Milan Express v. Averitt Express

• Decision Date: 07 April 2000
• Docket Number: No. 98-7024,98-7024
• Citation: 208 F.3d 975
• Parties: (11th Cir. 2000) MILAN EXPRESS, INC., Plaintiff-Appellant, Cross-Appellee, v. AVERITT EXPRESS, INC., United States Fidelity and Guaranty Co., Defendants-Appellees, Cross-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 975

208 F.3d 975 (11th Cir. 2000)

MILAN EXPRESS, INC., Plaintiff-Appellant, Cross-Appellee, v. AVERITT EXPRESS, INC., United States Fidelity and Guaranty Co., Defendants-Appellees, Cross-Appellants.

No. 98-7024.

United States Court of Appeals Eleventh Circuit.

April 7, 2000.

[Copyrighted Material Omitted]

Appeals from the United States District Court for the Northern District of Alabama.

Before CARNES, BARKETT and WILSON, Circuit Judges.

BARKETT, Circuit Judge:

Milan Express, Inc. ("Milan") appeals the district court's order vacating in part for lack of jurisdiction the jury's award of damages. The district court vacated the portion of the verdict awarding damages in excess of the amount of a Rule 56(c) bond posted to secure an injunction that had been wrongfully obtained by Averitt Express, Inc. ("Averitt").¹ The court ruled that its jurisdiction was limited only to Milan's claim for the specific amount of the bond and entered a final judgment upholding the jury's verdict for this amount. Averitt and U.S. Fidelity and Guaranty Co. ("USFG") cross-appeal from this final judgment, arguing that jurisdiction is likewise lacking over the claim on the bond. We affirm in part, and reverse and remand in part.

BACKGROUND

Milan and Averitt are trucking companies that have been involved in protracted litigation since the early 1990s when Averitt attempted to obtain intrastate operating authority in Alabama by contracting with another trucking company to transfer a portion of its operating authority to Averitt. When Averitt petitioned the Interstate Commerce Commission ("ICC") for approval of the transfer, Milan (and others) formally opposed the transfer, arguing to the ICC that "[t]he proposed interstate transaction ... is merely a pretense for avoiding the jurisdiction of the Alabama Public Service Commission." The ICC nonetheless issued a final order affirming the transfer to Averitt. However, the Alabama Public Service Commission ("APSC") refused to honor the ICC's order and rejected the tariff filed by Averitt.

Averitt filed suit in federal district court, seeking to enjoin the APSC from interfering with Averitt's Alabama intrastate operations. The trial court issued a preliminary injunction, and required Averitt to post a $50,000 bond "for the payment of such costs and damages as may be incurred or suffered by the defendants if this preliminary injunction is subsequently found to have erroneously issued." USFG posted the bond as Averitt's surety. Ultimately, when Milan and others sought review, this Court set aside the ICC order, holding that the ICC lacked authority over matters solely concerned with intrastate commerce.

After prevailing in this Court, Milan filed its complaint in this case, seeking to recover from Averitt and USFG the $50,000 bond connected with the previously issued injunction and seeking damages in excess of the bond amount from Averitt. A jury determined that: 1) the injunction had been wrongfully issued and Milan was entitled to judgment against Averitt and USFG for $50,000 on the bond claim, and 2) the injunctive relief had been obtained by Averitt in bad faith, and Milan was entitled to total damages in the amount of $1,920,521.21.

After various post judgment motions and activity, the district court ultimately determined that, while it had jurisdiction over the claim for the amount of the injunction bond under 28 U.S.C. 1352, it lacked jurisdiction over Milan's claim for damages in excess of the bond amount and vacated the jury verdict of $1,870,521.21 against Averitt. Milan appeals the district court's refusal to enforce the verdict for $1,870,521.21 in damages. Averitt and USFG cross-appeal both the district court's judgment on the jury's verdict awarding the $50,000 bond amount and the district court's denial of judgment as a matter of law in their favor. We review questions of subject matter jurisdiction de novo. McMillian v. FDIC, 81 F.3d 1041, 1045 (11th Cir.1996).

DISCUSSION

1.Jurisdiction over the claim for the amount of the bond

In connection with the injunction issued by the district court in favor of Averitt in the preceding lawsuit, Averitt was required to post a bond of $50,000. See Fed.R.Civ.P. 65(c).² As an initial matter, we reject Averitt's claim that Milan does not have standing to seek relief under the bond because the bond was issued in favor of "U.S. District Court for the Northern District of Alabama, Southern Division," not in favor of Milan. The district court ordered Averitt to "mak[e] bond in the amount of Fifty Thousand Dollars ($50,000.00) for the payment of such costs and damages as may be incurred or suffered by the defendants if this preliminary injunction is subsequently found to have been erroneously issued." Milan was at that point a defendant-intervener and was specifically listed in the injunction as a party that must comply with its provisions. Moreover, Rule 65(c), under which the bond was ordered, specifically states that the bond is to be used "for the payment of such costs and damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained." Milan is certainly such a party and is thus entitled to sue for the value of the bond.

Milan relies on several provisions as the basis for the district court's alleged jurisdiction over the suit on the bond. We agree with Averitt that neither Federal Rule of Civil Procedure 65.1 nor 49 U.S.C. 14707 gives the district court jurisdiction over a claim to recover on the bond. A federal rule cannot be the basis of original jurisdiction. Rather, Rule 65.1 provides a permissive mechanism whereby parties aggrieved by a wrongfully issued injunction may summarily seek to recover on an injunction bond by filing a motion in the original suit rather than by bringing a separate action. Fed.R.Civ.P. 65.1; see also Wright, Miller, & Kane, Federal Practice & Procedure: Civil 2d 297 ("The importance of Rule 65.1 is that it permits the liability of a surety to be enforced through an expeditious, summary procedure without the necessity of an independent action. On the other hand, the rule is permissive and does not prohibit the bringing of an independent action against the surety, which maybe commenced either in a state or federal court."). Milan did in fact make a Rule 65.1 motion in the original suit; the district court judge declined to act on that motion, reserving the issues for a separate action. Because this case is an independent action for damages resulting from a wrongfully issued injunction, Rule 65.1 is not a basis for jurisdiction.

Nor does 49 U.S.C. 11708, recodified at 49 U.S.C. 14707, provide subject matter jurisdiction. Section 11708, as written at the time the complaint in this case was filed, provided that a person injured by another person providing "transportation by motor vehicle or service of a household goods freight forwarder in clear violation of" certain provisions of Title 49 was entitled to "bring a civil action to enforce" the violated section of the Code. The district court could not "find anything which Averitt is alleged to have done or which was supported by evidence at trial, that arguably constituted a 'clear violation,' of any of these code sections or which would call for this action as a means to 'enforce any such section.' " This case is a claim for damages suffered as a result of a wrongfully issued injunction, not a suit brought to enforce any of the covered provisions of the Code. Section 11708 cannot, therefore, serve as a basis for jurisdiction over this claim.

We do conclude, however, that 28 U.S.C. 1352 provides a basis for jurisdiction over Milan's injunction bond claim. Section 1352 provides that "district courts shall have original jurisdiction, concurrent with State courts, of any action on a bond executed under any law of the United States...." Averitt contends that this case does not fall within the ambit of Section 1352 because considering this injunction bond as "a bond executed under any law of the United States" would run counter to the intent of Congress. In support of its argument, Averitt relies on the 1948 Code reviser's notes, which indicate that Section 1352 was enacted for the purpose of allowing suits on "any bond authorized by the law of the United States" that would not otherwise have met the amount in controversy jurisdictional requirement. Averitt concludes from this limited indication of purpose that the statute was originally intended to cover only bonds issued under Title 6 of the U.S. Code, which has since been repealed. Averitt does not point to any authoritative source, however, to support this theory or its contention that we should construe "any bond authorized by the law of the United States" to exclude injunction bonds.

This Circuit has not yet had occasion to decide whether an injunction bond is the type of bond contemplated by Section 1352. At least two other circuits, however, have implicitly held that parties aggrieved by a wrongfully issued injunction may sue to recover on an injunction bond under Section 1352. See Buddy Systems, Inc. v. Exer-Genie, Inc., 545 F.2d 1164, 1166 (9th Cir.1976) (holding that there was no jurisdiction under Section 1352, but only because the bond had been dissolved); Atomic Oil Co. v. Bardahl Oil Co., 419 F.2d 1097, 1099 (10th Cir.1969) (implicitly finding federal court jurisdiction over a collateral action to recover on an injunction bond); see also Alabama ex rel. Siegelman v. EPA, 925 F.2d 385, 388-90 (11th Cir.1991) (adopting the reasoning of Atomic Oil Co.). Given the plain meaning of...