Compagnie des Bauxites de Guinee v. L'Union Atlantique S.A. d'Assurances

• Decision Date: 22 December 1983
• Docket Number: No. 83-5114,83-5114
• Citation: 723 F.2d 357
• Parties: COMPAGNIE DES BAUXITES DE GUINEE, a corporation, Appellant, v. L'UNION ATLANTIQUE S.A. D'ASSURANCES, Vesta (UK) Insurance Company, and Chiyoda Fire & Marine Insurance Company, Ltd., Tokyo.
• Court: U.S. Court of Appeals — Third Circuit

Page 357

723 F.2d 357

COMPAGNIE DES BAUXITES DE GUINEE, a corporation, Appellant, v. L'UNION ATLANTIQUE S.A. D'ASSURANCES, Vesta (UK) Insurance Company, and Chiyoda Fire & Marine Insurance Company, Ltd., Tokyo.

No. 83-5114.

United States Court of Appeals Third Circuit.

Argued Sept. 12, 1983.

Decided Dec. 22, 1983.

Cloyd R. Mellott, Dale Hershey, Robert W. Doty (argued), Andrew M. Roman, Robert L. Byer, Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa., for appellant.

Thomas F. Weis (argued), David L. Beck, Weis & Weis, Pittsburgh, Pa., for appellees.

Before SEITZ, Chief Judge, GIBBONS and ROSENN, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge.

Compagnie des Bauxites de Guinee (CBG) appeals from an order of the district court dismissing its complaint based on diversity jurisdiction against three of its insurers for want of in personam jurisdiction, as time barred, and because its loss was not caused by a fortuitous event. It is not suggested that any law other than that of the forum is controlling, and we will therefore apply the law of Pennsylvania. The Court of Appeals has jurisdiction under 28 U.S.C. Sec. 1291.

I

The parties are not strangers to this court. The events giving rise to this suit and much of the relevant history of the case are reported in a previous opinion, Compagnie des Bauxites de Guinee v. Insurance Company of North America, 651 F.2d 877 (3d Cir.1981), aff'd sub nom Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982). We will therefore state only those facts relevant to this appeal.

In December of 1975 CBG filed an action in the district court against the Insurance Company of North America (INA) and a number of foreign excess insurers (the excess insurers), including the appellees in this case, in order to recover under an all-risk business interruption insurance policy covering its bauxite mining and processing plant in the Republic of Guinea. In August of 1976 CBG began a series of fruitless attempts to take discovery for the purpose of showing the excess insurers' contacts with Pennsylvania. For the next three years most of the excess insurers repeatedly refused to comply with CBG's discovery requests and the district court's discovery orders.

In March of 1979 the excess insurers filed suit in England, seeking to rescind the excess insurance policies. CBG moved to enjoin the excess insurers from proceeding with this action. On April 19 the district court preliminarily enjoined the English suit. It also imposed a sanction against the excess insurers for noncompliance with its discovery orders, pursuant to Fed.R.Civ.P. 37(b)(2)(A), by taking as established the facts which would support in personam jurisdiction. The district court also held that, notwithstanding the sanction, CBG had introduced sufficient evidence to independently establish the court's jurisdiction over all the excess insurer defendants.

The excess insurers hired new counsel, who promptly noticed a series of depositions in England in connection with the English suit. These depositions were apparently also intended to show that the excess insurers could not be sued in Pennsylvania. CBG moved for a protective order. The district court granted the order, holding that in personam jurisdiction "shall not be the subject of further discovery, testimony or evidence in this case ...." In November, a permanent injunction hearing was held regarding the English suit. Pursuant to the protective order, neither side introduced new evidence or testimony on jurisdiction at this hearing. The permanent injunction issued in August 1980, the district court holding that it had in personam jurisdiction based on the sanction and on the evidence relating to jurisdiction which was in the record of the preliminary injunction hearing.

The excess insurers took an interlocutory appeal to this court. Our review of the permanent injunction included review of its jurisdictional basis. We affirmed the discovery sanction as to all except the three appellees in this case, L'Union Atlantique S.A. d'Assurances (now L'Union Atlantique S.A. de Reassurances) (UNAT); Vesta (U.K.) Insurance Co. (Vesta); and Chiyoda Fire & Marine Insurance Co., Ltd., Tokyo (Chiyoda). We held that the sanctions should not apply to them because they had cooperated with the district court's discovery orders. We further held that the record contained no facts which would sustain a finding of personal jurisdiction as to them, and dismissed them from the suit. The Supreme Court denied CBG's petition for certiorari to review our dismissal of UNAT, Vesta and Chiyoda. 457 U.S. 1105, 102 S.Ct. 2902, 73 L.Ed.2d 1312 (1982).

After the district court, 555 F.Supp. 1027, granted the three insurers' motion to dismiss them from the 1975 action, CBG filed a new action against them, based on the same facts and alleging the same cause of action as in the 1975 suit from which they had just been dismissed. The three excess insurers moved to dismiss, claiming that the district court lacked in personam jurisdiction and that our previous dismissal on jurisdictional grounds in the 1981 appeal was res judicata or a collateral estoppel and prevented relitigating the insurers' amenability to Pennsylvania process. The motion to dismiss was twice amended to add defenses based on the running of the statute of limitations and the non-occurrence of a fortuitous event.

While the motion to dismiss was pending, CBG directed interrogatories to each of the defendants in order to discover their contacts with Pennsylvania, and the insurers moved for a protective order. The district court neither directed that the interrogatories be answered nor issued a protective order, but in February 1983, it granted the insurers' motion to dismiss. The district court held that our prior dismissal was res judicata and that CBG could not relitigate the jurisdiction issue. In addition, the district court reached the other two grounds for dismissal, holding that CBG's suit was time barred and that no recovery was available as a matter of law because CBG's losses were not caused by a fortuitous event.

II

We first address the district court's holding that our dismissal of the insurers in the 1981 appeal was res judicata as to the new suit against the three excess insurers. CBG argues first, that the principle of res judicata does not apply at all because the merits were never reached in the prior case. Second, CBG argues that any collateral estoppel applies only to the issue actually determined in the prior action, which was whether in personam jurisdiction existed when the first suit was filed in December of 1975. Thus, according to CBG the amenability of UNAT, Vesta and Chiyoda to suit in August of 1982 remains an open question.

We agree with CBG that the doctrine of res judicata, or claim preclusion, does not prevent this suit from being brought. The branch of res judicata which the excess insurers would have us apply, and which the district court did apply, is known as bar. Bar is invoked in order to prevent a second suit on a cause of action which has already been decided on the merits. Here the doctrine of bar does not apply because a dismissal for want of in personam jurisdiction is not a judgment on the merits of the cause of action itself. Fed.R.Civ.P. 41(b); see also Restatement of Judgments (Second) Sec. 20(a) and comment c. Since the prior judgment in the district court did not go to the merits, CBG was entitled to file a second suit on the same cause of action. Etten v. Lovell Manufacturing Co., 225 F.2d 844, 846 (3d Cir.1955), cert. denied, 350 U.S. 966, 76 S.Ct. 435, 100 L.Ed. 839 (1956); Thomas v. Furness (Pacific) Ltd., 171 F.2d 434, 435 (9th Cir.1948); Bucholz v. Hutton, 153 F.Supp. 62, 68-69 (D.Mont.1957); Radakovich v. Weisman, 241 Pa.Super. 35, 359 A.2d 426, 430-31 (1976). Cf. Orange Theatre Corp. v. Rayherstz Amusement Corp., 139 F.2d 871, 875 (3d Cir.) (in banc), cert. denied, 322 U.S. 740, 64 S.Ct. 1057, 88 L.Ed. 1573 (1944).

The insurers maintain that the prior action did go to the merits of the claim, citing Angel v. Bullington, 330 U.S. 183, 67 S.Ct. 657, 91 L.Ed. 832 (1947), for the proposition that "the 'merits' of a claim are disposed of when they are denied enforcement." Id. at 190, 67 S.Ct. at 661. Angel did not involve a question of in personam jurisdiction, but rather a litigant's attempt to obtain a deficiency judgment in a North Carolina court in the face of a state statute preventing such a suit from being brought in any court in the state. The litigant challenged the statute in the state courts. The constitutionality of the statute was upheld by the state supreme court, and rather than appeal to the U.S. Supreme Court the litigant instead sought to relitigate the issue in the federal courts. The Supreme Court prevented relitigation of this issue on the ground of res judicata. In Angel the merits were reached, since the merits involved the constitutionality of the state statute. Angel stands for the proposition that where the merits of a suit have been reached, they may not be relitigated, a proposition not disputed by either party. Nothing in Angel, however, can be used as the excess insurers would, to define the in personam jurisdiction issue reached in our prior dismissal as the merits of the suit. Angel v. Bullington is not authority for preventing CBG from bringing the 1982 action.

CBG is also correct in arguing that the doctrine of collateral estoppel, or issue preclusion, does not prevent it from litigating the jurisdiction issue in the 1982 suit. For collateral estoppel to apply the parties must have had an opportunity to fully litigate the issue in the prior proceeding. Public Service Mutual Insurance Co. v. Cohen, 616 F.2d 704, 707 (3d Cir.1980); Safeguard Mutual Insurance Co. v. Williams, 463 Pa. 567, 345 A.2d 664, 668 (1975). ¹ The district court's orders in the 1975 suit establishing...