Bradley v. Maryland Casualty Company

• Decision Date: 17 August 1967
• Docket Number: No. 18486.,18486.
• Parties: J. D. BRADLEY, Appellant, v. MARYLAND CASUALTY COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

382 F.2d 415 (1967)

J. D. BRADLEY, Appellant, v. MARYLAND CASUALTY COMPANY et al., Appellees.

No. 18486.

United States Court of Appeals Eighth Circuit.

August 17, 1967.

John A. Biersmith, Kansas City, Mo., for appellant; Charles J. Fraas, Jr., and Rafter, Biersmith & Walsh, Kansas City, Mo., on the brief.

Henry G. Eager and Richard K. Andrews, Kansas City, Mo., for appellees; Swanson, Midgley, Jones, Eager & Gangwere, Kansas City, Mo., on the brief.

Before VAN OOSTERHOUT, BLACKMUN and MEHAFFY, Circuit Judges.

BLACKMUN, Circuit Judge.

Plaintiff J. D. Bradley appeals from the district court's dismissal of all three counts of his second amended complaint. These counts relate, respectively, to liability under construction contract payment bonds, breach of contract and quantum meruit.

In May 1960 bids were taken for the construction of 504 Capehart Act housing units at Whiteman Air Force Base, Missouri. On June 24 the United States accepted the bid of The Swartout Company (Swartout). The acceptance was conditioned, as usual, upon Swartout's executing the prescribed form of housing contract and furnishing performance and payment bonds as required by the Capehart Housing Act's § 403(a), 42 U.S.C. § 1594(a).

As early as June 16, 1960, Swartout and Del E. Webb Corporation (Webb) formed a joint venture for the project. This arrangement underwent changes but eventually specified that Webb would have the management of the venture and that Swartout could not commit beyond $1,000 without Webb's written consent.

On August 15, 1960, a framing or carpentry agreement was entered into between Webb, as contractor, and Swartout, as subcontractor. This was supported by a performance bond in favor of Webb and executed by Swartout, as principal, and Aetna Casualty & Surety Company and Continental Casualty Company, as sureties. On September 22 the housing contract for the units was executed between the government and the joint venture (rather than Swartout alone as successful bidder). This in turn was supported by three payment bonds executed by the joint venture and the parties thereto, as principals, and by Maryland Casualty Company, as surety.

In late December 1960 plaintiff Bradley and Swartout's president met and negotiated an agreement under which Bradley was to do certain framing work which was covered by the August 15 agreement between Webb and Swartout and which, by that agreement, Swartout was obligated to perform. This oral contract was later formalized by two letters dated, respectively, January 3 and January 10, 1961, from Swartout to Bradley. These letters provided that Bradley was to set up and oversee the framing operation. They also provided that Bradley was to receive $25 per unit, payable as each unit was ready for dry wall; plus half the excess, if any, of $1,100 over the unit cost of the framing operation; plus Bradley's expenses to and from Whiteman; plus one-third of the amount, if any, which the cost of material items, specified as "items (c) and (d) * * * set forth on sheet two of subcontract agreement between Del E. Webb Construction Co. and The Swartout Company dated August 15, 1960, being subcontract number 4782", proved to be less than $750,000.

In the first part of 1961 Bradley made trips to the jobsite and assisted in the preparation of drawings and material lists. He began framing operations in April. By May 26 framing was under way, but not completed, on 14 units; none of these, however, was ready for dry wall by that date.

On May 26 and again on June 1 Swartout notified Webb that its payroll account was depleted and that it was unable to meet its payroll. Webb thereupon defaulted Swartout and, with permission of Swartout's performance bond sureties, Aetna and Continental, assumed completion of the framing work. On May 27 Bradley came to the site and was told by Webb representatives that Webb would complete the work required by its contract with Swartout and would not require Bradley's services.

Chronological treatment of the lawsuit's development, to the extent pertinent to the appeal, affords perspective at this point:

1. In August 1962 Bradley filed his initial complaint in Missouri state court against Webb, Swartout and Maryland. The complaint was in two counts. The first was based on the three payment bonds. The second was against only Webb and Swartout for breach of contract.

2. Process was never served on Swartout. On October 29, 1962, Swartout appeared specially in the state court and moved to dismiss for lack of personal jurisdiction. On the same date, on Webb's motion, filed pursuant to V.A. M.S. § 507.080 and Civil Rule 52.10, V.A. M.R., Aetna and Continental were joined as third-party defendants.

3. In November the two third-party defendants removed the case to the United States District Court for the Western District of Missouri. On February 5, 1963, Judge Gibson, then a district judge, dismissed the third-party petition with prejudice pursuant to a stipulation of compromise and settlement executed by Webb and the third-party defendants. Bradley moved to remand. Judge Gibson granted that motion on March 18, holding that there was an absence of "a separate and independent claim or cause of action", within the meaning of 28 U. S.C. § 1441(c). At the same time the court also vacated its order dismissing the third-party petition. Thus Aetna and Continental remained or at least were reinstated as parties to the litigation. On July 30, 1963, the state court, to which the case had been returned, sustained Swartout's motion to dismiss as to it for lack of jurisdiction.

4. This left in the litigation Bradley, a citizen of California; Webb, a citizen of Arizona; Maryland, a citizen of Maryland; Aetna, a citizen of Connecticut; and Continental, a citizen of Illinois. The dismissed defendant Swartout is a California citizen.

5. In August 1963 Webb and Maryland removed the case to federal court again. Bradley moved to remand for untimeliness and because the third-party defendants, Aetna and Continental, did not join in this second removal. Judge Gibson denied the remand motion.

6. In August 1964 an amended complaint was filed. This differed from the original only in the addition of J. D. Bradley, Inc., a California corporation, as a corporate plaintiff, and in an increase of the amount of the claim. It now appears to be conceded that J. D. Bradley, Inc. has no interest in the action.

7. On March 1, 1965, Webb and Maryland moved to dismiss the first, or payment bond, count of the amended complaint for lack of subject matter jurisdiction. This was based on the removal and the consequent derivative nature of the federal court's jurisdiction, and on this court's decision in Koppers Co. v. Continental Cas. Co., 337 F.2d 499 (8 Cir. 1964). Judge Gibson, on April 16, dismissed the first count.

8. In February 1966 the plaintiffs filed their second amended complaint. Its first two counts did not differ from those of the prior draft. This new draft contained, however, a third count in quantum meruit against Webb and Swartout and alleged that work had been subcontracted to Bradley by Swartout acting as agent for Webb.

9. The case went to trial on March 23 before Judge Hunter sitting without a jury. At trial plaintiffs' counsel contended, although Judge Gibson had dismissed the first count of the first amended complaint, that the plaintiffs were entitled to recover on the three payment bonds as contracts enforceable under the common law of Missouri. This, of course, was a theory which, if sound, would not founder on the limitations of federal court derivative jurisdiction.

10. On April 7, 1966, Judge Hunter, "for the purpose of clarification of the record", entered an order discharging and dismissing Webb and Maryland as to the first count; dismissing the third-party defendants Aetna and Continental, with prejudice, pursuant to the stipulation; and dismissing Swartout, with prejudice, pursuant to its motion and the state court order of July 30, 1963.

11. Judge Hunter's final judgment was entered May 12, 1966.

The issues raised on appeal concern the district court's (a) refusal to remand the second time; (b) trial of the case without a jury; (c) refusal to grant relief on the first count on common law grounds; (d) denial of relief on the breach of contract and quantum meruit counts; and (e) failure to exercise, in view of the authorship of its findings, conclusions and memorandum, "independent judicial determinations".

A. The refusal to remand. Bradley claims that Judge Gibson's refusal to remand the case the second time was error because only Webb and Maryland effected that removal and were not joined by Aetna and Continental as the statute, 28 U.S.C. § 1441(a), requires.

Where several defendants are jointly sued in a state court on a joint cause of action, the suit, as a general rule, may not be removed to federal court on diversity grounds unless all the defendants join in the removal. Wright v. Missouri Pac. R.R., 98 F.2d 34, 35 (8 Cir. 1938); Interstate Bakeries Corp. v. McKee Baking Co., 248 F.Supp. 946, 947 (W.D.Mo.1965); Moosbrugger v. McGraw-Edison Co., 215 F.Supp. 486, 487 (D.Minn.1963); McMahan v. Fontenot, 212 F.Supp. 812, 814 (W.D.Ark.1963). See Chicago, R.I. & P. Ry. v. Martin, 178 U.S. 245, 20 S.Ct. 854, 44 L.Ed. 1055 (1900); Gableman v. Peoria, D. & E. Ry., 179 U.S. 335, 337, 21 S.Ct. 171, 45 L.Ed. 220 (1900); Sheets v. Shamrock Oil & Gas Corp., 115 F.2d 880, 883 (5 Cir. 1940), aff'd 313 U.S. 100, 61 S.Ct. 868, 85 L.Ed. 1214 (1941); 1A Moore's Federal Practice (2d ed. 1965), par. 0.157 7, p. 266, par. 0.161 1, p. 522, par. 0.168 3.-2, p. 1171. We recognize that there may be a trend toward restriction, rather than enlargement, of federal diversity jurisdiction. Young Spring & Wire Corp. v. American Guarantee & Liab. Ins. Co., 220 F.Supp. 222, 228 (W. D.Mo.1963), and that the removal statutes are to be strictly construed, Shamrock Oil & Gas Corp. v. Sheets, supra, pp....