Interlocutory appeal pursuant to 28 U.S.C. § 1292(b) from a decision and order of the Southern District of New York entered by Judge Morris E. Lasker declining to apply retroactively the decision of the United States Supreme Court in Rush v. Savchuk, 444 U.S. 320, 62 L. Ed. 2d 516, 100 S. Ct. 571 (1980), which struck down as unconstitutional New York's exercise of personal jurisdictional through quasi-in-rem attachment of insurance policies pursuant to Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 (1966). Reversed .
Before Waterman, Mansfield and Meskill, Circuit Judges.
The Valley Hospital (the Hospital), defendant below, appeals a decision and order issued by Judge Morris E. Lasker of the Southern District of New York on July 8, 1980, declining to apply retroactively the Supreme Court's holding in Rush v. Savchuk, 444 U.S. 320, 100 S. Ct. 571, 62 L. Ed. 2d 516 (1980), that a plaintiff cannot obtain personal jurisdiction over a non-resident defendant through quasi-in-rem attachment of an insurance policy issued to the defendant by the defendant's resident insurer. 493 F. Supp. 120. Appeal of this issue was certified to us under 28 U.S.C. § 1292(b). On the facts of this case we conclude that Rush should be applied retroactively and therefore reverse.
On December 14, 1974, Donald Holzsager entered the Valley Hospital, a charitable organization as defined by New Jersey law, in Ridgewood, New Jersey, as an outpatient complaining of chest pain. Dr. Jack C. Warburton allegedly diagnosed his illness as gastroenteritis and discharged him. Within 15 minutes he died of a heart attack. At the time of his death, he and his wife, Barbara, the plaintiff below, were residents of New Jersey, having recently moved there from New York, and he was employed in New Jersey. His estate was probated in New Jersey.
Mrs. Holzsager retained counsel approximately one week after her husband's death. Under New Jersey law, N.J.S.A. 2A:31-3, she could have brought suit against the Hospital and Dr. Warburton in New Jersey state courts at any time within two years, i. e., until December 14, 1976. However, if she had done so she would have been confronted with a New Jersey law, N.J.S.A. 2A:53A-7, limiting a charitable hospital's liability to $10,000, although the potential liability of Dr. Warburton would have been unlimited. No such law limiting the liability of a hospital for damages for wrongful death exists in New York.
Rather than bring her action in New Jersey with the foregoing limitations, Mrs. Holzsager waited 20 months until August, 1976, when she re-established residence in New York, where she then instituted the present malpractice action against the Hospital alone in the New York County Supreme Court, premising jurisdiction on her attachment of an insurance policy issued to the Hospital by the Continental Insurance Co., a resident of New York, under the authority of Seider v. Roth, 17 N.Y.2d 111, 269 N.Y.S.2d 99, 216 N.E.2d 312 (1966), a decision permitting the exercise of personal jurisdiction through quasi-in-rem attachment of insurance policies issued by resident insurers.
After successfully petitioning to remove this case to the United States District Court for the Southern District of New York on September 24, 1976, the Hospital filed its answer on October 15, two months before New Jersey's two-year statute of limitations was due to expire. Among other allegations, the answer urged as a second affirmative defense the following:
"This Court, and the Court from which this action was removed, lacked jurisdiction over the person of the defendant."
The Hospital then sought to vacate the attachment and dismiss the complaint on the ground that Mrs. Holzsager was not a bona fide resident of New York when she instituted suit and was therefore not entitled to invoke Seider v. Roth jurisdiction by attachment. This motion was denied upon receipt of an affidavit satisfying the court that Holzsager had become a bona fide resident. The Hospital then successfully moved to have the case transferred to the District Court for the District of New Jersey for the purpose of impleading Dr. Warburton, who had moved to California but remained within the reach of New Jersey's long-arm statute.
After impleading Dr. Warburton, the Hospital joined the doctor in moving to dismiss the action for lack of subject matter jurisdiction, pointing out that the New Jersey $10,000 limitation on charitable organizations' liability made the jurisdictional amount requirement for diversity jurisdiction, 28 U.S.C. § 1332, unreachable. New Jersey District Judge H. Curtis Meanor granted this motion, acknowledging that objections to subject matter jurisdiction are non-waivable and can be raised at any time. See F.R.Civ.P. 12(h)(3). However, because he was reluctant to dismiss the federal case on the Hospital's motion when the case had been removed to federal court in the first place on the assumption that federal subject matter jurisdiction existed, he remanded the case to Judge Lasker in the Southern District of New York. Judge Lasker held on December 18, 1979, that under New York conflicts of laws principles the New Jersey charitable limitation would not apply to suits brought by New York residents, and accordingly declined to dismiss for lack of subject matter jurisdiction. 482 F. Supp. 629.
Meanwhile the Supreme Court was reconsidering the legitimacy of quasi-in-rem jurisdiction in general, and of Seider -type attachment jurisdiction in particular. When Mrs. Holzsager first brought this suit in 1976, the constitutional legitimacy of Seider jurisdiction was established in this Circuit, Minichiello v. Rosenberg, 410 F.2d 106 (2d Cir. 1968) (en banc), cert. denied, 396 U.S. 949, 90 S. Ct. 370, 24 L. Ed. 2d 254 (1969), and in New York State, Victor v. Lyon Associates, Inc., 21 N.Y.2d 695, 287 N.Y.S.2d 424, 234 N.E.2d 459 (1967). At the same time, the rule had met with considerable criticism. See sources cited in Donawitz v. Danek, 42 N.Y.2d 138, 141-42, 397 N.Y.S.2d 592, 366 N.E.2d 253 (1977), and in Minichiello v. Rosenberg, supra, 410 F.2d at 108. On June 24, 1977, the Supreme Court decided Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977), applying minimum contacts analysis to quasi-in-rem jurisdiction for the first time. Then, after this Court had declared Seider's constitutionality unaffected by Shaffer in O'Connor v. Lee-Hy Paving Corp., 579 F.2d 194 (2d Cir.), cert. denied, 439 U.S. 1034, 99 S. Ct. 638, 58 L. Ed. 2d 696 (1978), the Supreme Court declared Seider -type attachments unconstitutional in Rush v. Savchuk, supra.
Shortly after Rush was decided, the Hospital moved to dismiss this case for lack of personal jurisdiction. Judge Lasker denied this motion. Though he agreed with the Hospital that it was not precluded by waiver, estoppel or consent from raising objections to the court's jurisdiction over its person, he concluded that Rush should not be applied retroactively to eliminate the court's personal jurisdiction over the Hospital. He then certified both the waiver issue and the retroactivity issue to this court pursuant to 28 U.S.C. § 1292(b).*fn1
Appellee here first maintains that the Hospital constructively waived its power to object to the court's personal jurisdiction over it. She contends that the defense of lack of personal jurisdiction set up in the Hospital's answer was insufficiently specific to constitute an attack on the constitutionality of the Seider attachment, and argues that the Hospital's failure to raise a defense precisely claiming Seider-type jurisdiction to be unconstitutional adds up to a waiver under Federal Rules 12(h)(1) and 8(c).*fn2 Further, she suggests that the Hospital consented to personal jurisdiction over it when it petitioned for removal of the case to federal court, moved to transfer the case to the District of New Jersey, impleaded Dr. Warburton, and moved to dismiss on grounds of lack of subject matter ...