Hyman v. City of Gastonia

• Decision Date: 16 October 2006
• Docket Number: No. 05-1981.,05-1981.
• Citation: 466 F.3d 284
• Parties: Larry S. HYMAN, as Liquidating Trustee of Governmental Risk Insurance Trust, Plaintiff-Appellant, v. CITY OF GASTONIA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

466 F.3d 284

Larry S. HYMAN, as Liquidating Trustee of Governmental Risk Insurance Trust, Plaintiff-Appellant, v. CITY OF GASTONIA, Defendant-Appellee.

No. 05-1981.

United States Court of Appeals, Fourth Circuit.

Argued May 22, 2006.

Decided October 16, 2006.

ARGUED:

Lee S. Haramis, Gray Robinson, P.A., Jacksonville, Florida, for Appellant. Josephine Herring Hicks, Parker, Poe, Adams & Bernstein, L.L.P., Charlotte, North Carolina, for Appellee.

ON BRIEF:

Daniel A. Nicholas, Gray Robinson, P.A., Jacksonville, Florida, for Appellant. Richard J. Rivera, Parker, Poe, Adams & Bernstein, L.L.P., Charlotte, North Carolina, for Appellee.

Before WILLIAMS and GREGORY, Circuit Judges, and HENRY F. FLOYD, United States District Judge for the District of South Carolina, sitting by designation.

Dismissed by published opinion. Judge Williams wrote the opinion, in which Judge Gregory and Judge Floyd joined.

OPINION

WILLIAMS, Circuit Judge:

Larry S. Hyman, the Liquidating Trustee for the Governmental Risk Insurance Trust (GRIT), appeals the district court's application of North Carolina's doctrine of abatement, which resulted in the dismissal of GRIT's diversity action against the City of Gastonia, North Carolina (Gastonia). For the reasons that follow, we dismiss the appeal for lack of jurisdiction.

I.

GRIT is a workers' compensation self-insurance fund that was formed to provide workers' compensation insurance to governmental entities. Gastonia entered into a contract with GRIT for GRIT to provide workers' compensation insurance in exchange for premiums that Gastonia paid to GRIT. The contract was in effect until March 2000, when GRIT filed for bankruptcy.

In November 2002, GRIT sued Gastonia in Florida state court under various state-law contract theories alleging that Gastonia owed it $701,431.52 in unpaid premiums. Gastonia removed the case to the United States District Court for the Middle District of Florida based on diversity of citizenship. See 28 U.S.C.A. § 1441 (West 1994 & Supp.2006); § 1332 (West 1993). After removing the case, Gastonia filed a motion to dismiss arguing, inter alia, that venue was improper, see Fed R.Civ.P. 12(b)(3), that service of process was insufficient, see Fed.R.Civ.P. 12(b)(5), and that the complaint failed to state a claim upon which relief could be granted, see Fed.R.Civ.P. 12(b)(6), because the statute of limitations had run. The Florida district court agreed that venue was improper and transferred the case to the United States District Court for the Western District of North Carolina. Thereafter, the North Carolina district court granted Gastonia's Rule 12(b)(5) motion to dismiss for insufficient service of process and dismissed the action without prejudice.¹ See Fed.R.Civ.P. 41(b) ("For failure of the plaintiff to prosecute or to comply with [the Federal Rules of Civil Procedure] or any order of the court, a defendant may move for dismissal of an action . . . ."). GRIT appealed the district court's dismissal. Hyman v. City of Gastonia (Hyman I), 137 Fed.Appx. 536 (4th Cir.2005) (unpublished).

While GRIT's appeal in Hyman I was pending in this court, GRIT filed a second diversity action (Hyman II) against Gastonia in the same North Carolina district court, this time properly effecting service. GRIT's second action set forth the same claims, involved the same transactions and occurrences, and sought relief identical to that sought in GRIT's first action. Indeed, as GRIT candidly admits, Hyman II is the "same cause of action" as Hyman I. (Appellant's Br. at 21.) Gastonia moved under Rule 12(b)(6) to dismiss Hyman II, arguing that the complaint failed to state a claim upon which relief could be granted because it was subject to dismissal under North Carolina's doctrine of abatement. Under this doctrine, a defendant may assert, as an affirmative defense requiring dismissal, that a substantially identical, earlier-filed action is pending on appeal. Clark v. Craven Reg'l Med. Auth., 326 N.C. 15, 387 S.E.2d 168, 171 (1990).

On February 7, 2005, the North Carolina district court granted Gastonia's motion, holding that this was "a classic case for application of the doctrine of abatement" under North Carolina law. (J.A. at 340.) On May 23, 2005, we affirmed the district court's dismissal in Hyman I, 137 Fed.Appx. at 537. The district court granted GRIT leave to file an out-of-time notice of appeal in Hyman II, and on August 18, 2005, GRIT filed its notice of appeal.

II.

A.

GRIT primarily argues that the district court erred in dismissing Hyman II because application of North Carolina's doctrine of abatement is inconsistent with the district court's Rule 41(b) without prejudice dismissal of Hyman I and, under Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), Rule 41(b), not North Carolina's doctrine of abatement, should apply.

We have an obligation to inquire into jurisdictional issues sua sponte. Ridpath v. Bd. of Governors Marshall Univ., 447 F.3d 292, 304 (4th Cir.2006). Therefore, after we heard oral argument in this case, we directed the parties to submit supplemental briefs on whether we have the authority to consider Hyman's appeal in light of 28 U.S.C.A. § 2105 (West 1994) ("There shall be no reversal in the Supreme Court or a court of appeals for error in ruling upon matters in abatement which do not involve jurisdiction.").²

We now conclude that we lack jurisdiction to hear Hyman's appeal because the district court dismissed this case under North Carolina's doctrine of abatement. Although § 2105 has existed, with slightly different wording, since the Judiciary Act of 1789, see Stephens v. Monongahela Nat. Bank, 111 U.S. 197, 4 S.Ct. 336, 28 L.Ed. 399 (1884), there have been few applications of this statute, and we have no relevant precedents interpreting its provisions.³ Nevertheless, we conclude that § 2105 bars our consideration of this appeal because (1) the district court's abatement ruling falls within the strictures of § 2105 as interpreted by the Supreme Court, and (2) the statute deprives us of appellate jurisdiction to review the district court's abatement ruling.

B.

1.

Section 2105 places restrictions on appellate review of "matters in abatement," but the statute does not define that phrase. Generally speaking, abatement refers to "[t]he suspension or defeat of a pending action for a reason unrelated to the merits of the claim." Black's Law Dictionary 3 (8th ed.2004). At common law, abatement is the equivalent of a dismissal, and it results from the defendant raising some procedural or formality error in the plaintiff's action. 1 Am.Jur.2d Abatement, Survival, and Revival § 1 (2006). Examples of abatement defenses include (1) a defense of prematurity, i.e., that the plaintiff commenced the lawsuit before the underlying cause of action accrued; (2) a defense that the plaintiff's interest in the pending law-suit has terminated or transferred to another party; (3) a defense that a lawsuit cannot proceed because of the death of either the plaintiff or the defendant; and (4) a defense that there is a separate, identical lawsuit pending. 1 Am.Jur.2d Abatement, Survival, and Revival §§ 1-44. Because abatement defenses defeat the particular action for procedural defects that are unrelated to the merits of the plaintiff's claim, the plaintiff can typically correct the defects and proceed in another action. See Bowles v. Wilke, 175 F.2d 35, 38 (7th Cir.1949) (noting that an abatement defense defeats the pending action but not the cause of action).

To decide whether § 2105 applies to this case, however, we need not determine whether "matters in abatement" include each of the abatement defenses listed above. Instead, we can rest solely on the Supreme Court's decisions in Piquignot v. Penn. R. Co., 57 U.S. 104, 16 How. 104, 14 L.Ed. 863 (1853), and Stephens.⁴

In Piquignot, the plaintiff sued the defendant in state court and then, while the state court suit was pending, sued the defendant in federal trial court on the same cause of action. 57 U.S. at 104. The defendant raised as an abatement defense the fact that the state court suit was pending, and the federal court ruled for the defendant. The Supreme Court concluded that § 2105 applied to this type of abatement defense and accordingly refused to review the federal court's abatement ruling. Id.

Stephens involved the same abatement defense, i.e., that the federal court should not proceed in the case because of a pending state court suit between the same litigants for the same cause of action. 111 U.S. at 197, 4 S.Ct. 336. Citing Piquignot, the Supreme Court held that an abatement defense that "another action [was] pending" fell within the meaning of § 2105 and that the Court could not review the federal court's ruling on that defense. Id. The Supreme Court explained that § 2105 bars appellate review of a ruling on an abatement defense because "[t]he defense is one which merely defeats the present proceeding," and therefore does not address the merits of the action or prevent the plaintiff from suing in the future. Id.

Piquignot and Stephens set forth the rule that whatever else the phrase "matters in abatement" means in the context of § 2105, it surely encompasses a ruling in which a trial court dismisses a case because there is a separate, identical pending case. This rule covers the exact circumstances here: the district court dismissed Hyman II because of GRIT's identical, pending action in Hyman I. Because the Supreme Court has held that such a ruling involves a "matter in abatement" under § 2105, we conclude that the statute applies to our review of the district court's abatement ruling.⁵ See also Teixeira v. Goodyear Tire & Rubber Co., 261 F.2d 153, 154 (1st Cir.1958) (holding that § 2105 applies to a judgment of abatement for another action pending); Green v. Underwood, 86 F. 427, 430 (8th Cir.1898) (same); 15A Charles Alan Wright, Arthur R. Miller, & Edward H. Cooper, Federal...