40 F.4th 830
8th Cir.2022Background
- Dr. Charlisa Allen filed a wrongful-death suit and initially retained Neal Lewis; four years later she retained Wagstaff & Cartmell, LLP to litigate claims against heparin manufacturers.
- Wagstaff served as lead counsel and did the “bulk of the heavy lifting”; there was no written (or oral) fee‑splitting agreement between Lewis and Wagstaff and Lewis was never retained or employed by Wagstaff.
- After Allen’s dismissal of Lewis and a confidential settlement in 2018, Wagstaff filed a declaratory-judgment action seeking a declaration that it owed Lewis nothing (or alternatively the amount owed).
- Lewis counterclaimed (including quantum meruit), repeatedly moved to dismiss or amend pleadings, challenged subject-matter jurisdiction, and sought dismissal under abstention doctrines; he later abandoned the quantum meruit claim in briefing.
- The district court found diversity jurisdiction existed (concluding Lewis was domiciled in Indiana), denied Lewis’s motions to dismiss counterclaims without prejudice and to file a second amended answer, rejected abstention, and dismissed Lewis’s quantum meruit claim with prejudice as abandoned or meritless; it fixed Lewis’s recoverable fee at zero.
- The Eighth Circuit affirmed: it upheld the jurisdictional finding, the denials of leave to dismiss and to amend, the refusal to abstain, and the denial of Rule 59/60 relief.
Issues
| Issue | Plaintiff's Argument (Wagstaff) | Defendant's Argument (Lewis) | Held |
|---|---|---|---|
| Subject-matter jurisdiction (diversity) | Plaintiff: Partners’ citizenship properly alleged (Hyde decl.) and objective evidence shows Lewis domiciled in Indiana, creating complete diversity | Defendant: Wagstaff failed to prove partner citizenship; Lewis was domiciled in Missouri when suit was filed | Court: Affirmed jurisdiction; allowed complaint amendment via Hyde declaration and held objective factors show Lewis domiciled in Indiana |
| Motion to dismiss counterclaims without prejudice / leave to file 2d amended answer | Plaintiff: Denial appropriate because Wagstaff incurred expense, Lewis delayed, offered no adequate reason, amendments were in bad faith and futile | Defendant: Should be allowed to dismiss and to amend; quantum meruit could be pled as defense and dismissal would avoid preclusion | Court: Denial affirmed under Rule 41(a)(2) factors and abuse‑of‑discretion standard; amendment denied for bad faith, prejudice, and futility |
| Abstention / dismissal under Declaratory Judgment Act | Plaintiff: Federal court should exercise jurisdiction; no exceptional circumstances warrant abstention | Defendant: Court should dismiss under DJA to protect forum choice and because plaintiff alleges chiefly affirmative defenses | Court: Denial affirmed; applied Wilton/Scottsdale framework and concluded factors weigh against abstention |
| Motion to alter/amend judgment (Rule 59) and relief from judgment (Rule 60) | Plaintiff: Judgment that Lewis is entitled to zero fees is correct; no fraud or misconduct preventing presentation of case | Defendant: Argued he only abandoned claim to trust funds (not tort/quasi‑contract remedies) and alleged Wagstaff misconduct/unclean hands warrant relief | Court: Denial affirmed; Lewis abandoned quantum meruit and failed to show clear and convincing evidence of fraud or misconduct to justify Rule 60 relief |
Key Cases Cited
- Branson Label, Inc. v. City of Branson, 793 F.3d 910 (8th Cir. 2015) (district court may consider matters outside the pleadings when jurisdiction challenged)
- Nuevos Destinos, LLC v. Peck, 999 F.3d 641 (8th Cir. 2021) (federal courts are courts of limited jurisdiction; subject-matter jurisdiction cannot be waived)
- Barclay Square Props. v. Midwest Fed. Sav. & Loan Ass’n of Minneapolis, 893 F.2d 968 (8th Cir. 1990) (partnership citizenship requires examining each partner)
- Eckerberg v. Inter‑State Studio & Publ’g Co., 860 F.3d 1079 (8th Cir. 2017) (domicile requires physical presence and intent; objective factors govern)
- Witzman v. Gross, 148 F.3d 988 (8th Cir. 1998) (factors for Rule 41(a)(2) dismissal without prejudice)
- Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994 (8th Cir. 2005) (factors for discretionary dismissal/abstention in declaratory-judgment actions)
- Wilton v. Seven Falls Co., 515 U.S. 277 (1995) (Declaratory Judgment Act grants district courts substantial discretion)
- Cont’l Indem. Co. v. IPFS of New York, LLC, 7 F.4th 713 (8th Cir. 2021) (Rule 59(e) motions correct manifest error or present newly discovered evidence)
- In re Levaquin Prod. Liab. Litig., 739 F.3d 401 (8th Cir. 2014) (Rule 60(b) relief is extraordinary and requires exceptional circumstances)
- Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567 (2004) (jurisdictional facts measured at time of filing)