Lowe v. Ingalls Shipbuilding, a Div. of Litton Systems, Inc., 82-4361

Citation723 F.2d 1173
Decision Date30 January 1984
Docket NumberNo. 82-4361,82-4361
PartiesEdward L. LOWE, et al., Plaintiffs-Appellees, v. INGALLS SHIPBUILDING, A DIVISION OF LITTON SYSTEMS, INC., Defendant-Appellant.
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Wiesenburg & Reed, Karl Wiesenburg, John H. Carlson, Pascagoula, Miss., for defendant-appellant.

Jones, Maples & Lomax, Ransom P. Jones, III, Pascagoula, Miss., for Lowe, et al.

James Hilton Crosby, Vincent A. Noletto, Jr., Mobile, Ala., for Owens-Corning Fiberglass, et al.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GARZA, RANDALL and GARWOOD, Circuit Judges.

GARWOOD, Circuit Judge:

In this declaratory judgment action we are asked to determine whether a shipyard employer, self-insured under the Longshoremen's and Harbor Workers' Compensation Act, 33 U.S.C. Sec. 901, et seq. ("LHWCA" or the "Act"), which has paid LHWCA compensation to employees contracting asbestosis during their employment, has an "independent" cause of action, of the character recognized in Federal Marine Terminals, Inc. v. Burnside Shipping Co., 394 U.S. 404, 89 S.Ct. 1144, 22 L.Ed.2d 371 (1969), against a manufacturer of asbestos containing products used in the shipyard, for the excess of the compensation so paid over the amount for which the employees settle their third party claims against the manufacturer. Because we conclude that neither the complaint alone, nor the record as a whole, is sufficient to establish the district court's subject matter jurisdiction, we must decline the invitation. We accordingly vacate the judgment below.


This declaratory judgment action was brought by twenty-five individuals, residents of Mississippi, Alabama and Oklahoma, each either a current or former employee of Ingalls Shipbuilding Company, an unincorporated division of Litton Systems, Inc. ("Litton"), apparently at its Pascagoula, Mississippi shipyard, against Litton and Owens-Corning Fiberglass Corporation ("Owens-Corning"), each a Delaware corporation. The allegations of the complaint and the stipulations of the parties filed below reflect that prior to the institution of this suit Litton, a self-insurer under the Act, had admitted liability and paid compensation under the Act to twenty-two of the plaintiffs. Additionally, each of the plaintiffs had a separate suit against Owens-Corning, and numerous other third party manufacturers of asbestos containing insulation products, pending in the same federal district court. In those suits plaintiffs sought to recover for their respective personal injuries from Mississippi work related exposure to asbestos on theories of negligence, implied warranty and strict liability in tort. The plaintiffs instituted their personal injury suits before any LHWCA claims against or payments by Litton were made, and Litton was not, and did not seek The present plaintiffs, however, did reach conditional settlements with Owens-Corning of their personal injury suits against it. The settlement amounts were in many instances less than the amounts Litton had already paid the particular plaintiffs in LHWCA benefits respecting their asbestosis. To ensure that Owens-Corning would not be exposed to liability respecting plaintiffs' asbestosis beyond the amounts offered in settlement, consummation of the settlements was conditioned on either their being approved by Litton or judgment being procured declaring that on consummation of the settlements Owens-Corning would have no exposure to Litton, in regard to plaintiffs' asbestosis, beyond Litton's LHWCA subrogation rights respecting the settlement payments. As the complaint alleges, Litton declined to give its approval and took the position "that it has an independent right of indemnification against said Defendant, Owens-Corning Fiberglass, other than that provided by the Longshoremen's and Harbor Workers' Compensation Act." Plaintiffs accordingly instituted this declaratory judgment action against Litton and Owens-Corning seeking a determination that Litton "has no independent right of indemnification against the Defendant, Owens-Corning Fiberglass, and that the right of subrogation provided under the Longshoremen's and Harbor Workers' Compensation Act, and the case of Allen v. Texaco, 510 F.2d 977 (5th Cir.1975) are the exclusive remedies available to the Defendant" Litton. 1 Litton, in answer, maintained that it had "an independent Burnside action against any settling third party defendant who has not obtained Litton's consent to such settlement."

to become, a party to any of those suits. So far as the record reflects, the sole basis for federal court jurisdiction in the personal injury suits is diversity of citizenship, and none of those suits has gone to judgment or been finally settled.

The district court determined that Litton's "only right against" Owens-Corning "is the right of subrogation pursuant to the Longshoremen's and Harbor Workers' Compensation Act" and that Litton "does not have a present or future independent right" against Owens-Corning of the type recognized in Burnside. 2 Litton has appealed contending that it does have an independent, Burnside type remedy against Owens-Corning, governed by the general maritime law, and is not restricted to subrogation under the LHWCA. Plaintiffs and Owens-Corning, our appellees, contend that the LHWCA, especially its 1972 amendments, restricts Litton to the Act's subrogation rights, that Litton accordingly has no independent or Burnside type indemnity action, and that, if the LHWCA does not so restrict Litton's rights, any independent rights Litton might have would arise under state law, and that under the law of the relevant state, Mississippi, Litton has no such rights.


Although the subject matter jurisdiction issues which we consider were not raised by "... the rule is well settled that the party seeking to invoke the jurisdiction of a federal court must demonstrate that the case is within the competence of that court. The presumption is that a federal court lacks jurisdiction in a particular case until it has been demonstrated that jurisdiction over the subject matter exists. Thus the facts showing the existence of jurisdiction must be affirmatively alleged in the complaint." Id. at 45 (footnotes omitted).

the parties here or below, nor addressed by the district court, it is nevertheless our duty to address them sua sponte. Superior Oil Co. v. Pioneer Corp., 706 F.2d 603 (5th Cir.1983); Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction Sec. 3522 at 48, 49. Moreover:

See also Epps v. Bexar-Medina-Atascosa Counties Water Improvement Dist. No. 1, 665 F.2d 594, 595 (5th Cir.1982) ("... the party claiming federal subject matter jurisdiction bears the burden of proving it.").

The complaint here seeks to invoke jurisdiction on the following grounds:

"Jurisdiction of this cause of action is founded on the existence of a question arising under the laws of the United States of America and more particularly 33 U.S.C. Section 901, et seq. [LHWCA], 28 U.S.C. Section 1331 [federal question], 28 U.S.C. Section 1332 [diversity], 28 U.S.C. Section 1333 [admiralty], and 28 U.S.C. Section 2201 [declaratory judgment], and Rule 57 of the Federal Rules of Civil Procedure [declaratory judgment]."

In essence, then, subject matter jurisdiction is sought to be predicated on diversity of citizenship under 28 U.S.C. section 1332(a)(1), federal question jurisdiction under section 1331 as an action "arising under" the LHWCA, 3 and admiralty jurisdiction under section 1333(1). We proceed to examine these jurisdictional bases in the order indicated. 4


The required diversity under section 1332(a)(1) must be complete: where one or more plaintiffs sue one or more defendants, each plaintiff must be of a different citizenship than each defendant. Powell v. Offshore Navigation, Inc., 644 F.2d 1063 (5th Cir.1981), cert. denied, 454 U.S. 972, 102 S.Ct. 521, 70 L.Ed.2d 391 (1981); Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction Sec. 3605. This rule applies fully to parties joined under Fed.R.Civ.P. 19. Id., Sec. 3608 at 657, 658 ("... parties that are joined under Rules 19 and 20 or as additional parties to a permissive counterclaim must independently satisfy the jurisdictional requirements."). Moreover, it is settled that

"In determining whether diversity jurisdiction exists, the court is not bound by the way plaintiff formally aligns the parties in his original pleading. It is the court's duty to 'look beyond the pleadings "....

and arrange the parties according to their sides in the dispute.' ....

"The generally accepted test of proper alignment is whether the parties with the same 'ultimate interests' in the outcome of the action are on the same side. This test is meant to ensure that there is 'an "actual," * * * "substantial," * * * controversy between citizens of different states, all of whom on one side of the controversy are citizens of different states from all parties on the other side.' " Id., Sec. 3607 at 639, 641 (footnotes omitted). 5

This Court has long followed that principle, and has held that, when it relates to jurisdiction, it is our duty to notice party alignment and apply proper realignment sua sponte on appeal, and that such realignment is to be determined according to "the principal purpose of the suit and the primary and controlling matter in dispute." Indemnity Insurance Company of North America v. The First National Bank at Winter Park, Florida, 351 F.2d 519, 522 (5th Cir.1965). Applying these principles to the case at bar, it is evident that Owens-Corning must be realigned as a party plaintiff. The complaint reflects no dispute between plaintiffs and Owens-Corning, but rather reflects that they had essentially resolved their differences prior to the commencement of this action. In addition, with respect to the principal matters in...

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