Webb v. Just In Time, Inc.

• Decision Date: 22 July 1991
• Docket Number: 91-CV-70222-DT.,No. 90-CV-70373-DT,90-CV-70373-DT
• Citation: 769 F. Supp. 993
• Parties: Clinton H. WEBB and Robbie L. Webb, Plaintiffs, v. JUST IN TIME, INC., Roger L. Jones and Edward L. Hastings, Defendants. Roger L. JONES and Donna Jones, Plaintiffs, v. Clinton H. WEBB and Central Transport, Inc., Defendants.
• Court: U.S. District Court — Western District of Michigan

769 F. Supp. 993

Clinton H. WEBB and Robbie L. Webb, Plaintiffs, v. JUST IN TIME, INC., Roger L. Jones and Edward L. Hastings, Defendants.

Roger L. JONES and Donna Jones, Plaintiffs, v. Clinton H. WEBB and Central Transport, Inc., Defendants.

Nos. 90-CV-70373-DT, 91-CV-70222-DT.

United States District Court, E.D. Michigan, S.D.

July 22, 1991.

Paul R. Swanson, Detroit, Mich., for plaintiffs.

W.J. Zotter, Detroit, Mich., for respondents-claimants.

OPINION

GILMORE, District Judge.

In this case, two claims involving the same accident were filed in separate forums. One suit was brought in federal court, and the other in state court. The state court claim was subsequently removed to federal court on the basis of diversity jurisdiction.

Independently, both claims have complete diversity of citizenship. However, when the claims are consolidated and parties are realigned, the diversity appears to be destroyed as there is a Michigan citizen on both sides of the action. Despite the assertions of the parties, this is not the typical case where the doctrines of ancillary or pendent jurisdiction apply; the question presented in this case is not whether the Court has jurisdiction over the second claim. The question instead is whether jurisdiction over the entire action, once the claims are consolidated, is lost due to lack of complete diversity of citizenship. As the following analysis demonstrates, the Court finds that the claims should be consolidated, and that this Court maintains jurisdiction over the action.

I.

On March 1, 1988, at approximately 2:50 a.m., a truck operated by Roger Jones and a truck operated by Clinton Webb collided on a public highway in Jackson County, Michigan. Both Jones and Webb were injured. Jones, a Florida citizen, was in the employ of Just In Time, Inc., a Delaware corporation with its principal place of business in Michigan. The truck Jones was driving was owned by Edward Hastings, an Ohio citizen. Central Transport, Inc., a Michigan corporation with its principal place of business in Michigan, owned the vehicle driven by Webb, who was a citizen of Indiana.

On February 9, 1990, Webb and his spouse filed an action in this Court alleging that Jones' negligence in operating his truck caused the collision. The Webbs alleged that Just In Time, Inc. was liable because Jones was their agent. In addition, the Webbs alleged that Hastings was liable as the owner of the vehicle pursuant to the Michigan Civil Liability Statute, M.C.L.A. § 257.401.

On January 7, 1991, Jones filed a suit in Macomb County Circuit Court alleging that it was Webb's negligence which caused the accident and that Webb was liable for injury to Jones. Jones also alleged that Central Transport, Inc. was responsible for Webb's negligence under M.C.L.A. § 257.401.

By notice of removal submitted January 15, 1991, the Jones' action was moved to federal court, and was reassigned to this Court by order of April 12, 1991. The issues presented here are whether the cases should be consolidated, and, if so, whether jurisdiction is destroyed by such consolidation.

II.

A. Consolidation

In addressing whether actions should be consolidated, the analysis must begin with the applicable Federal Rule of Civil Procedure.¹ Rule 42(a) states that "when actions involving a common question of law or fact are pending before the court, ... it may order all the actions consolidated." Fed.R.Civ.P. 42(a). This rule is permissive; if the actions involve a common question, it is within the court's discretion to order consolidation.

Consolidation of these claims is proper pursuant to the Rule. Both involve the common question of which party's negligence caused the accident. The Court would be acting within its discretion in ordering consolidation of these suits.

In addition, this Court has determined that consolidation of these two actions is mandatory under Rule 13(a), the rule governing compulsory counterclaims. If a claim "arises out of the transaction or occurrence that is the subject matter of the opposing party's claim," it must be brought in the same proceeding. Fed.R.Civ.P. 13(a). Wright and Miller recite the following tests for determining whether claims arise out of the same transaction or occurrence:

1. Are the issues of fact and law raised by the claim and the counterclaim largely the same?

2. Would res judicata bar a subsequent suit on defendant's claim absent the compulsory counterclaim rule?

3. Will substantially the same evidence support or refute plaintiff's claim as well as defendant's counterclaim?

4. Is there any logical relation between the claim and the counterclaim?

Wright, Miller & Kane, Federal Practice and Procedure: Civil 2d § 1410 (1990).

When applying these tests to the pending actions, it becomes obvious that the Jones' claim is a compulsory counterclaim to the Webb claim.² The issues of fact and law are nearly identical in the two claims, as the same accident is at the core of both allegations. The doctrine of res judicata would bar the separate suit through its prohibition against splitting a cause of action. The same evidence will be involved in either supporting or refuting the parties' allegations and there is a logical relation between the two claims. The assertions made by the parties are in direct contradiction of each other; Webb claims that the accident was caused by Jones' negligence, whereas Jones claims that it was due to Webb's negligence. Because the Jones' action is a compulsory counterclaim to that of Webb, the mandatory language of Rule 13(a) ("a pleading shall state") requires that this Court order consolidation of the two claims.

The purpose of the rule as to compulsory counterclaims is "to prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters." Southern Constr. Co. v. United States, 371 U.S. 57, 60, 83 S.Ct. 108, 110, 9 L.Ed.2d 31 (1962). Having determined that these disputes arise from a common accident, time and money of both the judiciary and the parties will be spared by resolving the entire dispute in one trial. See Morrow v. District of Columbia, 417 F.2d 728, 738 (D.C.Cir.1969).

Furthermore, fairness to Webb requires that he be allowed to address all issues in relation to the collision in the same forum. Jones brought the second action in state court; Webb was involuntarily brought into state court as a defendant in Jones' action, although he had filed the original lawsuit in federal court. Any result other than consolidation would cause unfair prejudice to Webb, as he would be forced to endure the expense and inconvenience of litigation of the same issues in two separate trials. See Revere Copper & Brass Inc. v. Aetna Casualty & Surety Co., 426 F.2d 709 (5th Cir.1970).

Thus, Rules 42(a) and 13(a), case law and policy considerations all indicate that the claims in these two actions must be consolidated.

B. Citizenship and Alignment of the Parties

Having determined that consolidation is proper, the Court must now consider the effect of consolidation on its diversity jurisdiction. Before addressing this issue, the citizenship of the parties should be reviewed. The citizenship of the parties is summarized in the following chart:

                  ORIGINAL SUIT                              SUIT REMOVED AND REASSIGNED
                  WEBB                                       JONES
                  Indiana                                  Florida
                  v.                                         v
                  JUST IN TIME                               WEBB
                  Incorporated: Delaware;                   Indiana
                  Place of business
                  Michigan
                  &                                          &amp
                  JONES                                      CENTRAL TRANSPORT
                  Florida                                  Incorporated: Michigan
                                                             Place of business:
                  &                                          Michigan
                  HASTINGS
                  Ohio
                

Although there appears to be no problem with diversity of citizenship as the parties are set out above, "it is the court's duty to `look beyond the pleadings and arrange the parties according to their sides in the dispute.'" Employers Ins. of Wausau v. Crown Cork & Seal Co., 905 F.2d 42, 45 (3rd Cir.1990) (quoting Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69, 62 S.Ct. 15, 17, 86 L.Ed. 47 (1941) (citations omitted)). Once the parties have been properly aligned, the applicable rule is that "a federal court is devoid of diversity jurisdiction unless there is a diversity of citizenship between all plaintiffs and all defendants."³Fletcher v. Advo Systems, Inc., 616 F.Supp. 1511, 1513 (E.D.Mich.1985). See also Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435 (1806); Cabalceta v. Standard Fruit Co., 883 F.2d 1553 (11th Cir.1989); Panalpina Welttransport GMBH v. Geosource, Inc., 764 F.2d 352 (5th Cir.1985).

When the parties in the consolidated action are aligned according to interest, the following results:

AFTER CONSOLIDATION AND REALIGNMENT WEBB Indiana & CENTRAL TRANSPORT Michigan v. JUST IN TIME Delaware, Michigan & JONES Florida & HASTINGS Ohio

Thus, there are citizens of Michigan on both sides; Central is a corporation with its principal place of business in Michigan, and Just In Time is also a corporation with its principal place of business in Michigan.⁴

C. Diversity Jurisdiction

The Court based its decision to consolidate the two pending claims on both the discretionary Rule 42(a) and on the mandatory Rule 13(a). The Court will now deal with the impact of both rules individually.

Case law has clearly established that actions consolidated pursuant to Rule 42(a) maintain a separate identity. See Federal Deposit Ins. Corp. v. Caledonia Invest. Corp., 862 F.2d 378 (1st Cir.1988); Kraft, Inc. v. Local Union 327, Teamsters, Chauffeurs, Etc., 683 F.2d 131 (6th Cir. 1982); McKenzie v. United States, 678 F.2d 571 (5th Cir.1982); In re Massachusetts Helicopter Airlines, Inc., 469 F.2d 439 (1st Cir.197...