SOUTHEAST MORTGAGE COMPANY, Plaintiff-Appellee,
v.
Bеtty Ruth MULLINS, Defendant-Third-Party Plaintiff-Appellant,
v.
Carla Anderson HILLS, as Secretary of the United States
Department of Housing, etc., et al., Third-Party
Defendants-Appellees.
No. 74-1993.
United States Court of Appeals,
Fifth Circuit.
June 16, 1975.
Steven Wisotsky, Legal Services of Greater Miami, Inc., Miami, Fla., Robert A. Bertisch, Legal Services of Greater Miami, Inc., Perrine, Fla., for defendant-third-party plaintiff-appellant.
Robert W. Rust, U. S. Atty., Cаrol M. Anderson, Mary Ella Johnson, Asst. U. S. Attys., Miami, Fla., William Saxbe, U. S. Atty. Gen., U. S. Dept. of Justice, Washington, D. C., for third-party defendants-appellees.
C. Victor Tutan, James A. Smith, Miami, Fla., for plaintiff-appellee.
Appeal from the United States District Cоurt for the Southern District of Florida.
Before WISDOM and DYER, Circuit Judges, and KRAFT,* District Judge.
DYER, Circuit Judge:
On this appeal we are called upon to review an order dismissing with prejudice a third party complaint filed against the Department of Housing and Urban Development (HUD)1 by the defendаnt in a state mortgage foreclosure proceeding. The action came before the district court following removal by HUD pursuant to 28 U.S.C.A. § 1442, and is somewhat complicated by the fact that, following HUD's dismissal, the suit was remanded to state court. See 28 U.S.C.A. § 1447(c). We conclude that the remand does not bar our review of the district court's order dismissing the third party complaint, and that on the merits its action was correct, except that the dismissal should have been ordered without prejudice. As so modified, we affirm the district court's judgment.
Since this suit was dismissed on the pleadings, the factual allegations of the complaint must be taken as true for the purposes of appeal. Ward v. Hudnell, 5 Cir. 1966,
Mullins' 235 program mortgage was serviced by Southeast Mortgage Corporation. Due to the loss of her May, 1973, state assistance check under the Aid to Families with Dependent Children program, Mullins was unable to make the mortgage payment for June, 1973, when due. Although she explained that she would rectify the delinquency when the state reissued her welfare check, Southeast refused her subsequent tenders of individual monthly payments, and in September, 1973, demanded payment of all delinquent installments, attorney's fees, and related charges as a condition for reinstatement of the loan. Failing payment, Southeast instituted foreclosure proceedings in state court.
In addition to an answer, Mullins responded by filing a third party complaint against HUD which, as amended, sought relief on behalf of the class of all persons purchasing homes under the 235 program. The complaint alleged that HUD had violated the due process rights of the class by permitting the initiation of foreclosure proceedings, and the consequent suspension of government mortgage assistance payments, without a pretermination hearing; it also alleged that HUD was in violation of its duties under the National Housing Act by failing to enforсe as mandatory regulations certain provisions contained in the "Mortgagees Guide."2 The Guide recommended the use of informal procedures including letters, telephone calls, and personal visits by a mortgаgee to determine why a mortgage payment was late, and suggested the consideration of alternatives, such as accepting reduced payments, recasting the mortgage, or assigning the mortgage to the FHA, in liеu of foreclosure. HUD promptly removed the action to federal court, and filed a motion to dismiss the third party complaint. Its motion was granted and this appeal ensued.
As a threshold matter, we determine that wе have jurisdiction to review the district court's order of dismissal even though it resulted in a remand to state court. While by statute a remand order is non-reviewable "on appeal or otherwise," 28 U.S.C.A. § 1447(d), the situation before us is cоntrolled by the Supreme Court's decision in Waco v. United States Fidelity & Guar. Co., 1934,
(i)n logic and in fact the decree of dismissal preceded that of remand and was made by the District Court while it had control of the cause. Indisputably this order is the subject of аn appeal; and, if not reversed or set aside, is conclusive upon the petitioner.
Turning to the merits, we conclude that the claim Mullins seeks to assert cannot properly be raised by means of a third party complaint and that the district court acted correctly in dismissing it.
Under both Florida and federal rules of civil procedure, a third party defendant may be impleaded only when he "is or may be liable to (the defendant-third party plaintiff) for all or part of the plaintiff's claim against him." Fed.R.Civ.P. 14(a); Fla.R.Civ.P. 1.180(a). This permits the use of the procedural device of impleader only when the third party defendant's potential liability is dependent upon the outcome of the main claim, a concept discussed at some length in United States v. Joe Grasso & Son, Inc., 5 Cir. 1967,
(A)n entirely separate and independent claim cannot be maintained against a third party under Rule 14, even though it does rise out of the same general set of facts as the main claim.
The question whether a defendant's demand presents an appropriate occasion for the use of impleader or else constitutes a separate claim has been resolved consistently by permitting impleader only in cases where the third party's liability was in some way derivative of the outcome of the main claim. In most such cases it has bеen held that for impleader to be available the third party defendant must be "liable secondarily to the original defendant in the event that the latter is held liable to the plaintiff." Stating the same principle in different words, other authorities declare that the third party must necessarily be liable over to the defendant for all or part of the plaintiff's recovery, or that the defendant must attempt to pass on to the third party all оr part of the liability asserted against the defendant. Whichever expression is preferred, it is clear that impleader under Rule 14 requires that the liability of the third party be dependent upon the outcome of the main claim.
Under these principles, the impropriety of Mullins' class allegations is patent. The overwhelming majority of 235 program home purchasers are of course not being serviced by Southeast as mortgagee, and in any event, that institution's success or failure in foreclosing Mullins' mortgage is totally irrelevant to the issue of HUD's potential liability toward the class.
However, even treating Mullins' complaint as stating solely an individual rather than a class claim, we still find that it is insufficiently related to the main suit to be maintained by impleader. The gravamen of the third party complaint is that HUD has violated its statutory responsibilities under the 235 program by failing to provide more stringеnt limitations on the right of program mortgagees to foreclose, an issue on its face distinct from and collateral to those raised by Southeast's suit. The sole connection between the two is the contention that, but for HUD's failure to adopt and enforce adequate regulations, there would have been no foreclosure proceedings.
The suggestion that a separate and independent claim can be madе the proper subject of a third party complaint because, but for the violation of duty alleged the main claim would not have matured, has been rejected by this and other courts. A case closely in point is Mаjors v. Am. Nat'l Bank of Huntsville, 5 Cir. 1970,
To like effect is Rozelle v. Connecticut Gen. Life Ins. Co., 10 Cir. 1972,
The common thread running through these cases, and our own, is that the right or duty alleged to have been violated in the third party complaint does not emanate from the main claim but exists wholly indeрendent of it. In each, the nexus with the principal action is not that it establishes the right to relief, but merely the need for relief.
Since we hold that the district court's dismissal of Mullins' complaint was correct on procedural grounds, we need not and do not reach the question of whether it would state a claim in an appropriate proceeding. See, e. g., Brown v. Lynn, N.D.Ill.1974,
Affirmed.
Notes
Senior District Judge of the Eastern District of Pennsylvania, sitting by designation
The defеndants named in the third party complaint were James T. Lynn, Secretary of HUD, and Louis T. Baine, acting director of HUD's Miami office, both sued in their official capacities. For convenience, the agency name hаs been used in referring to these defendants throughout the opinion
Mortgagees Guide: Administration of Insured Mortgages, FHA G 4015
The holders of the timber rights were not directly involved in the foreclosure proceeding because the mortgage had been expressly made subject to them