Fajen v. Foundation Reserve Ins. Co., Inc., 80-1411

Decision Date15 July 1982
Docket NumberNo. 80-1411,80-1411
PartiesRoy E. FAJEN, Plaintiff-Appellant, v. FOUNDATION RESERVE INSURANCE COMPANY, INC., Defendant-Appellee.
CourtU.S. Court of Appeals — Tenth Circuit

Lloyd Jackson Webb of Webb, Burton, Carlson, Pedersen & Paine, Twin Falls, Idaho, for plaintiff-appellant.

Jonathan W. Hewes of Rodey, Dickason, Sloan, Akin & Robb, P. A., Albuquerque, N.M. (Perry C. Abernethy of Ussery & Parrish, P. A., Albuquerque, N.M., on brief), for defendant-appellee.

Before SETH, Chief Judge, and DOYLE and SEYMOUR, Circuit Judges.

SEYMOUR, Circuit Judge.

This lawsuit arises out of plaintiff Roy Fajen's attempts to enforce a default judgment obtained in Nevada state court. After a series of proceedings in state and federal courts, the United States District Court of New Mexico dismissed the action following its removal from New Mexico state court. We conclude that removal was improper and remand this case with directions to the district court to remand the action to state court.

In 1971 Fajen filed suit in a Nevada district court against William Sublett and Nelda McCallister for personal injuries sustained in an automobile accident that occurred on April 4, 1970, near Reno, Nevada (Cause No. 274721). Fajen served Sublett and McCallister through the director of the department of motor vehicles, under a statute that provides for substituted service on nonresident operators of motor vehicles involved in accidents in Nevada. Id. The statute also requires the plaintiff to send by registered or certified mail notice of the service and a copy of the process to the defendant at the address supplied by the accident report or at the best address available to the plaintiff. The original process, a return receipt from the mailing, and an affidavit of compliance, must be filed in the lawsuit. Nev.Rev.Stat. § 14.070. Fajen purported to comply with these requirements. The defendants did not appear and the Nevada court entered a judgment of default on December 5, 1972.

In 1977, Fajen filed suit in the United States District Court of New Mexico on the unsatisfied Nevada judgment (No. CIV 77-211-M). In this suit he named the present defendant, Foundation Reserve Insurance Company, Inc., as the insurer of Nelda McCallister and her vehicle, which had been driven by William Sublett. Foundation Reserve moved to dismiss on the ground that the Nevada state court was without personal jurisdiction over McCallister and William when it entered the default judgment.

The federal court in CIV 77-211-M found that the affidavit of compliance filed with the Nevada court did not meet the requirements of the Nevada substituted service of process statute because it failed to state the address where the process was sent and the source of the address, so as to establish the good faith effort of the plaintiff to give actual notice. In an effort to cure the problem, counsel for Fajen filed an affidavit in the federal court action explaining the source of the three addresses to which service of process had been sent. The court rejected this effort to remedy in federal court the defect in the Nevada state court proceeding, stating:

"All of the affidavits filed by the plaintiff in opposition to summary judgment attempting to show the good faith, due diligence and actual service of Sublett are of no avail. The Nevada Court must have had sufficient facts before it to justify its exercise of jurisdiction, which the record clearly indicates it did not. The record cannot be cured at this late date by affidavit. The Nevada statute requires that an affidavit of compliance, stating the address and source of that address of the defendant, must be filed, regardless of whether the return receipt was signed and received, refused or not signed by the defendant."

Rec., vol. II, at 87. The court granted summary judgment in favor of Foundation Reserve, finding that the Nevada court did not have jurisdiction over the alleged tortfeasors. Fajen appealed the decision to this court. However, he voluntarily dismissed the appeal on May 31, 1978, thus leaving the trial court judgment intact.

On May 11, 1978, Fajen returned to the Nevada state court that had entered the default judgment. His Nevada counsel filed an amended affidavit of compliance along with an affidavit by plaintiff's Idaho counsel that set out additional facts showing compliance with the statute. Based on these affidavits, the state court determined that the requirements of Nev.Rev.Stat. § 14.070 had been fully met and entered an amended default judgment nunc pro tunc (Cause No. 79-500).

In 1979, Fajen filed a complaint against defendant Foundation Reserve Insurance Company, Inc. in a New Mexico state court to enforce the unsatisfied amended Nevada judgment. Defendant petitioned to remove the action to federal court under the federal question removal statute, 28 U.S.C. § 1441(b). The United States District Court of New Mexico granted the petition of removal over plaintiff's objection, holding that it had jurisdiction to protect its judgment entered against plaintiff in 1977. The district court also consolidated the removed action with the first case (CIV 77-211-M) and treated plaintiff's claim as a Rule 60(b) motion to vacate the initial federal judgment. The court denied the Rule 60(b) motion and dismissed the case.

The threshold issue on this appeal is whether removal jurisdiction is proper. Removal statutes are to be strictly construed, Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108-09, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941), and all doubts are to be resolved against removal. Greenshields v. Warren Petroleum Corp., 248 F.2d 61, 65 (10th Cir.), cert. denied, 355 U.S. 907, 78 S.Ct. 334, 2 L.Ed.2d 261 (1957). This circuit has held that to support removal jurisdiction, "the required federal right or immunity must be an essential element of the plaintiff's cause of action, and that the federal controversy must be 'disclosed upon the face of the complaint, unaided by the answer or by the petition for removal.' " Madsen v. Prudential Federal Savings & Loan Assn., 635 F.2d 797, 800 (10th Cir. 1980) (citing Gully v. First National Bank, 299 U.S. 109, 113, 57 S.Ct. 96, 81 L.Ed. 70 (1936)), cert. denied, 451 U.S. 1018, 101 S.Ct. 3007, 69 L.Ed.2d 389 (1981); see also Oklahoma ex rel. Wilson v. Blankenship, 447 F.2d 687, 691-92 (10th Cir. 1971), cert. denied, 405 U.S. 918, 92 S.Ct. 942, 30 L.Ed.2d 787 (1972).

The district judge did not address these tests but instead held removal proper because he concluded that jurisdiction existed to protect the effect of his prior decision in CIV 77-211-M, citing Villarreal v. Brown Express, Inc., 529 F.2d 1219, 1221 (5th Cir. 1976). However, that case can be distinguished from the facts of the instant case. In Villarreal, the original action was brought in federal court and the judgment in that federal suit was a material part of the plaintiff's subsequent state court case. Here, the original cause of action resulting in the default judgment was brought in state court based on negligence. It involved no federal or Constitutional question. The first suit to enforce that judgment was brought in federal court based on diversity of citizenship. In that proceeding, the district court determined that the state court did not have sufficient documents before it to establish personal jurisdiction through compliance with the state's statutory procedure for substituted service on nonresident motorists. The district court further concluded that this defect could not be cured by an affidavit filed in federal court, noting that under state law an affidavit of compliance must be filed with the state court.

The district court's judgment in CIV 77-211-M was limited to a determination that the state court was without jurisdiction to render the original default judgment. The court did not determine whether under the applicable state law Fajen could go back to state court, cure the defects in the proof of service, and obtain an amended default judgment nunc pro tunc. This issue was not specifically addressed by the federal court until this removed action, where the court held that the Nevada court could not cure the previous void judgment.

The district court erred in concluding that federal jurisdiction existed to support removal in the second enforcement action. The first federal judgment held only that the Nevada state court lacked personal jurisdiction to render the original default judgment. The issue in this suit is whether the Nevada state court may cure the jurisdictional defect after the fact. Thus, the holding in the first federal action is not collaterally attacked in the second enforcement suit; in fact, it is presumed to be correct. Fajen is not making a second attempt to enforce the original state court default judgment but is seeking to enforce a judgment that was amended nunc pro tunc to cure admitted defects. The federal district court made no prior ruling on Fajen's ability under state law to cure the defect in this manner; the issue was simply not before the court. Consequently, the prior federal judgment is not at issue in this action and does not require protection.

The removed action seeks to enforce an amended state court judgment based on state law, and it reveals no federal question on its face. To the extent the first federal court judgment is relevant to this new action at all, and we cannot see that it is, it is so only by way of defense and does not support removal jurisdiction. When a plaintiff predicates his suit upon rights created under state law, it is irrelevant to federal question jurisdiction that a prior judgment in a related federal district court suit is alleged by defendant to bar recovery. See Madsen, 635 F.2d at 801. "(T)he fact that the suit involves the construction and effect of a federal judgment does not make it one arising under the federal law." Oklahoma ex rel. v....

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