Mutual of Omaha Ins. Co. v. Blury-Losolla

• Decision Date: 22 January 1998
• Docket Number: BLURY-LOSOLL,C,No. 96-304,96-304
• Parties: MUTUAL OF OMAHA INSURANCE COMPANY, a Nebraska Corporation; United of Omaha Life Insurance Company, a Nebraska Corporation, Appellants (Defendants), v. Julieindy Lusher, Larry Hutchinson, Fred Mau, and Donna Lamb, Suing on Behalf of Themselves and All Other Individuals Similarly Situated, Appellees (Plaintiffs).
• Court: Wyoming Supreme Court

Page 1117

952 P.2d 1117

MUTUAL OF OMAHA INSURANCE COMPANY, a Nebraska Corporation; United of Omaha Life Insurance Company, a Nebraska Corporation, Appellants (Defendants), v. Julie BLURY-LOSOLLA, Cindy Lusher, Larry Hutchinson, Fred Mau, and Donna Lamb, Suing on Behalf of Themselves and All Other Individuals Similarly Situated, Appellees (Plaintiffs).

No. 96-304.

Supreme Court of Wyoming.

Jan. 22, 1998.

Rehearing Denied Feb. 18, 1998.

Patrick R. Day and Donald I. Schultz of Holland & Hart, Cheyenne; and Marilyn S. Kite of Holland & Hart, Jackson, for Appellants (Defendants).

Glenn E. Smith of Glenn E. Smith & Associates, Cheyenne; and John R. Vincent, Riverton, for Appellees (Plaintiffs).

Before TAYLOR, C.J., and THOMAS, GOLDEN and LEHMAN, JJ., and VOIGT, District Judge.

VOIGT, District Judge.

Appellees are five former insurance agents. Appellants are affiliated insurance companies which were appellees' employers. Appellees brought suit on behalf of themselves and as a class action on behalf of approximately 10,000 other similarly situated former insurance agents across the country, seeking damages for the alleged breach of their respective employment contracts. After extensive discovery, and after the district court certified the class, appellants filed a motion to dismiss for lack of subject matter jurisdiction. The district court found "to a legal certainty" that none of the named appellees had a claim for $7,000.00 or more. The motion to dismiss was based on Wyo. Stat. § 5-5-131 (1997), which provides, in pertinent part:

(a) Each county court has exclusive original civil jurisdiction within the boundaries of the state for:

(i) An action where the prayer for recovery is an amount not exceeding seven thousand dollars ($7,000.00), exclusive of court costs[.]

The district court certified to this court, pursuant to W.R.A.P. 11, the following questions of law:

1. Can the separate claims of separate Plaintiffs be aggregated to meet the $7,000 amount in controversy requirement of Wyo. Stat. § 5-5-131 when none of the individual Plaintiffs' claims equal or exceed $7,000 at the commencement of the lawsuit?

2. If the answer to question number 1 is no for the typical case, should aggregation of separate Plaintiffs' claims nevertheless be permitted to accommodate class action litigation of small claims[ ¹] in district court?

3. Would the judicial aggregation of separate Plaintiffs' claims, to meet the statutory amount in controversy threshold established by the legislature in Wyo. Stat. § 5-5-131, violate Article 5, Section 10 of the Wyoming Constitution, which gives the legislature the authority to define the boundaries of district court jurisdiction?

4. Based upon the record submitted to the district court, and considering all of the arguments asserted by the parties in connection with the Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction, does the District Court have subject matter jurisdiction over this case?

I. LEGAL FRAMEWORK

A. THE COURTS

The jurisdiction of the district courts is defined in Wyo. Const. art. 5, § 10, which states, in pertinent part:

The district court shall have original jurisdiction of all causes both at law and in equity and in all criminal cases, of all matters of probate and insolvency and of such special cases and proceedings as are not otherwise provided for. The district court shall also have original jurisdiction in all cases and of all proceedings in which jurisdiction shall not have been by law vested exclusively in some other court * * *.

The legislation effectuating this constitutional directive is found in Title 5, ch. 3 (1997) of the Wyoming Statutes.

Wyoming's county courts were not specifically created by the state constitution, but provision for their creation is found in Wyo. Const. art. 5, § 1, which grants to the legislature the authority to establish subordinate courts. The county court statutes are found in Title 5, ch. 5 (1997) of the Wyoming Statutes. The $7,000.00 jurisdictional limit found in Wyo. Stat. § 5-5-131 is the focus of the present controversy. It is clear that, if that particular statute does not give the county court jurisdiction in this case, jurisdiction must lie in the district court under the language of the state constitution. Matter of Larsen, 770 P.2d 1089, 1092 (Wyo.1989).

B. SUBJECT MATTER JURISDICTION

The phrase "subject matter jurisdiction" refers to " 'the power to hear and determine cases of the general class to which the proceedings in question belong.' " Lacey v. Lacey, 925 P.2d 237, 238 (Wyo.1996) (quoting Fuller v. State, 568 P.2d 900, 903 (Wyo.1977)); 20 Am.Jur.2d, Courts, § 70 (1995). The issue of subject matter jurisdiction is so fundamental that it cannot be waived, can be raised on the court's own motion, and can be raised at any time, even on appeal. Pawlowski v. Pawlowski, 925 P.2d 240, 243 (Wyo.1996). This court has repeatedly emphasized the implications of this precept:

"It is fundamental, if not axiomatic, that, before a court can render any decision or order having any effect in any case or matter, it must have subject matter jurisdiction. Jurisdiction is essential to the exercise of judicial power. Unless the court has jurisdiction, it lacks any authority to proceed, and any decision, judgment, or other order is, as a matter of law, utterly void and of no effect for any purpose. Subject matter jurisdiction, like jurisdiction over the person, is not a subject of judicial discretion. There is a difference, however, because the lack of jurisdiction over the person can be waived, but lack of subject matter jurisdiction cannot be. Subject matter jurisdiction either exists or it does not and, before proceeding to a disposition on the merits, a court should be satisfied that it does have the requisite jurisdiction."

Boyd v. Nation, 909 P.2d 323, 325 (Wyo.1996) (quoting United Mine Workers of America Local 1972 v. Decker Coal Co., 774 P.2d 1274, 1283-84 (Wyo.1989)).

When the question of subject matter jurisdiction revolves around the amount claimed, this court has established the following determinative rules: (1) the sum claimed, rather than the amount eventually recovered, controls unless the amount claimed was not done in good faith; (2) to find a lack of good faith, it must appear to a legal certainty that the claim is really for less than $7,000.00; (3) the amount is determined as of the time the action is commenced; and (4) a plaintiff cannot control jurisdiction between the county and district court by setting forth an improper amount in the prayer for relief. Joslyn v. Professional Realty, 622 P.2d 1369, 1373 (Wyo.1981).

C. JOINDER

There are five separate plaintiffs in this case, with individual claims against the affiliated defendants. One lawsuit was brought, rather than five, because the Wyoming Rules of Civil Procedure permit such "joinder." A brief review of the joinder rules may help place this controversy in context.

W.R.C.P. 18 allows a party to join all the claims against an opposing party in one suit. W.R.C.P. 19 allows the court to order joinder of all parties necessary to adjudicate complete relief. W.R.C.P. 20 provides for permissive joinder of parties in particular circumstances, such as a right to relief held jointly, or claims arising out of the same transaction or occurrence. W.R.C.P. 21 prescribes remedies for misjoinder and nonjoinder.

W.R.C.P. 23, which provides for class action lawsuits, is not so much a joinder rule as it is a procedural device created to allow named parties to represent the interests of unnamed parties. In fact, class actions are only allowed where joinder is not feasible. W.R.C.P. 23(a)(1). W.R.C.P. 20 and 23 are the focus of the parties' discussion in this case.

The Wyoming Rules of Civil Procedure generally govern procedure in the state's county courts, "to the extent that they are consistent with the subject-matter jurisdiction of county courts * * *." W.R.C.P.C.C. 1.02. However, W.R.C.P. 23--the class action rule--has specifically been excepted from this general application by W.R.C.P.C.C. 1.06:

The following rules of the revised Wyoming Rules of Civil Procedure shall not apply in county courts, unless and until county courts have statutory subject matter jurisdiction of cases in which such relief is requested:

Rule 23 * * *--Class Actions[ ²

(Emphasis added.)

The key question becomes, if class actions are not available in county courts, whether named plaintiffs lacking the requisite district court jurisdictional claim amount may nevertheless come before the district court by aggregating their claims for the purposes of a class action lawsuit.

II. DISCUSSION

Wyoming adheres to the doctrine of separation of powers. Wyo. Const. art. 2, § 1. As part of that doctrine, both statutes and court rules have recognized the distinction between substantive law-making and procedural rule-making. State ex rel. Frederick v. District Court of Fifth Judicial Dist. In and For Big Horn County, 399 P.2d 583, 584-86 (Wyo.1965). Wyo. Stat. § 5-2-114 (1997) sets forth the court's authority to make rules "governing pleading, practice and procedure * * *." See White v. Fisher, 689 P.2d 102, 106 (Wyo.1984). Wyo. Stat. § 5-2-115(b) (1997) makes it clear that "[s]uch rules shall neither abridge, enlarge nor modify the substantive rights of any person nor the jurisdiction of any of the courts * * *." See McGuire v. McGuire, 608 P.2d 1278, 1290 (Wyo.1980). W.R.C.P. 82 dictates a narrow construction of the rules to ensure this limitation.

Wyo. Stat. § 5-5-131(a)(i) gives the county court exclusive jurisdiction over "[a]n action where the prayer for recovery is an amount not exceeding * * * $7,000.00 * * * [.]" This is a clear legislative mandate that such cases may not be heard in the district court. The fact that W.R.C.P. 20--a procedural rule--allows multiple plaintiffs with similar claims to join their separate claims in one lawsuit, cannot and does...