HOUSING AUTHORITY OF CITY OF ATLANTA, GA. v. Millwood, 72-2114.

• Decision Date: 02 March 1973
• Docket Number: No. 72-2114.,72-2114.
• Citation: 472 F.2d 268
• Parties: HOUSING AUTHORITY OF the CITY OF ATLANTA, GEORGIA, Plaintiff-Appellee, v. J. Earl MILLWOOD et al., Defendants-Third Party Plaintiffs-Appellants, v. George ROMNEY, Secretary of Housing and Urban Development, the City of Atlanta, Georgia, Third Party Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

472 F.2d 268 (1973)

HOUSING AUTHORITY OF the CITY OF ATLANTA, GEORGIA, Plaintiff-Appellee, v. J. Earl MILLWOOD et al., Defendants-Third Party Plaintiffs-Appellants, v. George ROMNEY, Secretary of Housing and Urban Development, the City of Atlanta, Georgia, Third Party Defendants-Appellees.

No. 72-2114.

United States Court of Appeals, Fifth Circuit.

January 24, 1973.

Rehearing Denied March 2, 1973.

Archer D. Smith, III, Atlanta, Ga., for defendants-third party plaintiffs-appellants.

Jack Watson, C. David Vaughan, Charles L. Weltner, Atlanta, Ga., for Housing Authority.

John W. Stokes, Jr., U. S. Atty., Beverly B. Bates, Asst. U. S. Atty., Atlanta, Ga., for Romney.

Ralph H. Witt, Henry L. Bowden, Atlanta, Ga., for City of Atlanta.

Before GEWIN, SIMPSON and RONEY, Circuit Judges.

SIMPSON, Circuit Judge:

Prior to March 11, 1971, the Housing Authority of the City of Atlanta, Georgia, (Housing Authority) filed five condemnation petitions in the Superior Court of Fulton County, Georgia (state court) pursuant to the state's general eminent domain provisions, Ga.Code Ann. tit. 36, ch. 11, seeking title to parcels of land in the federally funded Mod el Cities area belonging to Millwood, et al., initial defendants now appellants-counterclaimants (counterclaimants).¹

On March 11, 1971, counterclaimants brought an independent action in the court below seeking to enjoin the condemnation proceedings in the state court and to enjoin the Secretary of the U. S. Department of Housing and Urban Development (HUD) from disbursing funds for the clearance of residential properties in the Model Cities area. The grounds asserted for that relief were essentially that the administration of the Model Cities program violated several federal constitutional and statutory provisions. On March 23, 1971, that action was voluntarily dismissed without prejudice by counterclaimants.

On about April 8, 1971, counterclaimants filed answers in the state court proceedings and, additionally, sought injunctive relief via counterclaim making essentially the same allegations with respect to the administration of the Model Cities program as were made in the dismissed federal action. They sought to join in the suit the City of Atlanta and "George Romney in his official capacity as Secretary" of HUD by naming them as "defendants herein". No process was attached to the counterclaim and no motion was made for an order that they be added as parties.

On April 9 the state court ordered that "all Defendants" be served with counterclaimants' answers and allegations and that they show cause why the prayer of the counterclaim should not be granted. Before the show cause hearing date the Secretary on May 11 removed the condemnation actions to the federal district court. On May 25 the Housing Authority moved for the district court to sever the original condemnation actions which it had brought in the state court and remand them to the state court on the grounds that (1) HUD had no standing to remove the case to the federal court in the first place because it was never made a party to the state court proceedings; (2) the allegations raised by counterclaimants regarding the administration of the Model Cities program were separate and independent of the condemnation actions; and (3) in any event the state court was the better forum for the state condemnation cases. On June 1, HUD appeared and answered counterclaimants' first set of interrogatories and on June 14 moved to dismiss the claim against it on the grounds, inter alia, that as to it, there was insufficient process and no joinder in the state court.

On September 30, 1971, the court below ordered the case dismissed as to HUD because imperfection of process and service of process as to HUD resulted in HUD's never having been properly made a party to the state court litigation. The court then ordered the case remanded to the state court because the other parties were in federal court solely as a result of removal jurisdiction over HUD.

Having thus decided it lacked jurisdiction (and of course as a result lacked any power to reach the merits) the trial court nonetheless proceeded to the substantive issues raised and decided: (1) counterclaimants here did not fall within any sovereign immunity exception as to HUD mainly because they had failed to exhaust their administrative remedies; (2) the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970 (P.L. 91-646) was not applicable to counterclaimants because they had not yet been displaced but were only potential condemnees; and (3) the Relocation Act was not applicable to eminent domain proceedings.

Shortly thereafter counterclaimants moved the court for leave to amend their pleadings so that HUD et al could be properly served. On February 16, 1972, the court denied that motion and counterclaimants timely took this appeal.

The threshold question, of course, is whether HUD was properly brought into the state court litigation. If, as the district court held, HUD was never properly served, it was not a party to the action in the state court. In that case, the district court lacked jurisdiction over the matter and correctly dismissed HUD and remanded the other parties to the state court. In this posture the district court was without authority to decide the substantive issues as it attempted to do. We agree that service on HUD was not effected under applicable Georgia statutes and HUD was hence not a party to the state court action, and affirm the lower court's dismissal and remand. We vacate the district court's attempt to decide the substantive issues.

Counterclaimants argue that HUD was properly made a party to the state court litigation because (1) it was brought into the case by naming "George Romney in his official capacity as Secretary" of HUD as one of the named "defendants" in its counterclaim response made a part of the answer it filed in the Housing Authority's original condemnation actions; (2) Georgia Law, Ga.Code Ann. § 81A-113(h), infra, has no provision for attachment of process to a counterclaim and none was attached; (3) the state court's order in response to the counterclaim that "all Defendants" were to be served with a copy of counterclaimants' answer was that court's way of recognizing that HUD had in fact become a party to the case; and (4) moreover and of paramount significance, any deficiencies in jurisdiction over the person of the Secretary were waived by HUD's general appearance to answer counterclaimants' interrogatories while the case was pending before the district court.

It is true that Ga.Code Ann. § 81A-113(h) has no explicit provision that process be issued on a counterclaim even when parties additional to those to the original action are sought to be added:

"When the presence of parties other than those to the original action is required for the granting of complete relief in the determination of a counterclaim or cross-claim, the court shall order them to be brought in as defendants as provided in this Title, if jurisdiction of them can be obtained." Ga.Code Ann. § 81A-113(h).

Since HUD was not a party to the original condemnation actions, it would be an additional party under the statute. Counterclaimants argue that the state court's reference in its order to "all Defendants" was that court's way of recognizing, and...