Kroger v. Owen Equipment & Erection Co.

Decision Date16 August 1977
Docket NumberNo. 76-1187,76-1187
Citation558 F.2d 417
PartiesGeraldine KROGER, Administratrix of the Estate of James D. Kroger, Deceased, Appellee, v. OWEN EQUIPMENT & ERECTION COMPANY, a Nebraska Corporation, Appellant.
CourtU.S. Court of Appeals — Eighth Circuit

Ronald H. Stave, Omaha, Neb., for appellant; David A. Johnson, Omaha, Neb., on the brief.

Warren C. Schrempp, Omaha, Neb., for appellee; Richard E. Shugrue, Omaha, Neb., on the brief.

Before LAY and BRIGHT, Circuit Judges, and TALBOT SMITH, * Senior District Judge.

TALBOT SMITH, Senior District Judge.

This case involves the death of a workman assisting in moving a large steel tank. The tank was being moved by a large crane, the boom of which came into contact with high tension electric power lines, resulting in the workman's electrocution. At the time the deceased was 28 years of age with a wife and four children. The plaintiff, his widow, as administratrix of his estate was awarded a jury verdict of $234,756. We affirm.

The crane involved was owned by the Owen Equipment and Erection Company (hereafter "Owen"), and leased by Paxton & Vierling Steel Company (hereafter "Paxton") for heavy lifting. The case was initiated by a bill of complaint filed by plaintiff, an Iowa citizen, against Omaha Public Power District (hereafter "OPPD"), a Nebraska corporation, and Paxton, also a Nebraska corporation. The course of the pleadings thereafter was long and involved and will be found in the Appendix hereto. We note here only that Owen was impleaded as a third-party defendant by OPPD.

The relationship between defendant Owen and Paxton was somewhat involved. Paxton was engaged in the fabrication of structural steel and the manufacture of farm and similar products. It is a non-union plant. To avoid possible labor trouble in "erecting steel on the outside, which is strictly a union proposition," it formed Owen, both corporations having the same headquarters and the same officers, Owen being 100% owned by Paxton. Owen owned two cranes, operated by Fred (father) and David (son) Morrow, both of whom were on Paxton's payroll. Both of them held union cards. It was David who was operating the crime at the time of decedent's death.

After Owen was organized it hired one Harry Flynn, a qualified crane operator and member of the crane operator's union, to be its erection superintendent. It was he who trained Fred Morrow in the use and upkeep of the cranes and it was Fred himself who trained his son on the job. Fred Morrow retired in 1969. Mr. Flynn retired shortly before the accident and was not replaced by a successor. David Morrow then remained the sole operator qualified to operate Owen's big outside cranes. When Paxton required the big cranes, the operators went with the crane and "they ran that crane." Mr. Owen, President of Owen, agreed in his deposition that it "wouldn't do (Owen) a bit of good to own those cranes unless (Owen) had operators for them * * * ."

After long and involved pleadings, a summary of which, as we have noted, will be found in the Appendix, the parties had, by trial date, January 12, 1976, been reduced to two: plaintiff Kroger, an Iowa citizen, and So stood the description of the parties until noon on the third day of the trial. At this juncture, defendant Owen elicited from witness Petersen, Secretary of Owen, that Owen's principal place of business was in Carter Lake, Iowa. Having done so, defendant, the same afternoon challenged the jurisdiction of the court on the ground of lack of diversity.

defendant Owen, charged to be "a Nebraska corporation," and consistently self-admitted in the pleadings to be such.

The court and the plaintiff were taken by surprise because of defendant's pleadings. Plaintiff's amended complaint, filed on November 9, 1973, some two years prior to trial, had unequivocally charged that "Owen Equipment and Erection Co. is a Nebraska corporation with its principal place of business in Nebraska." Defendant had not denied this outright. It had utilized a qualified general denial. It "(a)dmit(ted) that Owen Equipment and Erection Company is a corporation organized and existing under the Laws of the State of Nebraska," and "(d)enie(d) each and every other allegation contained in said Amended Complaint * * * ." This form of answer was in violation of Fed.R.Civ.P. 8(b) which provides that "(w)hen a pleader intends in good faith to deny only a part or a qualification of an averment, he shall specify so much of it as is true and material and deny only the remainder." 1 Thus, defendant's admission of part of an averment and denial of the balance in a qualified general denial clearly does not meet the requirements of the Rule quoted. Nor, as also required by Rule 8(b), does it fairly meet the substance of the averment denied.

Appellant finally admitted on oral argument to us, after close questioning, a point clear from the pleadings, namely, that it had not specifically challenged the diversity jurisdiction of the court at any time during the long course of the pleadings, and particularly had not done so in response to the plaintiff's amended bill of complaint, filed on November 9, 1973, charging Owen to be "a Nebraska corporation with its principal place of business in Nebraska." Owen waited until near the close of the trial to make its challenge. The point had been concealed during the entire period of time since the filing of the amended complaint some two years theretofore. Under similar circumstances, the Third Circuit has held the allegation as to defendant's citizenship to be admitted. 2

The District Court rejected the challenge to its jurisdiction, holding, in its Memorandum Opinion, that although no independent basis of jurisdiction existed as to Owen, nevertheless it had discretion under the Gibbs case, 3 to exercise its judicial power over the case. It held, in part, that:

The law in Nebraska is that an independent basis of jurisdiction need not exist in order for plaintiff to assert a claim against a third party defendant. See Union Bank & Trust Co. v. St. Paul Fire & Marine Ins. Co., 38 F.R.D. 486 (D.Neb.1965); Olson v. United States, 38 F.R.D. 489 (D.Neb.1965). Although this view was once the minority view, this Court believes it is correct.

Properly read, United Mine Workers (v. Gibbs, 383 U.S. 715 (86 S.Ct. 1130, 16 L.Ed.2d 218) (1966)), reemphasizes the fundamental principle that a federal court has jurisdictional power to adjudicate the whole case, i. e., all claims, state or federal, which derive from a common nucleus of operative facts . . . (S)ince there is jurisdictional power to hear the whole case, the question is one of trial court discretion whether to exercise that jurisdiction, considering all the factors of economy and convenience in the context of federalism. 3 Moore's Federal Practice § 14.27(1), 14-569 to 14-570.

This case is nevertheless novel, in that the third party plaintiff was dismissed. However, having determined that ancillary jurisdiction exists, it is only equitable that the Court now retain jurisdiction of this "pendent" claim. 4 Defendant waited until trial to present its motion to dismiss. Should the Court grant defendant's motion, plaintiff would be left without a cause of action, because the Iowa Statute of Limitations has run. 5 Despite the fact that defendant has exclusive possession of the knowledge of the extent of its own business in Iowa, it remained silent on this issue until more than two years subsequent to the filing of the amended complaint. No reason for the delay has been offered and undoubtedly plaintiff was lulled into believing defendant's principal place of business was in Nebraska. As the matter of sound policy and logic, ancillary jurisdiction existed once and, under the facts presented in this case, this Court must retain jurisdiction.

The problem presented arises in the area of ancillary and pendent jurisdiction. We start, of course, with the proposition that federal courts are courts of limited jurisdiction. 6 However, under the developing doctrines of pendent and ancillary jurisdiction, 7 there has been expansion of federal jurisdiction into areas which ordinarily do not come under the jurisdiction of the federal courts. The limits of this expansion are our immediate concern.

Modern analysis starts with the landmark decision in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966). 8 In this case, the plaintiff, a mining superintendent and hauling contractor, was prevented from the performance of his contract by a local union which had forcibly prevented the opening of the mine. Suit was brought in the federal court alleging violation of section 303 of the Labor Management Relations Act, 9 to which was joined a state claim for malicious interference with contract rights. Plaintiff prevailed on both claims, but upon motion for judgment n. o. v. the federal claim was held The Supreme Court affirmed the assumption of jurisdiction over the pendent state claim. 11 The significance of the Gibbs case for our purposes lies in its discarding of the test established in Hurn v. Oursler, 289 U.S. 238, 246, 53 S.Ct. 586, 589, 77 L.Ed. 1148 (1933), for pendent jurisdiction, under which pendent jurisdiction was present when "two distinct grounds in support of a single cause of action 12 (were) alleged, one only of which present(ed) a federal question," but not "where two separate and distinct causes of action (were) alleged, one only of which (was) federal in character." In place of the Hurn test, the Court held that pendent jurisdiction is present whenever the state and federal claims "derive from a common nucleus of operative fact" to the degree that a plaintiff would "ordinarily be expected to try them all in one judicial proceeding." 13 If, the Court continued, the state claim is so related to the federal claim that there is "but one...

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    ...initial claim against the power company and the power company's third-party claim against the crane owner. Kroger v. Owen Equipment & Erection Co., 558 F.2d 417, 424 (8th Cir.1977), citing United Mine Workers v. Gibbs, 383 U.S. at 725, 86 S.Ct. at 1138. The Supreme The alignment of the part......
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