12:45:44.027434
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

AXEL JOHNSON, INCORPORATED,
Plaintiff-Appellant,

v.

CARROLL CAROLINA OIL COMPANY,
INCORPORATED; LINDA A. CARROLL;
                                                                    No. 97-1629
CHARLES S. LANIER, Trustee,
Defendants-Appellees,

and

PACE OIL COMPANY, INCORPORATED,
Defendant.

Appeal from the United States District Court
for the Eastern District of North Carolina, at Wilmington.
W. Earl Britt, Senior District Judge.
(CA-96-130-7-BR)

Argued: March 2, 1998

Decided: June 4, 1998

Before WILKINS, LUTTIG, and MOTZ, Circuit Judges.

_________________________________________________________________

Affirmed by published opinion. Judge Luttig wrote the opinion, in
which Judge Wilkins and Judge Motz joined.

_________________________________________________________________

COUNSEL

ARGUED: Kenneth Berlin, Sr., SKADDEN, ARPS, SLATE,
MEAGHER & FLOM, L.L.P., Washington, D.C., for Appellant. Mat-
thew Patrick McGuire, HUNTON & WILLIAMS, Raleigh, North
Carolina, for Appellees Carroll and Carroll Oil; Michael Perkins Flan-
agan, WARD & SMITH, P.A., Greenville, North Carolina, for Appel-
lee Lanier. ON BRIEF: Don J. Frost, Jr., SKADDEN, ARPS,
SLATE, MEAGHER & FLOM, L.L.P., Washington, D.C.; Kenneth
A. Shanklin, SHANKLIN & MCDANIEL, L.L.P., Wilmington, North
Carolina, for Appellant. Craig A. Bromby, HUNTON & WILLIAMS,
Raleigh, North Carolina, for Appellees Carroll and Carroll Oil.

_________________________________________________________________

OPINION

LUTTIG, Circuit Judge:

This case arises on appeal from the district court's dismissal of four
counts of a six-count complaint for want of subject matter jurisdic-
tion. For the reasons stated herein, we affirm.

I.

Defendant-appellee Carroll Carolina Oil Co., Inc. ("CCO") owns a
Superfund site, certain cleanup costs of which plaintiff-appellant Axel
Johnson, Inc. ("Axel") -- the former operator, either directly or
through its predecessors in interest, of petroleum refinery and storage
facilities at the site -- has agreed to pay pursuant to a consent decree
with the EPA. CCO received the property pursuant to a quitclaim
deed from defendant-appellee Linda Carroll, who at the relevant times
owned and operated CCO. Carroll had acquired the property through
a foreclosure sale conducted by defendant-appellee Charles Lanier,
the property's trustee.

Subsequent to entry of the consent decree, Axel brought a six-
count complaint against CCO, Carroll, and Lanier. The first two
counts ("the Superfund counts") of Axel's suit sought to hold Carroll
and CCO jointly and severally liable with Axel, under federal and
state law, for its Superfund cleanup costs. The four remaining counts
("the state-law counts") sought damages and rescission based on alle-
gations that Carroll and Lanier had fraudulently manipulated the fore-
closure sale through which Carroll obtained the Superfund property.

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The defendants-appellees moved to dismiss one of the two Super-
fund counts and the four state-law counts pursuant to FRCP 12(b)(1)
and FRCP 12(b)(6). The district court denied the motion as to the
Superfund count, but dismissed the state-law counts under FRCP
12(b)(1) on the grounds that Axel lacked standing to bring such
claims under North Carolina law. To expedite appeal of this decision,
Axel requested that the district court certify its decision as a final
judgment with respect to the state-law counts under FRCP 54(b). The
district court complied, and Axel noticed its appeal. Accordingly, nei-
ther Superfund count is before this court at this time.

II.

We hold that the district court lacked jurisdiction to consider
Axel's four state-law claims. In that court, Axel invoked three bases
for subject-matter jurisdiction: (1) 42 U.S.C.§ 9613(b) (exclusive
jurisdiction over Superfund litigation), (2) 28 U.S.C. § 1331 (federal
question jurisdiction), and (3) "principles of pendent jurisdiction."
J.A. at 42 (amended complaint); accord id. at 2 (initial complaint)
(same). It is undisputed -- and, of course, indisputable -- that neither
42 U.S.C. § 9613(b) nor 28 U.S.C. § 1331 extends federal jurisdiction
to state-law claims. Thus, jurisdiction can be sustained here only
under "principles of pendant jurisdiction."

These principles have been codified in 28 U.S.C.§ 1367, which
provides that,

          in any civil action of which the district courts have original
          jurisdiction, the district courts shall have supplemental juris-
          diction over all other claims that are so related to claims in
          the action within such original jurisdiction that they form
          part of the same case or controversy under Article III of the
          United States Constitution.

Id. § 1367(a). As is relevant here, the test for determining whether
state and federal claims form part of the same constitutional case or
controversy is set forth in United Mine Workers of America v. Gibbs:

          Pendent jurisdiction, in the sense of judicial power, exists
          whenever there is [a federal claim], and the relationship

                    3
          between that claim and the state claim permits the conclu-
          sion that the entire action before the court comprises but one
          constitutional "case." The federal claim must have substance
          sufficient to confer subject matter jurisdiction on the court.
          . . . The state and federal claims must derive from a common
          nucleus of operative fact. But if, considered without regard
          to their federal or state character, a plaintiff's claims are
          such that he would ordinarily be expected to try them all in
          one judicial proceeding, then, assuming substantiality of the
          federal issues, there is power in federal courts to hear the
          whole.

383 U.S. 715, 725 (1966) (citations and footnotes omitted; second and
third emphases added). Accord ESAB Group, Inc. v. Centricut, Inc.,
126 F.3d 617, 628 (4th Cir. 1997).

Although neither party, nor the district court, noted this jurisdic-
tional defect, Axel's submissions to the district court, as well as cer-
tain express findings made by that court at Axel's request, clearly
establish that Axel's four state-law counts were not within the district
court's supplemental jurisdiction. In particular, in requesting that the
district court certify as final its order dismissing those counts, Axel
argued that (1) the Superfund counts and state-law counts were factu-
ally distinct, J.A. at 91-93, (2) the Superfund counts and state-law
counts were legally distinct, id. at 93-94, and (3) because "the factual
and legal bases underlying [the Superfund and state-law counts] are
separate and distinct," id. at 98, "certification is warranted because . . .
the possibility of duplicative appellate review is remote," id. See also
id. at 93 n.1 ("Further, because there is minimal factual overlap
between the two claims, there is little concern that the Fourth Circuit
would have to relearn the same set of facts upon appeal after adjudi-
cation of all claims." (citation and internal quotation omitted)). Simi-
larly, in certifying its order under FRCP 54(b), the district court
explicitly found that "the Superfund Claims that have not been dis-
missed . . . are factually and legally distinct from the State Claims."
J.A. at 104. It follows from these arguments and findings that the
state-law counts and Superfund counts neither "derive from a com-
mon nucleus of operative fact," nor are so closely related that Axel
"would ordinarily be expected to try them all in one judicial proceed-
ing," and thus that supplemental jurisdiction could not be exercised

                     4
over the state-law counts. Cf. Hales v. Winn-Dixie Stores, Inc., 500
F.2d 836, 848 (4th Cir. 1974) (noting failure of pendant jurisdiction
over state-law count that was "separately maintainable and determin-
able without any reference to the facts alleged or contentions stated
in or with regard to the other [federal] count").

III.

When, at oral argument, this court questioned Axel's counsel about
the apparent lack of supplemental jurisdiction, counsel tentatively
suggested that jurisdiction over the state-law counts could, perhaps,
be sustained under 28 U.S.C. § 1332 (diversity jurisdiction), a statu-
tory basis for jurisdiction that Axel had previously invoked neither in
the district court nor before this court. An examination of the plead-
ings and record, however, revealed to counsel and this court that Axel
had not only failed to plead diversity jurisdiction, but that it had also
failed to plead facts from which the existence of such jurisdiction
could properly be inferred. Although the pleadings set forth the resi-
dence of each of the natural persons who are parties to the litigation,
they did not positively establish the citizenship of those persons. See,
e.g., J.A. at 43 (amended complaint) (stating residence, but not citi-
zenship or domicile of Carroll and Lanier); id . at 3-4 (initial com-
plaint) (same). Nor was counsel able to refer the court to anything
else in the record that clearly established the citizenship of those per-
sons.

As the Supreme Court has consistently held, however, state citizen-
ship for purposes of diversity jurisdiction depends not on residence,
but on national citizenship and domicile, see , e.g., Newman-Green,
Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 (1989) ("In order to be a
citizen of a State within the meaning of the diversity statute, a natural
person must both be a citizen of the United States and be domiciled
within the State."), and the existence of such citizenship cannot be
inferred from allegations of mere residence, standing alone. See, e.g.,
Realty Holding Co. v. Donaldson, 268 U.S. 398, 399 (1925) ("The
bill alleges that . . . appellee [is] a`resident' of Michigan. This is not
a sufficient allegation of appellee's Michigan citizenship."); Shaw v.
Quincy Mining Co., 145 U.S. 444, 447 (1892) ("It was held by this
court from the beginning that an averment that a party resided within
the State or the district in which the suit was brought was not suffi-

                     5
cient to support the [diversity] jurisdiction, because in the common
use of words a resident might not be a citizen, and therefore it was
not stated expressly and beyond ambiguity that he was a citizen of the
State . . . . The same rule has been maintained to the present day
. . . ."); Robertson v. Cease, 97 U.S. 646, 648 (1878) ("Looking, then,
at the pleadings, and to such portions of the transcript as properly
constitute the record, we find nothing beyond the naked averment of
Cease's residence in Illinois, which, according to the uniform course
of decisions in this court, is insufficient to show his citizenship in that
State. Citizenship and residence, as often declared by this court, are
not synonymous terms."); Brown v. Keene, 33 U.S. (8 Pet.) 112, 115
(1834) (Marshall, C.J.) (holding allegation that defendant was "a citi-
zen or resident" of Louisiana insufficient to support diversity jurisdic-
tion); Bingham v. Cabot, 3 U.S. (3 Dall.) 382 (1798) ("str[iking] off
the docket" many cases that alleged residence rather than citizenship);
cf. Hodgson v. Bowerbank, 9 U.S. (5 Cranch) 303 (1809) (holding
allegation of residence, as opposed to citizenship, insufficient to sup-
port alienage jurisdiction); Mossman v. Higginson, 4 U.S. (4 Dall.) 12
(1800) (same).

When confronted with the distinction between residence and domi-
cile, upon which distinction the above-cited cases largely rest, counsel
immediately acknowledged that he understood the difference between
these legal terms of art, see, e.g., Commissioner of Internal Revenue
v. Nubar, 185 F.2d 584, 587 (4th Cir. 1950) ("When these words,
`domicile' and `residence', are technically used by persons skilled in
legal semantics, their meanings are quite different."); that the com-
plaint alleged neither citizenship nor domicile, but only residence, and
thus did not properly invoke the court's diversity jurisdiction; and that
the complaint had, in fact, never been intended to invoke such juris-
diction, but had been drafted instead with deliberate intent to invoke
only the supplemental jurisdiction of the court.

Thus, at the conclusion of oral argument, it was apparent to the
court that Axel had abandoned its tentative attempt to invoke the
diversity jurisdiction, and had chosen to rest, instead, solely on its
invocation of the supplemental jurisdiction. Axel's abandonment of
this attempt was confirmed when, after argument, counsel for Axel
submitted to the court a letter addressing "the jurisdictional issue that
the Court of Appeals raised," which rested entirely on a discussion of

                     6
the supplemental jurisdiction without even mentioning the diversity
jurisdiction.

CONCLUSION

Because the district court lacked supplemental jurisdiction over
Axel's state-law counts, and because Axel has failed to establish any
other basis of federal jurisdiction over these counts, we hold that
Axel's state-law counts were properly dismissed for lack of subject
matter jurisdiction.*

AFFIRMED
_________________________________________________________________
*Because Axel has apparently abandoned its short-lived attempt to
invoke the diversity jurisdiction, and because, in light of Axel's explicit
arguments below, it is plain that its invocation of the supplemental juris-
diction cannot be cured by amendment, we conclude that the district
court did not err in dismissing Axel's complaint with prejudice.

                    7