Ortiz v. U.S. Government

• Decision Date: 30 March 1979
• Docket Number: No. 78-1321,78-1321
• Citation: 595 F.2d 65
• Parties: Ramonita ORTIZ et al., Plaintiffs, Appellants, v. UNITED STATES GOVERNMENT, Defendant, Appellee, v. HOSPITAL MIMIYA, INC., Third-Party Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 65

595 F.2d 65

Ramonita ORTIZ et al., Plaintiffs, Appellants, v. UNITED STATES GOVERNMENT, Defendant, Appellee, v. HOSPITAL MIMIYA, INC., Third-Party Defendant, Appellee.

No. 78-1321.

United States Court of Appeals First Circuit.

Submitted Oct. 6, 1979.

Decided March 30, 1979.

Osvaldo Perez Marrero, Hato Rey, P. R., and Fiddler, Gonzalez & Rodriguez, San Juan, P. R., on brief, for plaintiffs, appellants.

Barbara Allen Babcock, Asst. Atty. Gen., Washington, D. C., Julio Morales-Sanchez, U. S. Atty., San Juan, P. R., Leonard Schaitman and Michael F. Hertz, Attys., App. Section, Civ. Div., Dept. of Justice, Washington, D. C., on brief, for the United States.

Jose E. Otero, Jorge Benitez Gautier, and Salvador Antonetti, San Juan, P. R., on brief, for third-party defendant, appellee.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

This appeal concerns the power of the district court to permit certain Puerto Rican residents, who have sued the United States for the alleged negligence of a Veterans Hospital, to add to their complaint a nonfederal tort claim ¹ against Hospital Mimiya, Inc., a private institution in Puerto Rico. By the time of the proposed amendment, Hospital Mimiya had been brought into the litigation as a third-party defendant by the United States, which claimed a right of indemnification from Mimiya should the United States be found liable. The district court refused to allow plaintiffs to amend their complaint so as to sue Hospital Mimiya directly, and denied their motion for reconsideration, stating that it lacked power to exercise either ancillary or pendent jurisdiction over the proposed nonfederal claim against Hospital Mimiya. ² We hold that statutory considerations do not bar "the exercise of jurisdiction over the particular nonfederal claim" involved herein, See Owen Equipment and Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978) and remand to the district court with directions for it to follow in determining whether Article III of the Constitution bars such exercise.

I.

Upon exhausting their administrative remedies, 28 U.S.C. § 2675, Ramonita Ortiz, et al. (hereinafter appellants) sued the United States under the Federal Tort Claims Act, 28 U.S.C. §§ 1346(b), 2671-80, ³ alleging that on January 21, 1973 appellants' decedent was taken to the Veterans Hospital in San Juan where the employees and agents of that hospital, "failing to diagnose the seriousness of the condition, did not hospitalize or treat him, but at his wife's insistence, referred him to Mimiya Clinic for hospitalization with a diagnosis of 'malaria attack.' " Thereafter he allegedly was not given proper treatment and by the time, three days later, that he was returned to the V.A. Hospital he had allegedly sustained "permanent, irreparable damage." Appellants also contend that the V.A. Hospital's "referral (to Mimiya) was an authorization for admission under Veterans Administration's instructions." The decedent, in any event, steadily declined until he died one and one-half years later.

After suit was brought, the United States filed a third-party complaint against Hospital Mimiya seeking indemnification. This complaint, although it failed to make mention of the fact, was bottomed on an independent federal jurisdictional basis, 28 U.S.C. § 1345. ⁴ Thereafter, appellants unsuccessfully sought leave of court to amend their own complaint to add a negligence claim directly against Mimiya. After denying the motions to amend and for reconsideration, the district court granted appellants permission, to which we assented, to bring an interlocutory appeal, 28 U.S.C. § 1292(b), from these orders. We stayed consideration of the appeal pending the United States Supreme Court's decision in Qwen Equipment and Erection Co. v. Kroger, which issued last June, 437 U.S. 365, 98 S.Ct. 2391, 57 L.Ed.2d 274 (1978).

While when Kroger was first called to our attention it seemed as if it might be controlling, it is now clear that its underlying facts differ significantly from those before us. In Kroger, plaintiff, a citizen of Iowa, sued defendant, a citizen of Nebraska, under the diversity statute (there were no federal claims as such). After filing a third-party complaint against Owen Equipment and Erection Company, defendant moved for summary judgment on plaintiff's claim against it. While this motion was pending, plaintiff successfully moved to amend its complaint to add a claim against Owen. Summary judgment was thereafter rendered in defendant's favor on the original claims, leaving only plaintiff's claim against Owen to proceed to trial. On the third day of trial, Owen moved to dismiss for lack of subject matter jurisdiction on the ground that it was a citizen of the same state as plaintiff. The district court denied the motion and was affirmed on appeal. The Eighth Circuit reasoned that in light of United Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), because plaintiff's claims against the defendant and Owen arose out of a common nucleus of operative fact, exercise of jurisdiction over the nonfederal claim was not barred by Article III of the Constitution which defines the scope of district court jurisdiction. ⁵ The Supreme Court reversed holding that it would conflict with the intent of Congress as manifested in the diversity statute for the district court to exercise jurisdiction over plaintiff's claim against Owen.

The Court said that there are two "hurdle(s) that must be overcome in determining that a federal court has jurisdiction over a particular controversy. For the jurisdiction of the federal courts is limited not only by the provisions of Art. III of the Constitution, but by Acts of Congress." Kroger, 437 U.S. at 372, 98 S.Ct. at 2402. The Court went on to rule that the history of the diversity of citizenship statute, 28 U.S.C. § 1332(a)(1), "clearly demonstrates a congressional mandate that diversity jurisdiction is not to be available when any plaintiff is a citizen of the same State as any defendant." Id. at 374, 98 S.Ct. at 2403. Since the exercise of jurisdiction over plaintiff's claim against Owen destroyed complete diversity between the plaintiff and defendants, the claim was outside the scope of the jurisdiction conferred on federal courts by Congress in enacting the diversity statute. Id. The Court never reached the issue whether jurisdiction would have existed under Article III.

The Kroger analysis is not dispositive here since the present case was not brought under the diversity statute but rather under the Federal Tort Claims Act. Furthermore, Hospital Mimiya's status in the case is different from Owen's, as it is a third-party defendant under a federal jurisdictional statute. These factors point to a different analysis and, ultimately we believe, a different result, from Kroger.

In deciding whether the district court erred in ruling that it lacked judicial power to hear appellants' claim against Hospital Mimiya, we first consider whether jurisdiction is precluded by Article III. While this question was bypassed in Kroger, it remains as the Kroger Court acknowledged one of two fundamental "hurdles," both of which must be cleared for jurisdiction to exist. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218, contains guidelines for delineating the scope of the constitutional limits to federal judicial power, at least where the federal claim to which a plaintiff seeks to append a nonfederal claim arises under the portion of Article III extending the judicial power to cases " 'arising under (the) Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their authority." See Note 5, Supra ; Kroger, 437 U.S. at 371, 98 S.Ct. at 2401. In Gibbs plaintiff raised two claims arising out of the same incident against the defendant, one based on federal substantive law and the other on state law. The federal claim was founded upon a provision of the Labor Management Relations Act, 29 U.S.C. § 187(b), banning secondary boycotts and the state law claim was for intentional interference with employment and business contracts. At issue was whether the district court could exercise pendent jurisdiction over the state law claim. The Court held:

"Pendent jurisdiction, in the sense of judicial Power, exists whenever there is a claim 'arising under (the) Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority . . .,' U.S.Const., Art. III, § 2, and the relationship between that claim and the state claim permits the conclusion 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. Levering & Garrigues Co. v. Morrin, 289 U.S. 103, (53 S.Ct. 549, 77 L.Ed. 1062). 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. at 725, 86 S.Ct. at 1138 (emphasis in original; footnotes omitted). Thus, where the federal claim " 'aris(es) under . . . the Laws of the United States,' " the exercise of judicial power over a nonfederal claim is not barred by Article III when the federal claim raises a substantial question and the federal and nonfederal claims arise from a common nucleus of operative fact. Kroger, 437 U.S. at 378-79, 98 S.Ct. at 2401. (White, J., dissenting).

One possible distinction between Gibbs and the present case is that Gibbs involved a "(c)ase . . . arising under the Laws of the United States." It is by no means clear that Federal Tort Claims Act actions are "(c)ase(s) . ....