Axel Johnson, Inc. v. Carroll Carolina Oil Co., Inc.

• Decision Date: 04 June 1998
• Docket Number: No. 97-1629,97-1629
• Citation: 145 F.3d 660
• Parties: 28 Envtl. L. Rep. 21,256 AXEL JOHNSON, INCORPORATED, Plaintiff-Appellant, v. CARROLL CAROLINA OIL COMPANY, INCORPORATED; Linda A. Carroll; Charles S. Lanier, Trustee, Defendants-Appellees, and Pace Oil Company, Incorporated, Defendant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 660

145 F.3d 660

28 Envtl. L. Rep. 21,256

AXEL JOHNSON, INCORPORATED, Plaintiff-Appellant, v. CARROLL CAROLINA OIL COMPANY, INCORPORATED; Linda A Carroll; Charles S. Lanier, Trustee, Defendants-Appellees and Pace Oil Company, Incorporated, Defendant.

No. 97-1629.

United States Court of Appeals Fourth Circuit.

Argued March 2, 1998.

Decided June 4, 1998.

ARGUED: Kenneth Berlin, Sr., Skadden, Arps, Slate, Meagher & Flom, L.L.P., Washington, DC, for Appellant. Matthew Patrick McGuire, Hunton & Williams, Raleigh, NC, for Appellees Carroll and Carroll Oil; Michael Perkins Flanagan, Ward & Smith, P.A., Greenville, NC, for Appellee Lanier. ON BRIEF: Don J. Frost, Jr., Skadden, Arps, Slate, Meagher & Flom, L.L.P., Washington, DC; Kenneth A. Shanklin, Shanklin & McDaniel, L.L.P., Wilmington, NC, for Appellant. Craig A. Bromby, Hunton & Williams, Raleigh, NC, for Appellees Carroll and Carroll Oil.

Before WILKINS, LUTTIG, and MOTZ, Circuit Judges.

Affirmed by published opinion. Judge LUTTIG wrote the opinion, in which Judge WILKINS and Judge MOTZ joined.

OPINION

LUTTIG, Circuit Judge:

This case arises on appeal from the district court's dismissal of four counts of a six-count complaint for want of subject matter jurisdiction. For the reasons stated herein, we affirm.

I.

Defendant-appellee Carroll Carolina Oil Co., Inc. ("CCO") owns a Superfund site, certain cleanup costs of which plaintiff-appellant Axel Johnson, Inc. ("Axel")--the former operator, either directly or through its predecessors in interest, of petroleum refinery and storage facilities at the site--has agreed to pay pursuant to a consent decree with the EPA. CCO received the property pursuant to a quitclaim deed from defendant-appellee Linda Carroll, who at the relevant times owned and operated CCO. Carroll had acquired the property through a foreclosure sale conducted by defendant-appellee Charles Lanier, the property's trustee.

Subsequent to entry of the consent decree, Axel brought a sixcount complaint against CCO, Carroll, and Lanier. The first two counts ("the Superfund counts") of Axel's suit sought to hold Carroll and CCO jointly and severally liable with Axel, under federal and state law, for its Superfund cleanup costs. The four remaining counts ("the state-law counts") sought damages and rescission based on allegations that Carroll and Lanier had fraudulently manipulated the foreclosure sale through which Carroll obtained the Superfund property.

The defendants-appellees moved to dismiss one of the two Superfund counts and the four state-law counts pursuant to FRCP 12(b)(1) and FRCP 12(b)(6). The district court denied the motion as to the Superfund count, but dismissed the state-law counts under FRCP 12(b)(1) on the grounds that Axel lacked standing to bring such claims under North Carolina law. To expedite appeal of this decision, Axel requested that the district court certify its decision as a final judgment with respect to the state-law counts under FRCP 54(b). The district court complied, and Axel noticed its appeal. Accordingly neither Superfund count is before this court at this time.

II.

We hold that the district court lacked jurisdiction to consider Axel's four state-law claims. In that court, Axel invoked three bases for subject-matter jurisdiction: (1) 42 U.S.C. § 9613(b) (exclusive jurisdiction over Superfund litigation), (2) 28 U.S.C. § 1331 (federal question jurisdiction), and (3) "principles of pendent jurisdiction." J.A. at 42 (amended complaint); accord id. at 2 (initial complaint) (same). It is undisputed--and, of course, indisputable--that neither 42 U.S.C. § 9613(b) nor 28 U.S.C. § 1331 extends federal jurisdiction to state-law claims. Thus, jurisdiction can be sustained here only under "principles of pendant jurisdiction."

These principles have been codified in 28 U.S.C. § 1367, which provides that,

in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution.

Id. § 1367(a). As is relevant here, the test for determining whether state and federal claims form part of the same constitutional case or controversy is set forth in United Mine Workers of America v. Gibbs

Pendent jurisdiction, in the sense of judicial power, exists whenever there is [a federal claim], and the relationship between that claim and the state claim permits the conclusion that the entire action before the court comprises but one constitutional "case." The federal claim must have substance sufficient to confer subject matter jurisdiction on the court.... The state and federal claims must derive from a common nucleus of operative fact. But if, considered without regard to their federal or state character, a plaintiff's claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.

383 U.S. 715, 725, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966) (citations and footnotes omitted; second and third emphases added). Accord ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 628 (4th Cir.1997).

Although neither party, nor the district court, noted this jurisdictional defect, Axel's submissions to the district court, as well as certain express findings made by that court at Axel's request, clearly establish that Axel's four state-law counts were not within the district court's supplemental jurisdiction. In particular, in requesting that the district court certify as final its order dismissing those counts, Axel argued that (1) the Superfund counts and state-law counts were factually distinct, J.A. at 91-93, (2) the Superfund counts and state-law counts were legally distinct, id. at 93-94, and (3) because "the factual and legal bases underlying [the Superfund and state-law counts] are separate and distinct," id. at 98, "certification is warranted because ... the possibility of duplicative appellate review is remote," id. See also id. at 93 n. 1 ("Further, because there is minimal factual overlap between the two claims, there is little concern that the Fourth Circuit would have to relearn the same set of facts upon appeal after adjudication of all claims." (citation and internal quotation omitted)). Similarly, in certifying its order under FRCP 54(b), the district court explicitly found that "the Superfund Claims that have not been dismissed ... are factually and legally distinct from the State Claims." J.A. at 104. It follows from these arguments and findings that the state-law counts and Superfund counts neither "derive from a common nucleus of operative fact," nor are so closely related that Axel "would ordinarily be expected to try them all in one judicial proceeding," and thus that supplemental jurisdiction could not be exercised over the state-law counts. Cf. Hales v. Winn-Dixie Stores, Inc., 500 F.2d 836, 848 (4th Cir.1974) (noting failure of pendant jurisdiction over state-law count that was "separately maintainable and determinable without any reference to the facts alleged or contentions stated in or with regard to the other [federal] count").

III.

When, at oral argument, this court questioned Axel's counsel about the apparent lack of supplemental jurisdiction, counsel tentatively suggested that jurisdiction over the state-law counts could, perhaps, be sustained under 28 U.S.C. § 1332 (diversity jurisdiction), a statutory basis for jurisdiction that Axel had previously invoked neither in the district court nor before this court. An examination of the pleadings and record, however, revealed to counsel and this court that Axel had not only failed to plead diversity jurisdiction, but that it had also failed to plead facts from which the existence of such jurisdiction could properly be inferred. Although the pleadings set forth the residence of each of the natural persons who are parties to the litigation, they did not positively establish the citizenship of those persons. See, e.g., J.A. at 43 (amended complaint) (stating...