Delgado v. Plaza Las Americas

• Court: Court of Appeals for the First Circuit
• Decided: March 10, 1998
• Docket: 97-1750
• Status: Published

Opinion

USCA1 Opinion

                   United States Court of Appeals

                        For the First Circuit

                        ____________________


No. 97-1750



                           JULIO DELGADO,

                                  

                        Plaintiff, Appellant,

                                  

                                 v.

                                  

                  PLAZA LAS AMERICAS, INC., ET AL.,

                                  

                       Defendants, Appellees.

                                  

                        ____________________

                                  

            APPEAL FROM THE UNITED STATES DISTRICT COURT

                                  

                   FOR THE DISTRICT OF PUERTO RICO

                                  

          [Hon. Salvador E. Casellas, U.S. District Judge]

                                  

                        ____________________

                                  

                               Before

                                  

                       Torruella, Chief Judge,

                  Boudin and Stahl, Circuit Judges.

                                  

                        ____________________

                                  

    Jorge Miguel Suro Ballester, with whom Cherie K. Durand and Law

Offices Benjamin Acosta, Jr. were on brief for appellant.

    Ivan M. Fernandez for appellees.


____________________



                            March 9, 1998

                         ____________________      Per curiam.  Plaintiff-appellant Julio Delgado appeals from

    the district court's dismissal of his complaint against

    defendants-appellees Plaza Las Americas, Inc. and Universal

    Insurance Company for failure to join a party needed for just

    adjudication.  See Fed. R. Civ. P. 19.  Because we conclude

    that the court's determination was premised upon a mistaken

    reading of Fed. R. Civ. P. 19(a)(2)(ii), we vacate and

    remand.

                               I.

      On August 19, 1994, Nannette Delgado Ocasio was sexually

  abused and raped at gunpoint by an unidentified man on the

  premises of the Plaza Las Americas shopping center in San

  Juan, Puerto Rico.  Subsequently, plaintiff, who is Ocasio's

  father and a Florida resident, brought this diversity action

  in United States District Court for the District of Puerto

  Rico.  The complaint sought damages for the emotional pain

  and anguish plaintiff suffered as a result of the rape of his

  daughter.  Meanwhile, Ocasio, who is a Puerto Rico resident,

   sued the same defendants in Puerto Rico Superior Court.

      On February 27, 1996, acting sua sponte, the district court

  directed Delgado to show cause why this case should not be

  dismissed for (i) failure to meet the amount in controversy

  requirement of 28 U.S.C.  1332(a); and/or (ii) nonjoinder of

       a non-diverse party -- Ocasio -- needed for just

   adjudication.  Thereafter, the district court dismissed

  Delgado's complaint without prejudice, holding that, although

   a sufficient amount in controversy had been established,

  Delgado had failed to join a party necessary to the lawsuit

  under Fed. R. Civ. P. 19(a)(2)(ii)(an absentee may be deemed

   a necessary party if nonjoinder could "leave any of the

   persons already parties subject to a substantial risk of

    incurring double, multiple, or otherwise inconsistent

     obligations by reason of the claimed interest"), and

  indispensable to the lawsuit under Fed. R. Civ. P. 19(b).

      In determining that Ocasio was a necessary party, the court

   reasoned that the potential for inconsistent verdicts in

  Ocasio's state action and Delgado's federal action subjected

  defendants to a substantial risk of incurring multiple or

  otherwise inconsistent obligations.  The court also observed

     that allowing the two actions to proceed would be an

  inefficient use of judicial resources and raised the specter

     of one of the plaintiffs using "offensive collateral

  estoppel" against defendants.    Having determined that Ocasio

    was a necessary party on these bases, the court applied the

    gestalt factors set forth in Fed. R. Civ. P. 19(b) and found

    that Ocasio also was indispensable to the lawsuit.  Because

    Ocasio was non-diverse, the court then dismissed the action

    without prejudice to its being reinstated should the

    Commonwealth court deny plaintiff permission to join in

    Ocasio's lawsuit.

                              II.

      Plaintiff makes three arguments on appeal.  He first contends

  that the district court exceeded its discretion in addressing

  the issue of nonjoinder sua sponte.  He also argues that the

  court premised its dismissal upon an erroneous construction

  of Fed. R. Civ. P. 19(a)(2)(ii).  Finally, he challenges the

  lower court's indispensability determination under Fed. R.

  Civ. P. 19(b).  For their part, defendants contend that we do

  not have appellate jurisdiction over this appeal under 28

   U.S.C.  1291 because the dismissal challenged here was

  without prejudice and was therefore not a final judgment.

      Although we accept plaintiff's second argument, we think it

    important to note that his first argument is entirely

  unpersuasive.  We have squarely held that a district court

  may raise the issue of nonjoinder sua sponte.  See Gonzalezv. Cruz, 926 F.2d 1, 5 n.6 (1st Cir. 1991) (citing Fed. R.

   Civ. P. 21).  So too do we reject summarily defendant's

   contention that we lack appellate jurisdiction over this

  matter, as the effect of the dismissal without prejudice was

  to oust from federal court a suit over which the court had

   subject matter jurisdiction.  See Moses H. Cone Hosp. v.

     Mercury Constr. Corp., 460 U.S. 1, 9-10 & n.8 (1982)

  (appellate court has jurisdiction where district court enters

  a stay with expectation that if plaintiff does not obtain

  relief in state court federal litigation may resume); Burnsv. Watler, 931 F.2d 140, 143 (1st Cir. 1991) (similar).

      The primary question before us, then, is whether the district

  court correctly determined that Ocasio is a necessary party

  under Fed. R. Civ. P. 19(a)(2)(ii).    As stated above, Fed.

    R. Civ. P. 19(a)(2)(ii) provides that an absentee may be

    deemed a necessary party if nonjoinder will "leave any of the

    persons already parties subject to substantial risk of

    incurring double, multiple, or otherwise inconsistent

    obligations by reason of the claimed interest."  Although the

    plaintiff has the right to control his own litigation and to

    choose his own forum, Fed. R. Civ. P. 19(a)(2)(ii) balances

    these rights against the defendants' (and systemic) interests

    in avoiding judgments giving rise to "inconsistent

    obligations."  See Schutten v. Shell Oil Co., 421 F.2d 869,

    873 (5th Cir. 1970). 

        "Inconsistent obligations" are not, however, the same as

    inconsistent adjudications or results.  See Micheel v.

    Haralson, 586 F. Supp. 169, 171 (E.D. Pa. 1983); see also 4

    James Wm. Moore et al., Moore's Federal Practice  19.03 (3d

    ed. 1997).  Inconsistent obligations occur when a party is

    unable to comply with one court's order without breaching

    another court's order concerning the same incident.  See 4

    Moore's at  19.03.  Inconsistent adjudications or results,

    by contrast, occur when a defendant successfully defends a

    claim in one forum, yet loses on another claim arising from

    the same incident in another forum.  See National Union Fire

    Ins. Co. of Pittsburgh v. Massachusetts Mun. Wholesale Elec.

    Co., 117 F.R.D. 321, 322 (D. Mass. 1987) (citing Bedel v.

    Thompson, 103 F.R.D. 78, 81 (S.D. Ohio 1984)); see also Boonev. General Motors Acceptance Corp., 682 F.2d 552, 554 (5th

    Cir. 1982)(the threat of inconsistent obligations, not

    multiple litigations, informs Fed. R. Civ. P. 19(a)

    considerations); Field v. Volkswagenwerk AG, 626 F.2d 293,

    301 (3d Cir. 1980) (similar).     Unlike a risk of inconsistent

    obligations, a risk that a defendant who has successfully

    defended against a party may be found liable to another party

    in a subsequent action arising from the same incident --

    i.e., a risk of inconsistent adjudications or results -- does

    not necessitate joinder of all of the parties into one action

    pursuant to Fed. R. Civ. P. 19(a).  See Field, 626 F.2d at

    301.  Moreover, where two suits arising from the same

    incident involve different causes of action, defendants are

    not faced with the potential for double liability because

    separate suits have different consequences and different

    measures of damages.  See In Re Torcise, 116 F.3d 860, 866

    (11th Cir. 1997).

        In this situation, defendants faced a federal action and a

    state action arising from the same incident.  In reasoning

    that defendants could be facing "inconsistent obligations,"

    the district court noted that defendants could be found

    liable to Delgado in federal court, but not liable to Ocasio

    in state court, or vice versa.  Although the court also

    looked to other factors in reaching its conclusion, it is

    this determination -- which is really a determination that

    defendants faced the threat of inconsistent results -- that

    grounded the court's ruling that Ocasio was a necessary party

    to this lawsuit.  Yet as we have explained, the mere

    possibility of inconsistent results in separate actions does

    not make the plaintiff in each action a necessary party to

    the other.  And even if it did, the fact remains that Ocasio

    and her father have separate causes of action based on

    different theories of recovery.  We therefore cannot sustain

    the court's ruling that Ocasio is a party both necessary and

    indispensable to this lawsuit.

                              III.

      Although we think the district court was likely correct in

  thinking that efficiency would be served if Delgado's claim

  and Ocasio's claim were litigated in the same proceeding,

  Fed. R. Civ. P. 19 does not permit us to treat this concern

     alone as a basis for refusing to exercise diversity

  jurisdiction over this case.  And whether wise or not, the

  lesson of the abstention cases is, of course, that federal

   jurisdiction should be asserted almost all the time.  We

  therefore are left with no choice other than to vacate the

         judgment and remand for further proceedings.

                        Vacated and remanded.