Wilsey v. Eddingfield

• Decision Date: 09 August 1985
• Docket Number: 84-2237 and 84-2258,Nos. 84-2178,s. 84-2178
• Citation: 780 F.2d 614
• Parties: Krista WILSEY, Individually and as Special Administrator of the Estate of Lacey M. Hammel, Deceased Minor, 1 Plaintiff-Appellant, Cross-Appellee, v. Charles F. EDDINGFIELD, M.D., Edward McKenney, D.O., and Vasant F. Pawar, M.D., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 614

780 F.2d 614

Krista WILSEY, Individually and as Special Administrator of the Estate of Lacey M. Hammel, Deceased Minor,¹ Plaintiff-Appellant Cross-Appellee, v. Charles F. EDDINGFIELD, M.D., Edward McKenney, D.O., and Vasant F. Pawar, M.D., Defendants-Appellees Cross-Appellants.

Nos. 84-2178, 84-2237 and 84-2258.

United States Court of Appeals Seventh Circuit.

Aug. 9, 1985. ^*

Rehearing and Rehearing In Banc Denied Dec. 16, 1985.

Alexandra de Saint Phalle, Londrigan, Potter & Randle, Springfield, Ill., for plaintiff-appellant, cross-appellee.

David B. Mueller, Cassidy & Mueller, Peoria, Ill., for defendants-appellees, cross-appellants.

Before WOOD and FLAUM, Circuit Judges, and BROWN, Senior District Judge. ^**

ORDER

On consideration of the motion for reconsideration filed in the above-entitled cause by plaintiff-appellant, cross-appellee Krista Wilsey, all of the judges on the original panel have voted to deny reconsideration. Accordingly,

IT IS ORDERED that the aforesaid motion for reconsideration be, and the same is hereby, DENIED.

IT IS FURTHER ORDERED that this case be REMANDED to the district court with directions to dismiss the complaint for lack of subject matter jurisdiction. ²

Having had the full benefit of counsel's views on the jurisdictional issue presented and the district court's determination that decedent's father, like the defendants, is an Illinois citizen, we now hold that jurisdiction is lacking.

In Betar v. DeHavilland Aircraft of Canada, Ltd., 603 F.2d 30, 32 (7th Cir.1979), we stated the general rule that "the citizenship of the real party in interest is determinative in deciding whether the district court has diversity jurisdiction." A party who has no significant interest in the outcome of the litigation cannot use his citizenship to transform a local controversy into one within the diversity jurisdiction of a federal court. Thus, although one serving in a representative capacity is a real party in interest in the sense that the action is properly maintained in his name, Fed.R.Civ.P. 17(a), a representative is not necessarily the real party in interest for the purpose of determining diversity jurisdiction. Id. "[I]f the law of the state gives the administrator, guardian, or other representative the status of only a nominal fiduciary then the beneficiary or the ward, not the administrator or guardian, is the real party in interest, and it is the citizenship of the beneficiary or ward, as the case may be, that is determinative." 3A MOORE'S FEDERAL PRACTICE p 17.04 (2d ed. 1985). That the touchstone of the test is a review of the representative's legal powers, rights and duties was reaffirmed in Navarro Savings Assn. v. Lee, 446 U.S. 458, 100 S.Ct. 1779, 64 L.Ed.2d 425 (1980). See also Miller v. Perry, 456 F.2d 63, 65 (4th Cir.1972).

In Betar, we analyzed the duties of a personal representative under the Illinois Wrongful Death Act, Ill.Rev.Stat. ch. 70, Sec. 1 et seq., and determined that those duties were an inadequate basis for finding the personal representative to be the real party in interest for diversity purposes.

The Illinois Wrongful Death Act gives neither the personal representative nor the decedent's estate the right to share in the proceeds of the recovery. The representative's sole duty under the Act is to distribute the proceeds to the statutory beneficiaries in the event of recovery.

Betar, 603 F.2d at 35. ³ We therefore concluded that the personal representative lacked a "stake in the outcome" and that the statutory beneficiaries were the real parties in interest; "[t]hey are the only parties that have an actual stake in the outcome of the litigation." Id. We are fully aware that the Tenth Circuit has disagreed with the Betar analysis, finding that a personal representative, whose duties are to bring the wrongful death action, conduct the litigation, and distribute the proceeds, is not merely a nominal party. Hackney v. Newman Memorial Hospital, Inc., 621 F.2d 1069, 1071 (10th Cir.1980). We are, however, bound by this circuit's precedent unless that precedent is later determined to be erroneous. This is not such a case.

Wilsey nevertheless contends that Betar does not govern the outcome of the present suit. She reads Betar to hold that the beneficiaries are the real parties in interest only when the personal administrator lacks a personal stake in the outcome of the lawsuit. She would have us concentrate on her status as a beneficiary in conjunction with her nominal status as personal representative. She informs us that if we do not do so, we will be creating conflict with seven other circuit courts of appeals. ⁴ Initially, we note that Betar's reference to a stake in the outcome, read in context, was inextricably intertwined with its previous discussion of the duties of a personal representative under the Illinois Wrongful Death Act. The court held that the beneficiaries were the real parties in interest because the representative is only a nominal party. Betar neither holds, nor suggests, that the citizenship of a personal representative, who under state law has only nominal duties but who by virtue of her status as a beneficiary has a stake in the outcome, is controlling for diversity purposes. This is the issue presented here.

Hackney is cited by Wilsey in support of her argument. In Hackney, the decedent, the defendants, and all beneficiaries but one were Oklahoma citizens. The daughter-beneficiary who was an Oklahoma citizen originally was appointed administrator of decedent's estate. When the estate had been fully administered and only the cause of action for wrongful death remained, the administrator resigned and the daughter-beneficiary who was a Colorado citizen was named as her successor. The latter then filed suit in federal court claiming diversity of citizenship between herself and the defendants. The Tenth Circuit found that diversity jurisdiction had been properly invoked because the administrator had a "substantial relationship" to the litigation. Two considerations led the court to this conclusion. As previously noted, the court apparently disagreed with Betar, O'Brien v. AVCO Corp., 425 F.2d 1030 (2d Cir.1969), and Lester v. McFaddon, 415 F.2d 1101 (4th Cir.1969), that a personal representative appointed for the sole purpose of pursuing a wrongful death action is merely a nominal party. Under Oklahoma law, the administrator, to whom the cause of action belongs, has full authority to conduct the litigation; the beneficiaries have no right to settle, control or otherwise dispose of the action. The Hackney court further found that the administrator, by virtue of her status as a beneficiary under the Oklahoma wrongful death act, had a substantive stake in the litigation. The court's bottom line was that the appointment of a nonresident fiduciary who has a substantial beneficial interest in the litigation is immune from challenge on jurisdictional grounds. Hackney does not answer the question presented here. In that case, a personal representative's duties under the Oklahoma wrongful death statute were found to be more than nominal. In contrast, in this case Wilsey, as personal representative, would be merely a nominal party under Betar. She has a stake in the outcome (i.e., is a real party in interest) solely by virtue of her status as a beneficiary. But this stake is no different from that held by the two remaining beneficiaries, one of whom is an Illinois resident. We think that the exception Wilsey asks us to create cannot withstand scrutiny. Where the personal representative's role under state law is that of a nominal party, the citizenship of the beneficiaries controls. Merely because one of these beneficiaries seeks appointment as the personal representative does not dispense with consideration of the citizenship of the other beneficiaries. Complete diversity between the beneficiaries and the defendants is required. ⁵

Before CUMMINGS, Chief Judge, BAUER, WOOD, CUDAHY, ESCHBACH, ^* POSNER, COFFEY, FLAUM, EASTERBROOK and RIPPLE, Circuit Judges, and BROWN, Senior District Judge ^**.

ORDER

On consideration of the petition for rehearing and suggestion in banc filed in the above-entitled cause by plaintiff-appellant, Krista Wilsey, individually and as Special Administrator of the Estate of Lacey M. Hammel, Deceased Minor, a vote of the active members of the court was requested, and a majority of the active members of the court have voted to deny rehearing in banc. ¹ The order entered in this case on August 9, 1985, is amended sua sponte by the original panel by the addition of a new footnote number 1, and the renumbering of the original footnotes. All of the judges on the original panel have voted to deny the petition for rehearing. Accordingly,

IT IS ORDERED that the aforesaid petition for rehearing and petition for rehearing in banc be, and the same are hereby DENIED.

POSNER, Circuit Judge, whom ESCHBACH and EASTERBROOK, Circuit Judges, join, dissenting.

I would grant rehearing en banc to resolve the conflict between our circuit and the other circuits over whether the citizenship of a personal representative is controlling for purposes of determining whether there is diversity of citizenship. Although a majority of my colleagues have decided not to rehear the case I hope that the next panel of this court to be seised of this issue will give serious consideration to overruling Betar v. DeHavilland Aircraft of Canada, Ltd., 603 F.2d 30 (7th Cir.1979), on which the decision in the present case is based, in light of decisions subsequent to Betar.

Ordinarily the citizenship of the fiduciary who brings (or defends) a suit, rather than the citizenship of his beneficiaries, determines whether the suit can be brought in federal court under the diversity jurisdiction. This rule, derived from a line of Supreme Court decisions stretching back to 1808, was emphatically reaffirmed in Navarro Savings Ass'n v. Lee, 446 U.S. 458, 100...