American Fidelity Fire Ins. Co. v. U.S. Dist. Court for Northern Dist. of California

• Decision Date: 18 June 1976
• Docket Number: No. 75-3096,TRANS-BAY,75-3096
• Citation: 538 F.2d 1371
• Parties: AMERICAN FIDELITY FIRE INSURANCE COMPANY, Petitioner, v. UNITED STATES DISTRICT COURT FOR the NORTHERN DISTRICT OF CALIFORNIA, Respondent;ENGINEERS & BUILDERS, INC., Real Party in Interest.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1371

538 F.2d 1371

AMERICAN FIDELITY FIRE INSURANCE COMPANY, Petitioner, v. UNITED STATES DISTRICT COURT FOR the NORTHERN DISTRICT OF CALIFORNIA, Respondent TRANS-BAY ENGINEERS & BUILDERS, INC., Real Party in Interest.

No. 75-3096.

United States Court of Appeals Ninth Circuit.

June 18, 1976.

Martin Quinn (argued), Pettit, Evers & Martin, San Francisco, Cal., for petitioner.

Anthony C. Piazza, Atty. (argued), of The Small Business Administration, San Francisco, Cal., for respondent.

OPINION

Before BARNES, KILKENNY ^* and WALLACE, Circuit Judges

WALLACE, Circuit Judge:

We are confronted with a technical yet important question pertaining to whether we should issue a writ of mandamus directing a district court to vacate an order which transferred a cross-claim to the Court of Claims. We hold that we should not.

Trans-Bay Engineers & Builders, Inc. (Trans-Bay) was the prime contractor on a low-income residential housing project in Oakland, California. American Fidelity Fire Insurance Co. (American) had issued performance bonds covering the work of four subcontractors and naming Trans-Bay as obligee. The subcontractors allegedly defaulted. After investigating the claimed defaults, American denied liability. Trans-Bay then brought suit in a California state court against American and others.

Ninety per cent of American's liability on the performance bonds in question had been guaranteed by the Small Business Administration (SBA) pursuant to 15 U.S.C. § 694b. Therefore, American brought a cross-claim against the administrator and an associate administrator of the SBA seeking declaratory relief and indemnification, claiming jurisdiction pursuant to 15 U.S.C. § 634(b)(1). See 15 U.S.C. §§ 694b(d), 693. The cross-defendants then removed the action to the district court pursuant to 28 U.S.C. §§ 1441 et seq. and filed an answer. Subsequently, the United States was substituted as the cross-defendant.

Thereafter, the government filed a motion to dismiss the cross-claim on the grounds that it failed to state a cause of action upon which relief could be granted and that the district court lacked jurisdiction. The government first contended that it had not waived its immunity to be sued in the state or district court. The government next argued that jurisdiction to hear the claim would vest, if anywhere, exclusively in the Court of Claims pursuant to 28 U.S.C. §§ 1346(a)(2) and 1491 because the cross-claim sought damages in excess of $10,000.

American responded that the cross-claim was properly brought in the state court and properly removed by the SBA to the district court pursuant to a federal statute providing that the SBA administrator may

sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy; but no attachment, injunction, garnishment, or similar process, mesne or final, shall be issued against the Administrator or his property . . . .

15 U.S.C. § 634(b)(1) (emphasis added).

The district court concluded that it was without jurisdiction because the claim was in excess of $10,000. The district judge noted that his decision would be the same even if the SBA administrators were still involved as cross-defendants. ¹

Rather than have its cross-claim dismissed, American requested and the district court agreed to transfer the claim to the Court of Claims pursuant to 28 U.S.C. § 1406(c). It is this transfer that American seeks to have vacated by petitioning this court for a writ of mandamus or prohibition. Although tempted to discuss the interesting jurisdictional question whether the district court had power to hear the cross-claim, we are constrained to determine first the threshold question whether a writ of mandamus will lie.

I

Necessarily, we begin with our jurisdictional basis, the All Writs Statute. 28 U.S.C. § 1651. This statute authorizes us to issue any writ necessary in the aid of our appellate jurisdiction. It is true that presently we do not have appellate jurisdiction of this case apart from the petition for mandamus. However, we may also issue writs in aid of our prospective jurisdiction. As stated by the Supreme Court:

As the jurisdiction of the circuit court of appeals is exclusively appellate, its authority to issue writs of mandamus is restricted by statute to those cases in which the writ is in aid of that jurisdiction. Its authority is not confined to the issuance of writs in aid of a jurisdiction already acquired by appeal but extends to those cases which are within its appellate jurisdiction although no appeal has been perfected. Otherwise the appellate jurisdiction could be defeated and the purpose of the statute authorizing the writ thwarted by unauthorized action of the district court obstructing the appeal.

Roche v. Evaporated Milk Association, 319 U.S. 21, 25, 63 S.Ct. 938, 941, 87 L.Ed. 1185 (1943). Thus, there is no impediment to issuance of the writ due to lack of present appellate jurisdiction.

However, there is another statutory restriction: we may issue writs only if it is "agreeable to the usages and principles of law." 28 U.S.C. § 1651. While the boundaries of this restriction are not always clear, the Supreme Court has given general guidance:

The traditional use of the writ in aid of appellate jurisdiction both at common law and in the federal courts has been to confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it is its duty to do so.

Roche v. Evaporated Milk Association, supra, 319 U.S. at 26, 63 S.Ct. at 941; Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, at 352, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976).

American focuses its argument on the second part of this general rule. It argues that the district court had a duty to exercise jurisdiction over the cross-claim and had no power to transfer the case out of its jurisdiction pursuant to 28 U.S.C. § 1406(c). Since it had no power to transfer the case, American argues that the court repudiated its duty and acted outside of its jurisdiction. Moreover, the parties do not dispute that the transfer of the case is an interlocutory order which is nonappealable, see28 U.S.C. § 1291, and thus immediate review may be accomplished only by a writ of mandamus.

American's contentions, however, miss the mark. The critical question before us is whether American has chosen the proper road to appellate review. "(W) hile a function of mandamus in aid of appellate jurisdiction is to remove obstacles to appeal, it may not appropriately be used merely as a substitute for the appeal procedure prescribed by the statute." Roche v. Evaporated Milk Association, supra, 319 U.S. at 26, 63 S.Ct. at 941. This is especially true where, as here, the issue involves "jurisdictional questions which (the district court) was competent to decide and which are reviewable in the regular course of appeal." Id.; accord, United States Alkali Export Association, Inc. v. United States, 325 U.S. 196, 202-03, 65 S.Ct. 1120, 89 L.Ed. 1554 (1945); cf. Ex parte Railway Co., 103 U.S. 794, 26 L.Ed. 461 (1881).

Therefore, the issue before us is not whether the district court was in error, but whether the jurisdictional decision was so far afield that a writ of mandamus, rather than appeal, is a permissible method of review. Our brothers of the Third Circuit have enunciated a test which appears to us to be helpful in the case now before us:

The challenged assumption or denial of jurisdiction must be so plainly wrong as to indicate failure to comprehend or refusal to be guided by unambiguous provisions of a statute or settled common law doctrine. If a rational and substantial legal argument can be made in support of the questioned jurisdictional ruling, the case is not appropriate for mandamus . . . even though on normal appeal a reviewing court might find reversible error.

American Airlines, Inc. v. Forman, 204 F.2d 230, 232 (3d Cir. 1953) (writ to review allegation of erroneous retention of jurisdiction of suit within Civil Aeronautics Board primary jurisdiction denied); accord, Pfizer, Inc. v. Lord, 522 F.2d 612, 615 (8th Cir. 1975), cert. denied, 424 U.S. 950, 96 S.Ct. 1421, 47 L.Ed.2d 356, 44 U.S.L.W. 3494 (1976) (quoting Forman ) (writ to review jurisdiction over foreign governments under the Clayton Act denied). Pursuant to this test, we must make some observations pertaining to the merits of the district court's jurisdiction in order to determine whether the district judge had a rational and substantial argument in support of his decision.

American argues that when Congress permitted the SBA administrator to "sue and be sued" in state court, 15 U.S.C. § 634(b)(1), it waived the government's sovereign immunity and created a forum in the state courts. The district court then received proper jurisdiction on removal. On the other hand, the government argues that Congress has established a comprehensive scheme to handle claims against the government, requiring all claims for damages in excess of $10,000 to be brought in the Court of Claims. 28 U.S.C. §§ 1346(a)(2), 1491. The government argues that the clause "without regard to the amount in controversy" in section 634(b)(1) modifies only the minimum amount in controversy requirement for a district court's jurisdiction found in 28 U.S.C. § 1331 and not the jurisdictional rule that claims in excess of $10,000 may be brought only in the Court of Claims.

While we might well decide the case differently if it were before us on appeal, we cannot conclude that there is no rational and substantial legal argument in support of the district court's decision.

II

Nor is this result inconsistent with the reasoning of Thermtron Products, Inc. v. Hermansdorfer, supra, 423 U.S. 336, 96 S.Ct. 584. There the Court issued a writ of mandamus to correct a...