Rowland v. Patterson

852 F.2d 108, 1988 WL 73175

• Court: Court of Appeals for the Fourth Circuit
• Decided: July 18, 1988
• Docket: No. 87-1721
• Status: Published

Opinions

MURNAGHAN, Circuit Judge:

On July 16, 1985, Janet L. Rowland and Donald Rowland filed with the Maryland Health Claims Arbitration Office (HCAO) a malpractice proceeding against five defendants who are medical doctors. The step was taken in accordance with the Maryland Health Care Malpractice Claims subtitle of the Courts and Judicial Proceedings Article of the Annotated Code of Maryland. Md. Cts. & Jud.Proc.Code Ann. §§ 3-2A-01 to -09. That subtitle establishes as a pre-con-dition to legal action in court the institution of a medical malpractice proceeding. Md. Cts. & Jud.Proc.Code Ann. § 3-2A-02; Davison v. Sinai Hosp. of Baltimore, 462 F.Supp. 778 (D.Md.1978), aff'd, 617 F.2d 361 (4th Cir.1980); see Ott v. Kaiser-Georgetown Community Health Plan, Inc., 309 Md. 641, 646, 526 A.2d 46, 49 (1987).

Thereafter, following a summary judgment on May 6, 1987 by the HCAO for the defendants on the grounds that limitations had expired, plaintiffs filed a notice of rejection with the HCAO on June 12, 1987. Three days later, plaintiffs, alleging diversity jurisdiction, filed in the United States District Court for the District of Maryland a civil action to nullify the HCAO decision in favor of the defendants.¹

Judicial review under a standard akin to de novo review of the HCAO decision was called for. Md.Cts. & Jud.Proc.Code Ann. § 3-2A-06. Review is not precisely de novo since the HCAO decision has continuing vitality. The court on preliminary motion may modify, correct or vacate the award if it was procured by fraud or misconduct, occasioned by prejudice, or if the HCAO had exceeded its authority or committed a mistake of law or fact appearing on the face of the award. Md.Cts. & Jud. Proc.Code Ann. §§ 3-2A-06(c), 3-223, 3-224. Otherwise, the award is admissible in any subsequent judicial proceeding and is presumed correct. Section 3-2A-06(d). Not only does the HCAO award have continuing vitality, but so do constituent elements of the proceeding. For example, when Donald Rowland’s deposition in the HCAO proceeding was taken on December 15, 1986, it became admissible in the subsequent judicial proceeding. Section 3-2A-06(e).

On June 15, 1987 when the complaint was filed with the clerk of the Maryland federal district court, the plaintiffs and the defendants were diverse.² However, they were admittedly not diverse on July 16, 1985 when the HCAO proceeding first was filed.

The question of controlling importance, of course, is which of those two filings: the HCAO filing or the filing of the complaint in federal court commenced the action for purposes of determining the existence of diversity jurisdiction. It is well settled that diversity is judged as of the time of commencement of suit. Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 6 L.Ed. 154 (1824); Smith v. Sperling, 354 U.S. 91, 77 S.Ct. 1112, 1 L.Ed.2d 1205 (1957); Mullins v. Beatrice Pocahontas Co., 489 F.2d 260 (4th Cir.1974). We must decide which filing commenced the suit. The district court ruled that the HCAO filing commenced it, found that on the date of commencement the parties were not diverse, and therefore dismissed the case for want of subject matter jurisdiction.

The district judge proceeded from the view that an action must commence for all purposes on a single date. He first found that the HCAO filing commenced the action for limitations purposes. He then stated that, because of a current disinclination to expand diversity jurisdiction, he should not hold that there was commencement of the action on two different occasions, once when the HCAO action was initiated on July 16, 1985, for limitation purposes, and again when the federal district court suit was filed on June 15, 1987 for purposes of determination of diversity.

There may be some doubts as to the correctness of the district court’s logic. An action can commence on more than one date because of the holding in Erie Railroad v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Federal courts sitting in diversity generally apply state statutes of limitations. Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949). Thus, a federal action may commence for limitations purposes upon whatever event the state has defined for that purpose, e.g., the date of service of the complaint. Yet for all other purposes the federal action will commence under the applicable Federal Rule of Civil Procedure, Rule 3, that states that an action commences when the complaint is filed. However much it linguistically offends one’s first impression, in legal principle, there could indeed be two different times of commencement.

However, even if the reasoning employed by the district court should prove to be slightly faulty, he was on the right track and the result remains the same. We agree with the conclusion that the present action commenced for purposes of determining diversity when the HCAO proceeding was filed. Federal courts apply federal rules of procedure, both those promulgated in the Federal Rules of Civil Procedure as well as wholly judge made procedural rules, unless the Erie doctrine commands otherwise. Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965); Ely, The Irrepressible Myth of Erie, 87 Harv.L. Rev. 693 (1974). The present case requires us to decide which of two filings commenced an action in federal court for purposes of determining the existence of diversity jurisdiction. That is a purely federal procedural question, since no state substantive right is involved. Hanna, 380 U.S. at 471, 85 S.Ct. at 1143; 28 U.S.C. § 2072.

Looking at the situation solely from a federal point of view, what occurred on July 16, 1985, the bringing of the HCAO action, happened to amount for federal purposes to a commencement of the cause of action.³ Two reasons lead us to that conclusion. One, the HCAO proceeding continued to have effect when and after the case took on a completely judicial aspect. Two, submission to the HCAO is a condition precedent to filing suit in federal court as well as to state court filing. The HCAO filing then is the first filing necessary to institute a federal civil action. We hold that the HCAO filing commenced the suit for purposes of determining diversity jurisdiction. At the time-of filing the HCAO proceeding on July 16, 1985, there was no diversity.

Consequently, dismissal was, therefore, appropriate.

AFFIRMED.

1 . The nullification action which was accompanied by a Complaint was virtually identical with the medical negligence claim filed initially with HCAO.

2 . The defendants seek to controvert that fact, but in view of the result reached by the district court it never reached the issue. For reasons later appearing herein we need not and should not reach it either.

3 . The dissent suggests that Cannon v. Kroger, 832 F.2d 303 (4th Cir.1987), reh’g denied, 837 F.2d 660 (4th Cir.1988), supports its result. To the extent that Cannon is relevant, it simply supports a proposition to which the majority and dissent agree, viz,, that a federal procedural question is involved in the present case. The dissent states "[Cannon ] lends support to the proposition that federal courts should apply the Federal Rules unless there is a compelling reason not to do so.” We agree and have applied federal procedural law to the facts of the present case and have decided federally when the case "commenced” for purposes of determining diversity of the parties. That we measure diversity for that purpose by turning to an event occurring outside of a federal court makes ours no less a decision of federal procedural law for, in the same manner, federal procedural law requires, in cases removed from state court, that diversity exist at the time of commencement in state court as well as when the petition for removal is filed {i.e., at a time when commencement could only be by pertinent state rules). See 14A C. Wright, A. Miller and E. Cooper, Federal Practice and Procedure, § 3723, 311-14 (1985).