Ohio Hoist Manufacturing Co. v. Vincent Lirocchi, D/B/A Cable Climber Sales Co. , 490 F.2d 105 ( 1974 )

PHILLIPS, Chief Judge.

This is an appeal from an order of the District Court dismissing for lack of subject matter jurisdiction appellant’s damage action based on the theory of abuse of process.

Appellee LiRocchi obtained a money judgment against appellant in the United States District Court for the Central District of California. It is averred that execution of that judgment was stayed after appellant filed a motion for a new trial, but that, nevertheless, appel-lees presented to the United States District Court for the Northern District of Ohio for registration a document obtained from the California District Court entitled “Certification of Judgment for Registration in Another District” without revealing that execution of the California judgment had been stayed pending the motion for a new trial. The Ohio District Court subsequently issued a writ to appellees whereby execution was levied upon a bank account and other properties of appellant located in Ohio.

Appellant then instituted the instant abuse of process action with jurisdiction alleged on the basis of diversity of citizenship. 28 U.S.C. § 1332(a). The District Judge ruled that there was not complete diversity among all the parties inasmuch as appellant was a corporate citizen of Ohio and one party defendant, namely Lombardi, was also a citizen of Ohio. The District Judge consequently granted appellant leave to show cause why its complaint should not be dismissed for lack of jurisdiction.

Thereafter appellant abandoned its allegation that jurisdiction was predicated on diversity of citizenship and instead asserted jurisdiction on the basis that a federal question existed. 28 U.S.C. § 1331(a). The specific federal question alleged was a purported violation by ap-pellees of 28 U.S.C. § 1963, which provides in pertinent part as follows:

“A judgment in an action for the recovery of money or property now or hereafter entered in any district court which has become final by appeal or expiration of time for appeal may be registered in any other district by filing therein a certified copy of such judgment.”

The District Court, however, dismissed the case, finding that this alleged claim was “so insubstantial that subject matter jurisdiction is not present.”

Appellant contends that appellees’ violation of 28 U.S.C. § 1963 gave rise to a civil remedy under that statute. Although there is no express language in the statute conferring such a remedy, appellant asserts that a breach of a statutory duty gives rise to a private right of action on behalf of the injured person for whose benefit the statute was passed. Allen v. State Board of Elections, 393 U.S. 544, 557, 89 S.Ct. 817, 22 L.Ed. 2d 1 (1969). Further, in Stanford v. Utley, 341 F.2d 265 (8th Cir. 1965), then Circuit Judge Harry A. Blackmun, in holding that timely registration opens the way to enforcement procedure in the registration court, concluded that “§ 1963 is more than ‘ministerial’ and is more than a mere procedural device for the collection of the foreign judgment.” 341 F.2d at 268.

A brief summary of the legislative history of § 1963 is made an appendix to this opinion.

This statute has been held to have been adopted to protect both judgment creditors and judgment debtors from the additional cost and harassment of further litigation which otherwise would be incident to an action on the judgment in a foreign district. See, Stanford v. Utley, supra, 341 F.2d at 270, and authorities cited therein. One means of reducing the cost and harassment of further litigation is to permit the judgment creditor to enforce his registered judgment. In Gullet v. Gullet, 188 F.2d 719, 720 (5th Cir. 1951), the court held that the registration in a Florida District Court of a judgment of the District Court of the District of Columbia, pursuant to 28 U.S.C. § 1963, “has the same effect as a judgment of the Florida district court” and therefore “the judgment creditor is entitled to proceed by garnishment to enforce, payment.”

Under these authorities, the California judgment, once registered in the Northern District of Ohio, had the same effect as a judgment of the Northern District of Ohio. The United States District Court for the Northern District of Ohio has jurisdiction to enforce the judgment, and, as the record here indicates, has taken steps to do so.

The registration in Ohio of the judgment obtained in the California District Court was, in truth, according to the allegations of the amended complaint, an egregious violation of the terms of the statute. Not only had a motion for a new trial been filed in the California District Court after the judgment was rendered, but, in addition, the enforcement of the judgment had actually been stayed by the California court. These facts, as the amended complaint alleged, were known by the defendants-appellees at the time they accomplished the registration of the judgment in the Ohio District Court. The amended complaint further alleges that execution was issued on the registered judgment and that a levy was made upon certain bank accounts and properties of the plaintiff-appellant in Lisbon, Ohio, “seriously interfering with the conduct of plaintiff’s business.” The judgment was registered in the Ohio court as “Civil Action No. C 71-761.” The amended complaint prays not only for money damages, but also that the registration of the said judgment in the Ohio court “be quashed and expunged from the records of this court.”

Although the District Court by its order of October 4, 1972, after a pre-trial conference, vacated the judgment registered in case No. C 71-761, as requested by the plaintiff-appellant, it nevertheless dismissed the amended complaint by.its order of December 22, 1972, upon the ground that a civil remedy could not be inferred from a violation of the registration statute (§ 1963). The dismissal, as stated, was “for want of subject matter jurisdiction.”

While we decline to reach the question of whether a violation of § 1963 gives rise to a civil remedy for damages, it seems clear that the registering court has authority, necessarily implied from § 1963 and as a matter of inherent jurisdiction, where a foreign judgment has been registered in knowing violation of the terms of the registration statute, to grant relief (a) by annulling or vacating the registered judgment (as the court below has actually done); (b) by vacating any process or executions which may have issued upon the registered judgment; and (c) by restoring to the aggrieved parties any assets or properties which may have been seized or levied upon. These appear to be the minimum steps which a District Court could take to remedy a fraud which had been practiced upon it, and also to remedy a violation of the registration statute itself. Moreover, since it necessarily has implied federal authority to accomplish these results, the registering court also would have pendent jurisdiction of a non-federal claim for abuse of process where the aggrieved party has suffered damage or loss as a result of the wrongful registration. United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966); Hurn v. Oursler, 289 U.S. 238, 53 S.Ct. 586, 77 L.Ed. 1148 (1933).

In Hum it was held that state law claims are appropriate for federal court determination if they form a separate but parallel ground for relief also sought in a substantial claim based on federal law. In the Gibbs case the Supreme Court stated that “if, considered without regard to their federal or state character, a plaintiff’s claims are such that he would ordinarily be expected to try them all in one judicial proceeding, then, assuming substantiality of the federal issues, there is power in federal courts to hear the whole.” 383 U.S. at 725, 86 S.Ct. at 1138.

It is true that the Court pointed out in Gibbs that the justification for applying the doctrine of pendent jurisdiction “lies in considerations of judicial economy, convenience and fairness to litigants . . . .” 383 U.S. at 726, 86 S.Ct. at 1139.

Applying these principles to the present case, we are of the opinion that the jurisdiction of the registering court under § 1963 to take the remedial steps indicated above, where a foreign judgment has been registered in clear violation of the statute, presents a substantial federal question which it has the power to decide along with a closely related non-federal claim. It is clear to us that while the pendent jurisdiction doctrine may ultimately rest upon the exercise of discretion, the considerations of judicial economy, convenience and fairness to litigants referred to in Gibbs, dictate that the district court in the exercise of a sound judicial discretion should, on the facts presented here, entertain both the federal and non-federal claims.

It follows that the district court should proceed to adjudicate the appellant’s non-federal claims for damages proximately resulting from the wrongfully entered judgment.

The District Court’s dismissal of the appellant’s action for want of subject matter jurisdiction is reversed and the case is remanded for disposition of appellant’s claim on its merits.

In view of the foregoing disposition of this appeal, we need not reach the issue of whether appellant should be permitted under 28 U.S.C. § 1653 to amend its complaint to strike the non-diverse defendant as a party and thus proceed on the jurisdictional basis of diversity of citizenship.

Reversed and remanded.

APPENDIX

Section 1963 follows the recommendations of the Supreme Court’s Advisory Committee on Fed.R.Civ.P. (1937). The Committee proposed Rule 77, “Registration of Judgments in Other District Courts,” but the rule was never promulgated by the Supreme Court as a rule of procedure. Instead Congress enacted § 1963, which contained language similar to that in proposed Rule 77, as a part of the Judicial Code of 1948.

Except for a statement by Professor James William Moore of Yale Law School, there is no legislative history specifically on § 1963. On March 7, 1947, Professor Moore made the following statement before a subcommittee of the Committee on the Judiciary of the House of Representatives:

Ҥ 1963 provides for the registration of Federal judgments for the recovery of money or property in any other Federal district court. Provision for the registration of judgments in other courts is possible in some 46 British jurisdictions, and has been supported as to all judgments, State as well as Federal, by the American Bar Association, which has advocated congressional legislation in this matter since 1927.

“The Supreme Court’s advisory committee recommended a rule for the recognition of Federal judgments in 1937, but the Supreme Court did not promulgate the rule. While this may or may not be within the competence of the rule-making power, it is certainly within the competence of Congress at this time to provide for the registration of Federal judgments.” Hearings on H.B. 3214 Before a Subcommittee of the House Committee on the Judiciary, 80th Cong., 1st Sess., ser. 2, at 28 (1947).

The following is the text of proposed Rule 77 as contained in the final report of the Advisory Committee to the Supreme Court:

“Rule 77. Registration of Judgments in other District Courts. A judgment entered in any district court and which has become final through expiration of the time for appeal or by mandate on appeal may be registered in any other district court by filing therein an authenticated copy of the judgment. When so registered the judgment shall have the same effect and like proceedings for its enforcement may be taken thereon in the court in which it is registered as if the judgment had been originally entered by that court. If in the court in which the judgment was originally entered, the judgment has been satisfied in whole or in part or if an order has been made modifying or vacating it or affecting or suspending its operation, the party procuring the registration shall and any other party may file authenticated copies of the satisfaction or order with the court in which the judgment is registered. This rule shall not be construed to limit the effect of the Act of February 20, 1905, c. 592, § 20 (33 Stat. 729), as amended, U.S.C., Title 15, § 100; or the Act of March 4, 1909, c. 320, §§36 and 37 (35 Stat. 1084), U.S.C., Title 17, §§ 36 and 37; or § 56 of the Judicial Code, U.S.C., Title 28, § 117; or to authorize the registration elsewhere of an order or a judgment rendered in a divorce action in the District of Columbia.”

The note of the Advisory Committee on proposed Rule 77 was as follows:

“Compare the provisions of U.S.C., Title 28, § 252 (Judgments for set-off or counterclaims) for the registration of judgments of the Court of Claims in favor of the United States. ‘Any transcript of such judgment, filed in the clerk’s office of any district court, shall be entered upon the records thereof, and shall thereby become and be a judgment of such court and be enforced as other judgments in such court are enforced.’

“Provision for the registration of judgments in other courts is possible in some 46 British jurisdictions; and has been supported as to all judgments, state as well as federal, by the American Bar Association, which has advocated congressional legislation in this matter since 1927. See 52 A.B. A.Rep. 77-85, 292-310 (1927), and draft of an act at page 319; W. W. Cook, The Powers of Congress Under the Full Faith and Credit Clause (1919), 28 Yale L.J. 421-449; Ynte-ma, The Enforcement of Foreign Judgments in Anglo-American Law (1935), 33 Mich.L.Rev. 1128, 1150 et seq.; G. W. C. Ross, Full Faith and Credit in a Federal System (1936), 20 Minn.L.Rev. 140-190.”

The Supreme Court did not disclose why it did not adopt proposed Rule 77, but it has been suggested that the reason was apprehension that the rule might have affected substantive rights. See 2 Moore’s Federal Practice para. 1.-04 [2]; 1 Barron & Holtzoff, Federal Practice and Procedure (Wright Revision), § 5, pp. 20-21.