Koehring Co. v. American Mut. Liab. Ins. Co.

• Decision Date: 23 May 1983
• Docket Number: Civ. A. No. 78-C-737.
• Citation: 564 F. Supp. 303
• Parties: KOEHRING COMPANY, a Wisconsin corporation, Plaintiff, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a foreign mutual insurance company, Defendant.
• Court: U.S. District Court — Eastern District of Wisconsin

564 F. Supp. 303

KOEHRING COMPANY, a Wisconsin corporation, Plaintiff, v. AMERICAN MUTUAL LIABILITY INSURANCE COMPANY, a foreign mutual insurance company, Defendant.

Civ. A. No. 78-C-737.

United States District Court, E.D. Wisconsin.

May 23, 1983.

Andrew O. Riteris and Paul S. Medved, Michael, Best & Friedrich, Milwaukee, Wis., for plaintiff.

Robert D. Scott, Dennis Grzezinski and Michael Lund, Frisch, Dudek & Slattery, Ltd., Milwaukee, Wis., for defendant.

DECISION and ORDER

TERENCE T. EVANS, District Judge.

Five lawyers, two for the plaintiff, Koehring Company, and three for the defendant, American Mutual Liability Insurance Company, have participated in the preparation of the briefs filed with the court on Koehring's pending motion for summary judgment. When the underlying disputes in this case began, way back in 1959, none of the five were lawyers. The gray beard of the bunch, Andrew O. Riteris was a 24-year-old first year law student at Marquette University. Robert D. Scott (who was, ironically, born in Oklahoma where this mess all started) was a mere lad of 19, 6 years away from the day when he would receive his law degree from Georgetown. The other three, Dennis M. Grzezinski, Michael J. Lund and Paul S. Medved, were still of the pre-Clearasil set, being only 9, 5 and 3 years of age respectively when it all started. Somewhere, there must be a couple of third-graders playing kickball who will, when they mature, become lawyers and join in this quixotic legal odyssey.

To understand the present controversy, I will return to the era before the Beatles were formed, a time when Dwight D. Eisenhower was the President of the United States. The return is not an unpleasant one. 1959 was a great year for me, a 19-year-old college sophomore.

In 1959, the Hyde Construction Company of Mississippi was awarded a contract by the United States to construct a spillway for the Keystone Dam on the Arkansas River, in the State of Oklahoma¹. The performance of the 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 Vardaman S. Dunn, a Mississippi lawyer, 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.

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 apparently 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 removal². 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. Ultimately, the mandate of the Fifth Circuit was carried out, and the federal suit was transferred to 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). The Chancery Court trial was set to begin at 2 p.m. on March 11, 1964, after Chancellor Stennett, judge of the Mississippi Chancery Court, had considered and overruled a series of motions by Koehring to stay or continue the trial. So the stage was set; Hyde wanted to litigate in Mississippi and Koehring in Oklahoma. The bad dream was about to get worse.

During the morning of March 11, Koehring applied to Judge Allen E. Barrow, United States District Judge of the Northern District of Oklahoma, at Tulsa (the city where Attorney Scott was born just 24 years earlier), for a restraining order to halt the trial of the state court 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 the state proceedings. 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, 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. Judge Stennett was also notified, by telegram, of Judge Barrow's order.

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. It did. 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, Mississippi, 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 it 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.³

Dunn was thus able to resume the prosecution of the Chancery trial until the case concluded on March 25. On April 8, 1964, 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.⁴ Koehring considered but decided against petitioning the United States Supreme Court for review. Thus, the judgment obtained by Hyde became final.

During the time period when the Mississippi case was going forward, civil contempt proceedings by Koehring against Dunn and Hyde were proceeding in the Oklahoma federal court. On June 18, 1964, Judge Barrow conducted a hearing on Koehring's petition for contempt sanctions 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 in 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.

On March 21, 1966, Hyde filed a motion in the Oklahoma federal court to dissolve the September 1, 1964, injunction against collecting on the Mississippi judgment, to vacate the civil contempt orders, and to dismiss the action. Hyde claimed that the Mississippi judgment was res judicata as to any further proceedings. When these motions were overruled April 18, 1966, Hyde took an appeal to the United States Court of Appeals for the Tenth Circuit, which granted a stay of further proceedings in the District Court pending appeal.

Meanwhile, on June 28, 1966, the Court of Appeals for the Fifth Circuit reversed and vacated Judge Mize's habeas corpus order which had discharged Dunn from custody.⁵ Dunn then advised Judge Barrow that he would appear at Tulsa, upon...