Kerney v. Fort Griffin Fandangle Ass'n, Inc., 78-3599

• Decision Date: 22 August 1980
• Docket Number: No. 78-3599,78-3599
• Citation: 624 F.2d 717
• Parties: T. Lincoln KERNEY, II, Plaintiff-Appellant, v. FORT GRIFFIN FANDANGLE ASSOCIATION, INC., et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 717

624 F.2d 717

T. Lincoln KERNEY, II, Plaintiff-Appellant, v. FORT GRIFFIN FANDANGLE ASSOCIATION, INC., et al Defendants-Appellees.

No. 78-3599.

United States Court of Appeals, Fifth Circuit.

Aug. 22, 1980.

B. Prater Monning, III, Dallas, Tex., Richard M. Ticktin, New York City, for plaintiff-appellant.

Glandon, Erwin, Baker, Choate & Elmore, William F. (Pete) Baker, Abilene, Tex., for defendants-appellees.

Filmore & Camp, Inc., John P. Camp, Patrick H. O'Neill, Richard L. Griffith, Fort Worth, Tex., for Robert W. Williams.

Garrett, Settle & Callaway, Rufus S. Garrett, Jr., J. Robert Green, Jr., Fort Worth, Tex., for Griffin Fandangle Ass'n, Inc.

Appeal from the United States District Court for the Northern District of Texas.

Before MORGAN, CHARLES CLARK and TATE, Circuit Judges.

CHARLES CLARK, Circuit Judge:

On July 26, 1976, T. Lincoln Kerney, II, attended a theatrical event in Shackelford County, Texas, known as the Fort Griffin Fandangle. One of the Fandangle's most memorable acts, regrettably for Kerney, was the presentation known as the "fire in the anvil," in which an explosive charge was detonated under an iron anvil to send it skyward with a resounding blast, purporting to re-create the fireworks enjoyed by the Texas pioneers of old. The day Kerney attended, however, "something went wrong." Rather than being propelled skyward, fragments of the anvil flew into the audience, and a chunk weighing several pounds was blown into Kerney's head.

Alleging that his injuries resulted from negligence and gross negligence in performing the "fire in the anvil" and in failing properly to advise and protect the public, Kerney sued the Fort Griffin Fandangle Association, Inc. ("Association"), ¹ producer of the Fandangle, its officers, directors, shareholders, and members, and the owner of the premises on which the accident occurred, seeking compensatory and punitive damages. Kerney filed his action in the United States District Court for the Northern District of Texas, invoking the court's diversity jurisdiction. Because he was unable to learn the names of all the officers, directors, shareholders, or members of the Association, he sued by name those defendants whose names he knew and added as fictitious defendants John Doe, Richard Roe, John Roe, Richard Doe, Michael Moe, and Carl Coe. Alleging that all defendants were residents of Texas, the complaint asserted that Kerney would seek leave to amend, substituting real persons for the fictitious defendants, as soon as he learned the true names of the appropriate parties.

The defendants filed motions to dismiss for lack of jurisdiction over the subject matter of the action, asserting that because Kerney had alleged residence, not citizenship, and because he could not ascertain the citizenship of parties whose identity he did not know, he had not affirmatively established jurisdiction. ² After a hearing, the district court granted the defendants' motions, concluding that the record failed to show diversity of citizenship. The court dismissed the action without prejudice, granting Kerney the right to amend the pleadings to show jurisdiction and to move for reinstatement.

Kerney subsequently moved for leave to file an amended complaint and for reinstatement. The amended complaint abandoned the use of the fictitious parties and instead purported to bring a class action against the members of the Fandangle Association as provided by Rule 23.2, Fed.R.Civ.P., entitled "Actions Relating to Unincorporated Associations." He named as class representatives those nine officers and members of the Association whose names he had been able to learn. The complaint alleged that each of the nine was a citizen of Texas and that Kerney was a citizen of New York. The district court denied Kerney's motion for leave to file the amended complaint and for reinstatement, without giving any reason. ³

Kerney appeals from both orders. The first order dismissing Kerney's original complaint with leave to amend and to move for reinstatement was proper. Kerney did not satisfy the burden, always on plaintiff, of establishing diversity of citizenship between the plaintiff and all defendants, for he alleged only the residence and not the citizenship of the parties. An allegation of residence is insufficient to establish diversity jurisdiction. The plaintiff must allege citizenship. Delome v. Union Barge Line Co., 444 F.2d 225 (5th Cir.), cert. denied, 404 U.S. 995, 92 S.Ct. 534, 30 L.Ed.2d 547 (1971). This appeal does not present the question whether Kerney could have satisfied his burden by alleging that the fictitious parties were citizens of Texas. ⁴ The first order appealed from merely dismissed, with leave to amend, a complaint totally lacking in allegations of citizenship. Regardless of the propriety of fictitious-party practice in federal court and its effect on diversity, this dismissal was correct.

The amended complaint attempted to sue the Association itself and named nine defendants both as trustees for the benefit of creditors and as representatives of the class of all members of the Association. It alleged that the use of the class action device was authorized by rule 23.2, Fed.R.Civ.P., or in the alternative by the general class action rule, rule 23.

Rule 23.2 provides, in pertinent part:

An action brought by or against the members of an unincorporated association as a class by naming certain members as representative parties may be maintained only if it appears that the representative parties will fairly and adequately protect the interest of the association and its members.

The advisory committee note to rule 23.2 states that "(a)lthough an action by or against representatives of the membership of an unincorporated association has often been viewed as a class action, the real or main purpose of this characterization has been to give 'entity treatment' to the association when for formal reasons it cannot sue or be sued as a jural person under rule 17(b)." According to rule 17(b), the law of the forum state determines capacity to sue or be sued.

In light of the advisory committee note, the defendants contend, Kerney may not use rule 23.2 to bring a class action against the members of the Association because Texas law permits an unincorporated association to sue and be sued. Tex.Rev.Civ.Stat.Ann. art. 6133 (Vernon 1970). The defendants urge that we hold that rule 23.2 may be used only where the law of the forum state does not permit an unincorporated association to sue or be sued. We decline.

Rule 23.2 is a relatively little-used provision, but its purpose was clearly to enlarge, not contract, the authorization for class actions against unincorporated associations. Before the adoption of rule 23.2 in 1966, rule 23 afforded the basis for class actions against the members of an unincorporated association where the plaintiff sought to hold the individual members personally liable. E. g., Oskoian v. Canuel, 269 F.2d 311 (1st Cir.1959). Indeed such was generally the only relief available under the common-law tradition that a voluntary association of individuals created only common rights and liabilities, not liabilities of the association itself. Numerous jurisdictions have given entity status to these associations, allowing them to sue and be sued. But enough states had not done so by 1966 to persuade the advisory committee, in revising the class action amendments, to ensure that unincorporated associations could be the subject of class actions even where state law did not grant capacity to sue or be sued. In so doing, the drafters could not have intended either to abridge or expand the scope of substantive rights and liabilities under state law. The rule does not speak to the determination whether only the members of the association, or only the association itself, or both the association and its members may be held liable for its wrongs. That determination rests, as it always has, with the state rule of decision in diversity cases.

Although Texas law permits entity suits against unincorporated associations, it specifically provides that the grant of entity status does not "affect nor impair . . . the right of any person to sue the individual stockholders or members." Tex.Rev.Civ.Stat.Ann. art. 6138 (Vernon 1970). The reason why a plaintiff might elect to sue the members rather than the association is clear: under article 6136, Tex.Rev.Civ.Stat.Ann. (Vernon 1970), judgment rendered on an entity suit may be enforced against only the association's property and not that of the individual members. If the plaintiff sues the members individually, on the other hand, he can satisfy his judgment from both individual and association property (although he must first exhaust association property in satisfaction of the judgment). Tex.Rev.Civ.Stat.Ann. art. 6137 (Vernon 1970).

Although inartfully drafted, Kerney's amended complaint sought to sue the individual members and to recover against both individual and joint property. Rule 23.2 clearly authorizes a class action against the members of an unincorporated association in Texas. ⁵

Given that the amended complaint properly brought a class suit, it alleged citizenship sufficient to establish diversity by alleging that the named defendants were citizens of Texas, for a class is considered to be diverse from the opposing party if the named parties are diverse. Supreme Tribe of Ben-Hur v. Cauble, 255 U.S. 356, 41 S.Ct. 338, 65 L.Ed. 673 (1921); Calagaz v. Calhoon, 309 F.2d 248 (5th Cir.1962). ⁶

The defendants also contend that a court could not, consistently with due process, impose individual liability on members of a defendant class. Essentially, they would contend that a defendant class action is unconstitutional. We disagree. Both rules 23 and 23.2 expressly contemplate the possibility of defendant class actions and require that the representative parties fairly and adequately protect the interest of the class members....