Liberty Mutual Insurance Company v. Horton

Decision Date08 April 1960
Docket NumberNo. 17958.,17958.
PartiesLIBERTY MUTUAL INSURANCE COMPANY, Appellant, v. Emmett HORTON, Appellee.
CourtU.S. Court of Appeals — Fifth Circuit

Howell Cobb, Orgain, Bell & Tucker, Beaumont, Tex., for appellant.

Joe H. Tonahill, Floyd W. Addington, Jasper, Tex., for appellee.

Before RIVES, Chief Judge, and HUTCHESON and JONES, Circuit Judges.

HUTCHESON, Circuit Judge.

This is an appeal from a judgment dismissing for want of jurisdiction a workmen's compensation suit filed by appellant, Liberty Mutual Insurance Company, in the United States District Court for the Eastern District of Texas. It was brought to set aside an award of the Industrial Accident Board of Texas, and to be relieved from the employee's claim against it that he became totally and permanently disabled and entitled to an award, under the Texas Compensation Act, of $14,635.00, as a result of an accidental injury incurred while in the course of his employment on a job where Liberty Mutual Insurance Company was the compensation insurer.

Jurisdiction was founded upon diversity of citizenship: in that appellant is a Massachusetts corporation and Emmett Horton is a resident citizen of Texas; and upon the good faith allegation that more than $10,000.00 was in controversy: in that Horton allegedly was injured on October 8, 1957, while employed by American Bridge Division of United States Steel Corporation in Orange County, Texas; that Liberty Mutual Insurance Company, appellant, was the workmen's compensation carrier for the employer; that Horton filed his statement with the Industrial Accident Board claiming total and permanent disability at a rate of $35.00 per week for 401 weeks, or a total of $14,035.00; and that on April 30, 1959, the Board entered its award allowing Emmett Horton $35.00 a week for 30 weeks, a total of $1050.00.

Horton answered, and, in addition, filed a cross-action for total and permanent disability, 401 weeks at $35.00 a week, a total of $14,035.00, alleging diversity of citizenship and an amount in excess of $10,000 in controversy.

On motion by Horton to dismiss the suit for want of jurisdiction, the district judge turned his face away from the controlling decision of the Texas Supreme Court and from the many decisions of this court, declaring that Federal Court Jurisdiction in Texas Workmen's Compensation suits is a special jurisdiction and, in exercising it, the court is bound by, and must strictly follow, the construction placed on the statutes by the state courts. Advancing as his sole reason for doing so his reliance on National Surety Co. v. Chamberlain, 171 F.Supp. 591, an opinion of the District Court for the Northern District of Texas, he declined to follow the settled law to the contrary, and, holding that there was no jurisdiction in the federal court, since the order of the board was for less than $10,000.00, the amount in controversy was less than the requisite jurisdiction, he dismissed both the original action and the counter claim.

Appealing from this order, the insurer is here insisting that, for the reason set out in the margin,1 the district court erred in holding that the amount in controversy did not exceed $10,000.00, and in dismissing the cause. For the reasons following and upon the authorities hereafter set down, we agree that this is so.

Under Article 8307, Section 5, Vernon's Texas Statutes, either party may bring a de novo action to set aside an award. In the authoritative case of Booth v. Texas Employers' Insurance Association, 132 Tex. 237, 123 S.W.2d 322 (Tex.Com.App. opinion adopted by the Supreme Court, 1938), a thorough analysis of the procedures of the Workmen's Compensation Law was made. At page 328 of 123 S.W.2d the court declares:

"* * * The suit to set aside an award of the board is in fact a suit, not an appeal. It is filed as any other suit is filed and when filed the subject matter is withdrawn from the board. Section 5, as amended, of Article 8307, prohibits the board from proceeding further toward the adjudication of the claim after the filing of the suit. The trial in court is de novo, wholly without reference to what may have been decided by the board. It is true that as conditions precedent to the filing of suit the insurer or the employer must have been notified of the injury, claim must have been filed with the board, and the board must have made a final ruling and decision (Section 4a, Article 8307), but these requirements do not negative the fact that a suit is filed and tried, not merely an appeal taken."

Thus, as interpreted by the Supreme Court of Texas, proceedings before the Industrial Accident Board are viewed as mere procedural preliminaries to suit, the so-called "appeal" being in actuality an original action. Once the suit is brought, the Board's findings and award are totally abrogated.

Yet the claim before the Board does have the binding substantive effect of fixing the extent of the insurer's liability as claimed by the employee. In 123 S.W.2d 322, at page 329, the court declares:

"It has repeatedly been held that, although one claim cannot be filed with the board and another and different claim asserted in court, yet when the injury suffered is of that class of injuries, sometimes called general injuries, for which the compensation is based upon incapacity to work, and not of that class of injuries usually called specific injuries, for which the amount of compensation is fixed by the statute, a general description of the injury is sufficient in the claim made before the board, and that in the suit filed to set aside the award of the board the claim may be enlarged to include all injuries proximately resulting from the accident."

After thus holding, quite logically, that regardless of who files the suit attacking the Board's award, the true controversy concerns the right of the employee to compensation, and, the amount of his claim before the Board fixing the extent of the insurer's claimed liability is the sole indication of the amount actually in controversy, the court, at page 331 sets out the rule governing jurisdictional amount regardless of who files the suit. That rule is:

"When the claim filed with the board shows the amount claimed, in dollars and cents or by statement of facts from which the amount can definitely be determined and the award of the board is less in amount than that of the claim, the amount shown by the claim is the amount in controversy and the suit should be filed in the court having jurisdiction of that amount."

Appellant alleged in its petition that appellee had made a claim before the Board for total and permanent disability and for compensation in the aggregate amount of $14,035.00; while appellee has filed in this cause a cross-claim asking for the same relief and for the same $14,035.00, all growing out of the same controversy.

In 1936, in a Texas Workmen's Compensation suit, Great American Indemnity Co. v. Dominguez, 84 F.2d 179, 180, an opinion uniformly and many times approved and followed,2 this court, rejecting a district court ruling, in effect that federal courts, in determining their jurisdiction, are not bound to follow state court rulings, declared:

"We think this ruling out of accord with the decisions of the Texas courts which we are bound to follow. These settle that the jurisdiction of a court to hear a suit to set aside a final ruling and decision of the Industrial Accident Board is absolutely dependent upon plaintiffs pleading and proving precise and exact compliance with the essential statutory steps."

In 1937, this court in Heard v. Texas Compensation Ins. Co., 87 F.2d 30, at page 32 said:

"It is settled law that the remedy afforded by the Texas Workmen\'s Compensation Statutes is exclusive; that the jurisdiction of the District Court is a special jurisdiction and that in a workmen\'s compensation case every step provided in the statute must be taken as there presented."

Again, in 1942, after the Supreme Court of Texas had in 1938, in the Booth case, dealt specifically, completely, and authoritatively with the matter of trial court jurisdiction of suits to set aside orders of the Board, this court, in General Accident, Fire & Life Assur. Corp. v. Mostert, 131 F.2d 596, declared and followed the rule for determining jurisdiction laid down by the Supreme Court of Texas in the Booth case.

In the light of these decisions, we are in no doubt that the district judge in this case was without warrant in determining jurisdiction by any other rule than that there laid down. In addition, we think it clear that, if this court had not already ruled on the matter and it was an open one here, the district court would have erred in denying jurisdiction under the settled federal rule for determining it, as laid down by the Supreme Court in St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 58 S.Ct. 586, 82 L.Ed. 845 and Bell v. Preferred Life Assur. Soc., 320 U.S. 238, 64 S.Ct. 5, 88 L.Ed. 15, and by this court in Colonial Oil Co. v. Vining, 5 Cir., 237 F.2d 913, 914, and the many cases from this court cited in it to the same effect. This rule, as restated in the Vining case, is "that the good faith allegations of the complaint that the matter in controversy exceeds the sum of $3000 $10,000, exclusive of interest and costs, is sufficient to confer jurisdiction unless it appears elsewhere in the complaint or by proof aliunde that less than that amount is involved."

A further and additional reason why jurisdiction should not have been refused in this case is that it is the long established rule that...

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