French v. Clinchfield Coal Co.

• Citation: 407 F. Supp. 13
• Decision Date: 06 January 1976
• Docket Number: Civ. A. No. 75-199.
• Parties: Harold D. FRENCH and Wanda French, Plaintiffs, v. CLINCHFIELD COAL COMPANY, a Division of the Pittston Company, Defendant.
• Court: U.S. District Court — District of Delaware

407 F. Supp. 13

Harold D. FRENCH and Wanda French, Plaintiffs, v. CLINCHFIELD COAL COMPANY, a Division of the Pittston Company, Defendant.

Civ. A. No. 75-199.

United States District Court, D. Delaware.

January 6, 1976.

Walter P. McEvilly, Jr., and Richard P. S. Hannum of Prickett, Ward, Burt & Sanders, Wilmington, Del., for plaintiffs.

S. Samuel Arsht, and A. Gilchrist Sparks, III, of Morris, Nochols, Arsht & Tunnell, Wilmington, Del., for defendant.

OPINION

CALEB M. WRIGHT, Senior District Judge.

Plaintiffs, Harold and Wanda French ("the Frenches") own real property located in Dickenson County, Virginia.¹ The Frenches are citizens and residents of Virginia, living on the parcel which they own. The defendant, Clinchfield Coal Co. ("Clinchfield"), is a corporation chartered by the States of Delaware and Virginia, and owns the mineral rights to coal, gas and oil lying under the Frenches' property.² These rights are being exercised by Clinchfield to the extent that it operates a coal mine in the area. The Frenches' complaint alleges that the mining operations have destroyed the water supply to their farm by lowering the levels of the springs which feed it; and that continued mining operations may make it impossible to replace the existing water supply with another, since most or all of the wells in the area have been similarly affected. The Frenches also claim that as a part of the mining operations, Clinchfield transports coal through tunnels underneath their property, thereby entitling them to the payment of "wheel-right royalties".³

The defendant did not answer the complaint but filed a motion to dismiss the action for lack of diversity jurisdiction under 28 U.S.C. § 1332. Clinchfield also asserted that even if the Court should find jurisdiction, the action is local in character and therefore, under the doctrine of Livingston v. Jefferson, 15 Fed.Cas. 660 (No. 8411) (C.C.D.Va. 1811) and its progeny, venue exists only in Virginia where the action has already been dismissed;⁴ and thus, the complaint failed to state a claim upon which relief could be granted. Fed.R.Civ.Proc. Rule 12(b)(6).

This case presents questions which have not been authoritatively dealt with in this Circuit on the meaning of certain amendments to 28 U.S.C. § 1332(c). The Court, after carefully considering the argument of counsel, has determined that the action, although transitory in character, must be dismissed for lack of diversity.

VENUE

Under 28 U.S.C. § 1391, venue exists in the District Court wherever a corporation is incorporated, is licensed to do business, or is found doing business.⁵ Although it does not contain any exceptions by its own terms, it has long been interpreted to include only "non-local" or "transitory" actions. Since the opinions of Chief Justice Marshall and Judge Tyler in the Livingston case, supra, 15 Fed. Cases 660, "local" actions may be tried only in the District in which the property is found.⁶

The rule exists for salutory reasons. It prevents courts unfamiliar with local property rights and laws from interfering with the title to real property. Moreover, since such actions often involve the testimony of local witnesses concerning the cause of action and the historical usages of the property, the restricted venue makes it more likely that the action will be tried in a convenient forum with full disclosure of all relevant facts, and notice to all interested parties. See, Livingston, supra. The question not completely answered by Mr. Chief Justice Marshall's opinion, however, was what constituted a "local action".

This Court will not engage in an exhaustive survey of all the cases dealing with the "local" — "transitory" problem.⁷ It is sufficient to point out that generally those cases which have been found to be local involved either title to property; injunctive relief to stop the injury to property; or an action for trespass (the issue in Livingston, itself) or waste.⁸ Actions at law, on the other hand, even though involving real property, have often been seen as transitory.⁹ While the distinction is not so simplistic as to lie merely between equity and law, or even as has been urged by Professor Moore between those actions which are "in rem" and those which are not,¹⁰ such an analysis provides a starting point. If an action is not "in rem" or does not otherwise deal with title to specific real property directly and necessarily, the defendant must show some reason why the usual policy of trying an action in the district in which process was served, ought not to be followed.¹¹ The case here in issue involves the injuries which accrued to the plaintiffs from the mining operations of the defendant. There is no attempt to overturn the mineral rights presently held by the defendant, and no attempt to seek injunctive relief to halt the operations which led to the injury. The relief sought by the plaintiffs is monetary, and as to the wheelage royalties, quasi-contractual in nature. See generally, United States v. 180.37 Acres of Land, 254 F.Supp. 678, 684 (W.D.Va. 1966). The defendant must show some reason why such a quasi-contractual action is not transitory, and Clinchfield has failed to do so. There have been no allegations or statements in an affidavit that title to the land is in issue; or that the right to royalties cannot be resolved by examining the scope of the mineral rights granted to Clinchfield. Nor are there allegations that proof will be inconvenient or impossible, or merely difficult because of the distance witnesses might have to travel.

Further, the fact that one count of the action is for damages arising from the loss of water is not sufficient to make the suit one local in character. As several opinions have made clear,¹² except where the cause of action is clearly and traditionally one deemed local, i. e., waste, trespass, or title, the Court must determine what issues will be a matter of proof, and whether those issues are of such character as to require the case to be heard by a local court. The issues here go principally to the relation between Clinchfield's mining operation and the lowering of the water table. Although diversion of a water supply might be seen as local in character,¹³ the cases indicate that they are triable both where the diversion occurs, and where the injury is felt. Courts have thus not restricted such cases as has been done with trespass actions, but have allowed plaintiffs to sue where the defendant is located, though the injury did not occur there. The rule in Livingston has long been criticized as a "blind adherence to precedents"¹⁴ and this Court, though understanding the rationale of such a rule, will limit its application to those cases where the underlying issues make the application reasonable.

It would prove too much to accept the defendant's claim that all actions involving real property in any way must be seen as "local". Livingston has not and does not stand for that proposition in this district. See, Fox Pictures, supra. Where, as here, the action is not shown to have an effect on the continued ownership or use of the property, but involves only monetary damages for the injury done to the owner, the action is transitory, and venue lies where the defendant is found.¹⁵ Clinchfield's motion to dismiss on these grounds is therefore denied.

DIVERSITY JURISDICTION

Clinchfield has also moved to dismiss this action on the grounds that there is no diversity between the parties.¹⁶ If the defendant corporation were chartered only in Delaware, there is no doubt that diversity would exist.¹⁷ The difficulty in this case arises from the fact that the corporation is chartered in both Delaware and Virginia. The core of the issue before this Court is the varying interpretations put on the language of 28 U.S.C. § 1332(c) by the parties.¹⁸

Plaintiffs contend that the language of § 1332(c) must be read in light of previous case law; and that the case law was changed only in part by the amendments passed in 1958.¹⁹ That case law provided a "forum rule" which recognized only the incorporation of the state in which the Court sat: the fact that the corporation was chartered in another state was of no import.²⁰ The effect of this rule was a broader jurisdiction in the courts than at present, and an ability on the part of a corporation chartered in one state, but headquartered in another, to have actions brought against it in its main place of doing business removed to federal courts.²¹ The 1958 amendments, say the Frenches, were designed only to affect the ability of such multi-state corporations to remove their cases to federal court.

Defendant Clinchfield agrees that the "forum rule" as it once operated would have allowed this action, but points out that this rule was substantially altered by Supreme Court interpretations prior to the amendments,²² and eliminated by the 1958 amendments.

The direct interpretations of the language of the section since Jacobson and the amendments are sparse indeed. The Court has been cited to only one case directly on point, and its own research has disclosed no others.²³ In Hudak, Judge Wyatt found the legislative history of the amendments to be concerned with the right of removal from state courts, and after consideration held the forum rule not to be affected as it applied to suits brought by residents of a sister state against a corporation chartered in both the sister state and the forum state. See, Hudak, supra, 238 F.Supp. at 792; that is, under Hudak, the out-of-state incorporation of the defendant was ignored, and diversity held to exist.

Within this Circuit, there have been only dicta pronouncements on this problem.²⁴ Moreover, the Third Circuit opinions issued prior to the amendments seem to be aimed at carving out an exception which would allow the forum rule to continue to apply in this situation.²⁵

This Court, after a careful examination of the legislative history, and the cases cited supra, as well as the...