Farzetta v. Turner & Newall, Ltd., s. 85-1759

• Decision Date: 01 August 1986
• Docket Number: Nos. 85-1759,85-1760,s. 85-1759
• Citation: 797 F.2d 151
• Parties: George FARZETTA v. TURNER & NEWALL, LTD., Bell Asbestos Mines, Ltd., Turner Asbestos Fibres, Ltd., Brinco Mining Ltd., Asbestos Corporation, Ltd., Carey Canada, Inc., Johns-Manville Corp.; Johns-Manville Amiante Canada, Inc.; Managing Agent of Johns-Manville Sales Corp.; Huxley Development Corp.; Gaf Corporation; the Celotex Corporation Inc. v. CERTAINTEED CORP.; Certain Teed Corp.; Special Materials Inc-Wisconsin; Norca Corporation. Appeal of BELL ASBESTOS MINES, LTD. Appeal of ASBESTOS CORPORATION, LTD.
• Court: U.S. Court of Appeals — Third Circuit

Page 151

797 F.2d 151

5 Fed.R.Serv.3d 1408

George FARZETTA v. TURNER & NEWALL, LTD., Bell Asbestos Mines, Ltd., Turner

Asbestos Fibres, Ltd., Brinco Mining Ltd., Asbestos

Corporation, Ltd., Carey Canada, Inc., Johns-Manville Corp.;

Johns-Manville Amiante Canada, Inc.; Managing Agent of

Johns-Manville Sales Corp.; Huxley Development Corp.; Gaf

Corporation; the Celotex Corporation Inc. v. CERTAINTEED CORP.; Certain Teed Corp.; Special Materials

Inc-Wisconsin; Norca Corporation.

Appeal of BELL ASBESTOS MINES, LTD.

Appeal of ASBESTOS CORPORATION, LTD.

Nos. 85-1759, 85-1760.

United States Court of Appeals, Third Circuit.

Argued June 6, 1986.

Decided Aug. 1, 1986.

Frederic L. Goldfein (argued), Ellen Brown Furman, Goldfein and Joseph, Philadelphia, Pa., for appellants.

Edward Rubin (argued), Hamburg, Rubin, Mullin & Maxwell, Lansdale, Pa., for appellee.

Before GIBBONS, BECKER and STAPLETON, Circuit Judges.

OPINION OF THE COURT

GIBBONS, Circuit Judge:

In this diversity case two asbestos suppliers appeal from default judgments entered against them after they declined to defend a tort action brought by an individual who alleged that he had contracted asbestosis by virtue of contact with asbestos supplied by them. We affirm.

I.

The appellants are Bell Asbestos Mines, Ltd. (Bell) and Asbestos Corporation, Ltd. (ACL), corporations that supply raw asbestos to asbestos processors. The appellee is George Farzetta. From August 1950 until January 1982 Farzetta worked in an asbestos factory located in Ambler, Pennsylvania that processed asbestos fiber supplied by Bell and ACL. In January 1982 he was diagnosed as having asbestosis.

Sometime early in 1982 Farzetta filed a complaint in the Court of Common Pleas of Montgomery County, Pennsylvania, naming as defendants Bell, ACL, and a third corporation that supplied asbestos fiber to the plant at which Farzetta had worked, Brinco Mining Company, Ltd. (Brinco). After removing the case to the Eastern District of Pennsylvania, all three defendants filed answers in which each asserted that Farzetta was barred from recovering because he had assumed the risk of exposure to the asbestos.

The case went to trial in April 1985. Citing financial difficulties, Bell and ACL chose not to defend, leaving Brinco as the only participating defendant. Farzetta then moved under Rule 55 of the Federal Rules of Civil Procedure for default judgments against Bell and ACL. In defense they argued that default judgments would be improper because they had filed answers, actions they claimed required Farzetta to prove his case, regardless of whether they defended. The district court deferred decision on Farzetta's motion.

Farzetta then presented his case, proceeding upon a theory of strict liability and contending that the defendants had failed to place adequate warning labels on the packages of raw asbestos they sold to his employer. Brinco adduced evidence bearing on its assumption-of-risk defense.

By way of special interrogatories the jury found that the asbestos supplied by all three defendants was defective because of the absence of proper warnings and further found that those defects were substantial causal factors in physical injuries sustained by Farzetta. However, the jury then responded "yes" to the following question: "Has the defendant Brinco Mining, Ltd., proved by a preponderance of the evidence that the plaintiff [assumed the risk]?" Interrogatories to the Jury at 3, reprinted in Joint Appendix at 16.

At this point the jury returned to the courtroom, and the district court entered judgment in favor of Brinco. It then addressed the outstanding motion for the default judgments. Bell and ACL argued that the jury's finding that Farzetta had assumed the risk vis-a-vis Brinco compelled the entry of judgments in their favor. Although the court rejected this argument, it did not grant Farzetta's motion for the default judgments; rather it sent the jury back to asses damages against Bell and ACL. While the jury was deliberating on this issue, the district court returned to the default motion and granted it from the bench. See Trial Transcript (May 1, 1985), reprinted in Joint Appendix at 95-96. ¹

Shortly thereafter both Bell and ACL filed motions requesting the district court to "amend the judgment in accordance with the jury verdict." The district court denied both motions, see Farzetta v. Bell Asbestos, Ltd., Civil Action No. 82-1241 (E.D.Pa. Oct. 4, 1985) (Bell order); Farzetta v. Bell Asbestos, Ltd., Civil Action No. 82-1241 (E.D.Pa. Oct. 4, 1985) (ACL order), and this appeal followed.

II.

On appeal Bell and ACL assert that the district court erred in entering, pursuant to Rule 55(b) of the Federal Rules of Civil Procedure, default judgments against them. We can reverse the district court only if we find that it abused its discretion in entering the judgments. See C. Wright & A. Miller, Federal Practice & Procedure Sec. 2693, at 472-73 (1983); cf. Walker v. Tilley Lamp Co., 467 F.2d 219 (3d Cir.1972) (per curiam) (applying abuse-of-discretion standard in appeal of district court order denying Rule 55(c) motion seeking vacation of entry of default); Giordano v. McCartney, 385 F.2d 154, 155 (3d Cir.1967) (applying abuse-of-discretion standard in appeal of district court order denying Rule 60(b) motion).

In support of their assertion that the district court abused its discretion, Bell and ACL rely on a nineteenth century Supreme Court case in which the Court reversed a district court's default judgment. In that case, Frow v. De La Vega, 82 U.S. (15 Wall.) 552, 21 L.Ed. 60 (1872), the plaintiff De La Vega had filed a complaint against fourteen defendants, charging eight of them with a "joint conspiracy to defraud him" out of a piece of real property. One of those eight was Frow; he failed to file a timely answer, and the district court entered a pretrial default judgment against him. The case then went to trial, and the court "decided the merits of the cause adversely to the complainant and dismissed the bill." Id. at 553. Frow appealed.

In a one-page opinion the Court reversed. Justice Bradley wrote,

If the court in such a case as this can lawfully make a final decree against one defendant separately, on the merits, while the cause was proceeding undetermined against the other, then this absurdity might follow: there might be one decree of the court sustaining the charge of joint fraud committed by the defendants; and another decree disaffirming the said charge, and declaring it to be entirely unfounded, and dismissing the complainant's bill. And such an incongruity, it seems did actually occur in this case. Such a state of things is unseemly and absurd, as well as unauthorized by law.

... [I]f the suit should be decided against the complainant on the merits, the bill will be dismissed as to all the defendants alike--the defaulter as well as the others. If it be decided in the complainant's favor, he will then be entitled to a final decree against all.

Id. at 554. Contending that the relationship between Frow and the other defendants in Frow resembles the relationship between Brinco and them, Bell and ACL assert that Frow requires us to reverse the default judgments the district court entered against them.

Frow undoubtedly stands for the proposition that in certain circumstances it is inappropriate to enter a default judgment against one defendant when other defendants in the same case have prevailed. Unfortunately, the Court's opinion does not identify those specific circumstances. ² However, we believe that Frow stands for the proposition that if at trial facts are proved that exonerate certain defendants and that as a matter of logic preclude the liability of another defendant, the plaintiff should be collaterally estopped from obtaining a judgment against the latter defendant, even though it failed to participate in the proceeding in which the exculpatory facts were proved. This characterization of Frow is consistent with that endorsed by other Courts of Appeals. See Gulf Coast Fans, Inc. v. Midwest Electronics Importers, Inc., 740 F.2d 1499, 1511-12 (11th Cir.1984) (reversing district court refusal to grant defendant's Rule 55(c) motion to set aside default judgment in contract case and noting that under Frow plaintiff who failed to recover from one defendant because plaintiff had breached contract could not recover from a second defendant who had not defended the suit); In re Uranium Antitrust Litigation, 617 F.2d 1248, 1256-58 (7th Cir.1980) (affirming default judgment in antitrust case and distinguishing Frow on grounds that, because liability in antitrust cases was joint and several, nonliability of some defendants would not preclude logically liability of other d...