Walters v. Inexco Oil Co., 53841

• Decision Date: 07 September 1983
• Docket Number: No. 53841,53841
• Parties: Nevel A. WALTERS and Mrs. Delphia Walters, Appellants, v. INEXCO OIL COMPANY, A Delaware Corporation, Appellee.
• Court: Mississippi Supreme Court

Page 268

440 So.2d 268

Nevel A. WALTERS and Mrs. Delphia Walters, Appellants, v. INEXCO OIL COMPANY, A Delaware Corporation, Appellee.

No. 53841.

Supreme Court of Mississippi.

Sept. 7, 1983.

Rehearing Denied Nov. 16, 1983.

Melvin & Melvin, Leonard B. Melvin, Jr., Sarah L. Entrekin, Laurel, for appellants.

Roberts & Easterling, S. Wayne Easterling, Hattiesburg, for appellee.

Before PATTERSON, C.J., and BOWLING and ROBERTSON, JJ.

ROBERTSON, Justice, for the Court:

I. Introduction

At the heart of this case is the question whether our statute ¹ requiring assessment of a penalty against an unsuccessful appellant in this Court should be enforced in the federal courts under the Erie ² doctrine.

In the case at bar, the United States District Court for the Southern District of Mississippi held that the penalty statute did not apply, even though the sole basis for federal subject matter jurisdiction was diversity of citizenship. 28 U.S.C. Sec. 1332. That ruling has been appealed to the United States Court of Appeals for the Fifth Circuit which, invoking the procedures found in our Rule 46, has certified the question to us. ³

This Court has construed Section 11-3-23 on many occasions. ⁴ Whether that statute should apply in a federal court diversity case, however, appears to be an open question, one which is ultimately a question of federal law turning upon the federal judiciary's construction of the Federal Rules of Decisions Act, 28 U.S.C. Sec. 1652. We have accepted the certified questions and will attempt to shed such light on the subject as we can.

II. Factual and Procedural History Leading to Rule 46

Certification

On February 26, 1971, Nevel A. Walters was working as a roughneck on a drilling rig engaged in drilling a well on premises leased by Inexco Oil Company in Clarke County, Mississippi. On that day, he sustained personal injuries in an explosion occurring on the premises.

On February 24, 1977, Walters and his wife, residents of this state, commenced this action against Inexco, a non-resident corporation, to recover damages for his personal injuries and her loss of consortium. Invoking diversity of citizenship jurisdiction, 28 U.S.C. Sec. 1332, the Walters sued in the United States District Court for the Southern District of Mississippi, Hattiesburg Division. See 28 U.S.C. Sec. 104(b)(5).

On May 2, 1979, District Court entered judgments in favor of the Walters for $534,116.54 and $50,000, plus interest, respectively. Walters v. Inexco Oil Company, 511 F.Supp. 21 (S.D.Miss.1979). On November 5, 1980, the United States Court of Appeals for the Fifth Circuit affirmed, Walters v. Inexco Oil Company, 632 F.2d 891 (5th Cir.1980), and thereafter denied rehearing, 642 F.2d 1210 (5th Cir.1981). Inexco then filed in the Supreme Court of the United States a petition for writ of certiorari which has been denied. Inexco Oil Company v. Walters, 450 U.S. 999, 101 S.Ct. 1704, 68 L.Ed.2d 200 (1981).

On April 2, 1981, Inexco paid to the Walters the sum of $674,504.09. This sum represented payment in full of the judgments and interest. The instant question regarding the statutory penalty, however, was expressly reserved.

Back in the Court of Appeals, the Walters had filed a motion to assess statutory damages, pursuant to Section 11-3-23. They charged that they obtained judgments in the aggregate sum of $584,116.54 on May 2, 1979; that the judgments were affirmed on November 5, 1980; that they had been denied the use of the funds between May 2, 1979, and April 2, 1981, and that under Mississippi law, they are entitled to the damages, pursuant to Section 11-3-23, Miss.Code Ann., as amended. The Walters asserted further that such is the substantive law of the State of Mississippi, and cited a Fifth Circuit case, Proctor v. Gissendaner, 587 F.2d 182 (5th Cir.1979), wherein a similar Alabama statute had been held to constitute a substantive rule that governed in diversity cases.

On March 19, 1981, the Court of Appeals referred that motion to the District Court which denied it. The District Court reasoned that Section 11-3-23 applied only to appeals to the Supreme Court of Mississippi and could not be construed to be general in nature. The District Court felt that there was a clear distinction between the Alabama statute under consideration in the Proctor case, for it referred to the "appellate court", while the Mississippi statute, Section 11-3-23, prescribes a penalty to be assessed only by the "supreme court".

The Walters perfected an appeal from the District Court's denial of statutory damages, thus bringing the case back to the United States Court of Appeals for the Fifth Circuit. The Court of Appeals determined to invoke the procedures and authority found in our Rule 46. Following an opinion reported as Walters v. Inexco Oil Company, 670 F.2d 476 (5th Cir.1982), the Court of Appeals has certified to this Court two questions set forth below. III. The Questions Certified

1. Does Section 11-3-23, Mississippi Code Annotated, apply only to appeals to the Supreme Court of Mississippi from another court in the state system; or, is Section 11-3-23, Mississippi Code Annotated, general in nature so as to establish a "substantive" rule of damages, which a federal court, sitting in diversity, must apply?

2. If the answer to the above question is in the affirmative, does the amended Section 11-3-23, which substitutes 15% for the 5% figure, apply, or does the 5% figure apply?

IV. Our Response And Its Context

A. The Inartful Questions

In the present context we accept it as our responsibility to provide the Court of Appeals with such information about our statutory penalty rule as will best assist that Court in resolving the issue before it. The success and usefulness of our efforts depend upon our understanding just what information the Court of Appeals needs. With deference that Court has not worded the primary question--Question No. 1--as artfully as it might.

In Question No. 1, we are asked whether Section 11-3-23 is "... general in nature...."--as though we or any other group of judicial linguists could provide a meaningful answer to such a vague question, and as though something turns on the answer.

The question then asks whether the statute is "... general in nature so as to establish a 'substantive' rule of damages...." Implicit, of course, is the wholly dubious notion that a statute "general in nature" (whatever that means) is automatically "substantive". ⁵

The final step in the question's syllogism is "... which a federal court, sitting in diversity, must apply." In short, the Court of Appeals in Question No. 1, reasons that if the statute is general, it is substantive, and if it is substantive the federal court must apply it.

Experience suggests that "generality" and "substance", like beauty, are in the eye of the beholder. ⁶ We, therefore, take the Court of Appeals at its word when it makes clear that we are not to consider ourselves limited by the phrasing of the certified questions. Walters v. Inexco Oil Company, 670 F.2d at 478 fn. 7.

B. The Erie Doctrine Considered

It has been commonly supposed that under the familiar Erie doctrine the federal courts, when exercising diversity of citizenship jurisdiction, apply state substantive law and federal procedural law. This, of course, is not so much what was said in Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) as it is the subsequent mythology.

We understand the Erie doctrine to hold that the courts of the United States are required by the Federal Rules of Decisions Act, 28 U.S.C. Sec. 1652, to enforce what has loosely (and, in our view, often misleadingly) referred to as state substantive law. This law is not enforced because of any power the state may have to enact a statute enforcement of which is obligatory upon the federal courts. Erie ultimately construes a federal statute. Erie Railroad Co. v. Tompkins, supra, Reed, J., concurring, 304 U.S. at 90-92, 58 S.Ct. at 827-828, 82 L.Ed. at 1201-1202. It holds in effect that the Congress has declared in the Rules of Decisions Act that state law applies in certain cases tried in federal courts. ⁷

But the Erie doctrine does not include and encompass all state laws arguably substantive. Even though there may be an outcome determinative conflict between state and federal law, there has been a clear recognition that there are many instances in which a federal rule must prevail even in diversity cases. This is so even though there be present unmistakably important state interests underlying the rejected state rule.

In Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), the Supreme Court enforced the federal rule regarding service of process on an executor, even though enforcement of the conflicting Massachusetts rule would have produced a different result in the lawsuit. In Boeing Co. v. Shipman, 411 F.2d 365 (5th Cir.1969), the Court of Appeals held that a federal test applies when a jury verdict is challenged on a motion for judgment notwithstanding the verdict. Szantay v. Beech Aircraft Corp., 349 F.2d 60 (4th Cir.1965) held that South Carolina's "door closing" statute would not be enforced against non-Carolina litigants in a diversity case, even though the South Carolina state courts clearly would have enforced it. In Stovall v. Price Waterhouse Co., 652 F.2d 537, 540-541 (5th Cir.1981) the Court of Appeals applied a federal rule of collateral estoppel to a diversity case arising out of Mississippi, even though the state rule was substantially different.

Just how the courts of the United States decide whether a particular state rule should be enforced seems to become more obscure with each case. Guaranty Trust Co. v. York, 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079 (1945), suggested a mechanical outcome determinative test. Mechanics produced arbitrary results, so Byrd v. Blue Ridge Electric Cooperative, 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2d 953 (1958),...