706 F.2d 633 (5th Cir. 1983), 82-3642, Illinois Cent. Gulf R. Co. v. Pargas, Inc.

Docket Nº:82-3642
Citation:706 F.2d 633
Party Name:ILLINOIS CENTRAL GULF RAILROAD COMPANY, Plaintiff, v. PARGAS, INC., Defendant-Appellant, v. UNION TANK CAR CO., Third Party Defendant-Appellee.
Case Date:June 06, 1983
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 633

706 F.2d 633 (5th Cir. 1983)



PARGAS, INC., Defendant-Appellant,


UNION TANK CAR CO., Third Party Defendant-Appellee.

No. 82-3642

United States Court of Appeals, Fifth Circuit

June 6, 1983

Page 634

Charles A. O'Brien, III, Baton Rouge, La., for defendant-appellant.

Stephen K. Conroy, Metairie, La., for third-party defendant-appellee.

Appeal from the United States District Court for the Middle District of Louisiana.

Before GEE, RANDALL and TATE, Circuit Judges.

RANDALL, Circuit Judge:

This case arises out of the leakage of liquefied petroleum gas onto the tracks of the Illinois Central Gulf Railroad from a tank car owned by the defendant-third party

Page 635

plaintiff, Pargas, Inc., and "retrofitted" by the third-party defendant, Union Tank Car Company. The railroad has already settled its claim for some $40,000 in damages with Pargas and is no longer interested in the case. The only question the two remaining parties have asked us to decide is whether Pargas may recover that money in a third-party suit against Union Tank. Although the district court answered this question in the negative, we do not reach the merits of the question presented. On our own motion, we determine that the pleadings do not properly invoke the subject matter jurisdiction of the federal courts and that the case must be remanded in order to afford the parties an opportunity to correct the defect, if they can, under 28 U.S.C. Sec. 1653 (1976).

The facts are not in dispute and may be found in the district court's opinion. See 526 F.Supp. 209 (M.D.La.1981). The sole contention presented in the railroad's original complaint in this case was that Pargas owed it reimbursement for its $40,000 or so in damages according to the "terms and the conditions of the Association of American Railroads Interchange Rules, to which both [the railroad] and Pargas" have subscribed. (The AAR is an association of private concerns, and is not a governmental agency.) The sole substantial issue in Pargas's third-party complaint--the issue with which the parties have presented us on this appeal--concerns the legal consequences under Illinois law of the liability disclaimer in article 7 of the tank car retrofitting contract between Pargas and Union Tank. 1 Pargas argues that the disclaimer "of all indirect, special or consequential damages" is not broad enough to cover damages to the property of third parties (the railroad's tracks) caused by Union Tank's own negligence; Union Tank argues that, under the particular circumstances of this case, an Illinois court would hold that it is broad enough.

The railroad's complaint asserted jurisdiction under one of the special federal question jurisdictional statutes, 28 U.S.C. Sec. 1337. That statute gives the federal courts jurisdiction over all cases "arising under any Act of Congress regulating commerce." 28 U.S.C.A. Sec. 1337(a) (West Supp.1983). Presumably because the third-party action was ancillary to the principal suit filed by the railroad, Pargas' third-party complaint against Union Tank asserted no independent basis for federal jurisdiction. Before the case had proceeded very far beyond these technical preliminaries, however, Union Tank successfully moved on the pleadings for a judgment declaring that it would not be liable to Pargas even if Pargas was found to be liable to the railroad. The railroad then settled its suit against Pargas and consented to having its first-party suit dismissed with prejudice. Pargas has filed a timely appeal from the judgment on the pleadings dismissing its third-party suit against Union Tank.

Because "the trial court," as we noted in a similar case decided less than a year ago, "failed to indicate the basis upon which it presumed to exercise subject matter jurisdiction[,] ... the task falls to this Court to determine whether th[is] third-party claim[ ] properly come[s] within the scope of the federal courts' limited jurisdiction." Joiner v. Diamond M Drilling Co., 677 F.2d 1035, 1038 (5th Cir.1982). We have raised the issue on our own motion, and have invited the two remaining parties, Union Tank and Pargas, to submit supplemental briefs on that question. We now decide the

Page 636

case on the basis of subject matter jurisdiction. We consider, first, commerce-clause jurisdiction under section 1337, and second, diversity jurisdiction under 28 U.S.C. Sec. 1332 (1976).

Jurisdictional pleadings are governed by rule 8 of the Federal Rules of Civil Procedure. That rule provides:

A pleading which sets forth a claim for relief, whether an original claim, counterclaim, cross-claim, or third-party claim, shall contain ... a short and plain statement of...

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