Crutcher v. Aetna Life Ins. Co., s. 83-2514

• Decision Date: 19 November 1984
• Docket Number: Nos. 83-2514,83-2635,s. 83-2514
• Citation: 746 F.2d 1076
• Parties: W. Carey CRUTCHER, etc., et al., Plaintiffs-Appellants, v. The AETNA LIFE INSURANCE CO., et al., Defendants-Appellees, AETNA LIFE INSURANCE CO. and Aetna Casualty and Surety Co., Plaintiffs-Appellees, v. W. Carey CRUTCHER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1076

746 F.2d 1076

40 Fed.R.Serv.2d 714

W. Carey CRUTCHER, etc., et al., Plaintiffs-Appellants, v.The AETNA LIFE INSURANCE CO., et al., Defendants-Appellees,AETNA LIFE INSURANCE CO. and Aetna Casualty and Surety Co.,Plaintiffs-Appellees, v.W. Carey CRUTCHER, Defendant-Appellant.

Nos. 83-2514, 83-2635.

United States Court of Appeals Fifth Circuit.

Nov. 19, 1984.

Reynolds, Allen & Cook, Joe H. Reynolds, John O. Tyler, Jr., William E. Junell, Jr., Houston, Tex., for W. Carey Crutcher, et al.

Fulbright & Jaworski, James C. Slaughter, Houston, Tex., for Peat, Marwick and Mitchell.

Susman, Godfrey & McGowan, H. Lee Godfrey, Houston, Tex., for Aetna Life Ins., et al.

Appeal from the United States District Court for the Southern District of Texas.

Before BROWN, GEE and RUBIN, Circuit Judges.

JOHN R. BROWN, Circuit Judge:

This decision resolves two appeals by Crutcher arising from a common body of facts.In the first action (No. 83-2635), defendant Crutcher appeals from the denial of his Rule 60(b)motion to set aside the judgment entered against him on November 5, 1982.In the second action (No. 83-2514), plaintiff Crutcher appeals from the dismissal of his claims against Aetna.Both cases center on personal guarantees given by Crutcher to Aetna to secure moneys loaned to various Australian third-party entities.The purpose of the money loaned by Aetna was to fund the additional development of huge agricultural projects in the Australian outback.The size and scope of the development was truly staggering.¹

I.

After the Australian third parties defaulted on their loans, Aetna sued Crutcher (first case) on his guaranties in March of 1982.Crutcher answered and Aetna filed for summary judgment in August of 1982.At a hearing on the motion for summary judgment in November of 1982, Crutcher was represented by his original counsel in this case.Crutcher's first attorney conceded that his client was liable to Aetna and consented to Aetna taking judgment against his client.The district court entered judgment against Crutcher on November 5, 1982, for an amount totaling over $22 million.²Crutcher's attorney did not appeal.Through his present counsel, Crutcher now alleges that his original counsel informed him that he had no good defense to Aetna's lawsuit and that he relied on this advice to his detriment.

In January of 1983, well after the 30 day limitation in Rule 59 for a motion to amend the judgment, Crutcher retained new counsel.His new counsel informed him that he had certain defenses and counterclaims which should have been raised by his prior counsel in the guarantee suit with Aetna.These counterclaims are the subject of the other (second)case before us on this appeal.In August of 1983 Crutcher's new counsel filed a Rule 60motion to set aside the November 1982 judgment alleging inadequate representation by prior counsel and calling attention to cases favoring trial on the merits over summary dispositions.This motion was denied by the district court and the appeal in this first case followed.

II.

The companion (second)case before us on this appeal involves the counterclaims Crutcher, through his present as opposed to original counsel, now asserts against Aetna.In substance, Crutcher and Northern Development Party(NDP)³ negotiated for an agricultural loan with Aetna.NDP was a part of the Camballin Farms limited partnership--the partnership responsible for the development of the Australian agricultural projects.Originally the loan proceeds were to be available in January of 1980.However, the moneys were not forthcoming until June of 1980.Crutcher alleges that this delay of the loan money caused him to fail to get a crop planted, resulting in the absence of a cash flow from which to make the scheduled payments on the money Aetna advanced.Crutcher contends Aetna's late funding yielded the bitter harvest of default.Aetna replies that the delay was the result of Crutcher's failure to free the Australian collateral of liens.At oral argument both sides agreed that the loan agreement clearly contemplated that the moneys would be provided only after unencumbered collateral was available to secure the loan.

Regardless of the parties' contentions surrounding the late funding of the loan, it is clear that the Australian partnership was unable to carry out its planned income producing operations.After default, Aetna, as was its right under the loan agreement between the parties, appointed receivers for the agricultural property pursuant to Australian law.⁴Aetna then sued Crutcher on his guarantees (the first case before us in this appeal).In February of 1983, Crutcher, Camballin Farms, and NDP sued (the second case) Aetna, A.E. Four, ⁵ and Mr. Holman ⁶ alleging breach of fiduciary duties, mismanagement, self-dealing, tortious interference, and conspiracy.They also sought to cancel the receivership.The district court granted Aetna's motion to dismiss⁷ finding that the plaintiffs had failed to join an indispensable party under F.R.C.P. 19--the Australian receivers.The court also held that the action was a derivative claim by Crutcher and that the receivers were the proper parties to bring an action to protect the interest of Camballin Farms.The district court stated that since Crutcher had not obtained the consent of the receivers, the plaintiff's action should be dismissed.The court pointed out that Crutcher had not complied with Rule 23.1, which requires a verified complaint and particularized allegations of the efforts made to get the receivers to bring suit.The court rejected Crutcher's claim that Aetna was the receivers' principal since, under Australian law and the mortgage agreement, the receivers were deemed to be the agents of Crutcher.On appeal Crutcher argues that a futile demand is not required; Aetna agrees, but contends that more than bald-faced allegations are required to establish that demand upon the receivers would be ineffective.Crutcher also contends that he is a debtor in possession and that as a result his authority over NDP and Camballin Farms is unaffected by his filing for personal bankruptcy.Moreover, Crutcher contends that the receivers are not indispensable parties since no claim is asserted against them personally.We agree with the district court that the receivers of Camballin Farms are indispensable parties.If not present, our decree would not bind the receivers, thus running the risk of inconsistent obligations being imposed upon persons and property.⁸

The district judge held the facts which formed the basis of Crutcher's tort claim rendered it a compulsory counterclaim that Crutcher was required to raise in the earlier guarantee lawsuit with Aetna (first case) since the facts were known to him at that time.As a result, the district court dismissed the claim as barred under Rule 13(a).We agree.Failure to bring a compulsory tort counterclaim in an action on the contract will bar a later independent action on the tort.Cleckner v. Republic Van and Storage Co., 556 F.2d 766(5th Cir.1977).The district court also held that defendants A.E. Four and Holman had insufficient contacts in Texas for the Court to assert personal jurisdiction over them.The district court found no purposeful availment by A.E. Four or Holman of the protection of Texas laws under which personal jurisdiction could be sustained.We see no reason to disturb that ruling.The district judge also ruled that Crutcher had stated no claim for indemnity against Aetna because Aetna was a limited partner in Camballin Farms.In his reply brief, Crutcher now waives any appeal on this issue.

Finally, the district court rejected Crutcher's claim for declaratory relief on the basis of an inconsistent election of remedies by Aetna.The court ruled that Aetna could simultaneously pursue numerous remedies to a single satisfaction.Crutcher argues that because Aetna's claims against him were reduced to judgment (first case)he was forced to file for personal bankruptcy.He asserts that the doctrine of election of remedies precludes Aetna from proceeding now against the Australian land as collateral.This claim is meritless.As a mortgagee, Aetna is entitled to pursue concurrently the remedies under the loan guarantee and the mortgage to obtain satisfaction.Merely obtaining a judgment against another party--when such judgment remains uncollected--is not a satisfaction nor does it give rise to the bar of the election of remedies.

We also believe that plaintiff's contention that defendants have improperly pursued a double recovery--by proceeding against Crutcher as guarantor and against the collateral--is unfounded because the guarantee agreement signed by Crutcher provides that Aetna may proceed against Crutcher as guarantor and that simultaneous foreclosure procedures shall not be deemed an election of remedies.It is patent that parties are entitled to structure their private relations and remedies as they choose, within the boundaries of the law.Accordingly, Aetna enjoys the explicit right to proceed against both the guarantor and the collateral in the event of default on the loans.By way of summation, we uphold the district court's dismissal of Crutcher's claims against Aetna.

III.

Rule 60(b) provides in part:

On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons:

(1) mistake, inadvertence, surprise, or excusable neglect;

(2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

(3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party;

(4) the judgment is void;

(5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no...