KINGSTON CONSTRUCTORS INC v. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY

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Court of Appeal, Second District, Division 2, California.

KINGSTON CONSTRUCTORS, INC., Plaintiff and Appellant, v. WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY, Defendant and Respondent.

No. B088727.

Decided: April 03, 1996

Ronald K. Losch, San Francisco, for Plaintiff and Appellant. Mayer, Brown & Platt, Kenneth S. Geller and Donald M. Falk, Washington, DC, for Defendant and Respondent.

Appellant Kingston Constructors, Inc. (Kingston) appeals from an order vacating a judgment that had been taken by default against respondent Washington Metropolitan Area Transit Authority (WMATA).   The trial court concluded that it lacked subject matter jurisdiction over this case.   We agree and affirm the order.

FACTS AND PROCEDURAL HISTORY

Our focus will be on subject matter jurisdiction, which does not require a long factual discussion.   Therefore, we will briefly review the background facts.

WMATA is an interstate agency created by the United States Congress, Maryland and Virginia pursuant to the Washington Metropolitan Area Transit Authority Compact (Compact).  (Publ.L. No. 89–774 (1966) 80 Stat. 1324.)   The principal purpose of WMATA, as stated in Article II of the Compact, is to coordinate and implement transit systems within the Washington, D.C., metropolitan area.  (Id., at p. 1325.)   WMATA neither maintains facilities nor operates transit systems outside the Washington, D.C., metropolitan area.

Kingston, a California corporation, entered into a contract with WMATA in 1991 to supply and install replacement transformers.   Kingston, in turn, purchased the transformers from Power Energy Industries (PEI), another California contractor.   WMATA was dissatisfied with the transformers and refused to pay for them.

PEI sued Kingston and WMATA in Los Angeles County Superior Court in May 1992.   Counsel for WMATA sent a letter to the clerk of the superior court stating that WMATA would not enter an appearance.   PEI advised WMATA that the letter was not an appropriate response to the complaint, and warned that a default would be taken.   Default was in fact entered on October 19, 1992.

On December 22, 1993, PEI and Kingston entered into a settlement agreement whereby PEI assigned its action against WMATA to Kingston.   On May 3, 1994, Kingston was granted a default judgment against WMATA in the amount of $6,934,758 plus interest and attorney fees.

On August 12, 1994, WMATA filed a motion to vacate the judgment on the grounds that it was void for lack of personal and subject matter jurisdiction.   WMATA relied on the language of the Compact to argue that Congress intended that suits by and against WMATA could be brought only in federal district courts in Maryland and Virginia, or the Maryland and Virginia state courts, and that removal to the federal court was limited to actions originally filed in the trial courts of those two states.

The pertinent language of the Compact is:  “The United States District Courts shall have original jurisdiction, concurrent with the Courts of Maryland and Virginia, of all actions brought by or against [WMATA]․  Any such action initiated in a State Court shall be removable to the appropriate United States District Court in the manner provided by Act of June 25, 1948, as amended.   (28 U.S.C. 1446.)”  (Publ.L. No. 89–774 (1966) 80 Stat.1350.)

The trial court found that Congress's intent was not made clear in the Compact, but, citing federal case law, found itself obligated to construe a federal waiver of immunity narrowly.   Thus, the trial court interpreted the language to limit jurisdiction as argued by WMATA and, as noted, the court granted the motion on the subject matter jurisdiction ground.   This appeal followed.

CONTENTIONS

Kingston contends that (1) WMATA waived jurisdictional defects by failing to comply with Code of Civil Procedure section 418.10 and by filing a motion raising other issues, (2) the Compact waives sovereign immunity for proprietary actions, (3) the Compact does not limit state court jurisdiction, and (4) WMATA is estopped from raising a jurisdictional challenge.

We address the second and third contentions first.

The Matter Was Correctly Dismissed for Lack of Subject Matter Jurisdiction

Kingston asserts that the Compact is a waiver of sovereign immunity from suit in contract.   We agree, but we find that contention alone does not settle the question of whether the Compact confers concurrent jurisdiction on all states, including California.   Therefore, we proceed directly to Kingston's third contention.

Kingston argues that the Compact does not limit state court jurisdiction.   The first point made by Kingston is that state and federal courts have concurrent jurisdiction.

 Kingston is correct in stating the general rule that state courts may assume subject matter jurisdiction over a federal cause of action absent a provision by Congress to the contrary or “disabling incompatibility between the federal claim and state court.”  (Gulf Offshore Co. v. Mobil Oil Corp. (1981) 453 U.S. 473, 477, 101 S.Ct. 2870, 2875, 69 L.Ed.2d 784.)   In considering the propriety of state-court jurisdiction over any particular federal claim, we begin with the presumption that state courts enjoy concurrent jurisdiction.  (Id., at p. 478, 101 S.Ct. at 2875.)   Because Congress may confine jurisdiction to the federal courts either explicitly or impliedly, the presumption can be rebutted by an explicit statutory directive.   It can also be rebutted by a clear incompatibility between state-court jurisdiction and federal interests.  (Ibid.)

The provision at issue in Gulf Offshore granted the federal district courts “ ‘original jurisdiction of cases and controversies arising out of or in connection with any operations conducted on the outer Continental Shelf․’  [Citation.]”  (Id., at pp. 478–479, 101 S.Ct. at 2875.)   The argument in that case, however, was that state jurisdiction was incompatible with federal jurisdiction, an argument that was rejected by the Court.   Incompatibility is not the basis for WMATA's position of limited jurisdiction, thus, for other than its statement of the general rules of concurrent jurisdiction, Gulf Offshore is not controlling authority here.

Kingston also cites Yellow Freight System, Inc. v. Donnelly (1990) 494 U.S. 820, 824, 110 S.Ct. 1566, 1569, 108 L.Ed.2d 834, which held that federal courts did not have exclusive jurisdiction over Title VII cases.   The statute stated that “ ‘[e]ach United States district court and each United States court of a place subject to the jurisdiction of the United States shall have jurisdiction of actions brought under this subchapter.’ ”  (Id., at p. 823, 110 S.Ct. at 1568.)   The Court based its holding on the fact that the Title VII provision, unlike a number of other statutes in which Congress unequivocally stated that the jurisdiction of the federal courts is exclusive, contained no language expressly confining jurisdiction to the federal courts.  (Ibid.)

 In this case, the Compact states (1) the federal district courts have original jurisdiction concurrent with the Maryland and Virginia courts of actions brought by or against WMATA, and (2) any action initiated in a state court shall be removable to the appropriate federal district court.   Unlike Donnelly, here Congress was not silent on the question of the jurisdiction of the state courts.   The Compact addresses concurrent jurisdiction, but limits it to the courts of only two states, Virginia and Maryland.

Kingston argues that the use of the phrase “original jurisdiction” in the Compact does not indicate that Congress intended to confer exclusive jurisdiction on those courts, citing Brown v. Pitchess (1975) 13 Cal.3d 518, 521, 119 Cal.Rptr. 204, 531 P.2d 772.   There, the question was whether California courts had jurisdiction over federal civil rights actions brought under 42 U.S.C. section 1983.  Section 1983 did not address the question of jurisdiction, but the issue was governed by the general statute which conferred upon federal district courts original jurisdiction over any civil action.   Thus, the federal civil rights statute was even more silent than the statute at issue in Donnelly, because section 1983 did not address the jurisdiction question at all.   That being so, the California Supreme Court applied the general rule and found concurrent jurisdiction.

Once again, we must distinguish Kingston's authority.   The Compact was not completely silent about jurisdiction, which would justify reliance on the general rule of concurrent jurisdiction as applied by the Brown court.   Rather, the Compact refers to original jurisdiction in the same sentence as the reference to the two states, which leads to the conclusion that Congress intended state jurisdiction to be limited to Maryland and Virginia.   We agree that conferring original jurisdiction without more does not confer exclusive jurisdiction, or divest state courts of their concurrent jurisdiction, and we agree with the trial court that the language of the Compact could have been clearer.   There is more in the Compact, however.   To find that there is concurrent jurisdiction in all state courts would make superfluous the mention of two specific states.   Thus, even if the Compact does not clearly, explicitly confer jurisdiction on the federal district courts and the two state courts, it impliedly does so.

Kingston contests this last point, arguing that conferring jurisdiction on two states does not impliedly divest the other states of concurrent jurisdiction.   Kingston again cites several authorities for the general proposition that states have concurrent jurisdiction unless that jurisdiction is excluded by Congress, quoting from the Federalist No. 82 and New York v. United States (1992) 505 U.S. 144, 162–163, 112 S.Ct. 2408, 2421–2422, 120 L.Ed.2d 120.

Kingston also quotes Gregory v. Ashcroft (1991) 501 U.S. 452, 460, 111 S.Ct. 2395, 2400–2401, 115 L.Ed.2d 410, with more specific language requiring that Congress make it “unmistakably clear” that it intends to preempt the historic powers of the states, language that appears to contradict Gulf Offshore Co. v. Mobil Oil Corp., supra, 453 U.S. 473, 101 S.Ct. 2870, which permits an implied restriction of jurisdiction.  Gregory, however, is not a concurrent jurisdiction case at all.   In Gregory, Missouri state court judges attempted to challenge the state's mandatory retirement in federal court as a violation of the federal Age Discrimination in Employment Act.   The Supreme Court affirmed the lower court's dismissal of the action, holding that congressional interference with a decision of the citizens of Missouri regarding the qualifications of their judges “would upset the usual constitutional balance of federal and state powers,” which can be done but which requires a clear and manifest statement of intention to preempt the historic powers of the states.  (501 U.S. at p. 460, 111 S.Ct. at pp. 2400–2401.)   The issues in Gregory were clearly different from those before the Court in Gulf Offshore Co., and Gregory has no application to the matter before us.   Under Gulf Offshore and other concurrent jurisdiction cases, implied restriction of concurrent jurisdiction is permissible.

Kingston turns to the definition section of the Compact for support.   Title III, Article I, entitled “Definitions” states in subsection (e) that the word “state” includes the District of Columbia.  (Publ.L. No. 89–774 (1966) 80 Stat. 1325.)   Kingston contends that in numerous sections of the Compact, when the Congress sought to refer only to Maryland and Virginia, Congress referred to them as “signatories” or “signatory states.”   Kingston concludes that when Congress used the term “state” in the section at issue here, Congress must have intended to refer to all states, including the District of Columbia.

This analysis omits subdivision (d) of the definitions section of the Compact, which states that the term “signatory” means Maryland, Virginia and the District of Columbia.   Thus, the references in the Compact to “signatories” and “signatory states” which Kingston has cited to us cannot simply refer only to Maryland and Virginia.

Moreover, the fact that Congress conferred concurrent jurisdiction on the courts of Maryland and Virginia but not on the District of Columbia courts can be explained.   The Compact became law in 1966.   The District of Columbia's “state” superior courts were created by Congress in 1970.  (Publ.L. No. 91–358 (1970) 84 Stat. 475, § 11–101, subd. (2)(B).)   Prior to 1970, civil actions involving damages exceeding $10,000 were heard in the United States District Court for the District of Columbia.  (Publ.L. No. 88–241 (1963) 77 Stat. 490, § 11–962.)

Under our interpretation of the Compact, if a plaintiff were to file an action against the WMATA in courts of either Maryland, Virginia or the District of Columbia, which is considered a state for purposes of the Compact, the WMATA may seek removal to federal court.   Our reading of the Compact is consistent with the interpretation by the federal district court in District of Columbia ex rel. Geo–Systems, Inc. v. Mergentime Corp., (U.S.Dist.Ct. (D. D.C.), 1992, No. 92–1474–LFO) an unpublished decision of the district court of the District of Columbia.

Kingston relies on Mergentime, in which the WMATA was cross-defendant and had successfully removed the cross-complaint to the federal court from the “state” court of the District of Columbia.   The issue before the court was whether the removal of the entire action, as requested by the defendant in the main action, was permissible.   In its discussion, the federal trial court noted that “Congress's intent in enacting the WMATA removal provision ․ calls for the exercise of federal jurisdiction here, particularly in light of the fact that the provision establishes concurrent jurisdiction in the Virginia and Maryland courts, but not the District of Columbia courts.”  (Typed opn. p. 2.)

Kingston argues that, in this case, the WMATA's “exclusive remedy” was to remove this action to federal court.   The argument implies that because the WMATA did not remove the action to federal court, the WMATA is obligated to defend itself in a California court.   But that cannot be.  Medlin v. Boeing Vertol Co. (3d Cir.1980) 620 F.2d 957, 960 held that the plaintiff's failure to challenge removal cannot confer on a federal court subject matter jurisdiction that it does not otherwise possess.   Likewise, the defendant's failure to seek removal cannot confer subject matter jurisdiction on a state court.  (See National Union Fire Ins. Co. v. Stites Prof. Law Corp. (1991) 235 Cal.App.3d 1718, 1723–1724, 1 Cal.Rptr.2d 570 [subject matter jurisdiction cannot be conferred by consent, waiver or estoppel].)

 As stated in National Union Fire Ins. Co. v. Stites Prof. Law Corp., supra, 235 Cal.App.3d at pages 1723–1724, 1 Cal.Rptr.2d 570, a challenge to subject matter jurisdiction cannot be waived, nor can it be barred by application of the doctrine of estoppel.   Indeed, lack of subject matter jurisdiction can be raised for the first time on appeal.  (Id., at p. 1724, 1 Cal.Rptr.2d 570.)   Therefore, to the extent that Kingston's waiver and estoppel arguments address subject matter jurisdiction, we need not consider them.   Having concluded that we are without subject matter jurisdiction, we need not determine Kingston's personal jurisdiction contentions.

DISPOSITION

The order is affirmed.

NOTT, Associate Justice.

BOREN, P.J., and ZEBROWSKI, J., concur.