Berger v. State Farm Mutual Automobile Insurance Co.

• Decision Date: 24 May 1961
• Docket Number: No. 6509.,6509.
• Citation: 291 F.2d 666
• Parties: Harriet BERGER, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

291 F.2d 666 (1961)

Harriet BERGER, Appellant, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellee.

No. 6509.

United States Court of Appeals Tenth Circuit.

May 24, 1961.

Don M. Jackson, Kansas City, Mo. (Willard L. Phillips, Kansas City, Kan., on brief), for appellant.

J. Milton Sullivant, Kansas City, Kan. (Kenneth M. Wormwood, Denver, Colo., on brief), for appellee.

Before MURRAH, Chief Judge, PICKETT, Circuit Judge, and KERR, District Judge.

MURRAH, Chief Judge.

In this diversity-negligence suit, plaintiff-appellant appeals from the judgment of the trial court dismissing her claim against defendant insurance company on the grounds that she had elected in a prior suit to pursue an inconsistent remedy.

The material facts are that plaintiff sued a third party, Berdell, for injuries resulting from an automobile collision allegedly caused by the negligence of Berdell. In her answer Berdell pleaded a written release of all claims of liability, signed by plaintiff at the instigation of appellee-insurer who carried the insurance policies on both automobiles. By a subsequent pleading, denominated a reply, plaintiff denied execution of the release and stated that if executed it was invalid for fraudulent procurement.

Apparently after pretrial discovery, plaintiff instituted this action against the insurer, affirming the release, and alleging in effect that it constitutes a valid defense to the claim against Berdell, but because of its fraudulent procurement by the insurer, she was deprived of her right of action in the prior suit. The prayer was for damages in the amount of her claim against Berdell and for punitive damages.

Applying Kansas law, the trial court held that plaintiff, having elected in the first suit to pursue her right to disaffirm the release, was thereafter precluded from affirming it; and that the second suit based upon its fraudulent procurement was therefore not maintainable.

Under federal law an election of remedies is a "rule of procedure or judicial administration" and is sparingly applied. See Mr. Justice Brandeis dissenting in United States v. Oregon Lumber Co., 260 U.S. 290, 307, 43 S.Ct. 100, 67 L.Ed. 261; Bernstein v. United States, 10 Cir., 256 F.2d 697, 704, 706; Minneapolis National Bank of Minneapolis, Kansas v. Liberty National Bank of Kansas City, 10 Cir., 72 F.2d 434. Indeed, the Federal Rules of Civil Procedure expressly provide that "a party may * * * state as many separate claims * * * as he has regardless of consistency * * *." Rule 8(e) (2), 28 U.S.C.A. See Bernstein v. United States, supra; Blazer v. Black, 10 Cir., 196 F.2d 139.

But, the law generally recognizes a rather nebulous distinction between the choice of remedies in its narrow sense and a choice between alternative rights of action upon which the outcome of litigation depends. See Mr. Justice Brandeis in United States v. Oregon Lumber Co., supra; Wilhorn Builders, Inc. v. Cortaro Management Company, 81 Ariz. 381, 307 P.2d 94; United States Fidelity & Guaranty Co. v. First National Bank, 5 Cir., 172 F.2d 258; Restatement of Contracts, § 381; Annotation 6 A.L.R.2d 23.

Applicable law, however, is not determined by the fine distinction between procedural remedies and remedial rights, for, under the controlling conflicts rule, as announced in Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188, and vitalized in subsequent cases, the overriding consideration in diversity cases is not whether the matter is "procedural" or "substantive", but rather whether in a suit for the enforcement of state created rights the outcome would be "substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court." Guaranty Trust Co. v. York, 326 U.S. 99, 109, 65 S.Ct. 1464, 1470, 89 L.Ed. 2079. See also Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520; Woods v. Interstate Realty Co., 337 U.S. 535, 69 S.Ct. 1235, 93 L.Ed. 1524; Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528; Byrd v. Blue Ridge Rural Electric Cooperative, Inc., 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953; Allstate Insurance Co. v. Charneski, 7 Cir., 286 F.2d 238. In a diversity suit, a federal court is but another local forum and the right to recover is measured by the law of the state. If therefore the asserted right of action would not be maintainable in a state court, it is not maintainable here.

Appellant does not deny the controlling effect of the Kansas rule on election of remedies, but earnestly contends that she did not make a binding election under applicable Kansas law.

Kansas has consistently adhered to a strict rule on election of remedies to the effect that "when the law gives several means of redress or relief predicated upon conflicting theories, the election of one of them operates as a bar against the subsequent adoption of the others." Davidson v. McKown, 157 Kan. 217, 139 P.2d 421, 426, 6...