Esposito v. Emery

• Decision Date: 02 October 1968
• Docket Number: No. 16671.,16671.
• Citation: 402 F.2d 878
• Parties: Dominic A. ESPOSITO, Guardian of the Estate of David J. McClintock, Jr., a minor, Appellant, v. Ralph EMERY and Cecil Spencer.
• Court: U.S. Court of Appeals — Third Circuit

402 F.2d 878 (1968)

Dominic A. ESPOSITO, Guardian of the Estate of David J. McClintock, Jr., a minor, Appellant, v. Ralph EMERY and Cecil Spencer.

No. 16671.

United States Court of Appeals Third Circuit.

Submitted on Briefs February 21, 1968.

Argued April 16, 1968.

Decided October 2, 1968.

Bennett G. Picker, Tate & Ervin, Philadelphia, Pa., for appellant.

Francis E. Marshall, Marshall, Dennehey & Warner, Philadelphia, Pa. (Harold S. O'Brian, Jr., Philadelphia, Pa. on the brief), for appellee.

William B. Freilich, LaBrum & Doak, Philadelphia, Pa. (Edward C. German, James M. Marsh, Philadelphia, Pa., on the brief), for amicus curiae.

Before BIGGS, KALODNER and FREEDMAN, Circuit Judges.

Before HASTIE, Chief Judge, BIGGS, McLAUGHLIN, KALODNER, FREEDMAN, SEITZ and VAN DUSEN,^* Circuit Judges.

Submitted Feb. 21, 1968

Before BIGGS, KALODNER and FREEDMAN, Circuit Judges.

Argued en banc April 16, 1968

Before HASTIE, Chief Judge, BIGGS, McLAUGHLIN, KALODNER, FREEDMAN, SEITZ and VAN DUSEN,^* Circuit Judges.

OPINION OF THE COURT

FREEDMAN, Circuit Judge:

After submission to a panel we ordered this appeal to be argued before the court en banc with McSparran v. Weist, 402 F.2d 867, in order to review the jurisdictional question which we raised sua sponte,¹ where diversity of citizenship is created or "manufactured" by the appointment of a nonresident guardian of a minor, selected solely for the purpose of creating diversity.

On January 3, 1962, David J. McClintock, Jr., a seven year old second grade pupil at the Unionville, Pennsylvania, Elementary School, was seriously injured when a bank of school lockers toppled over on him as he tried to open one of them.

A year later the boy's parents with whom he resided in Pennsylvania petitioned the Orphans' Court of Chester County, Pennsylvania, to appoint Dominic A. Esposito, a resident of Wilmington, Delaware, as guardian of the minor's estate. Their petition expressly averred that "a Guardian is necessary for the Estate of the minor so that suit may be brought in the United States District Court for the Eastern District of Pennsylvania to recover for injuries received by the minor as the result of an accident on January 3, 1962." The petition also averred that the claim, "for which suit will be brought in the United States District Court for the Eastern District of Pennsylvania", was the "sole asset of the estate of the minor." Solely on the basis of the petition the Orphans' Court on January 18, 1963, appointed Esposito as "Guardian of the property of the Estate of David J. McClintock, Jr., without the necessity of filing bond, until such time as assets shall be received by said guardian."

Shortly thereafter Esposito brought the present action for negligence in the district court against the principal, the assistant principal, the director of administrative services and the janitor of the school, but recognizing its immunity, did not join the school district itself as a defendant. The individual defendants sought summary judgment on the ground that they too were immune from suit for conduct within the scope of their authority as employees of the school district. Their contention was rejected by the district court. 249 F.Supp. 308 (E. D.Pa.1965). In the course of the ensuing jury trial the director of administrative services and the assistant principal were dismissed as parties and the case was submitted to the jury against the two remaining defendants. The jury was unable to agree on one of the questions submitted in special interrogatories, but the court later granted the motion of defendants for judgment on the whole record on the ground that there was no evidence of negligence on their part. 266 F.Supp. 219 (E.D.Pa. 1967). Plaintiff thereupon took this appeal.

It is conceded that the present case is one of artificial or "manufactured" diversity in which an out-of-state guardian was appointed solely for the purpose of creating an apparent federal jurisdiction. As in McSparran not only was the straw guardian appointed solely to create diversity jurisdiction, but the controversy itself is essentially local, and one of the reasons underlying diversity jurisdiction, the prevention of discrimination against out-of-state litigants,² is completely absent. The accident occurred in Pennsylvania where the injured minor and both the defendants reside and have their citizenship. Moreover, the artificial creation of diversity here cast upon the federal courts the necessity to decide as a matter of first impression an important question of Pennsylvania policy — the immunity of school district officials for torts committed in the performance of their duties, a question in which there is no federal interest and which it would have been preferable for the state courts themselves to decide.

The case, therefore, is ruled by McSparran v. Weist, decided this day, holding that artificially "manufactured" diversity is insufficient to create federal jurisdiction, although Judge Van Dusen who sat at the rehearing en banc has since disqualified himself from participating in the disposition of this case and the remaining members of the court who sat at the rehearing are evenly divided as to the correctness of the McSparran ruling.

The accident in this case occurred on January 3, 1962, and Pennsylvania's two-year statute of limitations has long since expired. As we pointed out in McSparran it would be harsh to apply our new rule retrospectively to a case such as this, in which the plaintiff's rights would be lost because the statute of limitations bars the institution of a new suit in the state court.

We therefore have considered the merits of the case. After examining the evidence we are unanimous in finding it inadequate to establish any negligence by the individual defendants.

The judgment of the district court will be affirmed.

KALODNER, Circuit Judge, concurs in the result on the merits of the case, but dissents from the majority view with respect to the issue of "manufactured" diversity jurisdiction for the reasons stated in Judge Biggs' dissenting opinion.

BIGGS, Circuit Judge (dissenting in part and concurring in part).

As a Senior Circuit Judge, 28 U.S.C. § 371(b), I was not qualified to vote for rehearing or sit at the rehearing in McSparran, et al. v. Weist, et al., at 402 F.2d 867, a "companion" case to the instant case, for I did not sit at the original argument in McSparran. App. Rule 35, 43 F.R.D. 101, and 28 U.S.C. § 46(c). Nonetheless, I think I am entitled to state and I do state that what is said in the dissenting portion of this opinion is in all substantial respects equally applicable to the majority's McSparran opinion.

I believe the law as to the application of 28 U.S.C. Section 1359 was stated correctly by this court in Jaffe v. Philadelphia & Western R. Co., 180 F.2d 1010 (1950), in Fallat v. Gouran, 220 F.2d 325 (1955), and in Corabi v. Auto Racing Co., 264 F.2d 748 (en banc, 1959). I shall not repeat generally here what was said in those opinions. I do desire, however, to point out what appear to me to be grave weaknesses in the majority opinion in respect to the application of Section 1359.

The majority opinion states that Jaffe and Corabi are overruled and that Fallat v. Gouran is disapproved to the extent that it indicates approval of "manufactured" diversity, but the court's reasoning for its rulings goes far beyond this and will lead, in my opinion, to substantial difficulties. The majority opinion states: "We are not here concerned, however, with the capacity to sue under Rule 17, nor with the question whether the fiduciary is the real party in interest. Our problem is whether for purposes of diversity jurisdiction we should look to the citizenship of the representative, here the guardian of the estate of the minor, or to the person on whose behalf he acts." The language quoted indicates that the court cares not whether the suit be brought by the real party in interest or not and therefore the court's decision is equally applicable to cases where the plaintiff is the trustee of an express trust, of a resulting trust, or even of a trust ex maleficio, an administrator, a prochein ami, or any other type of fiduciary.

The reasoning and the rulings of the majority seem to turn on the statement: "Here plaintiff Esposito has added nothing to a record which shows on its face a naked arrangement for the selection of an out-of-state guardian in order to prosecute a diversity suit." (Emphasis added). The condition of a "naked arrangement" as a bar to the application of Section 1359 will prove, I think, most troublesome. The primary purpose of the "arrangement" in the case at bar, as in Jaffe v. Philadelphia & Western R. Co., 180 F.2d 1010, 1011 (1950),¹ was to collect a judgment and it probably was concluded by counsel for the widow in Jaffe that a larger judgment could be obtained in a federal court or that the case could be more expeditiously tried there. But what would be this court's ruling in a suit brought by the cestuis of an inter vivos trust where the donor had appointed an out-of-state fiduciary because he wished the cestuis to be able to maintain a diversity suit in a federal court? Would the donor's purpose be any more or less "naked" than that of the persons who petitioned the...