McLaughlin v. Mississippi Power Co.

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED JULY 22, 2004
June 28, 2004
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
Clerk
No. 03-60214
MAX V MCLAUGHLIN; ET AL
Plaintiffs
v.
MISSISSIPPI POWER COMPANY; ET AL
Defendants
INTERSTATE FIBERNET INC
Plaintiff - Appellant
v.
THIRTY-SEVEN (37) PARCELS; ET AL
Defendants
THIRTY-SEVEN (37) PARCELS OF REAL PROPERTY, LOCATED IN
FORREST, HANCOCK, HARRISON, JACKSON, JONES, LAMAR AND
LAUDERDALE COUNTIES, MISSISSIPPI; BANCORPSOUTH BANK; MARY
JANE DELMAS BAUGH; TERRELL ANN FORD; MARGARET FORD MURPHY;
CHANTILLY CORP; CLEMOVER CORP; COLUMBIA VENTURES INC;
COMMUNITY BANK; FEDERAL LAND BANK ASSOCIATION OF SOUTH
MISSISSIPPI FLCA; JOHN FORD, also known as Rena A Ford,
Trustee Of The Rena A Ford Inter Vivos Trust Agreement; MARY
ELIZABETH FORD, also known as Rena A Ford, Trustee of the
Rena A Ford Inter Vivos Trust Agreement; RENA ANN FORD, also
known as Rena A Ford, Trustee of the Rena A Ford Inter Vivos
Trust Agreement; MARIE FORD HORNE, also known as Rena A
Ford, Trustee of the Rena A Ford Inter Vivos Trust
Agreement; H H WHITE LIMITED PARTNERSHIP; DAVID HOBGOOD;
RICHARD HOBGOOD; ROBERT HOBGOOD, also known as Robert
Hobgood; STEVEN A MCRAE, also known as Stephen McRae; DENNIS
L PIERCE; RAY CROWELL REAL ESTATE INC; BRYAN SALIBA; NICK
1
WELCH; WEYERHAEUSER CO; UNKNOWN OTHERS; PLUM CREEK SOUTH
CENTRAL TIMBERLANDS, LLC
Defendants - Appellees
PURCELL COMPANY INC
Defendant-Counter-Claimant - Appellees
v.
MISSISSIPPI POWER COMPANY
Counter-Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Mississippi
Before KING, Chief Judge, and BENAVIDES and CLEMENT, Circuit
Judges.
PER CURIAM:
Mississippi Power Company (MPC) and Interstate Fibernet,
Inc. (IFN) appeal an order dissolving an injunction, dismissing
IFN’s complaint, and refusing to certify a class. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
MPC, an electricity provider, owns easements across tracts
of real property owned by Nick Welch, Purcell Company, Inc.,
Weyerhaeuser Company, Plum Creek South Central Timberlands, LLC,
and the other defendants in this suit. Among other things, these
easements authorize MPC to operate telecommunications lines
across the defendants’ properties “in connection” with their main
business of supplying electricity.
2
MPC entered into a contract with IFN, wherein IFN agreed to
contribute to the cost of constructing and maintaining a fiber
optic line through MPC’s easements in exchange for the right to
use the line for its commercial telecommunications business. In
McDonald v. Mississippi Power Co., the Mississippi Supreme Court
held that MPC had the right, under the terms of its easements, to
install and to use fiber optic cables. 732 So. 2d 893, 897
(Miss. 1999). Additionally, the court held that MPC’s sublease
of the line to IFN did not constitute an additional servitude on
the properties. Id. But the court also held that the terms of
the easements prevented MPC from subleasing space on its fiber
optic cables “for purposes other than those which are in
connection with providing electricity.” Id. The court then
remanded the case. Id. at 898.
While McDonald was pending in the state trial court on
remand, IFN filed this suit in federal district court, seeking a
declaration that it owed no compensation to any of the defendants
for its use of MPC’s fiber optic line, either because MPC had the
right to allow IFN to use its fiber optic line or because IFN’s
use of the line imposed no additional burden or servitude on the
properties. In the alternative, IFN asked the district court to
condemn an interest across the thirty-seven parcels of land for
its use. IFN premised jurisdiction on diversity of citizenship.
Two of the defendants to the suit, Welch and Purcell, filed
3
a class-action counterclaim against IFN and a class-action third-
party complaint against MPC and Southern Company, which owns MPC.
Welch and Purcell’s counterclaim and third-party complaint
alleged violations of the Racketeer Influenced and Corrupt
Organizations Act (RICO), 18 U.S.C. § 1961 et seq. (2000),
slander of title, trespass, civil conspiracy, unjust enrichment,
fraudulent concealment, and conversion. MPC, in turn, filed a
counterclaim against Welch and Purcell, seeking a declaration
that it had the right to allow third parties to use its
telecommunication lines, a declaration that Welch and Purcell
(and any future class members) had suffered no damages, and an
injunction against Welch and Purcell (and any future class
members) to prevent them from interfering with MPC’s use of its
telecommunications lines.
After MPC was made a party to Interstate Fibernet, the
district court consolidated the suit with McLaughlin v.
Mississippi Power Co., a similar suit filed by Mississippi
landowners against MPC. The district court’s order consolidated
the two suits “for all purposes.”
In the meantime, IFN filed a motion with the district court
to enjoin two defendants, Bryan Siliba and Dennis Pierce, from
pursuing an action they had filed in Mississippi state court
against IFN and MPC. The district court granted IFN’s motion,
pending resolution of the court’s subject-matter jurisdiction.
In accordance with their class-action counterclaim and
4
third-party complaint, Welch and Purcell filed a motion to
certify a class of similarly situated landowners. Shortly
thereafter, IFN moved to file an amended complaint that requested
certification of a defendant and counter-plaintiff class
represented by Welch and Purcell.1 Eventually, though, Welch and
Purcell filed a motion to withdraw their motion for class
certification and began to oppose IFN’s attempts to certify a
class. Welch and Purcell asserted that the typicality and
adequacy requirements for class certification under Federal Rule
of Civil Procedure 23 could not be met.
On February 19, 2003, the district court issued a memorandum
opinion and order. After finding that it lacked subject-matter
jurisdiction over IFN’s claims, the district court dismissed
IFN’s complaint, denied IFN and MPC’s motion for class
certification, and vacated the injunction against state-court
proceedings. The district court also purported to dismiss “the
case styled Interstate Fibernet v. Thirty-Seven (37) Parcels of
Real Property.” IFN appealed “from the order entered in Civil
Action No. 1:01CV324SR on the 19th day of February,
2003, . . . and from any final judgment to be entered pursuant
thereto under Fed.R.Civ.P. 58.” The district court did not,
however, dismiss McLaughlin, the case with which Interstate
Fibernet had been consolidated. Furthermore, the district court
1
MPC later joined in IFN’s motion for class
certification.
5
did not enter a final judgment under Rule 58.
After IFN and MPC filed an appeal with this court, the
district court continued to exercise jurisdiction over Interstate
Fibernet. The district court issued an order on March 19, 2003
that, inter alia, granted Welch and Purcell’s motion to withdraw
their RICO claims, granted Welch and Purcell’s motion to withdraw
their motion for class certification, and denied as moot Welch
and Purcell’s motion to dismiss for lack of subject-matter
jurisdiction. The order also dealt with various issues in the
McLaughlin case. Then, on May 7, 2003, the district court issued
an order granting John M. Deakle’s motion for leave to withdraw
as counsel of record for Welch and Purcell.
Based on the unusual circumstances surrounding the district
court’s February 19 order, this court requested the parties to
address whether we have jurisdiction to hear this appeal. Welch
and Purcell took the position that we lack appellate
jurisdiction, and filed a motion to remand. That motion was
carried with the case.
II. APPELLATE JURISDICTION
A. 28 U.S.C. § 1291
Before we consider the merits of this appeal, we must first
determine whether appellate jurisdiction exists. IFN and MPC
contend that we have jurisdiction over this appeal because the
district court’s February 19 order was a “final decision”
6
appealable under 28 U.S.C. § 1291. Welch and Purcell respond
that the order is not a final decision, under Ringwald v. Harris,
675 F.2d 768, 771 (5th Cir. 1982), because the order dealt only
with Interstate Fibernet, even though Interstate Fibernet had
been consolidated for all purposes with McLaughlin and the two
suits could have been filed as one suit. IFN and MPC disagree.
We conclude, however, that the district court’s February 19 order
was not a final judgment because it did not dispose of all claims
in the Interstate Fibernet case and the district court did not,
apparently, intend for the order to be a final judgment.
“A ‘final decision’ generally is one which ends the
litigation on the merits and leaves nothing for the court to do
but execute the judgment.” Catlin v. United States, 324 U.S.
229, 233 (1945). Thus, “as a general rule, all claims and issues
in a case must be adjudicated before appeal, and a notice of
appeal is effective only if it is from a final order or
judgment.” Swope v. Columbian Chems. Co., 281 F.3d 185, 191 (5th
Cir. 2002). We have also cautioned that “[t]he intention of the
judge is crucial in determining finality.” Vaughn v. Mobil Oil
Exploration & Producing S.E., Inc., 891 F.2d 1195, 1197 (5th Cir.
1990).
In its February 19 order, the district court did not dispose
of all the claims before it; Welch and Purcell’s counterclaims
and third-party complaint were still pending, as was MPC’s
counterclaim. Therefore, the district court’s order would not
7
normally be considered a final judgment. There are at least two
exceptions to the rule that a district court must dispose of all
issues for its decision to be final, however. Thus, before
concluding that the February 19 order was not a final decision,
we must consider whether either of these exceptions applies.
First, a decision is final if the only claims not disposed
of by the district court were abandoned. E.g., Moreau v. Harris
County, 158 F.3d 241, 244 (5th Cir. 1998); Chiari v. City of
League City, 920 F.2d 311, 314 (5th Cir. 1991). There is no
argument here that the parties abandoned their claims.
Therefore, this exception does not apply.
Second, a decision that does not specifically refer to all
pending claims will be deemed final if it is clear that the
district court intended, by the decision, to dispose of all
claims. Vaughn, 891 F.2d at 1197-98; see also Armstrong v. Trico
Marine, Inc., 923 F.2d 55, 58 (5th Cir. 1991). Thus, in Vaughn,
we held that a district court’s decision was intended to be
final, even though it left open a cross-claim, because it was
“couched in language calculated to conclude all claims,” and,
after issuing the judgment, the district court closed the case
and the clerk entered judgment. 891 F.2d at 1197-98. Likewise,
in Armstrong, we held that a district court’s decision was final
even though it failed to address two of the plaintiff’s claims,
because the district court’s decision “facially dismissed [the]
entire complaint” and the clerk subsequently entered judgment
8
against the plaintiff. 923 F.2d at 58.
Unlike the district courts in Vaughn and Armstrong, the
district court here did not evince an intent to end the
litigation by its order. True, the order did purport to dismiss
the entire case. But, importantly, the district court did not
close the case or direct the clerk to enter judgment after
issuing its opinion. Furthermore, the district court continued
to exercise jurisdiction over the case following its February 19
order, issuing orders on March 19 and on May 7. Accordingly, we
conclude that the district court did not intend for its February
19 order to be a final judgment.2
Because the February 19 order did not dispose of all the
claims in the case, and the district court did not, apparently,
intend for the order to be final, the order is not a final
decision. The parties failed to appeal from the district court’s
subsequent orders on March 19 and May 7. Therefore, there has
2
Moreover, this court did not gain jurisdiction over the
appeal once the district court dismissed Welch and Purcell’s RICO
counterclaim. Although our circuit formerly accepted premature
appeals in cases where the judgment became final prior to the
disposition of the appeal, Alcorn County, Miss. v. United States
Interstate Supplies, Inc., 731 F.2d 1160, 1165-66 (5th Cir.
1984), we held in United States v. Cooper, 135 F.3d 960, 963 (5th
Cir. 1998), that the Alcorn line of cases was no longer good law
after the Supreme Court’s opinion in FirsTier Mortgage Co. v.
Investors Mortgage Insurance Co., 498 U.S. 269 (1991). The rule
announced in Cooper is that we may consider premature appeals
“only where there has been a final decision, rendered without a
formal judgment.” 135 F.3d at 963. Since the district court’s
February 19 order was not a final decision, the appeal cannot be
saved by the rule in Cooper.
9
been no appeal from a final decision, and we do not have
jurisdiction over this appeal under § 1291.
B. 28 U.S.C. § 1292(a)(1)
In the alternative, IFN contends that this court has
jurisdiction over its appeal under 28 U.S.C. § 1292(a)(1) because
the February 19 order dissolved an injunction. Section
1292(a)(1) provides that “the courts of appeals shall have
jurisdiction of appeals from . . . [i]nterlocutory orders of the
district courts . . . dissolving injunctions.”
In its February 19 order, the district court vacated the
injunction it had entered on March 25, 2002, which prohibited
Defendants Siliba and Pierce from pursuing their state-court suit
against IFN and MPC. Thus, it would appear that we have
jurisdiction over this appeal under § 1292(a)(1). Nevertheless,
Welch and Purcell, citing Gardner v. Westinghouse Broadcasting
Co., 437 U.S. 478 (1978), argue that jurisdiction under
§ 1292(a)(1) does not exist because dissolution of the injunction
did not have an “irreparable impact on the merits of the
controversy,” id. at 482.
Welch and Purcell’s reliance on Gardner is misplaced.
Gardner did not deal with a situation where the district court
had explicitly granted or denied an injunction. Rather, the
question in Gardner was whether an order denying a motion for
class certification could be appealed under § 1292(a)(1) as an
10
order denying an injunction. Id. at 478-79. The Court held that
the order denying class certification could not be appealed
because it had “no direct or irreparable impact on the merits of
the controversy.” Id. at 482. Gardner did not change the rule
that “[o]rders which explicitly grant or deny injunctive relief
are immediately appealable as of right; no additional finding of
a threat of immediate, irreparable injury is required.” Sherri
A.D. v. Kirby, 975 F.2d 193, 203 (5th Cir. 1992). But, after
Gardner, “orders which . . . have the practical effect of denying
an injunction, but do not do so in explicit terms, are
immediately appealable if the order threatens ‘serious, perhaps
irreparable consequences’ and can be effectively challenged only
by immediate appeal.” Id. (quoting Carson v. Am. Brands, Inc.,
450 U.S. 79, 84 (1981)).
The district court’s February 19 order explicitly dissolved
an injunction that it had previously granted. Thus, an appeal
from that order fits squarely within § 1292(a)(1) and no finding
of irreparable injury is required. See Hamilton Plaintiffs v.
Williams Plaintiffs, 147 F.3d 367, 370 (5th Cir. 1998) (“[T]he
challenged order explicitly dissolved injunctive relief . . . .
Accordingly, the order clearly is appealable under 28 U.S.C.
§ 1292(a)(1).”). Consequently, we have jurisdiction over this
appeal.3
3
Given our conclusion that we have jurisdiction over
this appeal under § 1292(a)(1), we deny the motion of Welch and
11
III. SCOPE OF THE APPEAL
In this interlocutory appeal under § 1292(a)(1), we may
consider only those issues that bear on the district court’s
decision to dissolve the injunction against Siliba and Pierce.
The district court’s decision to dissolve the injunction was
premised on its conclusion that it lacked subject-matter
jurisdiction over IFN’s claims. Thus, in order to consider
whether the dissolution was proper, we must necessarily consider
whether the district court was correct that it lacked subject-
matter jurisdiction. See Veldhoen v. United States Coast Guard,
35 F.3d 222, 225 (5th Cir. 1994) (considering the district
court’s subject-matter jurisdiction on an appeal of an order
denying an injunction under § 1292(a)(1)).
MPC asks us also to consider its counterclaim against Welch
and Purcell. MPC’s counterclaim, however, has no bearing on the
district court’s decision to dissolve the injunction. Therefore,
we will not address the issue in this appeal. See Sherri A.D.,
975 F.2d at 204-05 (declining, in an appeal under § 1292(a)(1),
to consider issues that did not “resolve the legal status of
plaintiff’s claims for injunctive relief.”).
IV. SUBJECT-MATTER JURISDICTION
A. Standard of Review
We review for abuse of discretion the district court’s
Purcell to remand for lack of appellate jurisdiction.
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decision to dissolve an injunction. Collum v. Edwards, 578 F.2d
110, 113 (5th Cir. 1978). Here, however, the district court
based its dissolution of the injunction on the legal conclusion
that it lacked subject-matter jurisdiction. We review this legal
issue de novo. See Guy Carpenter & Co. v. Provenzale, 334 F.3d
459, 463 (5th Cir. 2003); In re Bissonnet Invs. LLC, 320 F.3d
520, 522 (5th Cir. 2003). We review a district court’s decision
regarding class certification for abuse of discretion. Allison
v. Citgo Petroleum Corp., 151 F.3d 402, 408 (5th Cir. 1998).
B. Diversity Jurisdiction
In Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806), the
Supreme Court established the rule of complete diversity for
cases arising under 28 U.S.C. § 1332. “The concept of complete
diversity requires that all persons on one side of the
controversy be citizens of different states than all persons on
the other side.” Harrison v. Prather, 404 F.2d 267, 272 (5th
Cir. 1968). IFN concedes that complete diversity does not exist
in this case because it shares state citizenship with some of the
defendants. Nevertheless, IFN argues that jurisdiction is proper
in this case, for one of three reasons. First, IFN contends that
Federal Rule of Civil Procedure 71A creates an exception to the
rule of complete diversity. Second, IFN suggests that any
nondiverse defendants could be dismissed from the case, leaving
the district court with subject-matter jurisdiction over the
13
remaining parties. Third, IFN points out that complete diversity
is not required under Federal Rule of Civil Procedure 23 and,
thus, that jurisdiction would exist if the district court had
certified a class. We address each of these arguments in turn.
1. Rule 71A
28 U.S.C. 1367(a) authorizes courts to exercise supplemental
jurisdiction over “claims that are so related to claims in the
action within such original jurisdiction that they form part of
the same case or controversy under Article III.” Section 1367(b)
provides, however, that when original jurisdiction is based on
the diversity of the parties, the district court may not exercise
supplemental jurisdiction “over claims by plaintiffs against
persons made parties under Rule 14, 19, 20, or 24 of the Federal
Rules of Civil Procedure” when it would be “inconsistent with the
jurisdictional requirements of section 1332.”4
IFN argues that the defendants were not joined under Rules
4
The full text of § 1367(b) provides:
In any civil action of which the district courts have
original jurisdiction founded solely on section 1332 of
this title, the district courts shall not have
supplemental jurisdiction under subsection (a) over
claims by plaintiffs against persons made parties under
Rule 14, 19, 20, or 24 of the Federal Rules of Civil
Procedure, or over claims by persons proposed to be
joined as plaintiffs under Rule 19 of such rules, or
seeking to intervene as plaintiffs under Rule 24 of such
rules, when exercising supplemental jurisdiction over
such claims would be inconsistent with the jurisdictional
requirements of section 1332.
14
14, 19, 20, or 24 of the Federal Rules of Civil Procedure.
Rather, the parties were joined under Rule 71A, which governs
condemnation actions. Since Rule 71A is not listed in § 1367(b),
reasons IFN, Congress must have meant to exclude it. Thus,
according to IFN, the district court could have exercised
supplemental jurisdiction (consistent with § 1367(b)) over IFN’s
claims against the nondiverse defendants.
IFN’s reasoning suffers from a fundamental flaw. Rule
71A(b) provides that, in condemnation actions, “[t]he plaintiff
may join in the same action one or more separate pieces of
property, whether in the same or different ownership and whether
or not sought for the same use.” (emphasis added). Thus, Rule
71A permits joinder of “pieces of property,” not parties. Cf.
Garrett v. United States, 407 F.2d 146, 150 n.5 (8th Cir. 1969)
(“Provisions of Rule 71A(b) permitting joinder of parcels of land
in condemnation are much broader than comparative provisions
governing joinder of parties (Rules 19 and 20) or joinder of
claims (Rule 18).” (emphasis added)). The defendants in this
suit, therefore, must have been joined under another Rule, such
as Rule 19 or Rule 20. See FED. R. CIV. P. 71A(a) (“The Rules of
Civil Procedure for the United States District Courts govern the
procedure for the condemnation of real and personal property
under the power of eminent domain, except as otherwise provided
in this rule.”); see also United States v. Smith, 307 F.2d 49, 58
(5th Cir. 1962) (noting that parties could be joined pursuant to
15
Rule 19 in a condemnation proceeding under Rule 71A). Since
§ 1367(b) provides that there must be complete diversity where
parties are joined in a diversity suit under Rule 19 or Rule 20,
complete diversity is required here.
2. Dismissal of nondiverse parties
Even if Rule 71A does not create an exception to the rule of
complete diversity, argues IFN, diversity in this suit could be
obtained by dismissing any nondiverse parties. In appropriate
circumstances, a court of appeals may dismiss dispensable
nondiverse parties whose presence defeats diversity jurisdiction.
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 837-38
(1989). We conclude, however, that once IFN joined the separate
parcels of real property, the landowners became indispensable
parties. Thus, we decline to dismiss the nondiverse parties in
this suit.
In a suit to condemn real property, known property owners
are necessary parties who must be joined. See FED. R. CIV. P.
71A(c)(2) (“Upon the commencement of the action, the plaintiff
need join as defendants only the persons having or claiming an
interest in the property whose names are then known . . . .”
(emphasis added)); United States v. 194.08 Acres of Land, 135
F.3d 1025, 1031 (5th Cir. 1998). Since IFN elected to proceed
against multiple properties in this suit, IFN was required to
16
join all property owners.5 Thus, technically, it is not the
parties who were misjoined, but the properties. Rule 21 gives us
the power to dismiss misjoined parties. See Rule 21 (“Parties
may be dropped or added by order of the court on motion of any
party or of its own initiative at any stage of the action and on
such terms as are just.” (emphasis added)); Newman-Green, 490
U.S. at 837-38. But there is no corresponding rule that permits
us to dismiss misjoined properties. Consequently, we may dismiss
neither the properties nor their (now-necessary) owners from this
suit, in order to establish diversity jurisdiction.
3. Rule 23
Finally, IFN argues that it need not be diverse from every
landowner, if the landowners are certified as a class. “[I]n a
class action authorized pursuant to Federal Rule of Civil
Procedure 23, only the citizenship of the named representatives
of the class is considered, without regard to whether the
citizenship of other members of the class would destroy complete
diversity. . . .” Carden v. Arkoma Assocs., 494 U.S. 185, 199-
200 (1990); Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d
720, 723 (5th Cir. 2002). Thus, the citizenship of the unnamed
class members is irrelevant to whether we have diversity
5
Of course, it was not necessary for IFN to join all
properties it sought to condemn. Cf. FED. R. CIV. P. 71A(b) (“The
plaintiff may join in the same action one or more separate pieces
of property . . . .” (emphasis added)).
17
jurisdiction, so long as the named class members are diverse from
the opposing parties.
Before the district court, IFN and MPC requested that Welch
and Purcell be made representatives of a defendant and counter-
plaintiff class. A class represented by Welch and Purcell would
not meet diversity requirements because (as IFN concedes) Purcell
is not diverse from IFN. On appeal, however, IFN and MPC have
changed tactics and now argue that a class should have been
certified with Welch alone acting as class representative. Since
Welch is diverse from IFN, and the amount in controversy has been
met with regard to Welch, a class represented by Welch would (as
the new theory goes) meet the diversity requirements of § 1332.
We are not disposed to salvage the district court’s jurisdiction
over this case by permitting IFN and MPC to raise for the first
time on appeal an argument that would require us to permit one
class representative to be dropped, leaving only Welch as the
lone class representative. The propriety of Welch as the lone
class representative was not passed on by the district court, and
it is a sensitive, fact-bound inquiry that ought not be made in
the first instance at the court of appeals level. Accordingly,
we conclude that the district court did not have diversity
jurisdiction over this case.
C. Federal-Question Jurisdiction
IFN argues that even if diversity jurisdiction is lacking,
18
federal-question jurisdiction was created when Welch and Purcell
filed their counterclaim against IFN. According to IFN, the
district court had federal-question jurisdiction over Welch and
Purcell’s counterclaim because the claim--which asserted
violations of RICO, 18 U.S.C. § 1961 et seq.--arose under federal
law. See 28 U.S.C. § 1331. Furthermore, IFN contends that, once
it had jurisdiction over Welch and Purcell’s counterclaim, the
district court could have exercised supplemental jurisdiction
over IFN’s state-law claims.
If an independent jurisdictional ground exists for a
counterclaim, the district court can retain jurisdiction over the
counterclaim even if the original claims are dismissed for lack
of subject-matter jurisdiction. Kuehne & Nagel (AG & Co) v.
Geosource, Inc., 874 F.2d 283, 291 (5th Cir. 1989). Moreover, if
the district court retains jurisdiction over the counterclaim, it
may permit the dismissed claims to be asserted as counterclaims
to the retained claim. Id. But that does not mean that
dismissal of the original claims is not warranted in the first
place. See id. IFN never attempted to re-file its claims as
counterclaims. Nor did it appeal the district court’s decision
to allow Welch and Purcell to withdraw their RICO counterclaims.
Therefore, we see no error in the district court’s dismissal of
IFN’s state-law claims for lack of subject-matter jurisdiction.
V. CONCLUSION
19
We AFFIRM the district court’s decision to dissolve the
injunction against Siliba and Pierce for the reason, recognized
by the district court, that it had no jurisdiction to enter the
injunction.
20