US v. Ringley

• Decision Date: 02 November 1990
• Docket Number: No. 89-0149-B.,89-0149-B.
• Citation: 750 F. Supp. 750
• Court: U.S. District Court — Western District of Virginia
• Parties: UNITED STATES of America, Plaintiff, v. Harold L. RINGLEY and James E. Manicure, Defendants.

750 F. Supp. 750

UNITED STATES of America, Plaintiff, v. Harold L. RINGLEY and James E. Manicure, Defendants.

No. 89-0149-B.

United States District Court, W.D. Virginia, Big Stone Gap Division.

November 2, 1990.

COPYRIGHT MATERIAL OMITTED

E. Montgomery Tucker, U.S. Atty., Roanoke, Va., Mark E. Siegel, Sp. Asst. U.S. Atty., Knoxville, Tenn., for plaintiff.

Joe H. Roberts, Wise, Va., for defendants.

MEMORANDUM OPINION

RICHARD L. WILLIAMS, District Judge.

This case is before the court on cross-motions for summary judgment. The court has jurisdiction pursuant to 30 U.S.C. § 1232(e) and 28 U.S.C. §§ 1331 and 1345.

FACTUAL AND PROCEDURAL BACKGROUND

On November 23, 1981, the court entered a money judgment in Civil Action no. 81-0151-B ("original action") against Ringley and Mancuso Coal Producers, a Virginia general partnership, in favor of the United States of America ("government"). The defendant in the original action ("partnership") had operated a surface coal mining operation in Dickenson County, Virginia. The complaint in the original action alleged that the partnership had failed to pay federal reclamation fees imposed by the Surface Mining Control and Reclamation Act of 1977, 30 U.S.C.A. §§ 1201-1328 (West 1986 and Supp.1990) (hereafter, "Act").

The partnership was composed of Harold Ringley and James E. Manicure ("partners"), the defendants in the instant case. The government achieved personal service on both partners in their capacities as registered agents of the partnership. The judgment against the partnership has not been satisfied.

On September 21, 1989, the government filed the complaint in the instant case. As in the case against the partnership, the complaint alleged failure to pay federal reclamation fees. On November 27, 1989, the government, in a motion for summary judgment, asserted that "the pleadings, the Affidavit of a federal reclamation fee collector, ... the exhibits attached to the motion, and the record in U.S. v. Ringley & Mancuso Coal Producers ... demonstrated that there was no genuine issue as to any material fact" and thus that the government was entitled to summary judgment.

The partners responded to the government's motion with their own motion for summary judgment. The partners asserted that judgment should go to them for several reasons: (1) Failure to state a claim upon which relief could be granted; (2) discharge in bankruptcy; (3) statute of limitations; (4) collateral estoppel; and (5) res judicata.

ANALYSIS

I. THE PARTNERS' GROUNDS FOR SUMMARY JUDGMENT

At the time the government sued the partnership itself, Virginia followed the common law and did not provide for suits against partnerships as partnerships. See McCormick v. Romans, 214 Va. 144, 147, 198 S.E.2d 651, 653-54 (1973). Virginia abrogated the common law rule by statute in 1985, well after the government sued and recovered a judgment against the partnership.¹

The government, seeking to enforce a right it had under the Act, sued the partnership itself via the following language:

Capacity to sue or be sued shall be determined by the law of the state in which the district court is held, except (1) that a partnership ... which has no capacity by the law of such state, may sue or be sued in its common name for the purpose of enforcing for or against it a substantive right existing under the Constitution or laws of the United States....

Fed.R.Civ.P. 17(b). The government did not join either Ringley or Manicure as defendants in the original action, and the judgment is against the partnership alone.

A. Res Judicata

As it will aid in disposition of the partners' other grounds for summary judgment, the court will address the partners' contentions regarding res judicata first. Because the government sued and received a judgment against the partnership alone, the partners assert that they are now insulated from any liability for the debts of the partnership. This ground of the partners' argument for summary judgment has two prongs: (1) In Virginia, a partner will not be personally liable on a partnership debt unless the partner is named in the suit on the debt and finally named in the judgment on the suit. (2) Under the doctrine of merger, the government's claim against the partners merged into the judgment the government received against the partnership.

The partners argue that the government cannot maintain a new action against the partners themselves (which the government must do in order to satisfy (1) above) because the government has no claim against the partners, it having merged into the judgment in the original action (as pointed out in (2) above). In other words, the partners assert that the government is in the position of needing a personal judgment against the partners but of not having a claim against them. This argument requires some analysis of the law of Virginia.

The partners in their "Memorandum in Support of Merger" cite only "the common law of Virginia" to support the proposition that a partner will endure individual liability for a partnership debt only if he is named both in a suit on the debt and in the judgment on the suit. The court's research reveals that the partners are probably relying on McCormick.

In McCormick, the Virginia Supreme Court decided a case involving plaintiffs who had sued the partners of a law firm individually, and not in the name of the partnership. In upholding the plaintiffs' judgment against the partners, the Court cited a common law rule regarding partnerships: "The general rule is that when a suit is brought on a contract entered into with the firm, all of the partners have to be joined, either as plaintiffs or defendants." McCormick, 214 Va. at 147, 198 S.E.2d at 653. As will be shown below, the issue here is not contractual. Nevertheless, the court feels that the rule described in McCormick has a general application to suits (other than tort actions) involving partners and partnerships, and the court is willing to accept it as a correct statement of Virginia's law.

The partners' second proposition is that the government's "cause of action merged into the judgment. That is, a claim against the partnership, which is the only cause of action the government has, was merged into the judgment it received. Any further action must be made on the judgment." The court turns now to the nature of the government's action against the partners.²

This is an effort to recover reclamation fees via an "action at law to compel payment of debts." 30 U.S.C.A. § 1232(e) (West 1986). Reclamation fees are considered excise taxes. United States v. Tri-No Enters., Inc., 819 F.2d 154, 159 (7th Cir.1987). This court has held that the payment of the reclamation fees is "not a contractual situation" between the government and the taxpayer. United States v. E & C Coal Co., Inc., 647 F.Supp. 268, 273 (W.D.Va.1986) (federal statute of limitations for actions on contracts did not apply to actions to collect reclamation fees); 84 C.J.S. Taxation § 1b(2) (1954) (obligation to pay taxes is not contractual). Also, the obligation here is clearly not tortious in origin.

Virginia law provides that all partners are jointly liable for all the debts and obligations of a partnership, except for certain tortious liabilities for which partners are both jointly and severally liable. Va.Code Ann. § 50-15 (1989). This provision merely codifies the common law. 59 Am.Jur.2d Partnership § 639 (1987) (citing, inter alia, Savings & Loan Corp. v. Bear, 155 Va. 312, 154 S.E. 587 (1930)). Under the common law, when there is a judgment against a partner for a partnership debt jointly owed by the partners, the judgment "merges the original cause of action, and is a bar to another suit against the remaining partners." Pitts v. Spotts, 86 Va. 71, 72, 9 S.E. 501, 502 (1889) (citing Mason v. Eldred, 73 U.S. (6 Wall.) 231, 18 L.Ed. 783 (1867)). The rule regarding partners announced in Pitts is a specific application of the larger common law rule that if a judgment is rendered against one of several joint debtors, no action may thereafter be maintained on the same cause of action against any of the other debtors. United States v. Ames, 99 U.S. 35, 25 L.Ed. 295 (1878). Absent abrogation by statute, this common law rule still applies. 46 Am. Jur.2d Judgments § 543 (1969).

Almost a century after the decision in Pitts, the Virginia Supreme Court shed more light on its view of the doctrine of merger. In Bates v. Devers, 214 Va. 667, 202 S.E.2d 917 (1974), the court described res judicata as having "four preclusive effects, each conceptually distinct, which a final personal judgment may have upon subsequent litigation. These are merger, direct estoppel, bar, and collateral estoppel." Id. at 670, 202 S.E.2d at 920 (citations omitted). The court went on in dicta to indicate that merger "occurs when a valid and final personal judgment for money is entered for plaintiff. His original cause of action is merged into the judgment and is extinguished. Plaintiff can maintain a subsequent action only on the judgment and not on the original cause of action." Id. at 670, n. 3, 202 S.E.2d at 920, n. 3 (emphasis in original) (citing Restatement of Judgments § 47 (1942)).

A question posed by the instant case is whether the common law rule barring subsequent suit against other partners applies to obligations and debts that are neither contractual nor the result of tortious behavior. The United States Supreme Court, in expounding on the rule, referred to "contract or obligation." Sessions v. Johnson, 95 U.S. 347, 348, 24 L.Ed. 596 (1877) (emphasis added). The Court in Sessions recognized an exception to the rule only for tortious actions. Id. This is because liability for torts is joint and several. See id.³ The court in Farmers' Exchange Bank v. Morse, 129 Cal. 239, 243, 61 P. 1088, 1090 (1900), quoted Pomeroy for the rule that requiring mandatory joinder by the plaintiff-obligee of all obligors of a joint liability "`is general,...