Chapman v. Therriault CV-97-372-SD 04/13/98 UNITED STATES DISTRICT COURT FOR THE

DISTRICT OF NEW HAMPSHIRE

Gregory G. Chapman, et al

v. Civil No. 97-372-SD

Iris Therriault, d/b/a Therriault Trucking

O R D E R

In this diversity action, plaintiffs Gregory Chapman,

personal representative of the estate of Tamber Chapman,

deceased, and Tiffani Chapman are suing Iris Therriault, d/b/a

Therriault Trucking for negligence and wrongful death. Defendant

Therriault has asserted a counterclaim for contribution against

Tamber Chapman. Presently before the court is plaintiffs' motion

to dismiss defendant's counterclaim, to which defendant objects.

Facts

This action arose from a collision between two automobiles,

one operated by decedent Tamber Chapman and occupied by plaintiff

Tiffani Chapman and the other operated by an employee of defendant

Therriault. In its counterclaim, defendant Therriault argues

that decedent Tamber Chapman was driving negligently, contributing

to the accident and injuries to Tiffani Chapman. Thus defendant

Therriault asserts that Tamber Chapman is liable on a theory of

contribution. Discussion

Defendant Therriault Trucking seeks to assert its

counterclaim for contribution concurrent with plaintiff Chapman's

principal action. However, plaintiff Chapman moves to dismiss

the counterclaim under New Hampshire's contribution statute.

Revised Statutes Annotated (RSA) 507:7-f & g, which prohibits

defendants from maintaining a cause of action for contribution

prior to resolution of the plaintiff's principal action, unless

the plaintiff consents. Here, plaintiff Chapman has expressly

withheld consent from defendant Therriault's counterclaim.

Defendant Therriault responds that RSA 507:7-f & g is displaced

by Rule 13 of the Federal Rules of Civil Procedure, which

requires a counterclaim arising out of the same transaction or

occurrence as the plaintiff's claim to be raised in the principal

action, regardless of plaintiff's consent. Thus there is a

direct conflict between RSA 507:7 and Rule 13. Under the former,

defendant Therriault cannot bring its counterclaim in this action

because plaintiff Chapman has not consented; under the later, the

counterclaim must be brought in this action, otherwise it is

deemed waived. Thus the court must determine whether the state

or the federal rule governs.

2 The validity of a Federal Rule that conflicts with state law

is judged under the Rules Enabling Act,

, which

provides:

(a) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrates thereof) and courts of appeals. (b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. (c) Such rules may define when a ruling of a district court is final for the purposes of appeal under section 1291 of this title.

Under the Rules Enabling Act, the Federal Rules govern in

federal court, displacing conflicting state rules provided they

do not "abridge, enlarge or modify any substantive right."

Plaintiff Chapman argues that his right under RSA 507:7 to

withhold consent from defendant Therriault's counterclaim should

be characterized as substantive, not procedural. Thus plaintiff

Chapman concludes that Rule 13 would abridge his substantive

right by requiring defendant Therriault to assert its

counterclaim in this action regardless of plaintiff's consent.

As support, plaintiff cites Connors v . Suburban Propane, Civ. No.

95-79-M, in which that court held that the consent provision of

RSA 507:7-f & g conferred substantive rights on plaintiffs, and

thus that court refused to apply Federal Rule of Civil Procedure

14, which would have permitted a third-party action for

contribution regardless of plaintiff's consent. In addition,

this court has found other support for plaintiff Chapman's 3 position. In Douglas v . NCNB Texas National Bank,

(5th Cir. 1992), the court refused to apply Rule 13 because

doing so would abridge the plaintiff's substantive right. Under

the applicable state law, when a borrower files an action

challenging the validity of a secured debt, the state's

compulsory counterclaim rule does not require the creditor to

counterclaim to collect on the debt if the creditor has a

contractual right to pursue a nonjudicial foreclosure. Under

Rule 13, however, the creditor must bring the counterclaim in the

borrower's principal action, or it is waived. According to the

Fifth Circuit, Rule 13 abridges the creditor's substantive right

to elect nonjudicial foreclosure.

However, this court respectfully disagrees with the Connors

and Douglas courts. Neither court provided solid reasoning for

the conclusion that the rights at issue were substantive.

Granted, there is scant precedent on the issue, see 17 M o o r e ' s

Federal Pra ct ic e , § 124.04 [2] (3d ed. 1997) ("Like the Supreme

Court, most lower federal courts have not decided many . . .

issues with reference to the Rules Enabling Act's substantive

rights provision."), and the caselaw has not yet produced any

clearly articulated criteria distinguishing between procedural

and substantive rights, in the context of Rule Enabling Act

analysis. Workable definitions have emerged in the context of

Erie R.R. v. Tompkins,

(1936), under which

substantive law is broadly defined by reference to Erie's twin

aims of preventing "forum-shopping and avoidance of inequitable

4 administration of the laws." Hanna v . Plummer,

(1965). However, "[t]he line between 'substantive' and

'procedure' shifts as the legal context changes,"

, and

neither term "represents the same invariants." Guaranty Trust

Co. v. York,

(1945). It is clear that Erie's

definition of substantive rights is too broad for Rules Enabling

Act analysis. In the Erie context, the question is whether a

federal judge-made rule may displace conflicting state law. In

such a case, the federalism concerns are strong because the

states enjoy no political influence over the federal judiciary

that would otherwise serve to protect the state's interests. In

Garcia v. San Antonio Metropolitan Transit Auth.,

(1985), the Court said, "the principal and basic limit on the

federal . . . power is that inherent in all congressional action

--the built-in restraints that our system provides through state

participation in federal government action. The political

process ensures that laws that unduly burden the States will not

be promulgated." However, this "principal and basic limit on the

federal . . . power" is inoperative when the federal judiciary

makes law that threatens to displace state law. Thus, Erie's

broad definition of substantive law that may not be displaced by

federal judge-made rules functions as "one of the modern

cornerstones of our federalism,"

(Harlan, J . , concurring), preserving a robust sphere of state

law-making authority against encroachment by an apolitical

federal judiciary.

5 However, as the Court noted in

, when there is a conflict between state law and one of the

Federal Rules, "the question facing the court is a far cry from

the typical, relatively unguided Erie choice." The Federal Rules

apply by congressional mandate, and are therefore subject to the

"principal and basic limit on the federal . . . power" inherent

in the political process. When one of the Federal Rules is held

to displace state law, the federalism concerns are less

significant than those at issue in the Erie context. Political

protections for the states' interests minimize the need for legal

protections, and the category of substantive state law that may

not be displaced by one of the Federal Rules may be more narrowly

circumscribed than in the Erie context.

This court believes that only those core rules governing the

"primary decisions respecting human conduct which our

constitutional system leaves to state regulation,"

(Harlan, J. concurring), may not be displaced by

the Federal Rules. While the states remain the primary

regulators of citizens' extra-judicial daily affairs, "the

constitutional provision for a federal court system (augmented by

the Necessary and Proper Clause) carries with it congressional

power,"

, to regulate citizens'

affairs in federal courts. The issue in this case, whether the

defendant may presently seek contribution as a counterclaim,

bears simply on the relations between the parties during this

federal judicial action rather than on the extra-judicial daily

6 affairs of the parties. For that reason, plaintiff Chapman's

right to consent under RSA 507:7 must be deemed procedural. Thus

application of Rule 13 does not abridge plaintiff Chapman's

substantive rights. Under the Rules Enabling Act, Rule 13 is

applicable to the case, and defendant Therriault must bring its

counterclaim regardless of plaintiff's consent.

Conclusion

For the foregoing reasons, plaintiff and counterclaim

defendant's motion to dismiss (document 9) must be and herewith

is denied.

SO ORDERED.

Shane Devine, Senior Judge United States District Court

April 13, 1998

cc: Nicholas R. Aeschliman, Esq. David K. Fulton, Esq. George W. Lindh, Esq.

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