991 F.2d 878 (1st Cir. 1993), 92-2046, Fragoso v. Lopez

Docket Nº:92-2046.
Citation:991 F.2d 878
Party Name:Carmen FRAGOSO, a/k/a Carmen Fragoso De Conway, Plaintiff, Appellant, v. Dr. Maria A. LOPEZ, et al., Defendants, Appellees.
Case Date:April 05, 1993
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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991 F.2d 878 (1st Cir. 1993)

Carmen FRAGOSO, a/k/a Carmen Fragoso De Conway, Plaintiff, Appellant,


Dr. Maria A. LOPEZ, et al., Defendants, Appellees.

No. 92-2046.

United States Court of Appeals, First Circuit

April 5, 1993

Submitted March 5, 1993.

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Hector M. Alvarado-Tizol, San Juan, PR, on brief for plaintiff, appellant.

Efren T. Irizarry-Colon and Elisa Figueroa-Baez, Arecibo, PR, on brief for defendants, appellees.

Jose Luis Gonzalez Castaner, Hato Rey, PR, on brief for Juan Antonio Garcia, Com'r of Ins. of the Com. of Puerto Rico.

Before SELYA, Circuit Judge, BOWNES, Senior Circuit Judge, and CYR, Circuit Judge.

SELYA, Circuit Judge.

Plaintiff-appellant Carmen Fragoso de Conway (Fragoso), a citizen of New Jersey, appeals from an order of the district court granting summary judgment in favor of certain defendants, including an insurer, Corporacion Insular de Seguros (CIS), which became insolvent during the pendency of the appeal. We now conclude (1) that there is no compelling reason, based on either Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), or Burford v. Sun Oil Co., 319 U.S. 315, 63 S.Ct. 1098, 87 L.Ed. 1424 (1943), for us to abstain in favor of the liquidator's forum, (2) that the appeal may proceed in the ordinary course, notwithstanding CIS's financial plight, and (3) that appellant's arguments on the merits are unavailing. Consequently, we affirm the judgment below.


Dr. Maria A. Lopez first treated appellant's mother, Milagros Rodriguez de Fragoso,

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as an outpatient. She diagnosed Mrs. Rodriguez's condition as transient cerebrovascular ischemic activity and referred her to Dr. Mojica for a neurological consultation. On October 13, 1984, Mrs. Rodriguez was admitted to Doctor's Hospital complaining of numbness in her limbs. Dr. Lopez performed a cardiology evaluation the next day. On October 18, Mrs. Rodriguez complained of tightness in her chest. Dr. Lopez sharply reduced the prescribed medication and ordered an electrocardiogram. Later that evening, Mrs. Rodriguez died of heart failure.

Plaintiff's cousin, Nilda Fragoso de Rodriguez, suspected medical malpractice. In December 1984, she relayed her suspicions to appellant. On January 16, 1985, appellant contacted Attorney Hector Alvarado-Tizol to explore the possibility of a suit. That same day, appellant hand-delivered a letter to Doctor's Hospital requesting her mother's medical records. 1 Appellant then returned to New Jersey, leaving matters in her attorney's hands.

On April 5, 1989--over four full years after her mother's death--appellant invoked diversity jurisdiction, 28 U.S.C. § 1332 (1988), and sued Lopez, CIS, and several other health-care providers in Puerto Rico's federal district court. (CIS was joined as a defendant pursuant to Puerto Rico's direct action statute, P.R.Laws Ann. tit. 26, § 2003 (1990).) Following a lengthy period devoted to discovery and pretrial skirmishing, and marked by settlement of the plaintiff's differences with other named defendants, Lopez and CIS sought summary judgment. On July 13, 1992, the district court found the suit to be barred by Puerto Rico's one-year statute of limitations governing negligence actions and granted the defendants' motion. 794 F.Supp. 49. The court thereafter denied Fragoso's motion for reconsideration. This appeal ensued. 2


On December 23, 1992, shortly after this appeal had been assigned for hearing, appellees filed a motion relating that, on December 21, 1992, the Puerto Rico Insurance Commissioner (the Commissioner) had petitioned for the liquidation of CIS; that a superior court judge, discerning a $28,000,000 capital insufficiency, appointed the Commissioner as liquidator of CIS under P.R.Laws Ann. tit. 26, § 4004 (1976); and that the judge had issued an order remitting all claims against CIS to the claims process demarcated within the liquidation proceedings. 3 Appellees requested that the claim underlying the instant appeal be so forwarded (and the appeal dismissed), or, alternatively, that proceedings herein be stayed pendente lite pursuant to a provision of Puerto Rico's Insurance Code. 4 We granted an interim stay of proceedings and requested supplemental briefing from the parties and the Commissioner. The briefing period having passed, we now consider appellees' and the Commissioner's requests that we remit the underlying claim to the liquidator's claims process or, at least, stay proceedings in this case pending the expiration of the full cooling-off period stipulated in the Insurance Code.

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  1. The Erie Doctrine.

    We start with bedrock: a state court cannot enjoin federal proceedings. See General Atomic Co. v. Felter, 434 U.S. 12, 17, 98 S.Ct. 76, 78, 54 L.Ed.2d 199 (1977); Donovan v. Dallas, 377 U.S. 408, 413, 84 S.Ct. 1579, 1582, 12 L.Ed.2d 409 (1964). Thus, the prohibitions contained in the Liquidation Order do not bind this court.

    The truism, however, does not end the matter. Relying on the Rules of Decision Act, see 28 U.S.C. § 1652 (1988), and the familiar Erie doctrine, 304 U.S. at 78, 58 S.Ct. at 822, the Commissioner posits that, in the exercise of diversity jurisdiction, this court must apply several provisions of Puerto Rico's Insurance Code collectively requiring dismissal of the claim against CIS and a six-month stay of the claim against Lopez. See P.R.Laws Ann. tit. 26, §§ 3818, 3819, 4021, 4032. We disagree.

    A federal court sitting in diversity is not required automatically to follow all particulars of a state court's process for dispute resolution. Rather, Erie and its progeny identify certain principles that must be used to cull wheat from chaff. The "twin aims" animating the Erie doctrine are "discouragement of forum-shopping and avoidance of inequitable administration of the laws." Hanna v. Plumer, 380 U.S. 460, 468, 85 S.Ct. 1136, 1142, 14 L.Ed.2d 8 (1965). These goals are intertwined with the policy that a federal forum "should conform as near as may be--in the absence of other considerations--to state rules even of form and mode" when those rules "may bear substantially" on the outcome of the litigation. Byrd v. Blue Ridge Rural Elec. Coop., Inc., 356 U.S. 525, 536, 78 S.Ct. 893, 900, 2 L.Ed.2d 953 (1958); see Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079 (1945); Feinstein v. Massachusetts Gen. Hosp., 643 F.2d 880, 884 (1st Cir.1981). After giving respectful consideration to the Commissioner's views, we believe that processing Fragoso's appeal without regard to Puerto Rico's legal framework for dealing with insolvent insurers will not offend the Erie rule.

    For one thing, it is inconceivable that a defendant's differential ability, depending upon whether the suit is brought in a federal or in a commonwealth court, to invoke Puerto Rico's procedural law anent insolvent insurers after trial and entry of judgment will influence a litigant's choice of forum. When a plaintiff selects a forum at the commencement of litigation, she is unlikely to weigh the possibility that a defendant's insurer might become insolvent years later, thus influencing the procedural status of pending appeals. We think, too, that the uncertainty as to how a Puerto Rico appellate court might apply the laws in question would stymie attempted forum-shopping. Although the Commissioner maintains that a commonwealth court would dismiss the appeal against CIS, the forecasted result is by no means certain. The Insurance Code directs a six-month stay of all proceedings against the insolvent insurer. See P.R.Laws Ann. tit. 26, § 3818, quoted supra note 4. While the Commissioner assumes that P.R.Laws Ann. tit. 26, § 4021(1) mandates dismissal of the appeal, 5 he neither suggests how to reconcile this provision with section 3818 nor explains how an appellate proceeding filed against the insurer before the issuance of a liquidation order comes within the contemplation of section 4021. The first Erie consideration, then, does not favor application of Puerto Rico's Insurance Code provisions to the instant appeal.

    For another thing, declining to apply the Commonwealth's procedural laws here will not advantage Fragoso as compared with similarly situated, non-diverse plaintiffs. Cf. Erie, 304 U.S. at 74-75, 58 S.Ct. at 820-21. A principal function of the Insurance Code provisions is to allow adequate time for defense preparation and minimize expense.

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    Here, additional time is wholly unnecessary; the case was fully briefed prior to the entry of the Liquidation Order and the merits are straightforward, not requiring oral argument. See Fed.R.App.P. 34(a) (providing for eschewal of oral argument where "the facts and legal arguments are adequately presented in the briefs and record and the decisional process would not be significantly aided by oral argument"); 1st Cir.Loc.R. 34.1(a)(2)(iii) (same). Thus, refusal to remit the action against CIS to the liquidator's forum or to stay the action against Lopez works no inequity from the standpoint of either preparation or defense costs.

    What is more, Puerto Rico's insolvent insurers' liquidation provisions do not bear in the slightest on the substantive outcome of the appeal. These laws provide a procedure through which claims against the insurer can be resolved and its assets equitably distributed. They do not absolve the insurer of any substantive liability. There is no basis for concluding that this court will reach a result regarding the underlying merits of Fragoso's appeal that is any different from the result that a Puerto Rico court would reach, had it stayed the action, or that the liquidator's forum would reach, had the action been forwarded there.

    Thus, we reject the Commissioner's argument that the Erie doctrine compels us to dismiss the appeal against CIS and stay the proceeding against Lopez.

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