Julie Steinlage v. Mayo Clinic ( 2006 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 05-2320
___________
Julie M. Steinlage, trustee for the heirs *
of Dolores May Smith, *
*
Plaintiff - Appellant, *
* Appeal from the United States
v. * District Court for the District of
* Minnesota.
Mayo Clinic Rochester, a Minnesota *
corporation, *
*
Defendant - Appellee. *
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Submitted:
Filed: January 30, 2006
___________
Before
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MELLOY, Circuit Judge.
Dolores May Smith, a citizen of Minnesota, died after doctors who worked for
the defendant allegedly failed to properly diagnose her illness. Ms. Smith’s daughter,
Julie Steinlage, brought this wrongful death action as a court-appointed wrongful
death trustee under Minn. Stat. Ann. § 573.02. Ms. Steinlage is a citizen of Nevada.
During trial, the defendant moved to dismiss for lack of jurisdiction, arguing that 28
U.S.C. § 1332(c)(2) required the court to impute the decedent’s Minnesota citizenship
to Ms. Steinlage for diversity purposes. The district court found that § 1332(c)(2)
applied and dismissed the case. Ms. Steinlage appeals, and we reverse. A Minnesota
wrongful death trustee is a representative of a decedent’s surviving spouse, next of
kin, and certain enumerated creditors, but not a representative of a decedent’s estate
as required by the plain language of § 1332(c)(2). Accordingly, a Minnesota wrongful
death trustee’s own state of citizenship controls for purposes of diversity jurisdiction.
I.
The facts relevant to this appeal are undisputed. If § 1332(c)(2) applies,
complete diversity is destroyed and the federal courts lack jurisdiction. If §
1332(c)(2) does not apply, Ms. Steinlage, as a Nevada citizen, may maintain this
diversity action against the Minnesota defendant. This case presents two questions
of law: first, does a Minnesota wrongful death trustee represent the estate of a
decedent; second, if a Minnesota wrongful death trustee does not technically represent
the estate of a decedent, does 28 U.S.C. § 1332(c)(2) nevertheless apply? We address
these issues in turn.
A. The Minnesota Statute
Minnesota’s wrongful death statute provides for the appointment of a wrongful
death trustee to sue for the recovery of pecuniary loss suffered by a decedent’s
surviving spouse and next of kin as well as for recovery on behalf of a few specifically
enumerated creditors. Minn. Stat. Ann. § 573.02. The statute specifically provides:
Subdivision 1. Death action. When death is caused by the wrongful act
or omission of any person or corporation, the trustee appointed as
provided in subdivision 3 may maintain an action therefor if the decedent
might have maintained an action, had the decedent lived, for an injury
caused by the wrongful act or omission. . . . The recovery in the action
is the amount the jury deems fair and just in reference to the pecuniary
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loss resulting from the death, and shall be for the exclusive benefit of the
surviving spouse and next of kin, proportionate to the pecuniary loss
severally suffered by the death. The court then determines the
proportionate pecuniary loss of the persons entitled to the recovery and
orders distribution accordingly. Funeral expenses and any demand for
the support of the decedent allowed by the court having jurisdiction of
the action, are first deducted and paid. Punitive damages may be
awarded as provided in section 549.20.
If an action for the injury was commenced by the decedent and not
finally determined while living, it may be continued by the trustee for
recovery of damages for the exclusive benefit of the surviving spouse and
next of kin, proportionate to the pecuniary loss severally suffered by the
death. The court on motion shall make an order allowing the
continuance and directing pleadings to be made and issues framed as in
actions begun under this section.
Subd. 2. When injury is caused to a person by the wrongful act or
omission of any person or corporation and the person thereafter dies
from a cause unrelated to those injuries, the trustee appointed in
subdivision 3 may maintain an action for special damages arising out of
such injury if the decedent might have maintained an action therefor had
the decedent lived.
Subd. 3. Trustee for action. Upon written petition by the surviving
spouse or one of the next of kin, the court having jurisdiction of an
action falling within the provisions of subdivisions 1 or 2, shall appoint
a suitable and competent person as trustee to commence or continue such
action and obtain recovery of damages therein. The trustee, before
commencing duties shall file a consent and oath. Before receiving any
money, the trustee shall file a bond as security therefor in such form and
with such sureties as the court may require.
Id. (emphasis added).
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A companion provision to Minnesota’s wrongful death statute is Minn. Stat.
Ann. § 573.01 regarding the survival of causes of action. Section 573.01 specifically
provides:
A cause of action arising out of an injury to the person dies with the
person of the party in whose favor it exists, except as provided in section
573.02. All other causes of action by one against another, whether
arising on contract or not, survive to the personal representatives of the
former and against those of the latter.
Read together, these two provisions demonstrate that, upon death, the right to
maintain existing actions based on personal injury to the decedent, as well as the right
to institute new actions based on personal injury, belong to the wrongful death trustee.
Any recovery in either type of action under section 573.02 inures exclusively to the
benefit of the surviving spouse and next of kin except for the payment of funeral
expenses and claims related to the support of the decedent. The wrongful death
trustee is not authorized to obtain a judgment for the benefit of general creditors who
may have claims against the decedent’s estate.1
By contrast, if an injured party survives, litigates a personal injury action to
completion, and recovers a judgment, anything recovered is subject to the claims of
general creditors because the judgment is in favor of the injured party. Even where
an aggrieved party dies, causes of action other than personal injury actions may be
maintained post-death by the “personal representatives of the [decedent].” Minn. Stat.
1
The Minnesota Supreme Court, in Shumway v. Nelson, 107 N.W.2d 531, 533
(Minn. 1961), stated:
Actions brought under § 573.02 are distinguishable from causes of action
which are said to survive the decedent. This statute creates an entirely
new cause of action for the purpose of compensating the next of kin who
have suffered pecuniary loss by reason of the death of the decedent. It
is not brought for the benefit of the decedent.
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Ann. § 573.01. In Minnesota, a statutory wrongful death trustee is not a personal
representative of the decedent, Shumway, 107 N.W.2d at 533, and has no authority
to maintain the type of actions described in Section 573.01 that might result in
judgments available to satisfy the claims of general creditors.
Sections 573.01 and 573.02, therefore, operate together to draw a clear
distinction between (1) the personal representatives of the decedent (administrator,
executor, etc.) and (2) the wrongful death trustee as the personal representative of the
decedent’s surviving spouse and next of kin. The decedent’s estate and general
creditors who hold claims against a decedent’s estate cannot collect against judgments
obtained by the wrongful death trustee because the wrongful death trustee is expressly
authorized only to obtain judgments on behalf of persons who are separate from the
estate of the decedent. See Martz v. Revier, 170 N.W.2d 83, 85 (Minn. 1969)
(“recovery for wrongful death is not a part of the decedent’s estate”).
Prior to a 1951 amendment, Minnesota’s wrongful death statute actually did
permit the “personal representative of the decedent” to bring a wrongful death action.
See Minn. Stat. Ann. § 573.02 (1950). Even then, however, the recovery in such an
action was not in any manner obtained for the benefit of the estate. Rather, it was
obtained exclusively for the benefit of the surviving spouse and next of kin as the
enumerated beneficiaries under the then-controlling version of the wrongful death
statute. Id. In other words, under that prior statute the personal representative of a
decedent was empowered to serve a dual role.
Even before that time, the Minnesota Supreme Court had clarified that any
recovery in a wrongful death action was separate and distinct from the general estate:
The damages do not go to the estate of the decedent for distribution
under the laws of descent. This money is not liable for debts of [the]
decedent, but belongs exclusively to those named in the statute. The
probate court has no jurisdiction over this money. It must be handled
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under the jurisdiction of the district court. The widow cannot select her
$500 worth of personal property, under the statute of descent, from this
money. This money never belonged to the decedent. The statute,
however, regulates the proportion in which damages recovered shall be
distributed. This language is clear.
Masek v. Hedlund, 202 N.W. 732, 732 (Minn. 1925) (internal citation omitted).
Accordingly, under prior law, when a personal representative of the decedent could
bring a Minnesota wrongful death action, the personal representative did not do so as
a representative of the decedent’s estate, but rather, as a representative of the wrongful
death beneficiaries. Further, under current Minnesota law, only a court-appointed
wrongful death trustee may maintain a wrongful death action, and the wrongful death
trustee does not represent the estate of the decedent.
Finally, we note our disagreement with a statement contained in dicta in James
v. Three Notch Med. Ctr., 966 F. Supp. 1112, 1114 (M.D. Ala. 1997), cited by the
defendant, regarding Minnesota’s wrongful death statute. In that case, the court stated
that wrongful death statutes that allow some recovery on the part of the estate fall
within the scope of § 1332(c)(2). The court proceeded to state that Minnesota’s
wrongful death statute permitted “some recovery on the part of the estate.” This
statement, presumably, was based on that portion of Minn. Stat. Ann. § 573.02 which
specifically allows for the payment of funeral expenses and claims for support of the
decedent along with payment of damages to the surviving spouse and next of kin. The
payment of such expenses does, necessarily, reduce expenses that might evolve into
potential claims against the estate. In this manner, proceeds from a wrongful death
action may reduce potential liabilities of the estate and thereby, indirectly, provide a
gross benefit to the estate. Minnesota’s legislature, however, made the specific choice
to enumerate two specific types of expenses as the sources for potential claims against
wrongful death proceeds. It did not elect to make wrongful death proceeds generally
available for the estate or available to satisfy the claims of general creditors. As such,
it may be appropriate to view the Minnesota wrongful death statute as providing some
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indirect benefit to the estate, but we do not believe it is possible to say that the
Minnesota wrongful death statute creates a trustee who represents the estate of the
decedent.
B. The Federal Statute
Because a Minnesota wrongful death trustee does not represent the estate, it is
necessary to determine whether 28 U.S.C. § 1332(c)(2) applies to representatives of
persons other than the estate of the decedent. The federal diversity jurisdiction statute,
28 U.S.C. § 1332, specifically provides:
(c) For the purposes of this section and section 1441 of this title--
(2) the legal representative of the estate of a decedent shall be deemed
to be a citizen only of the same State as the decedent, and the legal
representative of an infant or incompetent shall be deemed to be a citizen
only of the same State as the infant or incompetent.
(Emphasis added).
The plaintiff argues that we must take the text of the statute as a clear and
controlling statement of congressional intent. The defendant argues that legislative
history reveals a congressional intent to limit the scope of diversity jurisdiction such
that subsection (c)(2) should be interpreted to minimize diversity jurisdiction and
apply to a broad class of representative plaintiffs (not just plaintiffs who technically
represent the decedent’s estate).
The parties agree that, in 1988, Congress passed § 1332(c)(2) and other
amendments to the diversity statute as a means to limit the number of diversity cases
in federal court. See, e.g., H.R. Rep. 100-889, Subtitle B, Diversity Reform at *44-45
(1988) (“The provisions of this subtitle make amendments to reduce the basis for
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Federal court jurisdiction based solely on diversity of citizenship.”). In fact, “[a
House Judicial Committee] Subcommittee on Courts, Civil Liberties, and the
Administration of Justice adopted an amendment to generally abolish diversity of
citizenship.” Id. at 45. Congress, however, rejected the subcommittee’s dramatic
proposal to completely eliminate diversity jurisdiction, and instead, adopted §
1332(c)(2) regarding legal representatives. Congress also raised the amount in
controversy from $10,000 to $50,000. PL 100-702 Title II, Sec. 201(a).
Looking beyond the House Report (there is no Senate Report), the parties agree
that the text of § 1332(c)(2) was based on a 1969 American Law Institute legislative
proposal. American Law Institute, Study of the Division of Jurisdiction Between
State and Federal Courts § 1301(b)(4) at 11 (1969). That proposal provided:
An executor, administrator, or any person representing the estate of a
decedent or appointed pursuant to statute with authority to bring an
action for wrongful death is deemed to be a citizen only of the same state
as the decedent . . . . The purpose is to prevent either the creation or
destruction of diversity jurisdiction by the appointment of a
representative of different citizenship from that of the decedent or person
represented.
Id., reprinted in Richard H. Field, Jurisdiction of the Federal Courts, 46 F.R.D. 141,
143 (1969) (emphasis added). The text that Congress actually adopted in 1988
eliminated the phrase,“[a]n executor, administrator, or any person representing the
estate of a decedent or appointed pursuant to statute with authority to bring an action
for wrongful death” and replaced it with the phrase “the legal representative of the
estate of the decedent.” 28 U.S.C. § 1332(c)(2).
The plaintiff in this action argues that because Congress specifically omitted
from the ALI’s proposed legislation the express language that listed representatives
appointed under wrongful death statutes, it is clear that Congress did not intend to
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apply the restrictions of § 1332(c)(2) to such persons. Looking at the same change of
language, the defendant argues that Congress did not intend to limit the reach of §
1332(c)(2) through its facially more narrow word choice. Instead, the defendant
argues, Congress meant the statute to apply to the same, broad list of representative
plaintiffs set forth in the ALI proposal but elected the umbrella term “legal
representative of the estate of the decedent” as an efficient means of drafting.
Under either party’s interpretation, § 1332(c)(2) achieves the congressional goal
of reducing the number of diversity cases. The difference in the caseload reduction
brought about by the different interpretations is merely one of degree. Given this fact,
it cannot be said that Congress’s clear statement of general intent provides any
guidance as to how broadly or narrowly we should interpret the statute. It certainly
cannot be said that the undisputed, general statement of congressional intent
contradicts the plain language of the statute. Because the plain text is unambiguous
and the legislative history is equivocal at best, we are unwilling to depart from the text
and ignore the express congressional election to limit application to “legal
representative of the estate of the decedent.”2
2
The defendant raises an additional argument in favor of applying § 1332(c)(2)
in actions brought by persons who are not technically the legal representatives of the
estate of a decedent, namely, the need to prevent manipulation and collusive
appointments of representatives merely to create or destroy diversity. See, e.g., Liu
v. Westchester County Med. Ctr., 837 F. Supp. 82, 83 (S.D. N.Y. 1993) (“Holding the
citizenship of the decedent, not the representative, controlling in diversity suits based
on wrongful death makes a pre-existing non-manipulable fact determinative for
diversity purposes.”). In fact, at least one senator stated that such concerns motivated
the 1988 changes to 28 U.S.C. § 1332(c)(2). 134 Cong. Rec. S16284-01 at S16299
(1988). This argument is unconvincing, however, because Congress provided a
separate statutory provision to address this issue. See 28 U.S.C. § 1359 (“A district
court shall not have jurisdiction of a civil action in which any party, by assignment or
otherwise, has been improperly or collusively made or joined to invoke the
jurisdiction of such court.”). Accordingly, where a federal court finds that the
representative plaintiff has been improperly or collusively appointed, jurisdiction is
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The Seventh and Tenth Circuits agree. In Tank v. Chronister, 160 F.3d 597,
599-600 (10th Cir. 1998), the court analyzed the application of § 1332(c)(2) in a case
brought under a Kansas wrongful death statute. Importantly, we find no material
difference between the Kansas and Minnesota wrongful death statutes. Both provide
for a representative plaintiff who represents the interests of statutory beneficiaries
other than the decedent’s estate. The court in Tank concluded that since the action
was not for the benefit of the estate, the wrongful death trustee was not a legal
representative of the estate, and the wrongful death trustee’s citizenship controlled for
purposes of diversity jurisdiction. Id. at 609. In Milam v. State Farm Mut. Auto. Ins.
Co., 972 F.2d 166 (7th Cir. 1992), the court applied Louisiana law and noted that, in
accordance with “an oddity of Louisiana law,” a decedent’s estate was not “an entity
on behalf of which a lawsuit can be brought.” Id. at 168. As a result, a widow of the
decedent brought the action on her own behalf and on her children’s behalf, but not
as the legal representative of the estate of the decedent. Accordingly, § 1332(c)(2) did
not apply and the citizenship of the widow rather than citizenship of the decedent
controlled.
lacking regardless of § 1332(c)(2). Also, where the trustee is actually the decedent’s
next of kin, as in the present case (and therefore is, herself, one of the statutory
wrongful death beneficiaries) there is no reason to presume collusion or manipulation.
Compare County of Todd, Minn. v. Loegering, 297 F.2d 470, 473-74 (8th Cir. 1961)
(refusing to apply 28 U.S.C. § 1359 in a case where the out-of-state daughter of the
deceased served as the wrongful death trustee, stating, “[W]e find no acts of collusion
or improprieties . . . where as here the daughter, under the Wrongful Death Statute,
was duly appointed by the State District Court, and where in the process her
qualifications were finally settled and determined”), with Bartnick v. Reader Co., 487
F.2d 1021, 1022 (8th Cir. 1973) (dismissing a case brought by a South Dakota citizen
as a wrongful death trustee on behalf of the Minnesota widow and Minnesota next of
kin of a deceased Minnesota citizen, stating, “Under these circumstances, an
appointment solely to create diversity jurisdiction will not be recognized by federal
courts.”) (emphasis added).
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Other courts have followed this mode of analysis, given meaning to the federal
statute’s use of the term “estate,” and examined the identity of the represented party
to determine the applicability of § 1332(c)(2). See, e.g., Vaka v. Embraer-Empresa
Brasileira De Aeronautica, S.A., 303 F. Supp. 2d 1333, 1334 (S.D. Fla. 2003) (finding
§ 1332(c)(2) applicable because, under Fla. Stat. § 768.20, “the action shall be brought
by the decedent’s personal representative, who shall recover for the benefit of the
decedent’s survivors and estate”) (emphasis added); Winn v. Panola-Harrison Elec.
Coop., Inc., 966 F. Supp. 481, 483 (E.D. Tex. 1997) (finding § 1332(c)(2)
inapplicable and noting that Texas, like Minnesota provides that wrongful death
actions are for the benefit of the surviving spouse and children whereas other survival
actions are for the benefit of the estate).3
Other courts have not taken this approach. Instead, these courts expressly
adopted the defendant’s legislative history argument or applied § 1332(c)(2) without
analysis of the underlying wrongful death statute. See Palmer v. Hosp. Auth. of
Randolph County, 22 F.3d 1559 (11th Cir. 1994) (applying § 1332(c)(2) without
analysis where a plaintiff brought suit in multiple representative capacities, including
as the representative of a decedent’s estate); Wheelock v. Sport Kites, Inc., 839 F.
Supp. 730, 734 (D. Haw. 1993) (applying § 1332(c)(2) without analysis of the federal
statute or the state wrongful death statute and stating that “[t]he relevant citizenship
of plaintiffs in a wrongful death action is that of the decedent.”); Liu, 837 F. Supp.
at 84 (adopting the legislative history argument and applying § 1332(c)(2) in a
wrongful death action where the nominal/representative plaintiff was a Maryland
citizen and the deceased and defendants were New York citizens, but not addressing
3
In James, 966 F. Supp. at 1114, the court adopted the legislative history
argument set forth by the present defendants. That appears to have been unnecessary
dicta, however, because the district court in James ultimately found “no contradiction”
between § 1332(c)(2) and the Alabama Wrongful Death Statute because “a ‘personal
representative’ under Alabama law is ‘the legal representative of the estate of the
decedent.’” Id. at 1116.
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the specific question of whom the nominal plaintiff represented); Green v. Lake of the
Woods County, 815 F. Supp. 305 (D. Minn. 1993) (finding § 1332(c)(2) applicable
to a Minnesota wrongful death action based on an analysis of the federal legislative
history, but not addressing the specific question of whether the Minnesota wrongful
death trustee represented the estate of the decedent).
In Green, relied on by the district court below, the court accepted the legislative
history argument and found it “clear that Congress chose the single term ‘legal
representative’ as a simple—and encompassing—term.” Green, 815 F. Supp. at 308.
There, the court focused on the fact that the plaintiff, a Minnesota wrongful death
trustee, was acting in a representative capacity. The court did not address the question
of whether the wrongful death trustee actually represented the estate. Instead, the
court stated that § 1332(c)(2) should apply broadly to representative plaintiffs such
as trustees, administrators, and executors because “the name a given state legislature
chooses for its ‘legal representative of the estate of a decedent’ should not govern
federal diversity jurisdiction.” Id. at 309. We agree with the general thrust of this
statement— substance rather than labels should drive analysis. However, we believe
that it remains necessary to determine whether representative plaintiffs, variously
labeled by a state legislatures, represent the estates of decedents. That is what the
federal statute requires, and what Minnesota law does not provide.
We reverse the judgment of the district court and remand for further
proceedings consistent with this opinion.
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