Hixon v. Sherwin-Williams Co.
| Decision Date | 12 February 1982 |
| Docket Number | SHERWIN-WILLIAMS,No. 81-2312,81-2312 |
| Citation | 671 F.2d 1005 |
| Parties | 33 UCC Rep.Serv. 1295 Marv HIXON d/b/a Hixon Home Improvement, and American States Insurance Company, Plaintiffs-Appellants, v.COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Seventh Circuit |
Bruce P. Clark, Galvin & Galvin, Frank J. Galvin, Jr., Hammond, Ind., for plaintiffs-appellants.
Randall J. Nye, Beckman Kelly & Smith, Hammond, Ind., for defendant-appellee.
Before CUMMINGS, Chief Judge, SWYGERT, Senior Circuit Judge, and POSNER, Circuit Judge.
In this diversity case we decide a question of federal jurisdiction plus several questions under the common law of Indiana.
Mr. and Mrs. Chess, who are not parties to this litigation, sustained several hundred dollars in water damage to the kitchen floor of their home in Indiana. Their homeowner's insurer, American States Insurance Company, a nonresident corporation, hired a local contractor, Marv Hixon, to install a new linoleum floor in the kitchen. Too busy to attend to the contract himself, Hixon subcontracted the job to the Sherwin-Williams Company, another nonresident corporation. Sherwin-Williams is a manufacturer of linoleum and other products rather than a building contractor, but it undertook to install its linoleum in the Chesses' kitchen rather than just sell the linoleum to Hixon for installation. The local office of Sherwin-Williams hired Louis Benkovich to do the installation. Benkovich had been in the linoleum installation business for many years and had done previous jobs for Sherwin-Williams. His reputation was good; people said, "Louie puts in a nice floor." He had never been known to have an accident or otherwise fail to render adequate service. He was self-employed, and was retained by Sherwin-Williams as an independent contractor rather than an employee. Sherwin-Williams did not supervise his work and knew nothing about the particulars of the Chess job beyond the fact that Hixon wanted a new linoleum floor installed.
The new linoleum could not be attached directly to the cement floor beneath it because of dampness; a plywood layer was required between the cement and the linoleum. Benkovich used a glue that happened to be extremely flammable to fasten the plywood to the cement. The label on the can contained explicit and emphatic warnings concerning the flammability of the glue and the importance of good ventilation. Benkovich had never used this brand of glue before; in fact, he had never in his many years as a linoleum contractor fastened a plywood layer to a cement floor. He proceeded to ignore the warnings on the can; he may not even have read them. Instead of opening the windows and turning off the pilot light in the hot water heater in the Chesses' kitchen, he closed the windows and left the pilot light on. The glue exploded; and pursuant to its homeowner's policy American States found itself having to indemnify the Chesses for some $27,000 in additional damage to their house.
American States and Hixon brought this lawsuit in a federal district court in Indiana against Sherwin-Williams. Since American States and Sherwin-Williams are corporate citizens of different states and the amount in controversy between them exceeds $10,000 (it is $27,000, the sum that American States had to pay the Chesses because of the explosion), American States' claim is clearly within the federal diversity jurisdiction. 28 U.S.C. § 1332(a), (c). Hixon and Sherwin-Williams are also citizens of different states, but Hixon's claim is for less than $10,000. The district court, though aware of a lurking jurisdictional problem with Hixon's claim, allowed it to be tried along with American States' claim. At the close of the plaintiffs' evidence the defendant moved for a directed verdict. The district court granted the motion and dismissed the complaint on the merits. This appeal followed.
We consider first whether the district court had jurisdiction over Hixon's claim. The plaintiffs' counsel conceded at trial that the claim had never been worth more than $900. We find it hard to see how Hixon could have suffered any loss at all, but he claims to have lost some time from his regular work when he helped American States investigate the cause of the explosion. However that may be, it is clear that his claim was nowhere near the jurisdictional minimum. This is not a case where a plaintiff in good faith claims damages in excess of $10,000, but because he either fails to establish liability or fails to establish damages in the amount claimed the actual judgment is less than $10,000, and perhaps is zero. In such a case the jurisdiction of the federal court is not divested retroactively. Otherwise whenever a plaintiff in a diversity action lost on the merits his complaint would have to be dismissed for want of jurisdiction, allowing him to start over in state court, and there would be no decisions on the merits in diversity cases that plaintiffs lost. But Hixon never had a good-faith expectation of obtaining the statutory minimum, and in such a case dismissal for want of federal jurisdiction normally is mandatory. See, e.g., By-Prod Corp. v. Armen-Berry Co., 668 F.2d 956 at 961 (7th Cir. 1982).
The wrinkle here, however, is that Hixon's claim for less than $10,000 was joined with American States' claim for more than $10,000. This raises the question whether the doctrine of pendent jurisdiction allowed the district court to adjudicate Hixon's claim even though the claim would not have been within the federal jurisdiction if sued on alone.
Pendent jurisdiction usually refers to the case where a plaintiff having a claim based on federal law joins with it a closely related state-law claim against the same defendant but without an independent federal jurisdictional basis. Considerations of judicial economy have been held to justify the federal court's assertion of jurisdiction over the state-law claim, though retention is not mandatory: the court can, and should, decline to adjudicate the state-law claim, and remit the plaintiff to his remedies in the state courts, if the claim is on balance more suitable for adjudication in the state court than in the federal court. See United Mine Workers v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966).
In the present case, the plaintiff over whose claim the federal court had unquestioned jurisdiction, American States, did not present a federal question at all, but was in federal court solely by virtue of the diversity jurisdiction. And American States did not ask the federal court to consider some related claim that it had against the defendant. Instead, another claimant, Hixon, wanted to piggyback on American States' federal lawsuit in order to bring a state-law claim against the same defendant which he could not have brought in federal court but for the fortuity of American States' suit. Nevertheless, a number of federal courts, by analogy to pendent claim jurisdiction, will assert pendent jurisdiction over a party whose only claim is based on state law and is not within the diversity jurisdiction because it is for less than the jurisdictional minimum. See, e.g., Hatridge v. Aetna Cas. & Sur. Co., 415 F.2d 809, 816-17 (8th Cir. 1969). Pendent party jurisdiction may have other applications as well, but we are concerned in this case only with its use in circumventing the amount in controversy requirement of the diversity jurisdiction. We limit our holding accordingly.
There is no doubt that economies can be realized in some diversity cases by asserting jurisdiction over a pendent party. Where, as in Hatridge, a man has a claim for more than $10,000 for personal injuries and his wife has a claim for less than $10,000 for loss of consortium as a result of those injuries, the consolidation of the claims in a single suit brings about a clear saving in judicial and litigation resources. But this gain comes at the price of impairing the authority of state courts to decide issues of state law. In most pendent party cases-including this one, as we shall see-the addition of another party injects into the litigation one or more additional issues of state law that the federal court would not have had to decide if it had refused to allow the new party to join the suit. Even with respect to common issues, if the pendent claimant were denied a federal forum the state court would have the opportunity to decide those issues itself; pendent party jurisdiction deprives it of this opportunity.
To all this it may be replied that the balance between competing values was struck by Gibbs in favor of federal jurisdiction. But there is an important difference between pendent claim and pendent party jurisdiction. The federal-question jurisdiction is designed to give the federal claimant a federal forum, and pendent claim jurisdiction makes that forum a more attractive one by allowing him to join related state-law claims and save the expense of a second lawsuit. But in a pendent party case, by definition (at least by the limited definition that is all we are concerned with in this case), there is no federal-question claimant; there is only a diversity claimant, who may not even be a member of the class intended to be protected by the diversity jurisdiction. American States' decision to sue in federal court could not have been motivated by fear that a state court of Indiana might be prejudiced against it as a nonresident corporation suing an Indiana resident; the defendant is also a nonresident.
This court rejected the concept of pendent party jurisdiction in Hampton v. City of Chicago, 484 F.2d 602, 611 (7th Cir. 1973). But we hesitate to rest our decision in this case solely on Hampton, because Hampton based rejection of the pendent party concept solely...
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