Kenrose Mfg. Co., Inc. v. Fred Whitaker Co., Inc.
| Citation | 512 F.2d 890 |
| Decision Date | 07 August 1972 |
| Docket Number | No. 72-1007,72-1007 |
| Parties | KENROSE MFG. CO., INC., a New York Corporation, et al., Appellants, v. FRED WHITAKER COMPANY, INC., v. KILODYNE, INC., Appellees. |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
Ralph Masinter, Roanoke, Va. (Masinter & Masinter, Roanoke, Va., on brief), for appellants.
William B. Poff, Roanoke, Va. (Woods, Rogers, Muse, Walker & Thornton and B. K. Cruey, and Bates, Cruey & Lee, Roanoke, Va., on brief), for appellee, Kilodyne, Inc.
S. D. Roberts Moore, Roanoke, Va. (Gentry, Locke, Rakes & Moore, and Raymond R. Robrecht, Roanoke, Va., on brief), for appellee, Fred Whitaker Company, Inc.
Before SOBELOFF, Senior Circuit Judge, and WINTER and CRAVEN, Circuit Judges.
Our task here is to determine whether independent subject-matter jurisdiction is necessary for a plaintiff in a federal court to maintain a claim directly against a third-party defendant. Notwithstanding the acknowledged relaxation of jurisdictional requirements in federal third-party practice, we agree with the District Judge that the course of action proposed by plaintiff would exceed the limits of the court's power. We therefore affirm the District Court's order dismissing the amended complaint against the third-party defendant for lack of subject-matter jurisdiction.
The factual setting in which this issue arises is as follows. In August of 1970, Kenrose Manufacturing Company, a New York corporation regularly doing business in Virginia, joined by 60 of its employees, all Virginia residents, instituted an action for injunctive and monetary relief against Fred Whitaker Company, Inc., a Pennsylvania corporation. Plaintiffs sought an injunction to half the discharge of certain gaseous effluents by Whitaker's nearby synthetic fabric and dye plant and, in addition, claimed compensation for damages allegedly sustained by them through prior discharges of the gas.
After Whitaker served its answer, it moved for and was granted permission to file a third-party complaint against Kilodyne, Inc., a Virginia corporation operating its industrial plant in close proximity to Kenrose's dressmaking plant. In its third-party complaint against Kilodyne, Whitaker alleged, in the language of F.R.Civ.P. 14, that, should Kenrose recover judgment against Whitaker, Kilodyne " is or may be liable for all or part of" the plaintiff's claim against defendant Whitaker.
Seven days later, Kenrose amended the complaint to expand its original cause of action for nuisance to include a direct claim against the third-party defendant Kilodyne for injunctive and monetary relief. Kilodyne thereupon moved to dismiss the amended complaint as to it on the ground that diversity between it and the plaintiff Kenrose was absent. The court took the motion under advisement. In the meantime, third-party plaintiff Whitaker, after further investigation, moved for a voluntary dismissal, without prejudice, of its own third-party action against Kilodyne. 1 Kilodyne supported this motion.
After a court-appointed master had taken evidence, the District Judge granted Whitaker's motion to dismiss its third-party action without prejudice as well as Kilodyne's motion to dismiss Kenrose's amended complaint.
The trial court certified that its rulings on the above motions involved "a controlling question of law as to which there is a substantial ground for a difference of opinion." This court, agreeing that an immediate appeal would advance "the ultimate termination of the litigation," granted Kenrose permission to bring this interlocutory appeal, pursuant to 28 U.S.C. § 1292(b).
Kilodyne based its motion to dismiss Kenrose's amended complaint as to it on the undisputed fact that all the individual plaintiffs in the action, as well as Kilodyne itself, are Virginia citizens. As no other basis for jurisdiction appears to exist if there is no diversity of citizenship, Kilodyne argues that there is no subject-matter jurisdiction for Kenrose's action against it. Kenrose replies that a proper view of the law includes no requirement of diversity as between a plaintiff and a third-party defendant where plaintiff asserts an affirmative claim against the third-party defendant. Kenrose submits that Kilodyne's presence in the case rests on jurisdiction ancillary to the main action between Kenrose and Whitaker. The next step in Kenrose's argument is that, since the third-party defendant was already validly in the case when the amended complaint was served, no independent basis of jurisdiction is needed to support plaintiff's subsequent direct action against Kilodyne. We proceed to test these assertions against the background of available precedent.
Rule 14 of the Federal Rules of Civil Procedure governs third-party practice and it has indeed been held under that rule that, where there is diversity as between plaintiff and defendant, defendant may implead a third party of the same citizenship as the plaintiff. 2 In such case, it may be said that ancillary jurisdiction confers power upon the court over the third-party action.
Rule 14 also contains language permitting a plaintiff to
assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff.
There is, however, no indication in the rule whether a basis of jurisdiction independent of the main action must be alleged to support plaintiff's claim against the third-party defendant. Where jurisdiction does not otherwise appear, mere permission, in the rules, to assert a claim, does not itself confer jurisdiction over that claim. By express provision the rules are not to be read as a source of jurisdiction. See Rule 82. 3 To illuminate this point, we must necessarily look elsewhere.
Many courts have considered whether an independent basis of jurisdiction is necessary to support a plaintiff's action against a third-party defendant. With impressive consistency the overwhelming majority has held an independent jurisdictional basis to be a prerequisite to the maintenance of such a claim. 4 See, e. g., Stemler v. Burke, 344 F.2d 393, 395-396 (6 Cir. 1965); McPherson v. Hoffman, 275 F.2d 466, 470 (6 Cir. 1960); Patton v. B & O R.R. Co., 197 F.2d 732, 743 (3 Cir. 1952); United States v. Lushbough, 200 F.2d 717, 721-722 (8 Cir. 1952); Friend v. Middle Atlantic Transportation Co., 153 F.2d 778, 779-780 (2 Cir.), cert. denied, 328 U.S. 865, 66 S.Ct. 1370, 90 L.Ed.2d 1635 (1946); Corbi v. United States, 298 F.Supp. 521 (D.C.Pa.1969); Palumbo v. W. Md. Ry. Co., 271 F.Supp. 361 (D.C.Md.1967).
Several supporting reasons have been advanced by courts holding the majority view on this question. Among them are that: (1) plaintiff should not be allowed, by an indirect route, to sue a co-citizen under diversity jurisdiction when he is not permitted to sue that party directly; 5 (2) the majority rule prevents collusion between plaintiff and defendant to obtain federal jurisdiction over a party who would otherwise not be within the court's reach; 6 (3) the rule which generally does not require diversity as between plaintiff and third-party defendant proceeds on the assumption that the plaintiff is seeking no relief against the third-party defendant; 7 and (4) federal dockets are so overcrowded that the federal courts should not reach out for state law based on litigation. 8
Appellant Kenrose presses upon us the minority view and would have us recognize what it terms "a definite trend toward" allowing a plaintiff to assert claims directly against a third-party defendant without showing an independent ground of jurisdiction. Kenrose argues that such an approach would give currency to the philosophy of the law seeking, in the interest of efficiency, to avoid multiplicity of suits and piecemeal litigation.
The value of efficiency in the disposition of lawsuits by avoiding multiplicity may be readily conceded, but that is not the only consideration a federal court should take into account in assessing the presence or absence of jurisdiction. Especially is this true where, as here, the efficiency plaintiff seeks so avidly is available without question in the state courts. The majority view, as outlined above, has its own valid supporting reasons and we fail to discern any movement away from the well-established rule, which is directly contrary to appellant's contention.
It is true that four lower court cases have favored appellant's view. 9 However, not only are these in the minority among the decided cases, but they have been far from convincing to other judges in the very jurisdictions where they were rendered. 10 Other authorities relied upon by appellant are found to be unrelated to the point at issue, 11 or are readily distinguishable. 12
If this were the sum of the matter, we would feel entirely justified in affirming the District Court simply on the authority of the uniform precedents mentioned above. But, on the specific facts of this case, there is an even stronger reason for applying the majority rule.
Kenrose's only colorable claim to jurisdiction for its action against Kilodyne was that the action came within the ancillary jurisdiction emanating from the suit between Whitaker and Kilodyne-the third-party action. 13 Once the District Court, upon third-party plaintiff Whitaker's motion and with Kilodyne's consent, dismissed the third-party complaint, any basis for the exercise of ancillary jurisdiction completely evaporated. Kilodyne thereupon lost its status as a third-party defendant and became no more than a co-defendant of Whitaker. Under these circumstances, it is plain that diversity would be required as between Kilodyne and Kenrose. Strawbridge v. Curtiss, 7 U.S. 266, 2 L.Ed. 435 (1806).
To avert this inevitable result, plaintiff contends that the District Court abused its discretion in granting Whitaker's motion to dismiss because...
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