Court Opinion

ID: 27237
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:06:15+00
Date Added: 2024-06-11T14:56:57.741704
License: Public Domain

UNITED STATES COURT OF APPEALS

                        FOR THE FIFTH CIRCUIT

                  No.   01-41327   THROUGH 01-41335
                  No.   01-41366   (CONSOLIDATED)
                  No.   01-11481   (CONSOLIDATED)
                  No.   01-51209   (CONSOLIDATED)
                  No.   01-51241   (CONSOLIDATED)

                   BILLY ARNOLD, JR., ET AL.,

                                              Plaintiffs - Appellees,

                               VERSUS

                            GARLOCK INC.,

                                                Defendant - Appellant.

          Appeals from the United States District Court
       For the Southern District of Texas, Corpus Christi
                            April 9, 2002
                ON PETITION FOR REHEARING EN BANC
        (opinion 12/28/01, 278 F.3d 426 (5th Cir. 2001))
Before DeMOSS, PARKER, and DENNIS, Circuit Judges

PER CURIAM:

     Treating the petition for rehearing en banc as a petition for

panel rehearing, the petition for panel rehearing is DENIED.       No

member of the panel or judge in regular active service having

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requested that the court be polled on rehearing en banc, see FED R.

APP. P. 35; 5TH CIR. R. 35; the petition for rehearing en banc is

DENIED.

     In support of its petition for rehearing, Garlock asserts that

the holding of this court, Arnold v. Garlock, 278 F.3d 426 (5th

Cir. 2001), is in error regarding the law of contribution; that we

improperly adjudicated venue under 28 U.S.C. § 157(b)(5); and that

the automatic stay of 11 U.S.C. § 362 precludes the dismissal of a

bankruptcy-debtor co-defendant from an underlying tort lawsuit.

     Garlock asserts that a conflict exists with our decision in

Pope v. Manville Forest Products Corp., 778 F.2d 238 (5th Cir.

1985) regarding application of the § 362 stay.   There, we held that

a Louisiana district court erred in applying as res judicata a

judgment of $0 against a Title VII defendant in a New York

bankruptcy court so as to dismiss the plaintiff’s identical claim

in the Louisiana district court. Based on a statutory construction

of § 362, we reversed the district court and held that § 362(a)

stayed the dismissal.      Id. at 239.   A more-than cursory look,

however, reveals that we expressly limited the holding to the

specific facts of that case, “not wish[ing] unnecessarily, or with

technicality, to impede the district court in maintaining a current

docket. We simply h[e]ld that the entry of the particular order of

dismissal in the appeal before us was prohibited by the section 362

stay.”    Id.   In the instant cases, the issue was not protecting a

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plaintiff’s direct claim under Title VII from the preclusive effect

of another court’s ruling, but whether to permit a plaintiff to

voluntarily dismiss a claim under FED. R. CIV. P. 41(a) and a

district court’s interest in granting such a motion.

       Most circuits hold that the district court has jurisdiction to

determine the applicability of the automatic stay under § 362(a) to

proceedings before it.      See 2B Bankr. Service L. Ed. § 19:65 (2002)

(reporting that the Second, Third, Fifth, Sixth, Seventh, Eighth,

and Tenth Circuits so rule). Notwithstanding Pope, we have held

that the automatic stay does not divest all other courts of

jurisdiction to hear every claim that is in any way related to the

bankruptcy   proceeding.       Further,        that   district     courts   retain

jurisdiction     to    determine   the       applicability    of    the   stay    to

litigation     pending    before    them,       and   to    enter    orders      not

inconsistent with the terms of the stay.                   See Picco v. Global

Marine Drilling Co., 900 F.2d 846, 850 (5th Cir. 1990)(dismissal of

claim under forum non conveniens upheld regardless of § 362(a), in

part   because   the     defendant’s     Chapter      11   proceeding     made    it

unnecessary to keep the action on the court’s docket and because a

subsequent lifting of the stay by the bankruptcy court would cure

any defect, if one existed); Hunt v. Banker’s Trust Co., 799 F.2d
1060, 1069 (5th Cir. 1986); cf. In re National Gypsum Co., 118 F.3d
1056, 1070 n.24        (5th Cir. 1997)(restating the premise that a

district court may determine the applicability of the automatic

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stay and noting that such does not prevent a debtor from redressing

violations of the automatic stay through contempt proceedings in

the bankruptcy court nor limit a bankruptcy court from enforcing or

construing its own orders).    Other circuits hold likewise.   See,

e.g., Dennis v. A.H. Robins Co., Inc., 860 F.2d 871, 872 (8th Cir.

1988)(holding that a district court has the power to dismiss a case

for failure to comply with court rules, regardless of § 362(a), in

the interest of advancing a crowded docket and preserving respect

for the integrity of its internal procedures).

     The district courts in the instant cases were similarly

entitled to dismiss the debtor on the plaintiffs’ motions as a

matter consistent with the terms of § 362(a) and the effective

management of their dockets.

     Nevertheless, Garlock asserts that its contribution claim

survived the dismissal of the debtor in the underlying tort cases.

     The essential prerequisites for a contribution claim are a

judgment finding the party seeking contribution to be a joint

tortfeasor and the payment by such party of a disproportionate

share of the common liability.       See Beech Aircraft Corp. v.

Jinkins, 739 S.W.2d 19 (Tex. 1987); FDIC v. Niblo, 821 F. Supp.
441, 457 (N.D. Tex. 1993).

     Under Texas law, for a claim to survive a plaintiff’s nonsuit,

it must be a claim for affirmative relief.   Quanto Int’l Co. Inc.

v. Lloyd, 897 S.W.2d 482, 484-45 (Tex. App.--Houston [1st Div.]

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1995, no writ).          There, a defendant’s counterclaim to enforce

arbitration      survived    the    plaintiff’s         nonsuit       as   a     claim    for

affirmative      relief     under   TEX.       R.    CIV.    P.     162.   Id.    at     487.

Regardless, a claim for contribution is not a claim for affirmative

relief, despite Garlock’s bare contention that it is.

      Under Texas law, “[t]o qualify as a claim for affirmative

relief, a defensive pleading must allege that the defendant has a

cause of action, independent of the plaintiff’s claim, on which he

could recover benefits, compensation or relief, even though the

plaintiff may abandon his cause of action or fail to establish it.”

General Land Office v. OXY U.S.A., Inc., 789 S.W.2d 569, 570 (Tex.

1990).      A    cross    action    for    contribution             has    no    existence

independent of a plaintiff’s action.                 It does not amount to a claim

for affirmative relief under Texas law.                     See Pleasants v. Emmons,

871 S.W.2d 296,     298   (Tex.      App.--Eastland             1994,      no    writ)

(defendants’ counterclaim for contribution and indemnity from third

party could not be established because plaintiff had abandoned her

claim); Gillman v. Davidson, 934 S.W.2d 803, 805 (Tex. App.--

Houston [1st Dist.] 1996) (en banc) (Hedges, J., dissenting); Nat’l

Advertising Co. v. Smith, No. 01-98-00121-CV, 1999 WL 681957, at *4

(Tex.    App--Houston       [1st    Dist.]          1999)    (unpublished         opinion)

(“[c]ertain      claims     have    been       construed       as    not    constituting

independent affirmative claims for relief because they expire as

soon as the plaintiff’s claims are extinguished,” citing, inter

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alia, Pleasants v. Emmons).

      Under federal law, as the Texas courts have noted, FED. R. CIV.

P. 41 does not contemplate the “affirmative relief” requirement

essential to TEX. R. CIV. P. 162 regarding dismissal of an action.

Quanto, 897 S.W.2d at 486-87.      Each of Garlock’s cases, however,

were removed under federal question jurisdiction, as a matter

purportedly “related to” federal bankruptcy proceedings.            A claim

for contribution under federal question jurisdiction is governed by

federal procedural law, namely, FED. R. CIV. P. 8(c).          See Niblo,
821 F. Supp. at 456.    That court held that contribution was not an

affirmative   defense   within   the   purview   of   Rule   8(c)   but   an

affirmative claim which must be pled and proved.         The court would

not read the defendants’ plea in avoidance as an affirmative

defense under the last sentence of Rule 8(c)1 because the necessary

prerequisites to establish a claim of contribution under Texas law

had not been met.    Id. at 456-57 (citing Beech Aircraft Corp. v.

Jinkins, 739 S.W.2d 19, 21 (Tex. 1987), supra).         First, there had

been no judgment against the defendants with respect to any claim,

nor one finding the defendants to be jointly and severally liable,

and, second, there had been no disproportionate payment, if any

occurred, of a judgment by the defendants. 821 F. Supp. at 456.

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     “When a party has mistakenly designated a defense as a
counterclaim or a counterclaim as a defense, the court on terms, if
justice so requires, shall treat the pleading as if there had been
a proper designation.”

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      Here, similarly, there have been no judgments as to Garlock in

any of the previously-removed cases, nor has Garlock been subject

to payment of any amount by judgment. On those bases, Garlock has

merely pleaded contribution in avoidance.          Because the district

courts in the instant cases properly dismissed the debtor in the

face of § 362(a), Garlock’s purported claims did not survive the

dismissals.   Garlock also cites Koonce v. Quaker Safety Products &

Mfg. Co., 798 F.2d 700 (5th Cir. 1986) for the proposition that the

expiration of a statute of limitations for a plaintiff’s claim

against a third party does not preclude a defendant’s claim of

contribution against that third party.       There, a judgment had been

entered and a jury had apportioned fault among the plaintiff,

defendant, and third party.       Id. at 705.     Here, again, there has

been no judgment or apportionment of fault.              Garlock has not

satisfied the requirements for maintaining a claim for contribution

and further, as we noted, Arnold, 278 F.3d at 440, Garlock lacks

the   relationship   or   unity   of   identity   with   the   debtor   that

characterized, for example, In re Dow Corning, 86 F.3d 482 (6th

Cir. 1996).   There is no presently-cognizable claim under either

Texas state or federal law upon which       Garlock can found a claim of

“related-to” jurisdiction under 28 U.S.C. § 1334.

      On   these     bases,   Garlock’s     contribution       claims    are

unsupportable.

      Garlock also contends that we exceeded our jurisdiction by

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determining “on the merits” under § 157(b)(5) the venue of the tort

claims against it.      As Garlock correctly points out, such an

analysis belongs only in the “Home” district court with bankruptcy

jurisdiction.   Our analysis, however, did not purport to determine

the venue in which to proceed.            Instead, it was limited to

determining   whether   Garlock   could   make   a   showing   on   appeal

sufficient to justify issuing a stay pending appeal on its motion

to transfer under the circumstances presented.        As such, the focus

was on an analysis in this court, not in the “Home” district court.

Rather than ruling on the appropriate venue for a valid claim

within the § 157(b)(5) scheme, we simply conducted a threshold

analysis to determine whether Garlock had such a valid claim under

which to invoke “related-to” bankruptcy jurisdiction under § 1334

and so implicate § 157(b)(5) at all.       Finding that it did not, we

implicitly upheld the determinations of the district courts and

denied Garlock’s motion for stay pending appeal on the basis that

Garlock was unable to show a likelihood of success on such appeal.

Effectively, that denied a motion to transfer, not a motion to

determine venue under § 157(b)(5).

     Garlock apparently believes that such a transfer should have

been automatic upon application to the court in which the tort

action arose when the debtor entered bankruptcy proceedings.           In

this, Garlock fails to apprehend the difference between reviewing

a party’s eligibility for “related-to” bankruptcy jurisdiction and

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determining in law or equity the most appropriate venue in which to

proceed once such jurisdiction is established.

      Of greater concern is whether the court in which a tort action

arises, if different from the bankruptcy jurisdiction, is the

appropriate place to bring a transfer motion under § 157(b)(5).

Although the language of § 157(b)(5) seems to permit it, such a

determination is subject to an in-depth examination under the rules

of statutory construction.            Because our determination in this case

revolved around Garlock’s lack of a valid cross-claim against the

debtor and Garlock’s inability to show a likelihood of success on

appeal, we did not determine with finality whether § 157(b)(5),

alone,     enables      a    district    court     outside    of    the    bankruptcy

jurisdiction to effect such a transfer.               The point may be a minor

one, given that under the general transfer statute, 28 U.S.C. §

1404(a), “[f]or the convenience of parties and witnesses, in the

interest of justice, a district court may transfer any civil action

to   any   other     district    or     division    where    it    might   have   been

brought.”      Whether       transfer     would    have   been     predicated     on   §

157(b)(5)    or    on    a   district    court’s     broad   discretion      under §

1404(a), however, Garlock’s claim did not create “related-to”

bankruptcy jurisdiction.

      Garlock’s petition for rehearing en banc is therefore DENIED.

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