Capital Bancshares, Inc. v. North American Guar. Ins. Co.

• Decision Date: 10 November 1970
• Docket Number: No. 28638.,28638.
• Citation: 433 F.2d 279
• Parties: CAPITAL BANCSHARES, INC., Plaintiff-Appellant-Cross Appellee, v. NORTH AMERICAN GUARANTY INSURANCE COMPANY and David M. Pack, Commissioner of the Department of Insurance and Banking, State of Tennessee, etc., Defendants-Appellees-Cross Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

433 F.2d 279 (1970)

CAPITAL BANCSHARES, INC., Plaintiff-Appellant-Cross Appellee, v. NORTH AMERICAN GUARANTY INSURANCE COMPANY and David M. Pack, Commissioner of the Department of Insurance and Banking, State of Tennessee, etc., Defendants-Appellees-Cross Appellants.

No. 28638.

United States Court of Appeals, Fifth Circuit.

October 5, 1970.

Rehearing Denied November 10, 1970.

Gibson Tucker, Jr., James Foley, III, Tucker & Schonekas, New Orleans, La., for plaintiff-appellant.

Peter T. Dazzio, Robert L. Roland, Watson, Blanche, Wilson, Posner & Thibaut, Baton Rouge, La., for defendants-appellees.

Before JOHN R. BROWN, Chief Judge, and GEWIN and THORNBERRY, Circuit Judges.

JOHN R. BROWN, Chief Judge:

In an extremely complex factual setting, we would face here the often equally complex question of removal.¹ In Louisiana garnishment proceedings, the Court below refused to remand the case to the state Court and on the merits dissolved the attachments that it had ordered. Believing that there is no appealable order before us, we dismiss the appeal.²

Any comprehensible explanation of the problems here must begin with a rather detailed outline of the facts under which the case arose. In August 1967, Bank³ issued a certificate of deposit for $125,000 payable to Commissioner Pack.⁴ Pack was the statutory trustee for the protection of the Tennessee policyholders and creditors of Insurance Company.⁵ In February 1968, Bank filed an interpleader action under 28 U.S.C.A. § 1335 in the U.S. District Court for the Eastern District of Louisiana. The interpleader stated that both Pack and Bancshares⁶ were asserting claims to the assets of the now defunct Insurance Company and that both were thereby asserting claims to the certificate of deposit. Accordingly, Bank deposited $127,187, representing the proceeds due on the certificate, into the registry of the federal Court.

In August 1968 Bancshares filed suit in state Court in Louisiana naming Pack and Insurance Company as defendants and the U.S. District Clerk and Bank as garnishees. Bancshares asserted that Insurance Company had breached a stock sale with exchange agreement and sought a half million in damages. Bancshares alleged that it was entitled to a writ of attachment against the property of defendants,⁷ who were nonresidents of Louisiana, and sought to garnish the funds in the federal Court registry. The attachment was solely to obtain in personam jurisdiction over nonresident defendants and not to secure any peculiar interest in the property seized.⁸ The attachment issued, and Bank and the District Clerk answered the garnishment interrogatories saying essentially that the funds were in Court custody, and therefore not subject to garnishment.

Then on September 17, the interpleader was dismissed on the ground of lack of venue.⁹ However the funds were not released but stayed in the Clerk's custody.

On September 30, Pack filed with the Secretary of State a formal appointment of an agent for service of process.¹⁰ On October 4, Pack and Bank filed in the state proceeding a motion to dissolve the attachment on two grounds.¹¹

On November 8, the motion to dissolve was submitted and heard on its merits by the state Court. On January 29, 1969, on Bank's motion, the federal Court allowed Bank to withdraw the funds from the registry of the federal Court. This instantly triggered more litigation, for the same day Bancshares filed in the state Court proceeding a Supplemental Petition for Attachment against the original defendants (Pack and Insurance Company) with Bank as garnishee. The writ issued and pursuant to it Bank turned over the money to the Sheriff of the Parish of Orleans.

On February 26, 1969,¹² Defendants filed in the state Court motions to dissolve the supplemental writs.¹³ The next day, Defendants filed in the federal Court a petition for removal. On March 12, Bancshares moved to remand to the state Court. In April, the federal Court denied the motion to remand, and on June 2, Defendants moved the federal Court to dissolve the original attachment, on the identical grounds urged in state Court. See note 11, supra. Likewise on June 9 Defendants moved to dissolve the supplemental writs on the identical grounds urged in state Court. See note 13, supra. And on June 11, Defendants moved that the case be dismissed for lack of capacity to be sued and for failure of the original petition to state a claim for which relief could be granted. F.R.Civ.P. 12(b). On August 20, the District Court dissolved the original writ because the funds at the time were not subject to attachment. The Court also dissolved the supplemental writs because Defendants at the time were subject to service of in personam process in Louisiana. But the motions to dismiss for lack of procedural capacity and for failure to state a claim were denied. The federal Court thereby held that there (i) was a case stated for trial on the merits, and (ii) against nonresident defendants over whom the Court had personal jurisdiction.

On September 2, Defendants (Pack and Insurance Company) moved to withdraw the funds. In the meantime Bancshares on September 17 had filed a notice of appeal. The District Court authorized the release of the funds to Pack. But the order also, in effect, allowed an interlocutory appeal from the order dissolving the two writs (and presumably the denial of remand) but required Bancshares to post a $127,000 supersedeas bond.¹⁴ Otherwise the funds would be released. For reasons we do not attempt to surmise, the bond was not filed on time¹⁵ and the District Court permitted Pack to withdraw the funds on November 26, 1969.¹⁶ The funds, if not completely disbursed, are no longer in Louisiana or in the Fifth Circuit. As the case stands before us now, Bancshares argues that the Court improperly denied its motion for remand and that as a corollary the Court improperly dissolved the attachments of the state Court.

Though the path into this factual labyrinth is difficult, we, like Theseus, find that a narrow thread makes the return journey easy. For the resolution of this case hinges on the appealability of the order before us. A refusal to remand is not a final order and standing by itself cannot be appealed. Lewis v. E. I. DuPont De Nemours & Co., 5 Cir., 1950, 183 F.2d 29, 31. See also 28 U.S.C.A. § 1447(d). And so this appeal can be sustained only if the remand appeal is incidental to some "final" appealable judgment. Here the only order to tie it to is that dissolving the attachments. We hold that the orders of dissolution are not final and therefore must dismiss the appeal.

In 21 Turtle Creek Square, Ltd. v. New York State Teachers' Retirement System, 5 Cir., 1968, 404 F.2d 31, this Court found that an order quashing and dissolving a writ of attachment used to acquire in personam jurisdiction over a nonresident was not a final order. We therefore dismissed the appeal for want of jurisdiction. Turtle Creek is direct and controlling. None of the pragmatic factors delineated there, singly or collectively, add up to make an otherwise interlocutory order a "final" one.

The attachments had nothing to do with the subject matter of the underlying suit for damages but rather were used strictly as a means to acquire in personam jurisdiction over the person of the nonresident defendants. Since the suit began, Defendants have submitted to the in personam jurisdiction of the Louisiana Courts and by removal to the federal Court. Not only are all parties now before the District Court, but that Court refused to dismiss the suit for failure to state a claim. Thus the full merits of the damage suit are still before it. When a final judgment is entered, Bancshares, if dissatisfied, can then appeal and presumably raise the same issues as are now being pressed.

This appeal must be dismissed. With this also falls the cross appeals of Pack for attorney's fees and for damages resulting from the improvident attachments.

On some prior occasions in situations where the order was found not to be final and thus not appealable or when mandamus was sought, we have invited the parties to resubmit the matter to the District Court for...