John K. WHITEFORD, M.D., Appellant, v. John REED, Director of the Professional Liability Catastrophic Loss Fund; Daniel Kimball, Jr., M.D., Chairman of the Pennsylvania State Board of Medicine; Gerald Smith, Esq., Counsel for the State Board of Medicine, Commonwealth of Pennsylvania.
No. 97-3652.
United States Court of Appeals, Third Circuit.
Decided Sept. 9, 1998.
155 F.3d 671
Submitted Pursuant to Third Circuit LAR 34.1(a) July 17, 1998.
Notwithstanding any uncertainty in assessing lost profits as a measure of expectation damages, contract law does not preclude an otherwise appropriate remedy under a restitution theory of damages. This is especially the case where, as here, unknown variables cloud a reasonably certain calculation of lost profits stemming from the breach of the teaming agreement. See Air Tech., 199 N.E.2d at 549. Thus, we agree that it would be appropriate for the district court to measure “the fair value of [the subcontractor‘s] contribution to [the prime contractor‘s] agreement,” in order to protect the subcontractor‘s restitution interest. Id.
As the district court properly concluded in this case, plaintiffs contributed valuable services to defendant‘s Greek RFP bid and significantly enhanced its chances of winning the project. However, the court ultimately held that “it is not clear how to quantify the value of those services,” and therefore denied restitution as a measure of damages. While we share the district court‘s appreciation of the difficulties in measuring the benefit conferred on defendant, we believe the court‘s denial of restitution as a possible remedy premature without an evidentiary hearing. The district court, with characteristic courtesy, did invite the parties to further brief the issue of restitution, but it did not offer them an opportunity to present additional evidence that might shed light on the quantification of restitution damages. Such evidence might include the testimony of knowledgeable experts in the field who would testify as to the reasonable value of plaintiffs’ technical and consulting services in this market of government contracting. Furthermore, as the plaintiffs claimed before the district court, defendant saved approximately $2 million by subcontracting with Craig and Airflow. See App. at 835. If this is indeed the case, the district court may then consider how much of that savings reflected preliminary services rendered by the plaintiffs that ultimately benefitted the Craig proposal. Thus, given the possibility of the plaintiffs’ proving reasonable restitution damages, we will vacate the district court‘s entry of judgment against defendant for nominal damages in the amount of $1. In arriving at this conclusion to remand, we believe that equitable considerations must predominate over a parochial approach to the number of issues properly before us.
IV. Conclusion
For the foregoing reasons, the judgment of the district court will be affirmed except as to the award of nominal damages. The entry of judgment against defendant in the amount of $1 will be vacated and the matter remanded to the district court in accordance with the directions in this opinion.
John K. Whiteford, Murrysville, PA, Appellant, Pro Se
Before: BECKER, Chief Judge, STAPLETON and WEIS, Circuit Judges.
OPINION OF THE COURT
STAPLETON, Circuit Judge.
Whiteford appeals the district court‘s dismissal of his complaint for lack of subject matter jurisdiction under the Rooker-Feldman doctrine. Whiteford argues that Rooker-Feldman is inapplicable because no state court addressed the merits of his claims. We have jurisdiction under
I.
Whiteford, a Pennsylvania physician, filed suit in the United States District Court for the Western District of Pennsylvania alleging that Pennsylvania‘s Health Care Services Malpractice Act (“Act“) violates several of his constitutional rights.
for the purpose of paying all awards, judgments and settlements for loss or damages against a health care provider entitled to participate in the fund as a consequence of any claim for professional liability against such health care provider as a defendant or additional defendant to the extent such health care provider‘s share exceeds its basic coverage in effect at the time of the occurrence.
In 1995, the Fund was operating under a $107 million deficit. To deal with this deficit, the Fund imposed the first emergency surcharge in the Fund‘s history. Generally, the emergency surcharges amounted to several thousand dollars per physician. Appellant Whiteford did not pay his 1995 emergency surcharge.
The Act and applicable regulations provide two major consequences for failure to pay surcharges. First, nonpaying health care providers are no longer “covered by the Fund in the event of loss.”
Upon determining that Whiteford had failed to pay his 1995 emergency surcharge, the Fund initiated formal administrative proceedings against Whiteford including a hearing held on October 26, 1996.2 At the hearing, Whiteford admitted to his failure to pay and presented an affirmative defense that the Fund surcharges violated his constitutional rights. Additionally, Whiteford informed the hearing officer that he was no longer carrying medical malpractice insurance as required by the Act.
Whiteford then filed this action in the Western District of Pennsylvania claiming that the suspension of his license and imposition of the fine, as well as the Act generally, violated his constitutional rights.3 The district court dismissed Whiteford‘s complaint for lack of subject matter jurisdiction under the Rooker-Feldman doctrine without considering his constitutional claims. In dismissing Whiteford‘s action under Rooker-Feldman the district court stated:
When a plaintiff seeks to litigate a claim in federal court, the existence of a state court judgment in another case bars the federal proceeding under Rooker-Feldman when entertaining the federal court claim would be the equivalent of an appellate review of that order.
(App. B3). The district court was correct in its characterization of the Rooker-Feldman doctrine, however, we conclude that the court incorrectly applied the doctrine in this case.
II.
“Under
In other words, Rooker-Feldman precludes a federal action if the relief requested in the federal action would effectively reverse the state decision or void its ruling. Accordingly, to determine whether Rooker-Feldman bars [a] federal suit requires determining exactly what the state court held ... If the relief requested in the federal action requires determining that the state court‘s decision is wrong or would void the state court‘s ruling, then the issues are inextricably intertwined and the district court has no subject matter jurisdiction to hear the suit. FOCUS, 75 F.3d at 840. The Rooker-Feldman doctrine has been interpreted to apply to the decisions of lower state courts. In re General Motors Corp. Pick-Up Truck Fuel Tank Prod‘s Liability Litigation, 134 F.3d 133, 143 (3d Cir.1998).
The state court dismissed Whiteford‘s appeal of the Board‘s decision because Whiteford‘s petition contained “numerous substantial errors which impair[ed the court‘s] ability to conduct a meaningful review.” (App. A3). Thus, the court held that he had violated Pennsylvania‘s rules of appellate procedure.
Moreover, this court has consistently held that where a state action does not reach the merits of a plaintiff‘s claims, then Rooker-Feldman does not deprive the federal court of jurisdiction. See Gulla, 146 F.3d at 172-73; E.B. v. Verniero, 119 F.3d 1077, 1091 (3d Cir.1997) (noting that if state court had not decided merits of plaintiff‘s claim, then Rooker-Feldman would not bar federal action). For instance, in Gulla the plaintiffs brought a constitutional challenge in state court to a municipality‘s decision regarding subdivision of property adjacent to their own. Gulla, 146 F.3d at 170. The state court dismissed plaintiffs’ action because it concluded that they lacked standing under state law.
[W]e conclude that the Gullas are not precluded from bringing their federal claims because the state court could not and did not adjudicate the merits of their constitutional claims. Rather, the state court noted that the Gullas lacked standing to raise their constitutional claims ... Since the Gullas could not obtain an adjudication of their claims in state court, they are not precluded from raising their constitutional claims in the federal forum.
Id. at 173. Similarly, Whiteford could not obtain an adjudication of his constitutional claims in state court and Rooker-Feldman does not preclude him from seeking review in federal court.
III.
In sum, we conclude that the district court erred when it dismissed Whiteford‘s complaint under the Rooker-Feldman doctrine. We will reverse and remand so that the district court may consider his claims.
STAPLETON
CIRCUIT JUDGE