Appeal from a Memorandum Order of the United States District Court for the Western District of Pennsylvania Civil Action
Before: COWEN, ALITO, and ROSENN, Circuit Judges
This appeal, having wended a tortured procedural path to arrive finally at this court, raises an interesting issue concerning the extent of a federal court's jurisdiction: whether a federal district court, having previously dismissed an action for lack of subject-matter jurisdiction, could properly exert jurisdiction over an identical state court action removed to that federal court by the defendants on diversity grounds. Having considered the jurisdictional limitations imposed on a federal court by statutory law and the doctrine of res judicata, we hold that the district court is precluded from exercising further jurisdiction over that claim and must remand the case to the state court from which it was removed.
The current litigation arose out of a tragic accident that occurred at the Breezewood Interchange of the Pennsylvania Turnpike on June 17, 1990. A tractor-trailer owned by Ralph Meyers Trucking, Inc. ("Meyers Trucking") and operated by David A. Stacey "rear-ended" a motorcycle operated by Brian Kent Adams, on which Elizabeth Naomi Bromwell was a passenger, and then "rear-ended" a second motorcycle operated by John Darrow, Jr. Stacey's truck pushed the two motorcycles into the rear of another tractor-trailer, driven by Pete L. Wurm. The three motorcyclists, Adams, Bromwell, and Darrow, were killed in the collision and Wurm suffered serious physical and psychological injuries.
Representatives of the estates of the three deceased motorcyclists individually brought actions against Meyers Trucking and Stacey for wrongful death and negligence; Wurm brought an action against Meyers Trucking and Stacey for negligence. These actions were filed in the United States District Court for the Western District of Pennsylvania and were consolidated into a single case, with jurisdiction premised on diversity grounds pursuant to 28 U.S.C. Section(s) 1332. Both Meyers Trucking and Stacey are citizens of Michigan, Wurm is a citizen of Missouri, and the three decedents were citizens of Maryland.
On January 27, 1992, the district court granted a motion for partial summary judgment filed by the estate representatives and Wurm (hereinafter collectively referred to as "Appellants") on the issue of liability. The Appellants subsequently entered into a settlement agreement and release with Meyers Trucking's insurers, Michigan Mutual Insurance Company and Michigan Automobile Insurance Placement Facility (hereinafter referred to collectively as "Appellees"). The terms of the settlement agreement are, in pertinent part:
For and in consideration of the sum of Seven Hundred and Fifty Thousand Dollars ($750,000.00) plus whatever other liability insurance coverage that may be declared available by judgment of any Court as the result of any Declaratory Judgment action now pending or to be filed . . . hereby fully and forever release, acquit and discharge Ralph Meyers Trucking, Inc. and David Stacey to the full extent of their personal and/or corporate liability (while at the same time preserving our rights to pursue to the full extent possible the limits of insurance coverage available to either David Stacey and/or Ralph Meyers Tucking, Inc. pursuant to policies of insurance issued by Michigan Mutual and Michigan Automobile Insurance Placement Facility, the extent of said coverage having been placed at issue in the U.S. District Court for the Western District of Pennsylvania at Civil Actions Nos. 92-0183 and 92-1172 and/or which may be placed in issue in another court of competent jurisdiction) from any and all actions . . . by John Darrow, Jr., Elizabeth Naomi Bromwell, Pete L. Wurm, and Brian Kent Adams or our property sustained or received on or about the 17th day of June, 1990 when a vehicular accident occurred in the vicinity of the Breezewood Interchange of the Pennsylvania Turnpike for which injuries, losses and damages we claim Ralph Meyers Trucking, Inc. and David Stacey to be legally liable and on account of which suit was brought in the United States District Court for the Western District of Pennsylvania at Civil Actions Nos. 90-1120, 90-1608, and 91-1154, it being understood and agreed that the acceptance of said sum is in full accord and satisfaction of a disputed claim and that the payment of said sum is not an admission of liability by Ralph Meyers Trucking, Inc. and David Stacey.
The agreement further addressed the pending declaratory judgment action brought by the Appellants against the Appellees, stating:
It is further agreed and understood that this release and settlement agreement is not intended to compromise, reduce or in any way affect the continued prosecution or outcome of the Declaratory Judgment Actions filed by us and Michigan Mutual Insurance Company/Michigan Automobile Insurance Placement Facility at Nos. 92-0183 and 92-1172 in the United States District Court for the Western District of Pennsylvania or of any other Declaratory Judgment action that may be filed or of any appeals that may be taken therefrom. It is further agreed and understood by the parties hereto that the within Settlement Agreement and Release will not be raised as a ...