Addington v. Farmer's Elevator Mut. Ins. Co.
| Decision Date | 13 July 1981 |
| Docket Number | No. 80-2284,80-2284 |
| Citation | 650 F.2d 663 |
| Parties | William H. ADDINGTON, Plaintiff-Appellant, v. FARMER'S ELEVATOR MUTUAL INSURANCE COMPANY, A Corporation, Defendant-Appellee. Summary Calendar. . Unit A |
| Court | U.S. Court of Appeals — Fifth Circuit |
William H. Addington, pro se.
Thompson & Knight, James B. Harris, Dallas, Tex., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Texas.
Before BROWN, POLITZ, and TATE, Circuit Judges.
The plaintiff Addington, proceeding pro se in the district court and on appeal, seeks reversal of the district court's order granting the defendant's motion for summary judgment. The plaintiff filed a civil diversity action below, alleging that the defendant Farmland Mutual Insurance Company (Farmland) 1 subjected him to harassment by: (1) prosecuting a subrogation claim against Addington that was allegedly discharged upon Addington's adjudication as a bankrupt, and (2) attempting to enforce the allegedly invalid money judgment granted to the defendant on the basis of the subrogation claim. On appeal, the plaintiff admits that the defendant's subrogation claim was not discharged in bankruptcy, and he therefore waives his action alleging harassment on that basis. Rather, the plaintiff urges that the district court erred by refusing to allow him to amend his complaint to state another claim forming the basis for relief. We find no error below and affirm the summary judgment of dismissal.
The plaintiff Addington formerly owned as sole stockholder the Addington Grain Company, Inc. (Addington Grain), a grain storage company. Sometime prior to 1965, the plaintiff issued a personal guaranty agreement. By it, he agreed to reimburse the Commodity Credit Corporation (Commodity) for any losses that it might suffer due to a shortage of its grain stored in the Addington Grain elevators.
In November of 1965, a shortage of Commodity grain was discovered at Addington Grain. Farmland (then Farmer's Elevator Mutual Insurance Company), as insurer for Commodity and pursuant to its blanket policy covering the obligation of the grain elevator/warehouseman, paid Commodity in the amount of its losses resulting from the grain shortage. Farmland was then subrogated to Commodity's right to recover losses from the plaintiff Addington.
On the basis of this subrogation claim, Farmland filed suit in federal district court in Kansas against Addington on August 7, 1967, to recover the outstanding amount paid to Commodity under the contract of insurance. On November 5, 1968, Addington filed bankruptcy and, on August 20, 1969, was discharged in bankruptcy. Aware that Addington had filed for bankruptcy and was adjudged bankrupt, Farmland continued to prosecute its separate suit against Addington, rather than to intervene in the bankruptcy proceedings.
On November 14, 1974, Farmland obtained in the federal district court a judgment against Addington for $303,038.00 plus costs (representing unrecovered amounts paid by it to Commodity due to grain shortage losses). Under the findings of fact and law in this suit, Addington had participated in causing the shortage, and the debt was not discharged by Addington's bankruptcy by virtue of Section 17(a)(2) of the former bankruptcy act (fraudulent acts). Addington did not appeal this judgment. Thereafter, on two separate occasions subsequent to entrance of its judgment, Farmland caused Addington to return to Kansas (from his home in Fort Worth, Texas) for examination (as the judgment debtor) in aid of execution of the money judgment. There is no indication in the appellate record that the judgment has been satisfied to date.
On March 2, 1979, Addington filed the present diversity suit in federal district court in Texas, alleging that he was subject to harassment by Farmland, through its attempts to execute upon the Kansas federal judgment, allegedly invalid on the basis of Addington's discharge in bankruptcy. Addington sought to recover damages thereby caused to him. (The proposed amended complaint at issue attacks this judgment as fraudulently obtained.)
On April 2, 1980, the defendant filed a motion for summary judgment. The grounds for the motion were that the subrogation claim was not discharged by Addington's adjudication as a bankrupt and, moreover, that Addington could not now collaterally attack the Kansas federal district court judgment.
The plaintiff responded, on April 10, 1980, with his own motion for summary judgment. Additionally, on April 11, 1980, the plaintiff filed a motion to amend his complaint to attack collaterally Farmland's Kansas federal district court judgment on the basis of fraud. In essence, the plaintiff contends in his proposed amended complaint that the defendant Farmland, the federal district judge presiding over the federal case in Kansas, and certain former employees of Addington Grain (one of whom, who had been convicted of embezzlement in connection with the missing grain, testified on Farmland's behalf in the prior case) conspired to have the federal district court judgment entered against him.
On October 9, 1980, the Texas federal district court held a hearing on the motions for summary judgment. On October 28, 1980, the district court granted the defendant's motion for summary judgment without express disposition of the plaintiff's motion to amend his complaint.
On appeal, the plaintiff abandoned any claim that the Kansas judgment was invalid on the basis that Farmland's subrogation claim was discharged in bankruptcy. Thus, the plaintiff's success on appeal rests on the validity of his attack directed to the Kansas judgment on the basis of fraud attempted to be asserted by the proposed amended complaint.
At the hearing on the motions for summary judgment, the district court judge questioned Addington as to the facts forming the basis for his allegations of fraud as set forth in his proposed amended complaint. However, in presenting Farmland's case, counsel pointed out that, since the court had not granted the motion to amend, the issue of fraud was not before the court at the hearing on the motions for summary judgment. Counsel for Farmland argued its motion on the basis of Addington's allegations that the judgment was invalid due to his discharge in bankruptcy, but he also pointed out that the Kansas judgment was not subject to collateral attack in this Texas proceeding, as was sought by the proposed amended complaint. The district judge made no comment with regard to what it considered to be the posture at the time of hearing of Addington's amendment-asserted fraud claim.
Following hearing, the district court issued an order, stated to have been based on the pleadings, briefs, and oral argument. By it, the court granted the defendant's motion for summary judgment and dismissed the plaintiff's suit. No mention was made of the intended disposition of the plaintiff's motion to amend his complaint.
In order to determine the proper disposition of the plaintiff's appeal which rests solely on the merits of the fraud in the Kansas federal district court suit which was first asserted by the proposed amended complaint we must initially determine whether the district court's final order can be considered an implied denial of the motion to amend or whether, instead, the case must either be remanded for a ruling on his motion or else the summary judgment be set aside as (on the basis of the amendment) improvidently granted.
The denial of a motion by the district court, although not formally expressed, may be implied by the entry of final judgment (which is in effect an overruling of pending pretrial motions) or of an order inconsistent with the granting of the relief sought by the motion. Agostino v. Ellamar Packing Co., 191 F.2d 576, 577 (9th Cir. 1951); Mosier v. Federal Reserve Bank of New York, 132 F.2d 710, 712 (2d Cir. 1942); see also Cohen v. Curtis Publishing Co., 333 F.2d 974, 977 (8th Cir.), cert. denied 380 U.S. 921, 85 S.Ct. 923, 13 L.Ed.2d 808 (1965). Other decisions have recognized that this principle may be applicable, although not finding in the particular instance that the denial was so implied. 2
We find that the district court's order of October 27, 1980, granting the defendant's motion for summary judgment and dismissing the plaintiff's suit, was so inconsistent with the plaintiff's request for leave to amend to state a new claim for relief as implicitly to deny the motion to amend. The district court itself noted at the hearing on the motion for summary judgment that the new grounds asserted by the proposed amended complaint constituted a collateral attack upon a judgment valid on its face, R.II at p. 23, and counsel for the defendant strongly argued the impropriety of that attack as barred by collateral estoppel and lack of recognized ground for collateral attack in another court than that which entered judgment, R.II at pp. 26-29. 3
In light of our determination that the district court denied by necessary implication the plaintiff's motion to amend, we now direct our review to a determination of whether, as the plaintiff contends, the district court erred in so doing.
Leave to amend pleadings "shall be freely given when justice so requires," Fed.R.Civ.Proc. Rule 15(a). However, it is by no means automatic, Layfield v. Bill Heard Chevrolet Company, 607 F.2d 1097, 1099 (5th Cir. 1979), cert. denied 446 U.S. 939, 100 S.Ct. 2161, 64 L.Ed.2d 793 (1980). Thus, the decision to grant or to deny a motion for leave to amend lies within the sound discretion of the trial court. Layfield, supra. Here, we find no abuse of discretion in the district court's failure to grant the plaintiff's motion for leave to amend.
In exercising its discretion, the trial court may consider such factors as "undue delay, bad faith or dilatory...
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