Kansas Public Employees Retirement System v. Reimer & Koger Associates, Inc.
| Decision Date | 18 April 1996 |
| Docket Number | No. 95-3499,95-3499 |
| Citation | 77 F.3d 1063 |
| Court | U.S. Court of Appeals — Eighth Circuit |
| Parties | KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM, Plaintiff-Appellant, v. REIMER & KOGER ASSOCIATES, INC., a Kansas Corporation; Ronald Reimer, an individual; Kenneth H. Koger, an individual; Clifford W. Shinski, an individual; Brent Messick, an individual; Robert Crew, an individual; Sherman Dreiseszun, an individual; Leland Gerhart, an individual; I.I. Ozar, an individual; Raymond Gifford, an individual; Harry S. Jonas, an individual; Randall M. Nay, an individual; Frank Sebree, an individual; Tony Salazar, an individual; Philip Pistilli, an individual; Michael K. Russell, an individual; Gage & Tucker, a law partnership; Peat, Marwick, Mitchell & Co., an accountancy firm; KPMG Peat Marwick, an accountancy firm; Robert Spence, an individual; Thomas S. Morgan, co-executor of the estate of Frank S. Morgan; Marilyn J, co-executor of the estate of Frank S. Morgan; Isabel A. Kiene, executrix of the estate of Ralph E. Kiene, Defendants-Appellees, Shook, Hardy & Bacon; C. Patrick McLarney, Substituted for Shook Hardy law firm; Blackwell Sanders Matheny Weary & Lombardi, L.C., Intervenor-defendant-Appellees. |
Appeal from the United States District Court for the Western District of Missouri, Brook D. Bartlett, Judge.
Kenneth Ross, Chicago, Illinois, argued (Robert F. Coleman, Eugene I. Pavalon and Geoffrey L. Gifford, Chicago, Illinois, on the brief), for appellant.
John Villa, Washington, DC, argued (Robert J. Campbell, Elizabeth D. Nay, James E. Kelley, Jr., Charles W. German, Brant M. Laue, Robert Thompson, Robert R. Barton, Kansas City, Missouri, on the brief), for Estate of Frank Morgan, et al. (Mary G. Clark and Eric A. Kuhl, Washington, DC and Gene Voights, Kansas City, Missouri, on the brief), for Shook, Hardy, and Bacon. (Donald W. Rose, New York City and William F. Lloyd, Jeffrey R. Tone and Nancy Temple, Chicago, Illinois, on the brief), for KPMG Peat Marwick LLP and Robert W.L. Spence. (Kathleen A. Hardee, John K. Sherk, III and Gregory F. Maher, Kansas City, Missouri, on the brief), for Reimer & Koger and Assoc., Inc., Kenneth Koger, Robert Crew, Brent Messick and Clifford Shinski. (R. Lawrence Ward and Russell S. Jones, Jr., Kansas City, Missouri, on the brief), for Blackwell Sanders Matheny Weary & Lombardi, L.C.
Before McMILLIAN, JOHN R. GIBSON, and BOWMAN, Circuit Judges.
In this, the fourth interlocutory appeal in the Kansas Public Employees' Retirement System (KPERS) case, KPERS seeks review of the district court's 1 order enjoining KPERS from prosecuting lawsuits in Kansas based on the same claims being litigated in this case. Because we conclude that the effect of the Kansas lawsuits is to subvert the district court's removal jurisdiction, we affirm the district court's order.
KPERS invested $65 million in debentures of Home Savings Association, a Missouri-based savings and loan that failed. The RTC was appointed receiver for Home Savings. KPERS filed this case in Kansas state court on June 5, 1991 against Reimer & Koger Associates, KPERS's former investment advisers, seeking to recoup the $65 million. While the case was still pending in state court, KPERS also joined as defendants various officers and directors of Home Savings; Michael Russell, KPERS's own former chairman of the board; KPMG Peat Marwick, KPERS's accountants; and Gage & Tucker, KPERS's former lawyers. KPERS alleged only state-law claims.
The defendants promptly moved for summary judgment in the state court on the ground that KPERS's suit was barred by the Kansas two- and three-year statutes of limitations. The Kansas court ruled that KPERS was not subject to any statute of limitations and so denied the summary judgment motion. Then the Home Savings defendants impleaded the RTC, Home Savings's successor, which has a statutory right to remove any case to which it is a party to its choice of three federal district courts. When KPERS learned that the RTC had been impleaded, it had the third-party claims severed by ex parte proceedings in the Kansas court before the RTC could remove. Despite the severance, the RTC removed the entire case to the federal district court for the Western District of Missouri; the district court held that the severance by the Kansas court was ineffective to prevent removal of the entire case, and we affirmed that holding. KPERS v. Reimer & Koger Assocs., 4 F.3d 614 (8th Cir.1993) (KPERS I ), cert. denied, --- U.S. ----, 114 S.Ct. 2132, 128 L.Ed.2d 862 (1994).
In the Western District of Missouri, the RTC moved to dismiss the third-party claims against it, and the district court granted its motion. The Home Savings defendants moved for reconsideration of the dismissal and the court granted the RTC the right to intervene for the limited purpose of defending the reconsideration motion and protecting its right to any derivative claims belonging to Home Savings that KPERS might assert; the court then reaffirmed its earlier dismissal of the claims against the RTC and held that KPERS was not asserting any derivative claims. In the wake of the RTC's dismissal, KPERS moved to remand the case to the Kansas state court, but the district court decided to retain jurisdiction of the case under 28 U.S.C. § 1367 (1994), the supplemental jurisdiction statute.
KPERS threatened to sue two additional law firms, Shook, Hardy, and Bacon and Blackwell, Sanders, in state court. 2 The law firms sought leave to intervene in the federal case. The district court allowed Shook, Hardy to intervene as a defendant and denied Blackwell, Sanders's motion to intervene. We reversed and allowed Blackwell, Sanders to intervene, although not as a defendant. KPERS v. Reimer & Koger Assocs., 60 F.3d 1304 (8th Cir.1995) (KPERS II ). KPERS amended its complaint in federal court to add Shook, Hardy as a defendant.
Once in federal court, the defendants renewed their motion for summary judgment on the basis of the statute of limitations. The district court reconsidered the question decided by the state court and concluded that KPERS was subject to a statute of limitations, but that the applicable statute was ten years. The defendants took an interlocutory appeal from the holding that the ten-year statute was applicable. We reversed, holding that the ten-year statute was inapplicable and remanding for determination of which of the shorter statutes should be applied. KPERS v. Reimer & Koger Assocs., 61 F.3d 608, 614-16 (8th Cir.1995) (KPERS III ), cert. denied, --- U.S. ----, 116 S.Ct. 915, 133 L.Ed.2d 845 (1996).
On August 23, 1995, about a month after we announced our decisions in KPERS II and KPERS III, KPERS filed two new cases in the Kansas courts. In the first of these cases, KPERS sued Michael Russell; the Reimer & Koger defendants; and Shook, Hardy for damages arising out of the Home Savings investments. In the second, KPERS sued Peat, Marwick for negligence and breach of contract in auditing KPERS. Earlier, in January 1995 KPERS had also sued Blackwell, Sanders in state court for damages arising out of the Home Savings investments. One of the counsel for KPERS made a statement to the press, made part of the record below, that KPERS filed the cases in Kansas because of a "multitude of problems and issues that are causing delays in federal court, coupled with what we think is an erroneous decision by the 8th Circuit in interpreting the Kansas statute of limitations."
On September 11, 1995, Blackwell, Sanders and Shook, Hardy impleaded the RTC in their respective state court cases. The next day, the RTC removed both cases to the federal district court for the Western District of Missouri. Peat, Marwick did not implead the RTC and, therefore, its case is still pending in state court.
Blackwell, Sanders and Shook, Hardy moved in the original federal court action to enjoin KPERS from filing further state court actions against them, and Peat, Marwick moved to stay the pending state court action. In a brief filed with the district court in opposition to the motions for preliminary injunctions, KPERS stated,
The district court granted the injunctions. The court held that KPERS asserted claims in the new state lawsuits that were substantially identical to the claims KPERS asserted against the same parties (other than Blackwell, Sanders) in the original KPERS case pending before the district court. The court observed that "[b]ased on the information furnished by the parties ... the reason the August 23, 1995, cases were filed by KPERS was to attempt to obtain Kansas courts' more favorable rulings on the statute of limitations issue decided by the 8th Circuit Court of Appeals and also to escape a multitude of problems and issues that are causing delays in federal court." The court held that the Anti-Injunction Act, 28 U.S.C. § 2283 (1994), did not prohibit the grant of injunctive relief in this case. The court also held that the All Writs Act, 28 U.S.C. § 1651(a) (1994), authorized the relief, and that relief was appropriate under Northwest Airlines v. American Airlines, 989 F.2d 1002 (8th Cir.1993). The court preliminarily enjoined KPERS from filing any further lawsuits arising out of the Home Savings investments against Shook, Hardy; Reimer & Koger; Blackwell, Sanders; Peat, Marwick; and defendants related to the firms named above. The court also enjoined KPERS from pursuing its existing Kansas case against Peat, Marwick.
KPERS appeals the injunctions,...
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