Wojan v. General Motors Corp.

• Decision Date: 22 August 1988
• Docket Number: No. 87-1453,87-1453
• Citation: 851 F.2d 969
• Parties: Angela J. WOJAN, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, a Delaware Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 969

851 F.2d 969

11 Fed.R.Serv.3d 914

Angela J. WOJAN, Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, a Delaware Corporation Defendant-Appellee.

No. 87-1453.

United States Court of Appeals Seventh Circuit.

Argued Dec. 8, 1987.

Decided July 12, 1988.

Rehearing Denied Aug. 22, 1988.

John C. Ambrose, Ambrose & Cushing, Chicago, Ill., for plaintiff-appellant.

Diane I. Jennings, Lord Bissel & Brook, Chicago, Ill., for defendant-appellee.

Before BAUER, Chief Judge, and COFFEY and KANNE, Circuit Judges.

COFFEY, Circuit Judge.

Plaintiff-appellant Angela Wojan appeals the district court's denial of her motions for the imposition of Rule 11 sanctions against the defendant, General Motors Corporation. We affirm, but on grounds other than those set forth in the district court's order.

I.

On October 3, 1979, Angela Wojan was involved in a head-on automobile collision while travelling eastbound on a highway in the State of Michigan. She suffered severe facial injuries when her face struck the windshield of her 1974 Chevrolet Vega. On September 30, 1981, Wojan filed a products liability action against General Motors Corporation (GM) in the United States District Court for the Northern District of Illinois alleging that the Vega's negligently designed windshield rendered the automobile uncrashworthy.

Premising federal jurisdiction on diversity of citizenship between the parties, 28 U.S.C. Sec. 1332, the plaintiff's complaint alleged (1) that GM was "a Delaware corporation, duly authorized to do business in the State of Illinois," and (2) the plaintiff was a citizen of the State of Michigan. On October 22, 1981, GM filed its answer, admitting that it was a Delaware corporation "licensed" to do business in Illinois but asserting a lack of knowledge as to the plaintiff's citizenship. GM's answer was silent as to its possible status as a citizen of the state of Michigan (GM's principal place of business).

The case then, as too often occurs, plodded along for some five years or more in the district court. In addition to the routine status hearings, pretrial conferences, and discovery procedures, during its first two years this case enjoyed two dismissals without prejudice for want of prosecution and a third dismissal on the merits for the plaintiff's failure to comply with discovery requests (although upon reconsideration the court sanctioned counsel rather than dismiss the case). In each instance the case was reinstated. On March 5, 1984, between the second and third dismissals, Wojan filed an amended complaint revising certain allegations (not pertinent to this appeal), but the jurisdictional paragraphs remained as originally pleaded in the complaint. Some two years later, on April 11, 1986, GM admitted the existence of diversity jurisdiction in its answer to the plaintiff's amended complaint, despite Wojan's Michigan citizenship and GM's obvious nexus with that state.

GM's answer to the amended complaint also included several affirmative defenses, including the defense of the plaintiff's contributory negligence. In particular, GM called attention to the fact that the Vega automobile, when sold, came equipped with an ignition interlock system which prevented the driver from engaging the car's engine until the lap and shoulder belts were secured. The defendant in its answer maintained that Wojan disconnected the seatbelt interlock system, modifying and bypassing the Vega's ignition system, thus permitting the driver to start the car without "buckling up." GM asserted that if Wojan had been wearing her seatbelt at the time of the impact, it would have been impossible for her to catapult forward and make contact with the allegedly defective windshield.

In response to GM's affirmative defenses, the plaintiff filed a motion to strike the defenses and a motion in limine attempting to exclude the reception of any evidence regarding the seatbelts and/or their use or non-use. Wojan argued that Michigan law prohibits the admission of such evidence for any purpose. GM countered that, regardless of the admissibility of the seatbelt evidence as to the issue of the plaintiff's contributory negligence, the seatbelt evidence was admissible under Michigan law (assuming arguendo that the issue is governed by state substantive law rather than the Federal Rules of Evidence) to establish the crashworthiness of the vehicle.

On April 29, 1986, the district court denied the plaintiff's motion in limine, agreeing with GM's assertion that the seatbelt evidence was admissible and pertinent to the question of Vega's overall ability to withstand a crash. On May 29, 1986, the court denied the plaintiff's motion to reconsider its evidentiary ruling. Again, on January 8, 1987, the court reaffirmed its ruling that the seatbelt evidence was admissible to establish the vehicle's crashworthiness. But shortly thereafter, the district court discovered a Michigan case, Hierta v. General Motors Corp., 147 Mich.App. 274, 382 N.W.2d 765 (1985), remanded, 429 Mich. 887, 416 N.W.2d 313 (1987) (decided on November 19, 1985, and released for publication on March 21, 1986), which the court understood as holding that evidence of seatbelt use or non-use is inadmissible to establish either the plaintiff's contributory negligence or the crashworthiness of the vehicle. Accordingly, the court reversed its position and ordered the exclusion of the evidence for all purposes.

On January 30, 1987, Wojan filed a motion requesting the imposition of Rule 11 sanctions against GM based upon GM's failure to cite the Hierta case to the trial judge. The plaintiff asserted that GM, as a defendant in the Hierta case, was well aware of the adverse precedent, and that GM's failure to disclose this directly adverse decision to the court constituted grounds for sanctions under Rule 11.

During a subsequent motion hearing dealing with Wojan's Rule 11 allegations, the case changed course. At the hearing, counsel for GM pointed out to the court that despite its earlier admission of the existence of diversity jurisdiction, it had now discovered a serious problem concerning the court's subject matter jurisdiction over the case (the problem being that federal jurisdiction was grounded on diversity of citizenship, although both parties were Michigan citizens). In light of this revelation, the court granted GM until February 6, 1987 to address the jurisdictional issue. On that date, GM filed a motion to dismiss the case for want of diversity jurisdiction, reporting for the first time that both Wojan and GM, with its principal place of business in Michigan, were citizens of the State of Michigan. On February 26, 1987, some five and a half years after the case was initially filed, the district court dismissed the case for want of diversity jurisdiction. The dismissal was without prejudice, thereby allowing the plaintiff to refile her lawsuit in the state court system.

Wojan nevertheless persisted, returning to the federal court on March 12, 1987, and filed two motions. The first requested that the court impose Rule 11 sanctions against GM for failing to deny diversity jurisdiction in its answer to the plaintiff's complaint. Secondly, Wojan requested the court to amend or set aside its order dismissing the case to retain jurisdiction over the two collateral Rule 11 motions for the purpose of determining whether GM should be sanctioned for its failure to deny diversity jurisdiction and/or its failure to disclose the Hierta case. The district court denied the plaintiff's motions, ruling that it "no longer [had] jurisdiction over [the] case." In this appeal Wojan insists that: (1) the district court had inherent power to impose Rule 11 sanctions notwithstanding its lack of subject matter jurisdiction over the underlying case; and (2) both GM's admission of diversity jurisdiction and its failure to disclose the Hierta case to the district court constitute sanctionable conduct pursuant to Rule 11.

II.

The district court denied Wojan's motions for the imposition of Rule 11 sanctions against GM on the ground that its dismissal for lack of diversity jurisdiction prior to a ruling on the Rule 11 motions divested the court of "jurisdiction" to consider the motions. See Chick Kam Choo v. Exxon Corp., 764 F.2d 1148, 1153 n. 4 (5th Cir.1985) (vacating the district court's imposition of Rule 11 sanctions because diversity jurisdiction was wanting). We disagree with the district court's reason for denying Wojan's Rule 11 motions as it confuses subject matter jurisdiction with the court's inherent "power" to engage in those judicial acts attendant to the presence of a live controversy before the court. Accordingly, we also reject the approach apparently taken by the Fifth Circuit in Chick Kam Choo, supra.

Recently, we observed that " '[j]urisdiction' is an all-purpose word denoting adjudicatory power. A court may have power to do some things but not others, and the use of 'lack of jurisdiction' to describe the things it may not do does not mean that the court is out of business." Szabo Food Service, Inc. v. Canteen Corp., 823 F.2d 1073, 1077 (7th Cir.1987). In Szabo, we held that not only does a court have the adjudicatory power to impose sanctions under Rule 11 after a Fed.R.Civ.P. 41(a)(1)(i) dismissal, but also regardless of whether a court actually has subject matter jurisdiction (either diversity or federal question), the court retains the power to consider a Rule 11 motion. Id. at 1078. This conclusion is founded upon the inherent authority of a court "to determine its jurisdiction and [to] engage in all the usual judicial acts [including imposing Rule 11 sanctions], even though it has no power to decide the case on the merits." Id. Our observation in Szabo that district courts possess inherent power over Rule 11 motions even under circumstances where jurisdiction over the underlying case is absent is consistent with the now well-established rule that the "inherent powers of ...