Burleson v. Coastal Recreation, Inc.

• Decision Date: 12 December 1978
• Docket Number: No. 75-4184,75-4184
• Citation: 595 F.2d 332
• Parties: Ron BURLESON, Plaintiff-Appellant, v. COASTAL RECREATION, INC., Defendant-Third Party Plaintiff-Appellee, v. INLAND SAILBOATS, INCORPORATED, Third Party Defendant-Fourth PartyPlaintiff-Appellee, v. DUTTON LAINSON COMPANY, Fourth Party Defendant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 332

595 F.2d 332

Ron BURLESON, Plaintiff-Appellant, v. COASTAL RECREATION, INC., Defendant-Third Party Plaintiff-Appellee, v. INLAND SAILBOATS, INCORPORATED, Third Party Defendant-Fourth

PartyPlaintiff-Appellee, v. DUTTON LAINSON COMPANY, Fourth Party Defendant.

No. 75-4184.

United States Court of Appeals, Fifth Circuit.

Dec. 12, 1978.

Dissenting Opinion May 16, 1979.

Charles M. Wilson, III, Joe Hill Jones, Dallas, Tex., for plaintiff-appellant.

D. L. Case, Jack Pew, Jr., Dallas, Tex., for Coastal Recreation.

Thomas G. Nash, Jr., Dallas, Tex., for Inland Sailboats, etc.

Before BROWN, Chief Judge, and THORNBERRY, COLEMAN, GOLDBERG, AINSWORTH, GODBOLD, CLARK, RONEY, GEE, TJOFLAT, HILL, FAY, RUBIN and VANCE, Circuit Judges.

BY THE COURT:

This case having been considered on briefs and oral argument by the Court en banc pursuant to the order entered on July 11, 1978, 577 F.2d 354 (5 Cir. 1978), it is ORDERED that the en banc Court convened to consider this case is hereby DISSOLVED and the cause is remanded to the panel. (For panel disposition see 572 F.2d 509 (5 Cir. 1978).)

JOHN R. BROWN, Chief Judge, with whom Judges GODBOLD and TJOFLAT, Circuit Judges, join, dissenting:

I dissent to the Court's unenbancing the case and refusing to reconsider the panel's opinion. More so, I dissent to the Court's putting the imprimatur of the whole Court on the decision of the panel. The panel's decision, with deference, is simply wrong. It flies in the face of our decision in Fawvor v. Texaco, Inc., CA 5, 1977, 546 F.2d 636, ¹ and worse, the Supreme Court's decision in Owen Equipment and Erection Co. v. Kroger, 1978, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274.

Burleson appeals from two judgments, one for him, one against. He asserts several grounds for reversal, including lack of subject matter jurisdiction over the diversity suit which he instituted below. I believe strongly that we must agree with his jurisdictional argument and that the case should be vacated and remanded.

The Wayward Winch

In August 1973, Burleson, a Texas citizen, ordered a Balboa 26 sailboat from Inland Sailboats, Incorporated ("Inland"), a Texas corporation with its principal place of business in Dallas. The Balboa 26 manufactured by Coastal Recreation, Inc. ("Coastal"), a California corporation has a swing keel which is operated by a hand-cranked winch. The winch is manufactured by Dutton Lainson Company.

On March 1, 1974, Ed Maybaum, a salesman for Inland, helped Burleson rig his new boat. Burleson and Maybaum discovered that the winch handle on the new Balboa was different from the snap-on winch handle Burleson had previously seen both in the sales literature provided him and on Maybaum's own Balboa. The one delivered with Burleson's boat was made to be affixed by means of a lock nut. No instructions or warnings were supplied to Burleson concerning its use. ² As delivered, the handle and lock nut were not attached to the winch. That day Maybaum affixed the handle to the winch without the use of the nut and lowered the keel. ³

The following day when Burleson was raising the keel, he let go of the handle so that he could check the boat for leaks. The handle began to spin and flew off, striking Burleson in the skull. This blow caused almost total blindness in his right eye and necessitated plastic surgery to rebuild one side of his face.

Burleson brought a diversity action against Coastal seeking $510,000 in damages in the Texas Federal District Court. His cause of action was based on negligence, strict liability and breach of warranty. Coastal in turn brought a third party complaint against Inland, whereupon Burleson amended his complaint to include Inland, a nondiverse party, as a defendant. Burleson alleged ancillary and, alternatively, pendent jurisdiction over his claim against Inland. ⁴

Inland moved to dismiss the action for want of jurisdiction. ⁵ Judge Hughes denied the motion on the following basis:

After a review of the motion, the briefs, the pleadings, and the current law on both the majority and minority views regarding the joinder of a third party defendant as a party defendant by plaintiff, where such joinder destroys diversity, this Court chooses to adopt the minority view in this particular case.

Here, good diversity exists as between Ron Burleson and Coastal Recreation, Inc. However, Ron Burleson and Inland Sailboats are both Texas residents. In arriving at the decision that this Court will retain jurisdiction, the Court has considered the cases of Saalfrank v. O'Daniel, 390 F.Supp. 45 (N.D.Ohio W.D.1975) and Fawvor v. Texaco, 387 F.Supp. 626 (E.D.Tex.1975), and finds that it substantially agrees with them. Where there is no evidence of collusion or showing of prejudice, and the case has proceeded for a good length of time in Federal Court, it is more equitable and desirable to retain jurisdiction there. ⁶

The case proceeded to trial and was submitted to the jury on special interrogatories ⁷ under Rule 49(a), F.R.Civ.P. The jury assessed damages in the amount of $30,000 and found the percentage of the parties' negligence that caused the injuries to be:

However, the jury additionally found that Inland's negligence was not a proximate cause of the injury. ⁸ Burleson moved for a mistrial on the basis that the jury returned an incomplete and conflicting verdict. Following the denial of this motion and Coastal's stipulation to assume the 10% Negligence assigned to Inland, ⁹ the District Court by judgment assessed 55% Of the $30,000 in damages against Coastal and awarded plaintiff $16,500. ¹⁰ The District Court also entered a take nothing judgment in favor of Inland on Burleson's claim and on Coastal's third party claim. ¹¹

Burleson appeals from the judgments, asserting various trial errors ¹² and lack of subject matter jurisdiction. Because I am forced to conclude that the District Court was without jurisdiction, I do not reach the other issues presented on appeal. ¹³

No Jurisdiction

The issue first raised by Inland and decided in Burleson's favor below about which he now unabashedly complains is this: Must there be an independent basis for jurisdiction to sustain a state-created cause of action by the plaintiff in a diversity suit against a third party defendant when the plaintiff and the third party defendant are citizens of the same state and no questions of federal law are involved in the original action or in the plaintiff's action against the third party defendant? After Burleson filed the present appeal, this Court answered that question affirmatively in Fawvor v. Texaco, Inc., 5 Cir., 1977, 546 F.2d 636, Rev'g, E.D.Tex., 1975, 387 F.Supp. 626, ¹⁴ and the Supreme Court approved that ruling in Owen Equipment and Erection Co. v. Kroger, 1978, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274.

The only distinction between this case and Fawvor lies in the fact that Fawvor was decided on an interlocutory appeal taken by the third party defendant before trial. Here the issue is raised by the self-same party invoking federal jurisdiction in the first instance after opposing an initial motion to dismiss and after the case has gone to judgment. Thus, the Court must decide whether this is a distinction without a difference and, if that be so, what disposition is required on remand.

It has long been the rule that subject matter jurisdiction cannot be waived or conferred by consent of the parties. ¹⁵ Subject matter jurisdiction is an issue which can be raised at any time, and if not raised by the parties, it can and must be raised by the courts at Any level of the proceedings. ¹⁶ Moreover, parties who have invoked the aid of federal courts or consented to litigate before them are not estopped from challenging jurisdiction at a later time, ¹⁷ regardless of the anomalous results and the inequities caused by allowing them to do so. ¹⁸ These rules have evolved in order to prevent expansion of federal judicial power which is constitutionally and statutorily limited. E. g., American Fire & Casualty Co. v. Finn, 1951, 341 U.S. 6, 17-18, 71 S.Ct. 534, 95 L.Ed. 702; Paxton v. Weaver, 5 Cir., 1977, 553 F.2d 936, 942.

Thus, unaware of any legal bar to Burleson's challenge to jurisdiction, and bound by Fawvor and Kroger, ¹⁹ I turn to the question of what disposition is in order. The decisions in American Fire & Casualty Co. v. Finn, 1951, 341 U.S. 6, 71 S.Ct. 534, 95 L.Ed. 702, On appeal following remand, 5 Cir., 1953, 207 F.2d 113, Cert. denied, 1954, 347 U.S. 912, 74 S.Ct. 476, 98 L.Ed. 1069, control here.

Finn involved a suit brought by a Texas citizen in state court against two nonresident insurance companies and their agent, a Texas citizen. American Fire sought removal to federal court where, after a trial on the merits, judgment was entered against American and in favor of the other two defendants. American Fire moved to vacate that judgment on the ground that the case had been improperly removed. The District Court denied that motion and this Circuit affirmed. 181 F.2d 845. The Supreme Court reversed, holding that since removal had been improper and because the District Court would not have had jurisdiction had the action been brought there originally, American was not estopped to assert lack of jurisdiction. 341 U.S. at 16-17, 71 S.Ct. at 541-542, 95 L.Ed. at 710. And this was so despite the fact that the Texas defendant like Inland here whose presence had destroyed diversity jurisdiction had been absolved of liability:

The posture of this case even at the time of judgment also barred federal jurisdiction. A Texas citizen was and remained a party defendant. The trial court judgment, after decreeing recovery against American Fire and Casualty Company on the jury's verdict, added, over American's objection,

"It is Further Ordered, Adjudged and Decreed that the Plaintiff take nothing as against Defendants, Indiana Lumbermens Mutual Insurance Company and Joe Reiss, individually and doing business as the Joe Reiss...