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11/22/72 Booker T. Hines Et Al., v. City Finance Company of

November 22, 1972




Fahy, Senior Circuit Judge, and Tamm and Wilkey, Circuit Judges.




On January 29, 1971, Booker T. Hines and Cora M. Hines, the appellants, individually and on behalf of all others similarly situated, *fn1 filed an action in the District Court against City Finance Co. of Eastover, Inc., a Maryland corporation, appellee, and against Aaron J. Rehr and James H. Pinkus. The substance of the original complaint was to obtain relief primarily directed to the defendant corporation. Appellants alleged that City Finance made loans to them and to numerous other persons in this jurisdiction requiring the payment of interest in excess of the statutory limit of 8 percent, *fn2 28 D.C.Code § 3301 (1967), as amended, (Supp. V, 1972). It was also alleged that appellee corporation was unlawfully doing business in this jurisdiction without the certificate of authority to do so required by 29 D.C.Code § 933 (1967), was illegally loaning money for more than 6 percent without the license required by 26 D.C.Code § 601 (1967), and was illicitly charging credit life insurance without the necessary license in violation of 35 D.C.Code § 1363 (Supp. V, 1972). Appellees Rehr and Pinkus were sued as trustees on the deeds of trust executed as security for the loans made to the Hines.

Appellants sought declaratory judgments that City Finance had violated these statutory provisions and that therefore the loans were null and void and unenforceable. They requested the court to cancel the notes and deeds of trust, and to order an accounting and the return of all monies paid on such notes by the class. Appellants also requested injunctive relief, pendente lite and permanently, to prohibit further collection on all such notes, to restrain the enforcement of all deeds of trusts securing such notes, and to enjoin City Finance from maintaining any suits in the District of Columbia.

On March 23, 1971, appellants filed an Amended Complaint adding allegations set forth in the margin, *fn3 seeking to bring the activities of the corporate appellee within the prohibitions of 18 U.S.C. § 1962 (the Organized Crime Control Act of 1970).

January 29, 1971, the day the original complaint was filed, was a Friday. The Monday following, February 1, the District of Columbia Reorganization Act of 1970 became effective. This circumstance led the District Court on April 14, 1971, to certify the case to the Superior Court of the District of Columbia. The Court relied upon the following provision of the District of Columbia Code:

In a civil action begun in the United States District Court for the District of Columbia before the effective date of the District of Columbia Reorganization Act of 1970 (other than an action for equitable relief), where it appears to the satisfaction of the court at or subsequent to any pretrial hearing but before trial thereof that the action will not justify a judgment in excess of $10,000 and does not otherwise invoke the jurisdiction of the court, the court may certify the action to the Superior Court for trial.

11 D.C.Code § 922(a) (Supp. V, 1972). The appeal is from the April 14 order of certification.

Were the allegations of the Amended Complaint accepted as a well pleaded additional cause of action the contention of appellants is that notwithstanding the Amended Complaint was filed subsequent to the effective date of the Reorganization Act, the action "otherwise" invoked the jurisdiction of the District Court and, therefore, under 11 D.C.Code § 922(b)(2) (Supp. V, 1972), having been filed within the thirty-month period subsequent to the effective date of the Reorganization Act, *fn4 was not certifiable to the Superior Court. We need not decide the problems thus presented, for the reasons now to be stated.

We think the original complaint itself sets forth "an action for equitable relief" within the meaning of 11 D.C.Code § 922(a) (Supp. V, 1972) and, therefore, having been filed prior to the effective date of the Reorganization Act, was not certifiable to the Superior Court.

Several interpretations of "an action for equitable relief" are possible. We do not construe this provision for retention of jurisdiction by the District Court as intended to cover what is essentially a legal action, which seeks equitable relief only of a character incidental to the main legal thrust of the action. On the other hand, if substantial equitable relief is sought as such, the District Court should have retained jurisdiction even though legal relief is also sought. Otherwise, certification of the case to the Superior Court defeats the plain purpose of Congress to have the District Court decide the basis alleged for equitable relief.

In reorganizing the jurisdiction of the local and federal courts in the District of Columbia, Congress, while intending to give "the local courts jurisdiction over all purely local matters," S.Rep.No. 91-405, 91st Cong., 1st Sess., at 5 (1969), recognized "the need for staging the transfer of jurisdiction in an orderly progression, to assure an orderly development of the court receiving the judicial business." Id. at 5. Congress was also aware of the past limitations of the equity jurisdiction of the local courts in civil matters, Hearings on S.1066, S.1067, S.1214, S.1215, S.1711 and S.2601, before the Senate Comm. on the District of Columbia and the Subcomm. on Improvements in Judicial Machinery, of the Senate Comm. of the Judiciary, 91st Cong., 1st Sess., Pt. 3, 562 at 576-583 (1969) (Report of the Ad Hoc Comm. assigned to Study the History and Jurisdiction of the D.C. Court System), and of the need to expand its equity jurisdiction in civil matters, id. at 1205-1206, 1216-1217 (Statement and remarks of the Hon. Harold H. Greene, C.J., District of Columbia Court of General Sessions). Congress was aware also of the practical problems of manageability: "'A court is not a commodity that can be produced fullbloom . . .' As I gather, what you [Chief Judge Greene] are proposing here is an increase of better than 50 percent in the size of your court, an increase in the jurisdiction . . . perhaps as much as 100 percent . . . when admittedly you have administrative problems in your own court right now." Id. at 1220 (Remarks of Senator Joseph D. Tydings, Chairman).

It thus appears that, while the legislative history is silent concerning Congress' specific intent in enacting the "equitable relief" exception to transferability, it is nevertheless clear that Congress as part of its plan for an orderly transition did not authorize the certification to the Superior Court of those actions for independent equitable relief which were initiated in the District Court prior to the effective date of the Act, ...

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