Burka v. Aetna Life Ins. Co., 95-7284
| Decision Date | 14 June 1996 |
| Docket Number | No. 95-7284,95-7284 |
| Citation | 318 App.D.C. 244,87 F.3d 478 |
| Parties | , 35 Fed.R.Serv.3d 421, 110 Ed. Law Rep. 595 Paul S. BURKA, and Robert A. Burka, Trustees, Appellants v. AETNA LIFE INSURANCE COMPANY, et al., Appellees. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Peter A. Greenburg, Washington, DC, argued the cause and filed the briefs, for appellants.
Paul J. Kiernan, Washington, DC, argued the cause, for appellee Aetna Life Insurance Company, with whom Gloria B. Solomon, was on the brief.
Charles H. Fleischer, Washington, DC, argued the cause, for appellee The American University, with whom Michael William Sacks, was on the brief.
Before: EDWARDS, Chief Judge, GINSBURG and ROGERS, Circuit Judges.
Opinion for the Court filed by Chief Judge HARRY T. EDWARDS.
Through a 1993 foreclosure sale, appellee Aetna Life Insurance Company acquired property located in the District of Columbia ("D.C." or "the District") that previously had been owned by a family trust of which appellants Paul S. Burka and Robert A. Burka are presently trustees. Aetna subsequently arranged to sell the property to appellee American University ("AU"), a nonprofit D.C. institution that plans to use the property for its law school. After Aetna and AU had entered into a purchase agreement, but before the sale took place, the Burkas filed suit in the D.C. Superior Court challenging Aetna's ownership of the property or, in the alternative, claiming that the size of a commercial building located on the property was larger than a Declaration of Easement and Agreement ("Declaration") concerning the property permitted.
Because Aetna is a Connecticut corporation and the Burkas are citizens of the District of Columbia and Maryland, Aetna was able to remove the case to the federal District Court based on diversity jurisdiction. After the District Court granted summary judgment in favor of Aetna on all counts of the Burkas' complaint, Aetna conveyed the property to AU, but retained a security interest. On appeal, this court upheld the District Court's grant of summary judgment as to all claims except the allegation that the size of the building on the property violated the Declaration; the court remanded this claim because the District Court had not addressed it. Burka v. Aetna Life Ins. Co., 56 F.3d 1509 (D.C.Cir.1995) (per curiam) ("Burka I").
Following the remand, but before a scheduled evidentiary hearing on the building-size issue, the parties submitted a series of procedural motions, which form the basis of the instant appeal. First, on July 6, 1995, Aetna moved to add AU as a defendant pursuant to Federal Rule of Civil Procedure ("Rule") 25(c). 1 A week later, the Burkas moved to join AU as a defendant pursuant to Rule 19, 2 and sought to amend their complaint to add claims against AU. Because the Rule 19 joinder of AU as a defendant would have destroyed diversity, the Burkas also asked the federal court to remand the case to the Superior Court pursuant to 28 U.S.C. § 1447(e) (1994). 3 Four days after the Burkas filed their motions, AU requested leave to amend and supplement the answer previously filed by Aetna. AU also asserted a counterclaim against the Burkas relating to actions taken by them during the pendency of the first appeal to this court.
By Memorandum Opinion and Order, the District Court granted Aetna's motion to substitute AU, denied the Burkas' motions both to join AU and remand or dismiss the case, granted the Burkas' motion to amend the complaint, and granted AU's motion to amend and supplement the answer. Burka v. Aetna Life Ins. Co., 894 F.Supp. 28 (D.D.C.1995). On interlocutory appeal, the Burkas' principal claim is that the District Court erred in permitting AU to be added as a defendant pursuant to Rule 25(c) rather than Rule 19 and/or section 1447(e), and in refusing to remand or dismiss the case for lack of subject matter jurisdiction once AU was added.
We conclude, however, that the District Court was well within its discretion in granting Aetna's Rule 25(c) motion, and in doing so before considering the Burkas' joinder requests. We find nothing in the law suggesting that Rule 19 and/or section 1447(e) must come into play and trump Rule 25(c) as a method for adding a party when, as here, Rule 25(c) clearly is applicable, particularly where the Rule 25(c) motion is first in time. Further, the Supreme Court's decision in Freeport-McMoRan Inc. v. K N Energy, Inc., 498 U.S. 426, 111 S.Ct. 858, 112 L.Ed.2d 951 (1991) (per curiam), which we find fully applicable to this case, establishes that the addition of a non-diverse party pursuant to Rule 25(c) generally does not deprive the District Court of subject matter jurisdiction, and hence does not require remand or dismissal. Although Freeport-McMoRan indicates that there might be an exception if the new party was actually an indispensable party at the beginning of the litigation, we agree with the trial court that AU was not such a party. Therefore, we affirm the District Court's rulings on the parties' procedural motions. 4
Little more need be said here concerning the details and history of the parties' underlying property dispute, which is duly recounted in Burka I. See 56 F.3d at 1510-12. For present purposes, we focus on the District Court's August 2, 1995, decision disposing of the parties' procedural motions. The District Court framed the issues before it and capsulized its reasoning as follows:
The key question presented by the instant pleadings is how, as a matter of procedure, [AU] should become a part of this case. All parties, including [AU], agree that AU should be a defendant in this suit because it now owns the subject property. However, the [Burkas] quarrel with Aetna and AU over whether the proper vehicle for accomplishing this objective is Rule 25(c) or, as the [Burkas] urge, Rule 19....
It is obvious that the reason why the [Burkas] argue for joinder under Rule 19 is that, under 28 U.S.C. § 1447(e), the Court could remand the case to Superior Court if such joinder would destroy diversity.... The option of remanding the case is evidently not available to the Court if AU is substituted in as a party defendant pursuant to Rule 25(c). Because all parties agree that AU is a proper party to this case (and the [Burkas'] argument is solely designed to change the forum in which this case is heard), and because Rule 25(c) properly applies to this case on its face, the Court disagrees with the [Burkas] that joinder under Rule 19 followed by remand to the Superior Court is the appropriate course.
Turning to its more detailed analysis, the District Court first addressed the applicability of Rule 25(c). The court found that Rule 25(c) "plainly appl[ies] to the instant suit," because "Aetna transferred its interest in the subject property to AU for business reasons unrelated to this litigation" after the suit was filed. Id. at 30. The court also determined that, under the Supreme Court's decision in Freeport-McMoRan, applying Rule 25(c) to add AU as a party defendant would not deprive the court of jurisdiction. Id.; see also Freeport-McMoRan, 498 U.S. at 428, 111 S.Ct. at 860 ().
While acknowledging that "28 U.S.C. § 1447(e) does not allow a court to retain jurisdiction over a case where a non-diverse party is joined," the District Court nevertheless refused to deny the Rule 25 substitution, observing that the Burkas "have not cited a case ... where substitution under Rule 25 in a removed action triggered the application of ... § 1447(e), or where application of § 1447(e) trumped application of Rule 25 and Freeport-McMoRan in circumstances where both rules could arguably apply." Burka, 894 F.Supp. at 30 n. 1. Thus, given that all parties agreed that AU should be a party defendant in the case, and given that "Rule 25(c) neatly applies to accomplish this uncontested end," the District Court saw "no reason why [Aetna's] Motion to Substitute should not be granted." Id. at 30.
Turning to the Burkas' motions, the court considered and rejected appellants' requests for joinder and remand pursuant to section 1447(e). 5 The court also rejected as without merit the Burkas' contention that AU had actually been an indispensable party at the onset of this litigation due to its already having entered into a contract to purchase the subject property before the Burkas filed suit and that, therefore, the court lacked subject matter jurisdiction over the case.
Although the District Court judge expressed "absolute[ ]" certainty as to the correctness of his decision regarding the parties' procedural motions, the court nevertheless granted the Burkas' request to certify the case for interlocutory appeal in order to conserve judicial resources. Id. at 33. We granted the Burkas' petition for appeal by Order filed December 1, 1995.
Appellants mount two principal arguments to challenge the District Court's rulings on the parties' procedural motions: (1) that a Rule 25(c) addition was not available on the facts of this case and that, in any event, adding AU as a defendant pursuant to Rule 25(c) would require remand to the D.C. Superior Court; and (2) that, even if a Rule 25(c) addition would not require remand, the District Court had no discretion to add AU to the case per Aetna's Rule 25(c) motion while in the same decision refusing to apply Rule 19 and/or section 1447(e) to join AU as a defendant per appellants' request. We find neither argument persuasive. 6
Appellants' first contention--that Rule 25(c) is inapplicable in ...
To continue reading
Request your trial
-
Termorio S.A. v. Electrificadora Del Atlantico
...See 6 Moore's Fed. Prac. § 25.30[7] (2000) ("Substitution has no effect on subject matter jurisdiction."); cf. Burka v. Aetna Life Ins. Co., 87 F.3d 478, 482 (D.C.Cir. 1996) (substitution of non-diverse party does not defeat jurisdiction). Although Burka held that jurisdiction cannot be def......
-
Paleteria La Michoacana, Inc. v. Productos Lacteos Tocumbo S.A. De C.V.
...25(c). The decision to grant or deny a Rule 25(c) motion is a matter within the district court's discretion. See Burka v. Aetna Life Ins. Co. , 87 F.3d 478, 482 (D.C. Cir. 1996) ; see also Bauer v. Commerce Union Bank , 859 F.2d 438, 441 (6th Cir. 1988) ("[O]rders [granting Rule 25(c) subst......
-
Styller v. Zoning Bd. of Appeals of Lynnfield
...unabated when the property changes hands,13 see In re Bernal, 207 F.3d 595, 598 (9th Cir. 2000). See also Burka v. Aetna Life Ins. Co., 87 F.3d 478, 480, 482 (D.C. Cir. 1996) (property purchaser properly substituted as defendant on remand). ii. Mootness. Although the plaintiff's ownership o......
-
Rose, LLC v. Treasure Island, LLC
...a plaintiff to negate an adverse ruling because of its own failure to join all indispensable parties"); cf. Burka v. Aetna Life Ins. Co., 87 F.3d 478, 483 (D.C. Cir. 1996) (concluding that an appellant's conscious, tactical decision not to join a party at the beginning of the action militat......