Regan v. Starcraft Marine, LLC

• Decision Date: 10 April 2008
• Docket Number: No. 07-30382.,07-30382.
• Citation: 524 F.3d 627
• Parties: Daniel J. REGAN; Francis Elwood Regan, Jr., Plaintiffs-Appellees, v. STARCRAFT MARINE, LLC, Defendant-Third party Plaintiff-Appellant, v. United States of America, on behalf of United States Department of Army, Third party Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

524 F.3d 627

Daniel J. REGAN; Francis Elwood Regan, Jr., Plaintiffs-Appellees, v. STARCRAFT MARINE, LLC, Defendant-Third party Plaintiff-Appellant, v. United States of America, on behalf of United States Department of Army, Third party Defendant-Appellee.

No. 07-30382.

United States Court of Appeals, Fifth Circuit.

April 10, 2008.

John W. deGravelles, deGravelles, Palmintier, Holthaus & Frugé, Baton Rouge, LA, for Plaintiffs-Appellees.

Cathynn H. Cannon (argued), E. Stratton Horres, Jr., Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, Dallas, TX, Francis P. Manchisi (argued), Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, White Plains, NY, for Starcraft Marine, LLC.

Lowell V. Sturgill, Jr. (argued), Robert S. Greenspan, U.S. Dept. of Justice, Civ. Div., Washington, DC, Jennifer Bailey Drago, LAfayette, LA, for U.S.

Appeal from the United States District Court for the Western District of Louisiana.

Before KING, DeMOSS and SOUTHWICK, Circuit Judges.

SOUTHWICK, Circuit Judge:

A boat manufacturer, which is the defendant in a personal injury suit, appeals the district court's dismissal of its third-party complaint against the United States. This defendant sought indemnity on the basis of alleged negligence by an Army recreational facility, which owned the boat and rented it to an off-duty soldier. The manufacturer argues that jurisdiction exists because the service member who was injured on the boat was not engaged in activity incident to military service. We agree, reverse and remand.

FACTS

On Saturday, April 16, 2005, near noon, the Plaintiff, Daniel J. Regan, met his friend, John Vandergriff, at the Army's Toledo Bend Morale, Welfare, and Recreation (MWR) facility.¹ The recreational facility is located forty-five miles from the military base at Fort Polk, Louisiana. Both Regan and Vandergriff were active duty Army staff sergeants assigned to Fort Polk who were off duty for the day. Earlier that morning, Staff Sergeant Vandergriff had rented a pontoon boat from the MWR facility. Staff Sergeant Regan was a Missouri National Guardsman who had been on active military duty with the Army for more than a year. Regan's civilian girlfriend was with him. Including the other soldiers and guests who joined them, eight people were on the pontoon boat. The group spent a day relaxing, swimming, and drinking.

The MWR rental boats are kept in a small cove that is part of the Army recreational facility, but the boats may be taken out into the Toledo Bend Reservoir. At approximately 7:00 p.m. that day, the pontoon boat was in the waters of the Reservoir. As Regan stood up from his seat in the bow of the boat, Vandergriff reduced the speed of the boat, causing Regan to stumble forward. Regan grabbed the front gate in effort to regain his balance and prevent him from falling overboard. The gate ripped from its post, causing Regan to fall off the front of the boat. The pontoon boat's propeller struck Regan's right leg, causing serious injuries and ultimately leading to the leg's amputation.

After the accident, the Army conducted an investigation. The resulting report determined that the soldiers' activities were not mission or training related, that the accident was off-post, and that Vandergriff and Regan were off duty at the time of the accident. The report found that neither Vandergriff nor Regan had received the necessary license to operate the pontoon boat on the Reservoir, and the pontoon boat was civilian, not military, equipment. The report included recommendations for improved safety briefings for soldiers renting boats. A different Army report made other recommendations, such as improving safety briefings, equipping each boat with propeller guards, and strengthening the gates at the front end of the pontoons.

The Toledo Bend MWR facility falls under the direct command of the Garrison Commander at Fort Polk, but the facility is run by civilian employees. The facility is open only to military personnel and their dependents, federal civilian employees of Fort Polk, military retirees, and guests accompanying authorized patrons. See Army Reg. 215-1, ¶ 7-1.

Starcraft Marine LLC designed and manufactured the boat Vandergriff rented from the MWR facility. Regan sued Starcraft, two insurance companies, and Vandergriff in Louisiana state court. The allegations against Starcraft were defective design, manufacture, and marketing of the pontoon boat. Starcraft removed the case to federal court, alleging federal question jurisdiction because the accident allegedly occurred on property over which the United States had exclusive jurisdiction. The district court remanded because Starcraft failed to offer evidence of federal authority over the site of the accident.

Following remand, Starcraft filed a third-party complaint against the United States, alleging claims under the Federal Tort Claims Act (FTCA). The third-party complaint alleged that the United States was negligent in (1) renting the boat to Vandergriff when it was in disrepair; (2) renting the boat to Vandergriff to use in a manner inconsistent with the intended function of the boat; (3) failing to ascertain how Vandergriff and his boating party intended to use the boat; (4) failing to provide adequate instructions to Vandergriff and his boating party regarding the proper use of the boat; and (5) failing to maintain and repair the boat properly.

The United States again removed the case to federal court. After removal, it sought to dismiss the complaint due to what is referred to as the Feres doctrine, which bars tort suits against the United States by or on behalf of service members² whose injuries arise out of activity incident to their military service. Feres v. United States, 340 U.S. 135, 146, 71 S.Ct. 153, 95 L.Ed. 152 (1950). On March 26, 2007, the district court issued two orders. The first order dismissed the third-party claim against the United States for lack of subject matter jurisdiction under the Feres doctrine. The second order remanded the state-law claims to state court. Starcraft timely appealed from the district court's judgment. Starcraft presents for our review only the district court's dismissal of the third-party claim against the United States pursuant to the Feres doctrine.

DISCUSSION

I. Jurisdiction

The order which is the subject of this appeal is the dismissal of the United States as a party. The district court in the same judgment remanded the remaining issues of the litigation to the state court from which the suit had earlier been removed. Whether the dismissal order is a proper subject of appeal is our first legal issue.

Generally, a federal appellate court may not review a remand by a district court to state court for lack of subject matter jurisdiction. 28 U.S.C. § 1447(d). However, when the trial court "clearly and affirmatively" states that it is remanding on a ground other than a lack of subject matter jurisdiction, the Section 1447(d) bar to appeal does not apply. Tillman v. CSX Transportation, 929 F.2d 1023, 1027 (5th Cir.1991). The district court here dismissed all claims over which original jurisdiction existed, then exercised its discretion not to retain supplemental jurisdiction over remaining claims. See 28 U.S.C. § 1367(c). This Circuit has held that a clear and affirmative use of the Section 1367(c) discretion not to retain supplemental jurisdiction but instead to remand, is reviewable on appeal for an abuse of discretion. Thomas v. LTV Corp., 39 F.3d 611, 616 (5th Cir.1994). We note that the Supreme Court has recently found it "far from clear" that such a remand is free of the Section 1447(d) bar. Powerex Corp. v. Reliant Energy Servs., ___ U.S. ___, 127 S.Ct. 2411, 2418-19, 168 L.Ed.2d 112 (2007). The concurring opinion recommends asserting our authority to review the remand order and logically describes some benefits of doing so. However, Starcraft stated in its brief that "it is not appealing the order of remand." We decline to proceed beyond the appellant's disclaimer.

Our conclusion about the order appealed here, explained in some detail below, is that the dismissal of the United States was improper. Should our decision suggest the desirability of again seeking to bring all the claims together in one court, a possibility significantly impacted by whatever has occurred in state court since the remand over one year ago, the parties may address that issue in the state and federal trial courts.

Because the district court coupled its dismissal with a remand order, we must answer two questions to determine whether the dismissal order may be reviewed on appeal. The first is whether there is an order that is "distinct and separable" from the remand order, and therefore not encompassed within Section 1447(d)'s bar to review of a remand. First Nat'l Bank v. Genina Marine Servs., Inc., 136 F.3d 391, 394 (5th Cir.1998). The second question is whether that order is either final and appealable under 28 U.S.C. § 1291, or subject to appeal because of some doctrinal exception to finality. Doleac ex rel. Doleac v. Michalson, 264 F.3d 470, 478, 489 (5th Cir.2001).

Turning to the first question, "we may review any aspect of a judgment containing a remand order that is distinct and separable from the remand proper. An order is `separable' if it precedes the remand order `in logic and in fact' and is `conclusive.'" Genina Marine, 136 F.3d at 394 (citations and some internal quotation marks omitted). The district court's dismissal of Starcraft's third-party claims against the Army preceded the remand order; the dismissal is conclusive because "it will have preclusive effect in the state-court litigation and will not be subject to review there." Id.; see City of Waco v. United States Fidelity & Guar. Co., 293 U.S. 140, 143, 55 S.Ct. 6, 79 L.Ed. 244 (1934). Judge Barksdale in Doleac described the separableness concept as being "rooted" in the City of Waco decision. Doleac, 264 F.3d at 479. A separate order for these purposes...