Hyde Construction Co., Inc. v. Koehring Company

• Decision Date: 31 December 1974
• Docket Number: 4524.,No. 4478,4478
• Citation: 387 F. Supp. 702
• Parties: HYDE CONSTRUCTION COMPANY, INC., Plaintiff, v. KOEHRING COMPANY, Defendant. Vardaman S. DUNN, Plaintiff, v. KOEHRING COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

387 F. Supp. 702

HYDE CONSTRUCTION COMPANY, INC., Plaintiff, v. KOEHRING COMPANY, Defendant. Vardaman S. DUNN, Plaintiff, v. KOEHRING COMPANY, Defendant.

Nos. 4478, 4524.

United States District Court, S. D. Mississippi, Jackson Division.

December 31, 1974.

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William E. Suddath, Jr., Vardaman S. Dunn, Jackson, Miss., for plaintiffs.

Dan H. Shell and Edward P. Lobrano, Jr., Jackson, Miss., for defendant.

MEMORANDUM OPINION

KEADY, Chief Judge.

In these diversity actions, consolidated for trial, Hyde Construction Company, Inc. (Hyde) and Vardaman S. Dunn (Dunn), Mississippi citizens, sue Koehring Company (Koehring), a Wisconsin citizen, seeking substantial damages for malicious prosecution and abuse of process. Separate actions commenced by Hyde and Dunn¹ in the Circuit Court of the First Judicial District of Hinds County, Mississippi, were timely removed to this federal district court. Koehring's motions to dismiss for lack of personal jurisdiction or for transfer of venue were denied. Hyde Constr. Co. v. Koehring Co., D.C., 321 F.Supp. 1193 (1969). Koehring then filed responsive answers.

After extensive pretrial discovery and further orders of the district court, including an interlocutory appeal to the Fifth Circuit, Hyde Constr. Co. v. Koehring Co., 455 F.2d 337 (1972), which dealt with the scope of allowable discovery, the parties waived jury trial and submitted the issues to the court in an evidentiary hearing which began March 18, 1974.² At this trial the court received a joint stipulation of the parties, live testimony, depositions and voluminous exhibits. The court incorporates herein findings of fact and conclusions of law required by Rule 52, F.R. Civ.P.

The present suits arise as a sequel to extensive and unique litigation between Hyde, its attorney Dunn, and Koehring which began August 30, 1961, when Hyde sued Koehring in the United States District Court for the Southern District of Mississippi on a breach of warranty claim. After almost a decade of bitter contest, the litigation ended March 25, 1970, when Koehring discharged the judgment obtained by Hyde on its contract claims by paying $551,914.60. In the interim, various aspects of the controversy reportedly received the attention of no less than 30 judges in 9 state and federal courts.³

I. BACKGROUND FACTS

In order to facilitate understanding of Hyde's and Dunn's present claims of misuse and abuse of process, we must develop the significant background facts at some length. In the latter part of 1959, Hyde, which was then engaged in the construction business, was awarded a contract with the United States to construct a spillway for the Keystone Dam on the Arkansas River, in the State of Oklahoma. The performance of this contract required the acquisition and installation of a large concrete mixing and cooling plant. Hyde contracted to purchase from Koehring the concrete plant which Koehring proceeded to erect at the job site. Hyde became dissatisfied with the operation and capacity of the installed plant, and employed Dunn to bring an action against Koehring for breach of warranty. Suit was filed against Koehring on August 30, 1961, in the United States District Court for the Southern District of Mississippi, at Jackson, seeking damages for breach of warranty, an attachment against Koehring's resident debtors, and other relief. Koehring challenged the jurisdiction of the Mississippi federal court, claiming that Koehring was not subject to suit in Mississippi; in the alternative, Koehring moved for transfer of venue under 28 U.S.C. § 1404(a) to the federal district court for the Northern District of Oklahoma.⁴

Six days after the filing of this motion, Hyde, on September 27, 1961, sued Koehring in the Chancery Court of Hinds County, Mississippi, at Jackson, on the same breach of contract action and obtained jurisdiction under a state statute providing for chancery attachment, which was executed upon equipment dealers in Mississippi indebted to Koehring. Hyde filed the state action as a protective measure to be assured of a Mississippi forum in the event the Mississippi federal court failed to maintain jurisdiction. Koehring considered but did not seek removal. Hyde did not immediately seek prosecution of the state action, allowing it to remain dormant pending disposition of Koehring's contentions before the federal court in Mississippi. After a hearing, United States District Judge Sidney Mize concluded that the federal court possessed in personam jurisdiction over Koehring, overruled Koehring's motion for dismissal or transfer of venue, but on June 15, 1962, certified his rulings for an interlocutory appeal to the United States Fifth Circuit Court of Appeals.

On September 19, 1963, the Fifth Circuit, without reaching the jurisdictional question, reversed Judge Mize on the venue issue and remanded the case to the district court for transfer to the Oklahoma court.⁵ Ultimately, the mandate of the Fifth Circuit was carried out, and the federal suit was transferred to the U. S. District Court for the Northern District of Oklahoma, effective March 10, 1964.

Meanwhile, Koehring had answered on the merits in the state court action, thus subjecting itself to the in personam jurisdiction of the Mississippi chancery court. Miss.Code Ann. § 2729 (1942); Mobile and Ohio Ry. Co. v. Swain, 164 Miss. 825, 145 So. 627 (1933). The chancery court trial was then set to begin at 2 p. m. on March 11, 1964, after Chancellor Stennett, judge of the chancery court, had considered and overruled a series of motions by Koehring to stay or continue the trial.

On the forenoon of March 11, however, Koehring applied to Honorable Allen E. Barrow, United States District Judge of the Northern District of Oklahoma, at Tulsa, for a restraining order to halt the trial of the chancery suit. At this hearing, Hyde challenged both the jurisdiction of the Oklahoma federal court and the power of the federal court, in view of the Anti-Injunction Act, 28 U.S.C. § 2283, to enjoin proceedings of the Mississippi state court.⁶ Judge Barrow decided that, because of the nature of the case and the special circumstances incident to the transfer, § 2283 did not preclude the granting of a temporary restraining order to enjoin Hyde and its attorneys from prosecuting the Mississippi action, pending a determination of federal jurisdiction. Thus, at or about the same hour of the day when the trial on the merits was to begin in state court at Jackson, a temporary restraining order was granted by Judge Barrow, who also requested briefs on the issues and set the cause for hearing on Koehring's motion for preliminary injunction the following Monday, March 16. Hyde's attorneys received immediate notice of the order, and Chancellor Stennett was also notified by telegram from Judge Barrow.

Although Chancellor Stennett at first offered to recess the case to March 23, Dunn, without consulting Hyde's corporate officers, insisted that his client wished the trial to proceed despite the restraining order. The Chancellor, on March 12, ordered that the trial proceed, and this was done. That same day, Koehring filed in the Oklahoma federal court a petition charging Hyde and Dunn with willful disobedience of the restraining order, and obtained from Judge Barrow an order directing Hyde and Dunn to appear on March 14 at Tulsa to show cause why they should not be held in contempt of court.

The show-cause order was served upon Dunn on March 13 at Jackson, but no service was obtained upon Hyde or its corporate officers. Dunn failed to appear at the March 14 hearing, and Hyde was represented only briefly by counsel, who did not remain throughout the proceedings. Judge Barrow received evidence that Hyde and Dunn had violated his restraining order by proceeding with trial after notice of the restraint. The court found Hyde and Dunn in civil contempt. After announcing from the bench that criminal contempt proceedings were also involved, the court directed the United States Attorney to prepare an order for Dunn's arrest and appearance at Tulsa. An arrest order issued forthwith, and on March 16 was served on Dunn at Jackson. Dunn immediately sought habeas corpus relief from Judge Mize, who released him on bail and later ruled that the arrest order was void.⁷

Dunn was thus able to resume the prosecution of the chancery trial until the case concluded on March 25; and on April 8, Chancellor Stennett rendered an in personam decree for $464,450.08 in favor of Hyde against Koehring. Koehring appealed to the Mississippi Supreme Court from Chancellor Stennett's decision on the merits. On October 4, 1965, the state supreme court upheld the jurisdiction of the chancery court to hear the case, notwithstanding the pendency of the federal action, and affirmed the decree in favor of Hyde with a reduction of about $50,000 in damages.⁸ Koehring considered but decided against petitioning the United States Supreme Court for writ of certiorari. The judgment obtained by Hyde thus became final.

During this time interval, however, civil contempt proceedings by Koehring against Dunn and Hyde went forward in the Oklahoma federal court. On June 18, 1964, Judge Barrow conducted a hearing on Koehring's petition for sanctions in civil contempt against Hyde and Dunn. On September 1, 1964, the district judge enjoined Hyde from collecting the judgment rendered against Koehring, directed that the case be retried at Tulsa, entered a civil contempt judgment in favor of Koehring against Hyde and Dunn for $9,009.80 to defray litigation expenses, but nevertheless allowed Hyde to participate in the appeal then pending in the Mississippi Supreme Court.

In a subsequent appeal, the United States Supreme Court determined, on January 17, 1966, that the transfer order of the Fifth Circuit vested jurisdiction in the Oklahoma district court.⁹

On March 21, 1966, Hyde filed a...