Pallazola v. Rucker

• Decision Date: 08 November 1985
• Docket Number: Civ. A. No. 80-2605-K.
• Citation: 621 F. Supp. 764
• Parties: Carol PALLAZOLA, Administratrix of the Estate of Betty Ann Michaud, Plaintiff, v. Carolyn RUCKER, Michael Schwartz, Eugene Smith, Charles Peters, Guenther Herpfer, June Pickering Nurses Registry, and Lynn Hospital, Defendants.
• Court: U.S. District Court — District of Massachusetts

621 F. Supp. 764

Carol PALLAZOLA, Administratrix of the Estate of Betty Ann Michaud, Plaintiff, v. Carolyn RUCKER, Michael Schwartz, Eugene Smith, Charles Peters, Guenther Herpfer, June Pickering Nurses Registry, and Lynn Hospital, Defendants.

Civ. A. No. 80-2605-K.

United States District Court, D. Massachusetts.

August 1, 1985.

As modified November 8, 1985.

Ann Marie Maguire, Andrew C. Meyer, Jr., Lubin & Meyer, Boston, Mass., for plaintiff.

Raymond Kenney, Jr., Clement McCarthy, and Daniel Griffin, Boston, Mass., for Eugene Smith, M.D.

Barbara Buell, Somerville, Mass., for Michael Schwartz.

Richard L. Fox and John Britt, Carragher, Fox & Lampert, Chelmsford, Mass., for Carolyn Rucker.

John Kane, Ropes & Gray, Boston, Mass., for June Pickering Nurses Registry.

Edward McCarthy, McCarthy & Keane, Cambridge, Mass., for Guenther Herpfer, M.D. and Lynn Hosp.

Craig M. Brown, Melick & Porter, Boston, Mass., for Charles Peters, M.D. Wilson D. Rogers, Jr., Dunn & Rogers, P.C., Boston, Mass., for Lynn Hosp.

OPINION

KEETON, District Judge.

In November 1980, the plaintiff, Carol Pallazola, administratrix of the estate of Betty Ann Michaud, filed this malpractice action on behalf of that estate against Carolyn Rucker and June Pickering Nurses Registry. After repeated deferrals of court action at the joint request of counsel, plaintiff filed an amended complaint in 1983 naming several additional defendants. Since that time some limited discovery has occurred and the parties have engaged in extensive proceedings concerning the role of the state malpractice tribunal and the posting of bonds by the plaintiff. See Pallazola v. Rucker, 602 F.Supp. 459 (D.Mass. 1984). Now, some four and one-half years after the initiation of this action in federal court and after the state statute of limitations for refiling this action in state court, unless tolled, has long ago run (indeed, having done so even before the filing of the amended complaint), some of the defendants challenge the diversity of citizenship on which the jurisdiction of this court is based. This court having previously entered an interlocutory order, on February 20, 1985, dismissing the action as to defendants Peters, Schwartz, and June Pickering Nurses Registry, these defendants have not participated in this challenge to jurisdiction. One defendant (Rucker), had included in her answer a challenge to jurisdiction, but without specifying why she contended that no diversity of jurisdiction existed. The defendants who now participate in this challenge claim that diversity was "manufactured" for the purpose of this action by the appointment of plaintiff Pallazola as administratrix, and that federal jurisdiction is thus barred under 28 U.S.C. § 1359 (1982). Of course, this court cannot act without jurisdiction and must be open to jurisdictional challenge at any and every point during the proceedings. Therefore, despite any hardship that may result from this holding, either to plaintiff or to any of the defendants (either those who have participated in this challenge or those who have not done so), I am constrained, based on the evidence presented to me at the hearing on June 5, 1985, to conclude that diversity was "improperly" created within the meaning of § 1359, and federal jurisdiction does not exist in this case.

I.

Under 28 U.S.C. § 1332(a) (1982), "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $10,000, exclusive of interest and costs, and is between ... citizens of different states." Because the plaintiff Pallazola is a citizen of California and the defendants are citizens of Massachusetts and various other states not including California, diversity jurisdiction would appear to exist. The defendants, however, contend that the plaintiff was appointed administratrix for the purpose of creating diversity and that such "manufactured" diversity is barred by 28 U.S.C. § 1359 (1982). That statute prevents a district court from assuming jurisdiction of an action "in which any party, by assignment or otherwise, has been improperly or collusively made or joined to invoke the jurisdiction of such court." Id.

Early judicial interpretations of § 1359 permitted jurisdiction even where an administrator admittedly had been chosen solely for the purpose of creating jurisdiction. See Corabi v. Auto Racing, Inc., 264 F.2d 784 (3d Cir.1959) (holding that the appointment of an administrator in order to create diversity was not "improper" or "collusive"); Lang v. Elm City Construction Company, 324 F.2d 235 (2d Cir.1963) (following Corabi); Todd County v. Loegering, 297 F.2d 470 (8th Cir.1961) (following Corabi with respect to trustees).

In 1968, however, the Court of Appeals for the Third Circuit overruled its Corabi decision in McSparran v. Weist, 402 F.2d 867 (3d Cir.1968). In McSparran the Court concluded that § 1359 barred jurisdiction where a nominal party, whether a guardian, administrator or executor, "who has no real or substantial interest in the dispute or controversy" is designated "simply for the purpose of creating diversity of citizenship jurisdiction." 402 F.2d at 873.

Shortly after McSparran was decided, the Supreme Court held that an assignment made for the purpose of creating diversity jurisdiction is improper and collusive. See Kramer v. Caribbean Mills, Inc., 394 U.S. 823, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969). The Court concluded that such "`manufacture of Federal jurisdiction'" falls within the "very core" of the prohibition of § 1359. 394 U.S. at 829-30, 89 S.Ct. at 1490-91. The Court reserved decision on the issue as to whether manufacture of diversity jurisdiction was barred for administrators and guardians as well as for assignees. 394 U.S. at 828 n. 9, 89 S.Ct. at 1490 n. 9. It noted that court-appointed representatives such as administrators differ from assignees in some respects because they hold their position pursuant to a decree of a state court rather than merely to the action of the parties. But the Court declined to decide whether "these distinctions amount to a difference for purposes of § 1359." Id.

Although the First Circuit has not specifically addressed the question, the various Courts of Appeals have held "with one voice," C. Wright, Law of Federal Courts § 31, at 168 (4th ed. 1983), that in the context of the appointment of an administrator these distinctions are not sufficient to warrant departure from the Kramer rule. These courts have held that jurisdiction is barred by § 1359 as improper or collusive where an administrator has been chosen for the purpose of creating diversity jurisdiction. See Bass v. Texas Power and Light Company, 432 F.2d 763 (5th Cir.1970), cert. denied, 401 U.S. 975, 91 S.Ct. 1194, 28 L.Ed.2d 324 (1971); O'Brien v. AVCO Corp., 425 F.2d 1030 (2d Cir. 1969); Lester v. McFaddon, 415 F.2d 1101 (4th Cir.1969).

In light of the weight of this authority and the underlying purpose of § 1359, to protect diversity jurisdiction against misuse by parties where there is no danger of discrimination against an out-of-state party in state court, I conclude that the McSparran interpretation is the proper one to be applied in this case. The question therefore is whether plaintiff Pallazola was appointed for the purpose of creating diversity jurisdiction in the malpractice action. This question is factual, McSparran, 402 F.2d at 876.

Plaintiff, as the party invoking federal diversity jurisdiction, has the burden of proving diversity of citizenship. Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 675, 86 L.Ed. 951 (1942); Hawes v. Club Ecuestre El Comandante, 598 F.2d 698, 702 (1st Cir.1979); McSparran, 402 F.2d at 875-6. Because statutes conferring federal jurisdiction are to be strictly construed, the plaintiff retains the burden at all times to support the allegations of jurisdictional facts. That the jurisdictional challenge is based on defendants' allegation that the plaintiff "manufactured" diversity does not shift that burden from the plaintiff. Whether or not this usual rule applies in the present case, however, I conclude that there is no federal jurisdiction, because my findings, stated below, are made on a preponderance of the evidence and not on the basis that the burden of proof is decisive.

The decedent Betty Ann Michaud died on December 31, 1977, following surgery and while under the medical care of defendants. She was survived by her mother, her sister Dorothy Waselchuk, and her son and sole heir, Donald Michaud. Ms. Michaud had been a resident of Massachusetts as were her mother, sister, and son at the time this action was filed. Plaintiff Carol Pallazola, a citizen of California at the time this action was filed, was appointed administratrix on October 28, 1980, and the malpractice action was filed in this court in November 1980.

Dorothy Waselchuk, the sister of the decedent, has in many respects been the principal actor in handling the malpractice action and other aspects of the estate of her sister thus far. She headed the household and handled the finances of her sister, her sister's son and their mother before the death of Betty Ann Michaud, and she has continued to do so since that time. Ms. Waselchuk, an airline stewardess, supported and continues to support the family, paying the rent, health insurance, and other household expenses. With respect to the estate of the decedent, Ms. Waselchuk discovered and paid all debts, including the costs of the funeral, disposed of what assets there were and made the claim on a small life insurance policy held by Ms. Michaud. Having decided to pursue the possibility of a malpractice action, Ms. Waselchuk approached the law firm, Lubin and Meyer, that is now representing the plaintiff in this action. Ms. Waselchuk engaged that firm to handle the malpractice claim in 1980. Later that same year she asked plaintiff Pallazola to become the administratrix. Since the filing...