Lasky v. Continental Products Corp.
| Decision Date | 18 November 1986 |
| Docket Number | No. 85-1460,85-1460 |
| Citation | 804 F.2d 250 |
| Parties | LASKY, Harvey, Guardian ad litem Lasky, Jesse I. and Jamie November, husband and wife, individually, and as parents and natural guardians of their minor son, Gregory Lasky v. CONTINENTAL PRODUCTS CORPORATION Continental Gummi-Werke, Aktiengesellschaft Nissan Motor Corporation In USA, Nissan Motor Corporation Limited (Japan). Appeal of Jamie November LASKY, individually and as parent and natural guardian of her minor son, Gregory Lasky. |
| Court | U.S. Court of Appeals — Third Circuit |
William J. Gallagher (argued), Michael G. Louis, MacElree, Harvey, Gallagher, O'Donnell & Featherman, West Chester, Pa., for appellant.
Leonard J. Bucki (argued), Wolf, Block, Schorr & Solis-Cohen, Philadelphia, Pa., for appellee.
Before HIGGINBOTHAM and STAPLETON, Circuit Judges, and TEITELBAUM, District Judge. *
This unfortunate appeal is again before us for resolution due to the parties' inability to reach a prompt settlement of their dispute. We must decide whether the district court erred in finding that it lacked jurisdiction to allocate settlement proceeds among the plaintiffs in the underlying personal injury action and, if so, whether its refusal to allocate constituted an abuse of discretion. For the reasons that follow we will reverse the order denying appellant's Rule 60(b) motion for lack of jurisdiction, and remand for proceedings consistent with this opinion.
On February 11, 1986, this court heard oral argument on this appeal and was of the opinion that the parties should attempt to reach a prompt and equitable settlement of their claims. Decision in this matter was accordingly held in abeyance pending settlement negotiations mediated by Judge Rosenn. 1 Unfortunately, after months of negotiations the bitter rift between the parties could not be closed and we are again faced with the resolution of their dispute.
On August 6, 1982, Jesse Lasky instituted a products liability action against defendant Continental Products seeking to recover damages for injuries he sustained in an automobile accident on March 31, 1981. Lasky's wife, Jamie, and his minor son, Gregory, appellants in the instant appeal, joined as co-plaintiffs asserting claims for loss of consortium and companionship respectively. Due to Lasky's deteriorating condition, his brother, Harvey, was appointed guardian ad litem.
Prior to trial, plaintiffs and Nissan Motor Corporation in USA and Nissan Motor Corporation Limited (Japan) agreed to a compromise settlement. Following three days of jury trial Continental Products Corporation and Continental Gummi-Werke Aktiengesellschaft also entered into a compromise settlement with the plaintiffs. Pursuant to these settlement agreements plaintiffs were to receive a handsome lump sum settlement, the amount of which was to remain confidential. 2
Subsequently, the plaintiffs reported to the district court that although they had agreed that payment of the lump sum amount would settle their claims against the defendants, they had been unable to agree upon an equitable allocation of the funds among themselves. On December 6, 1984, the district court dismissed the action against Continental with prejudice pursuant to Local Rule 23(b). 3 Shortly thereafter, on or about January 16, 1985, Mrs. Lasky filed a divorce action in the Chester County Common Pleas Court seeking, inter alia, distribution of all marital property. Some two months later a consent order in the products liability action was submitted to and signed by the district judge. That order of March 18, 1985 approved the payment of counsel fees and expenses out of the settlement proceeds. Since no agreement had been reached among father, wife and son on the division of the funds, however, the court directed that the balance of the settlement fund be deposited in an interest bearing account in the court registry. Three separate deposits were duly made to the account for the benefit of the plaintiffs. To date, those funds remain in the registry of the court.
On June 7, 1985, after numerous attempts to negotiate a division of the settlement among the plaintiffs proved unsuccessful, Jamie Lasky, individually and as parent and natural guardian of her minor son, Gregory, filed a Rule 60(b) motion for an order allocating the settlement proceeds among the plaintiffs. Harvey Lasky as guardian ad litem for his brother, Jesse, opposed the motion arguing, inter alia, lack of subject-matter jurisdiction and filed a cross-motion requesting that the funds be transferred to the Chester County Court for further disposition. The district court denied the motion to allocate, on July 16, 1985, holding that it was without subject-matter jurisdiction to adjudicate the conflicting claims for shares in the settlement. This appeal ensued. After oral argument this Court remitted the parties to further settlement negotiations. Those negotiations have also turned sour. We now consider the merits of appellant's appeal. We will reverse the order of the district court.
At the outset, the question arises whether we may exercise appellate jurisdiction in this case because the district court has failed to dispose of the settlement funds and may still take further action. We find that this court may exercise appellate jurisdiction in this action pursuant to 28 U.S.C. Sec. 1291. First, under the "final order" rule, orders dismissing a complaint for lack of jurisdiction are typically considered final. See Knibb, Federal Court of Appeals Manual Sec. 4.3 at 18 (1981). Moreover, and more specifically, "it is now well established that orders denying a motion for relief from a judgment under Civil Rule 60 are final." 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure Sec. 3916, at 610-11 (1976). On the facts of this case, it is clear that the district court intends to take no further action with regard to the settlement fund. Indeed, the court considers itself powerless to do so. Thus, there is no impediment to our exercise of appellate jurisdiction over the district court's denial of appellant's Rule 60(b) motion. Our review of the court's ruling, however, is restricted to the issue raised by the motion and does not extend to the merits of the underlying judgment.
A question concerning the jurisdiction of the district court is also raised by this appeal. Following futile attempts to negotiate an equitable division of the settlement fund, appellant, Jamie Lasky, moved for an order allocating the settlement proceeds among the plaintiffs pursuant to Rule 60(b)(6). 4 The district court, in ruling on appellant's motion, held that it lacked jurisdiction "to adjudicate the allocation of proceeds dispute among [the] plaintiffs...." App. at 194. In addition, Harvey Lasky, on behalf of his brother, Jesse, independently alleges a jurisdictional defect at the district court level, contending that the dismissal of the underlying products liability action divested the court of jurisdiction over the subsequent motion to allocate. Specifically, appellee maintains that, because the Rule 60(b) motion involves competing claims of non-diverse parties, there is no basis for federal court subject-matter jurisdiction. 5 See Brief of Appellee, Jesse I. Lasky at 10-11.
We briefly address the issue whether the district court could properly entertain the Rule 60(b) motion to allocate. Appellee suggests that the dismissal of the products liability action with prejudice on December 5, 1984 terminated the district court's jurisdiction over the allocation dispute because diversity jurisdiction no longer existed. Appellee also contends that the 90-day time limit for seeking relief from a final dismissal pursuant to Rule 23(b) had elapsed, thereby extinguishing any right of appellant to object to the consent order. Both arguments are without merit. First, appellant's motion seeks relief from the March 18, 1985 consent order of district court approving the settlement amount and directing, inter alia, that deposits in satisfaction of the settlement be made to the registry of the court. Appellee does not challenge, nor could he, the court's jurisdiction over the consent decree. The power of a court to enter a consent decree emanates from its authority to adjudicate the rights of the parties in the first instance. The authority thereafter to modify the consent decree similarly derives directly from the court's initial exercise of jurisdiction over the dispute. Put otherwise, a court has inherent power to modify a consent decree that it initially had the power to approve. See Sansom Committee By Cook v. Lynn, 735 F.2d 1535, 1538 (3d Cir.1984). Thus, jurisdiction over appellant's motion to allocate is not contingent upon the diversity of the parties seeking modification of the consent decree. Rather, the district court's power to consider the motion at all is based on the consent decree itself which was properly entered pursuant to the court's diversity jurisdiction. See Smith v. Widman Trucking & Excavating, 627 F.2d 792 (7th Cir.1980) () (citing Kelly v. Greer, 334 F.2d 434 (3d Cir.1964)). 6 See also 7 J. Moore & J. Lucas, supra, at p 60.28, p. 60-308 (). Thus, that the current dispute with regard to the consent order does not involve the original adversaries in the products liability action does not defeat the district court's jurisdiction over its order. 7
Nor does the 90-day limitation period of Local Rule 23(b) preclude district court...
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