Acuity v. Rex, LLC

• Decision Date: 12 July 2019
• Docket Number: No. 18-1735,18-1735
• Citation: 929 F.3d 995
• Parties: ACUITY, A Mutual Insurance Company Plaintiff-Appellant v. REX, LLC; Tab Robert Barks; Ronald Lee Gean; Estate of Jean Carol Gean; Swift Transportation Company of Arizona, LLC; Gaganjot Singh Virk; Auto-Owners Insurance Company; Air EVAC EMS, Inc., also known as Air Evac Lifeteam; Deaconess Hospital, Inc.; Heartland Regional Medical Center, also known as Marion Hospital Corporation; Zurich American Insurance Company Defendants-Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

929 F.3d 995

ACUITY, A Mutual Insurance Company Plaintiff-Appellant

v.REX, LLC; Tab Robert Barks; Ronald Lee Gean; Estate of Jean Carol Gean; Swift Transportation Company of Arizona, LLC; Gaganjot Singh Virk; Auto-Owners Insurance Company; Air EVAC EMS, Inc., also known as Air Evac Lifeteam; Deaconess Hospital, Inc.; Heartland Regional Medical Center, also known as Marion Hospital Corporation; Zurich American Insurance Company Defendants-Appellees

No. 18-1735

United States Court of Appeals, Eighth Circuit.

Submitted: January 16, 2019

Filed: July 12, 2019

Rehearing and Rehearing En Banc Denied August 30, 2019

Counsel who presented argument on behalf of the appellant was Jason Orleans, of Chicago, IL.

Counsel who presented argument on behalf of the appellee was Mark D. Prince, of Marion, IL. The following attorney(s) appeared on the appellee brief; Tyler N. Dihle, of Marion, IL.

Before GRUENDER, WOLLMAN, and SHEPHERD, Circuit Judges.

GRUENDER, Circuit Judge.

Acuity appeals the district court's¹ orders requiring it to deposit $21 million in disputed insurance proceeds to maintain its federal statutory interpleader claim and dismissing Ronald Gean and the Estate of Jean Carol Gean ("the Geans") for lack of personal jurisdiction in its declaratory judgment claims. We affirm.

On August 5, 2016, a truck operated by Rex, LLC struck a vehicle driven by Ronald Gean, injuring him and killing his passenger Jean Carol Gean. Rex and its driver were covered by a business auto insurance policy issued by Acuity with a stated liability limit of $1 million for "each accident."

On December 30, 2016, Acuity filed a two-count complaint in the U.S. District Court for the Eastern District of Missouri against the Geans and several other parties affected by the accident. Count I sought to distribute the $1 million policy proceeds among potential claimants using federal statutory interpleader. See 28 U.S.C. § 1335. Count II sought a declaratory judgment that the applicable policy limit was in fact $1 million per accident. Acuity also moved to deposit the stated policy limit of $1 million into the registry of the court as required by § 1335(a), the district court granted the motion, and Acuity submitted the funds to the court's registry.

Meanwhile, on January 4, 2017, the Geans brought suit in Illinois state court for personal injury, wrongful death, and a declaratory judgment that Acuity's $1 million policy limit "stacked" for each of the twenty-one vehicles covered by the policy, providing total coverage of $21 million. The Geans also filed a motion in federal court to dismiss Acuity's federal action, arguing that the district court lacked subject-matter jurisdiction under the federal interpleader statute unless Acuity deposited the disputed $21 million, rather than the $1 million in the court's registry. The Geans also alleged that the district court lacked personal jurisdiction over them and that venue was improper in the Eastern District of Missouri.

The district court held the motion to dismiss in abeyance. Agreeing with the Geans that § 1335(a) requires an interpleader plaintiff to deposit the full disputed sum, it "granted [Acuity] leave to post the appropriate amount of $21 million or dismiss Count I" and warned that "[f]ailure to post the appropriate amount or dismiss Count I may result in the Court dismissing Count I for lack of subject matter jurisdiction." In response, Acuity filed an amended complaint dismissing its interpleader claim and adding an additional claim for declaratory judgment under Missouri state law.

The district court next concluded that it lacked personal jurisdiction over the Geans because they did not have sufficient minimum contacts with Missouri, dismissed them from the lawsuit, and ordered Acuity to show cause why the lawsuit could proceed in their absence. Acuity conceded that the Geans were necessary and indispensable parties, and the district court dismissed the lawsuit without prejudice. Acuity appealed and challenges the district court's orders concerning subject-matter and personal jurisdiction.

We must first address whether Acuity waived appellate review of the district court's order concerning subject-matter jurisdiction by amending its complaint to dismiss its interpleader claim in response to the district court's threat to dismiss if Acuity did not deposit $21 million. Generally, "an amended complaint supercedes an original complaint and renders the original complaint without legal effect." Tolen v. Ashcroft , 377 F.3d 879, 882 n.2 (8th Cir. 2004). Thus, a plaintiff who amends his complaint and dismisses certain claims waives his right to appeal them. Id. But we have refused to find waiver where the court's involuntary dismissal of the original counts "struck a vital blow to a substantial part of plaintiff's cause of action." Williamson v. Liverpool & London & Globe Ins. Co. , 141 F. 54, 57 (8th Cir. 1905) ; see also Karnes v. Poplar Bluff Transfer Co. (In re Atlas Van Lines, Inc.) , 209 F.3d 1064, 1067 (8th Cir. 2000) ; Hayward v. Cleveland Clinic Found. , 759 F.3d 601, 617-18 (6th Cir. 2014). The Geans nonetheless argue that Tolen controls and that Acuity's dismissal of its interpleader claim was not truly involuntary because the court gave Acuity a choice other than dismissal, namely depositing $21 million.

We conclude that Acuity did not waive its right to appeal the district court's ruling concerning the deposit requirement. In giving Acuity the option of depositing the full $21 million or dismissing its interpleader claim, the district court rejected Acuity's interpretation of the requirements of § 1335.² Rather than continuing to advance an argument that the district court had rejected, Acuity proceeded with the remainder of its case. As the Seventh Circuit has pointed out, "It is not waiver—it is prudence and economy—for parties not to reassert a position that the trial judge has rejected." Bastian v. Petren Res. Corp. , 892 F.2d 680, 683 (7th Cir. 1990). These factors support the conclusion that Acuity did not waive its arguments concerning the deposit required under § 1335. As we have indicated in the removal context, a motion to amend is involuntary where the plaintiff "faced the Hobson's choice of amending his complaint or risking dismissal." In re Atlas Van Lines, Inc. , 209 F.3d at 1067 (footnote omitted and emphasis added). While Acuity could have avoided such a choice by depositing $21 million, the requirement to deposit such a large sum still confronted the company with "a patently coercive predicament." Id.

To be sure, Acuity could have stood on its original complaint and forced the district court to dismiss its interpleader claim. But, as the concurring opinion acknowledges, Acuity "would have arrived at the same place on appeal" had it done so.³

Post , at 1004. Given that nothing of substance turns on the distinction, enforcing waiver under these circumstances "merely sets a trap for unsuspecting plaintiffs with no concomitant benefit to the opposing party." See Davis v. TXO Prod. Corp. , 929 F.2d 1515, 1518 (10th Cir. 1991) (footnote omitted); 6 Charles Alan Wright et al. , Federal Practice & Procedure § 1476 (3d ed. 2019) ("It therefore is not logical to deny a party the right to appeal simply because the party decides to abide by the court's order and amend the pleading rather than allowing an adverse judgment to be entered and taking an immediate appeal."). Thus, we may review the district court's order concerning subject-matter jurisdiction over Acuity's interpleader claim.

We review the existence of subject-matter jurisdiction de novo . Iowa League of Cities v. EPA , 711 F.3d 844, 861 (8th Cir. 2013). Federal statutory interpleader allows a party holding money or property to join the various parties asserting mutually exclusive claims, thereby avoiding the threat of multiple liability or multiple lawsuits. Gaines v. Sunray Oil Co. , 539 F.2d 1136, 1141 (8th Cir. 1976). A district court has jurisdiction over a statutory interpleader claim if there are adverse claimants to money or property worth at least $500 and diverse citizenship between at least two of the adverse claimants. 28 U.S.C. § 1335(a). In addition, the plaintiff must deposit the money or property in the registry of the district court. Id.

Several courts have held that a district court lacks jurisdiction over an interpleader action unless the stakeholder deposits the sum claimed by the claimants. See, e.g. , Metal Trans. Corp. v. Pac. Venture S.S. Corp ., 288 F.2d 363, 365 (2d Cir. 1961) ; Miller & Miller Auctioneers, Inc. v. G. W. Murphy Indus. , 472 F.2d 893, 895 (10th Cir. 1973) ; N.Y. Life Ins. Co. v. Lee , 232 F.2d 811, 815 (9th Cir. 1956) ; 7 Wright et al. , § 1716. But Acuity points to a Third Circuit case and suggests that the district court should first peek ahead to the merits of its declaratory judgment claim contesting the Geans' stacking argument before setting the deposit requirement. See U.S. Fire Ins. Co. v. Asbestospray, Inc. , 182 F.3d 201, 210 (3d Cir. 1999). In an opinion by then-Judge Samuel Alito, the court explained that the deposit requirement "is not a mechanical process under which the court uncritically searches for the highest amount claimed by the adverse claimants," and it held that "[a]mounts that are not realistically within the scope of the interpleader as pleaded are not required to be deposited or bonded to sustain federal jurisdiction." Id. Acuity therefore argues that it needed to deposit only the $1 million it believes it owes, not the $21 million claimed by the Geans.

We agree with the district court that subject-matter jurisdiction is lacking because Acuity did not deposit the disputed amount into the court's registry. First, we previously held that a "stakeholder may not compel a party to litigate his claim in interpleader unless he deposits with the court an amount equal to the sum claimed by that party ." Gaines , 539 F.2d at 1142 (emphasis added). "It is a cardinal rule...