ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
Aldisert and Higginbotham, Circuit Judges, and Sarokin, District Judge*fn*
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
This action was initiated in the United States District Court for the Western District of Pennsylvania by Sanford M. Nobel and Carol Nobel Hirsh, trading as Menallen Coke Company of New Salem ("Menallen"), seeking damages for the wrongful taking of coal. Defendants filed a Motion to Dismiss asserting, inter alia, the lack of diversity between the parties. The Honorable Daniel J. Snyder, Jr. denied defendants' motion.
Following a nonjury trial Judge Snyder took the case under advisement, but he died before entering findings of fact and conclusions of law. The parties agreed that the case be submitted to a substitute judge for decision on the record developed at trial. Subsequently, the Honorable Paul A. Simmons was assigned to decide the case.
Judge Simmons made a preliminary statement in which he expressed his inability to determine whether the court had proper diversity jurisdiction over the matter although the late Judge Snyder already had found diversity jurisdiction. Despite the absence of substantially different evidence than that already considered by Judge Snyder, Judge Simmons reopened the case and ordered the parties to produce documents relating to the partnership and the prior state court action in order to decide again the issue of jurisdiction.
During a hearing held on October 30, 1981, these documents were received in evidence and testimony was taken from Max Nobel, a 77-year-old retired general partner of Menallen. Subsequently, plaintiffs' case was dismissed with prejudice for lack of jurisdiction and other inadequacies. We disagree with the district court's ruling on all of the issues and will reverse.
This case concerns competing claims to title to the coal ("the Dumbauld Coal") underlying two areas of land owned by William and Mary Dumbauld. The parties stipulated that Max and Helen Nobel had acted as straw parties in acquiring the disputed coal for Menallen by deed dated December 18, 1973. The purchase was made using Menallen's funds and was reflected on Menallen's books. In addition, Menallen later paid approximately $40,000 in back taxes on the coal interest.
In late July, 1977, it was discovered that the Dumbauld Coal was being removed. Max Nobel immediately filed suit in the Fayette County Court against James Morchesky, a Pennsylvania resident, and Better Mining Company, Inc. ("Better Mining"), a Pennsylvania corporation, seeking an injunction against any further removal of coal and damages for the coal already removed. Max and Helen Nobel, in whose name record title was held, were the named plaintiffs in the state court action.
In attempting to resolve the dispute the parties agreed that defendants would pay a royalty of $2.00 per ton for coal already removed. Additionally, the parties agreed that defendants would refrain from further removal of the Dumbauld Coal except for a small triangle of land where mining operations were already in progress.
The parties informed the Fayette County Court of their agreement in a hearing on October 5, 1977. The court, after the hearing and on stipulation of the parties, enjoined James Morchesky and Better Mining from further mining operations of the disputed coal. The Order was entered without prejudice. Notwithstanding the purported agreement, coal continued to be removed (by the parties).
On May 5, 1978, Max and Helen Nobel transferred their record title to the Dumbauld Coal to Menallen, the erstwhile equitable owner.*fn1 On May 22, 1978, Max Nobel, at the age of 74, resigned from Menallen. He was Menallen's only Pennsylvania resident. He testified that he resigned because he had suffered a stroke about two months earlier which required eight days of hospitalization, five days of which required intensive care. ...