Indianapolis Colts v. Mayor and City Council of Baltimore

• Decision Date: 10 August 1984
• Docket Number: No. 84-1649,84-1649
• Citation: 741 F.2d 954
• Parties: INDIANAPOLIS COLTS, Plaintiff-Appellee, v. MAYOR AND CITY COUNCIL OF BALTIMORE, Defendants-Appellants, and Capital Improvement Board of Managers of Marion County, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 954

741 F.2d 954

INDIANAPOLIS COLTS, Plaintiff-Appellee, v. MAYOR AND CITY COUNCIL OF BALTIMORE, Defendants-Appellants and Capital Improvement Board of Managers of Marion County Defendant-Appellee.

No. 84-1649.

United States Court of Appeals Seventh Circuit.

Argued July 10, 1984.

Decided Aug. 10, 1984.

Samuel K. Skinner, Sidley & Austin, Chicago, Ill., for plaintiff-appellee.

Edwin C. Thomas, III, Bell, Boyd & Lloyd, Chicago, Ill., for defendants-appellants.

John P. Price, Bingham, Summers, Welsh & Spilman, Indianapolis, Ind., for defendant-appellee.

Before BAUER, POSNER and COFFEY, Circuit Judges.

BAUER, Circuit Judge.

Defendants Mayor and City Council of Baltimore (collectively "Baltimore") appeal from two district court orders entered in this interpleader action Plaintiff Indianapolis Colts filed pursuant to 28 U.S.C. Sec. 1335 (1948). The Colts, a football team owning a National Football League franchise, filed the action claiming interpleader jurisdiction on the ground that Baltimore and the Capital Improvement Board of Managers of Marion County, Indiana (CIB), operators of the Indianapolis Hoosier Dome, had conflicting claims against the team. The district court in Indiana granted the Colts' request for an order restraining Baltimore from pursuing its condemnation action against the Colts, which was pending in a federal district court in Maryland. Two weeks later, the district court also enjoined Baltimore from pursuing a Maryland state court action against the NFL in which Baltimore hoped to stop the Colts from moving to Indianapolis. Baltimore filed a notice of appeal from the court's two orders on April 19, 1984. On April 23, Baltimore also filed in this court an emergency motion to stay the district court orders and to enjoin the Colts from preparing to play football in Indianapolis pending this appeal. On May 8, this court granted Baltimore's motion for a stay, but denied Baltimore's request for an injunction against the Colts. Indianapolis Colts v. Mayor of Baltimore, 733 F.2d 484 (7th Cir.1984). Our jurisdiction is based on 28 U.S.C. Sec. 1292(a)(1) (1982). We hold that the district court did not have interpleader jurisdiction to hear this suit, and therefore vacate the orders and remand with instructions to dismiss.

I

Through the 1983 season, the Colts played their home games in Baltimore Memorial Stadium. In February 1984, the Colts and the stadium managers began negotiating a renewal of the Memorial Stadium lease. At the same time, the Colts negotiated with the CIB regarding the possibility of moving the team to the Hoosier Dome.

On March 27, 1984, Colts owner Robert Irsay learned that the Maryland Senate passed a bill granting the City of Baltimore the power to acquire the Colts by eminent domain. Irsay decided to move the team to Indianapolis and promptly executed a lease with the CIB. The Colts fled Baltimore under the cloak of darkness; eight moving vans full of Colts equipment arrived in Indianapolis on March 29.

On March 29, Maryland's governor signed into law the bill authorizing Baltimore to acquire the Colts by condemnation. Baltimore filed a condemnation petition against the Colts on March 30 in Maryland state court. The state court restrained the Colts from transferring any element of the team from Baltimore.

After learning about the condemnation suit by telegram, the Colts took two actions. First, on April 2, the Colts caused removal of the state court condemnation proceeding to federal district court in Maryland. Second, on April 5, the Colts filed this action in the United States District Court for the Southern District of Indiana, claiming that their obligations under the lease with the CIB conflicted with Baltimore's attempts to acquire the team through eminent domain.

II

Our review of this case extends to the question of whether the interpleader was proper. Allstate Insurance Co. v. McNeill, 382 F.2d 84 (4th Cir.1967), cert. denied, 392 U.S. 931, 88 S.Ct. 2290, 20 L.Ed.2d 1390 (1968). This question is an issue of law entitled to full appellate review.

We hold that the Colts have not successfully satisfied the pleading requirements of 28 U.S.C. Sec. 1335. Despite the Colts' argument that it is unfair for the City of Indianapolis to lose the team by another city's condemnation suit, we find that the CIB and Baltimore do not have conflicting claims over a single stake. Additionally, even assuming the CIB and Baltimore have claims over the same stake, the Colts do not face a reasonable danger of multiple liability or vexatious, conflicting claims from the claimants, and thus interpleader is not justified here.

A

A basic jurisdictional requirement of statutory interpleader is that there be adverse claimants to a particular fund. See Libby, McNeill & Libby v. City National Bank, 592 F.2d 504 (9th Cir.1978). The CIB and Baltimore are not claimants to the same stake. Baltimore seeks ownership of the Colts franchise, whereas the CIB has no claim to ownership of the franchise. Instead, the CIB has a lease with the Colts that requires the team to play its games in the Hoosier Dome and imposes other obligations to ensure the success of the enterprise.

The Colts argue in part that clause 11 of their lease with the CIB raises an interest in the CIB which conflicts with Baltimore's attempt to obtain the franchise. Clause 11 grants the CIB the first chance to find purchasers for the team if Irsay decides to sell his controlling interest. This right of first refusal is the CIB's contractual guarantee either that Irsay always will control the team or that the CIB will have the right to choose his successor. Yet this provision does not give the CIB a present right to buy the Colts, and thus does not raise a claim against the franchise conflicting with Baltimore's claim. ¹

A successful eminent domain action obviously will defeat the CIB's interests in keeping the Colts in Indianapolis. Nevertheless, interpleader is not designed to aid every plaintiff confronted by one claim which, if successful, would defeat a second claim because the plaintiff has lost the ability to pay damages. Such an interpretation would twist interpleader into protection for defendants from losing the opportunity to recover damages because the plaintiff's resources already have been depleted. Interpleader is warranted only to protect the plaintiff-stakeholder from conflicting liability to the stake.

Interpleader is proper in cases such as a surety confronted by claims of subcontractors and materialmen which exceed the surety's contractual liability, conflicting claims of entitlement to the proceeds of a life insurance policy, or automobile insurers surrendering the maximum sum of their liability to the court for disposition to plaintiffs in an accident case. The issue of whether the interpleaded defendants' claims are adverse does not arise often. The Colts' argument here that the "bottom line" of this case is which city "gets" the Colts clouds the issue of adversity. Only reasonable legal claims can form the adversity to the plaintiff necessary to justify interpleader. The CIB has no reasonable legal claim to ownership of the franchise sought by Baltimore. For the Colts, losing their franchise to Baltimore may lead to breach of the lease claims by the CIB, but this is not a situation for which interpleader was designed. ² See Texas v. Florida, 306 U.S. 398, 405-08, 59 S.Ct. 563, 567-568, 83 L.Ed. 817 (1939); Indianapolis Colts, 733 F.2d at 487.

B

Interpleader is a suit in equity. See Champlin Petroleum Co. v. Ingram, 560 F.2d 994 (10th Cir.1977), cert. denied, 436 U.S. 958, 98 S.Ct. 3072, 57 L.Ed.2d 1123 (1978); see also First National Bank v. United States, 633 F.2d 1168 (5th Cir.1981); United States v. Major Oil Corp., 583 F.2d 1152 (10th Cir.1978). Because the sole basis for equitable relief to the stakeholder is the danger of exposure to double liability or the vexation of conflicting claims, Texas v. Florida, 306 U.S. at 406, 59 S.Ct. at 567, the stakeholder must have a real and reasonable fear of double liability or vexatious, conflicting claims to justify interpleader. Fonseca v. Regan, 734 F.2d 944 (2d Cir.1984); Bass v. Federal Savings & Loan Insurance Corp., 698 F.2d 328 (7th Cir.1983); Dunbar v. United States, 502 F.2d 506 (5th Cir.1974); General Electric Credit Corp. v. Grubbs, 447 F.2d 286 (5th Cir.1971), rev'd on other grounds, 405 U.S. 699, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972); Fulton v. Kaiser Steel Corp., 397 F.2d 580 (5th Cir.1968); Francis I. duPont & Co. v. O'Keefe, 365 F.2d 141 (7th Cir.1966); Bierman v. Marcus, 246 F.2d 200 (3d Cir.1957), cert. denied, 356 U.S. 933, 78 S.Ct. 774, 2 L.Ed.2d 762 (1958); New York Life Insurance Co. v. Lee, 232 F.2d 811 (9th Cir.1956); John Hancock Mutual Life Insurance Co. v. Beardslee, 216 F.2d 457 (7th Cir.1954), cert. denied, 348 U.S. 964, 75 S.Ct. 523, 99 L.Ed. 751 (1955); American Fidelity Fire Insurance Co. v. Construcciones Werl, Inc., 407 F.Supp. 164 (D.V.I.1975). Even assuming that Baltimore and the CIB are fighting over the same stake, the Colts do not have a reasonable fear of double liability or vexatious claims here. The Colts and the CIB foresaw the likelihood of legal obstacles to prevent the Colts from leaving Baltimore, among which was an eminent domain action. The Colts and the CIB thus specifically contracted that the lease obligations will terminate at the Colts' option if the Colts' franchise is acquired by eminent domain. Clause 21.6 of the lease states in part:

21.6 Club's Option.

21.6(a) Actions. The parties acknowledge and recognize that at the present time there are pending various lawsuits in the state and federal courts dealing with the issues of the provisions of the Constitution and By-Laws of the League, the Constitution of the United States, and various State Constitutions, state and federal antitrust laws, and state and federal laws of eminent domain and other state and federal laws which may be impact on...