                 UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit


                          No. 96-31260

                    NEW YORK LIFE INSURANCE COMPANY,

                                             Plaintiff - Appellee,

                             VERSUS

                    JANE DESHOTEL; ET AL,

                                              Defendants,

                     JUNE G. SMITH,

                                             Defendant - Appellant,

       __________________________________________________

           Appeal from the United States District Court
               for the Eastern District of Louisiana
       __________________________________________________



                          No. 96-31269

                    JUNE G. SMITH, ET AL.,

                                                        Plaintiffs,

                         JUNE G. SMITH,
                                             Plaintiff - Appellant,

                             VERSUS

                NEW YORK LIFE INSURANCE COMPANY,

                                             Defendant - Appellee.



          Appeal from the United States District Court
             for the Western District of Louisiana

                          June 1, 1998
Before JOLLY, SMITH, and DENNIS, Circuit Judges.
DENNIS, Circuit Judge:

     In these consolidated appeals, Appellant June G. Smith,* whose

claim to be the sole beneficiary of her husband’s life insurance

policies was rejected in previous litigation, seeks to have us

reverse (1) the judgment of the United States District Court for

the Eastern District of Louisiana enjoining Smith from prosecuting

two delictual civil actions against New York Life based on the

alleged   negligence   of   New   York   Life   in    mishandling    and   not

recording a form naming Smith beneficiary of the life insurance

policies, originally filed in state court and later removed to the

United States District Court for the Western District of Louisiana;

and (2) the judgment of the Western District Court dismissing those

civil actions with prejudice based on the Eastern District Court’s

injunction.

                                    I.

     Rodney Smith purchased five life insurance policies from New

York Life between 1964 and 1974.         The original beneficiary listed

on each policy was his wife, June Smith.             In September 1991, the

Smiths separated after thirty-one years of marriage.                Two years

later, Rodney Smith was diagnosed with terminal cirrhosis of the

liver.    He designated his half-brother, Donald Kelley, to aid him

in his business affairs during his illness.

     On February 14, 1994, Rodney Smith's insurance agent, Thomas

C. Klotz, received a change of beneficiary form designating Kelley


    *
       Appellant June G. Smith appears in this litigation in both
her individual capacity and as administrator of the Succession of
Rodney G. Smith.     For convenience, we refer to her in both
capacities as “June G. Smith” or “Smith.”
and Jane Deshotel -- a high school and college friend of Rodney

Smith -- as co-beneficiaries of Rodney Smith's life insurance

policies.    Klotz sent the form to New York Life's Customer Service

Office (the "CSO") in Dallas for processing. On February 17, Klotz

received another change of beneficiary form signed by Rodney Smith

-- this time indicating Kelley as the sole beneficiary.                 The next

day, in     Klotz's    presence,   Rodney   Smith    executed     a    change   of

beneficiary form designating Jane Deshotel as sole beneficiary.

This change of beneficiary was received and processed by the CSO on

February 24.

     Rodney Smith died on May 6, 1994.             June Smith alleges that,

before he died, Rodney Smith made one final change to his policies.

According to June Smith, on March 11, 1994, Rodney Smith signed a

change of beneficiary form designating her as the sole beneficiary.

She contends that he instructed Kelley to hold onto the form until

further notice, and that later, on the day of his death, Rodney

Smith directed Kelley to submit the final change of beneficiary

form to New York Life.       Kelley states that he mailed the form to

the office of insurance agent Linwood Broussard.                      Broussard's

office    manager     testified    that    she   received    the      change    of

beneficiary    form.      However,   the    form    was   never    received     or

processed by the CSO, and consequently, the records of the CSO

continued to indicate that Jane Deshotel was the sole beneficiary.

     When New York Life received beneficiary claims from both Jane

Deshotel and June Smith, it instituted an action for interpleader

under Federal Rule of Civil Procedure 22 in the District Court for


                                      3
the   Eastern   District     of     Louisiana.       In    its   complaint   for

interpleader    New   York   Life    stated   that    it   had   no   beneficial

interest in the policies but that it was only a stakeholder willing

to make payment to the person lawfully entitled to receive the

proceeds.   The company said that it had been unable to determine

which of the claimants was entitled to payment.

      The New York Life complaint for interpleader, filed October

11, 1994, alleged, in pertinent part, the following:

                                 9.
           In investigating the conflicting claims, New York
      Life records revealed a change of beneficiary form dated
      February 12, 1994, which purported to bear the signature
      of Rodney G. Smith and which named “Jane Deshotel, a
      Friend and Donald W. Kelly, a half brother to share and
      share alike” as first beneficiaries of the Policies. The
      form indicates that it was forwarded to New York Life
      Central Records on February 18, 1994.

                                10.
           On information and belief, Rodney G. Smith’s wife,
      Jane G. Smith, had been the beneficiary of the above
      policies prior to the change of beneficiary executed on
      February 12, 1994.

                                 11.
            New York Life records further revealed a change of
      beneficiary form dated February 18, 1994, which purported
      to bear the signature of Rodney G. Smith and which named
      “Jane Deshotel, Friend of Insured” as first beneficiary
      of the Policies.      The form indicates that it was
      forwarded to New York Life Central Records on March 2,
      1994.

                                12.
           New York Life also was presented with a change of
      beneficiary form dated March 11, 1994 which purported to
      bear the signature of Rodney G. Smith and which named
      “June Smith (wife)” as beneficiary of the Policies.

                                 13.
           New York Life was advised that the foregoing change
      of beneficiary form had been turned over to a New York
      Life agency office on May 10, 1994 and that the form then
      was forwarded to New York Life’s Dallas Customer Service

                                        4
     Office for processing. New York Life has no record of
     the submission or processing of the March 11, 1994 change
     of beneficiary form.

     New York Life deposited with the court the policy proceeds

plus interest -- $106,397.51.       New York Life was granted summary

judgment dismissing it from the interpleader action. Jane Deshotel

and June Smith filed cross motions for summary judgment.                The

district court found that Rodney Smith and New York Life had

contracted that changes in beneficiary would not be enforceable

absent recordation of the change at the CSO.2         The court determined

that as a matter of law Rodney Smith had not strictly complied with

the policy. Therefore, on September 12, 1995, the Eastern District

Court    rendered   summary   judgment   in   favor   of   Jane   Deshotel,

decreeing her to be the owner of the insurance proceeds.

     Smith appealed.     This court, on March 22, 1996, affirmed the

Eastern District Court’s judgment declaring Jane Deshotel owner of

the insurance proceeds.       New York Life Ins. Co. v. Jane Deshotel

and June G. Smith, No. 95-31050, slip op. (5th Cir., March 22,

1996)(per curiam).


     2
       The insurance contract between Rodney Smith and New York
Life provided in pertinent part:

  While the Insured is living, the beneficiary designation can
  be changed from time to time by written notice in form
  satisfactory to the Company. No such change will take effect
  unless recorded in the records of the Company at its Home
  Office. Upon being so recorded, the change will be effective
  as of the date the notice was signed, whether or not the
  Insured is living when the change is recorded, subject to any
  payment made or other action taken by the Company before such
  recording.

Record at 162, New York Life Ins. Co. v. Smith (No. 96-31260).

                                    5
     After New York Life filed the interpleader action on October

11, 1994, Smith filed three state court delictual actions based on

the alleged negligence in handling the change of beneficiary form

by New York Life and its agents in the 15th Judicial District Court

for the Parish of Lafayette, State of Louisiana.               The first state

court action was filed on April 20, 1995 by June G. Smith in her

individual capacity and in her capacity as representative of the

Succession of Rodney G. Smith against New York Life Insurance

Company (“Smith I”).     The second state court action was filed on

April 26, 1995 by June G. Smith in her individual capacity and in

her capacity as representative of the Succession of Rodney G. Smith

against Linwood Broussard (“Smith II”).                The third state court

action was filed on October 30, 1995 by June G. Smith in her

capacity as representative of the Succession of Rodney G. Smith

against New York Life Insurance Company and Linwood Broussard

(“Smith III”).   In accordance with the instructions of Smith’s

attorney, the clerk of court withheld service of process on the

defendants in the three state court delictual actions.

     On May 28, 1996, soon after this court had affirmed the

Eastern District Court’s award of the insurance proceeds to Jane

Deshotel and had denied Smith’s petition for rehearing on April 19,

1996, Smith   obtained   an   order       from   the   state   district   court

consolidating the three state court delictual actions, Smith I,

Smith II, and Smith III, in state court.          On May 27, 1996, New York

Life received a copy of the ex parte motion to consolidate.               This

was the first notice New York Life received of the pending state


                                      6
suits.    New York Life removed Smith I and III to the District Court

for the Western District of Louisiana on June 4, 1996 and June 26,

1996, respectively.    Smith II was not removed and is pending in the

state court.

     In July 1996, Smith moved the Western District Court to remand

Smith I and Smith III to state court.         On October 3, 1996, the

Western District Court denied Smith’s motions to remand.

     Meanwhile, the Eastern District Court, on June 25, 1996,

entered an amended judgment sua sponte to correct a clerical

mistake by adding to its original judgment in the interpleader an

order permanently enjoining Jane Deshotel and June G. Smith from

instituting or prosecuting any proceedings against New York Life

in any state or federal court pertaining to the proceeds of the

life insurance policies.    On July 1, 1996, Smith moved the Eastern

District Court to alter or amend its judgment to state that it does

not enjoin her from bringing or prosecuting her delictual actions

against New York Life in Smith I, Smith II, and Smith III.         New

York Life opposed Smith’s motion on grounds that her delictual

claims against it were barred by res judicata because they should

have been raised as compulsory counterclaims in the interpleader

action.    On July 19, 1996, New York Life filed a motion for a

preliminary    and   permanent   injunction    enjoining   Smith   from

prosecuting her delictual claims against it in any state or federal

court.

     On November 21, 1996, the Eastern District Court denied

Smith’s motion to alter or amend its judgment; denied New York


                                   7
Life’s motion insofar as it sought to enjoin Smith from proceeding

in Smith II, the action pending in state court; and entered

judgment permanently enjoining Smith or the Succession of Rodney

Smith from prosecuting the civil actions Smith I and Smith III,

which had been removed to the Western District Court.

     On November 22, 1996, based on the Eastern District Court’s

injunction, the Western District Court dismissed Smith I and III

with prejudice.

                                             II.

     Pursuant to the All Writs Statute, 28 U.S.C. § 1651, the

Eastern District Court enjoined Smith’s delictual actions against

New York Life pending in the Western District Court.                Under the All

Writs Statute, a federal court has the power to enjoin a party

before it from attempting to relitigate the same issues or related

issues precluded by the principles of res judicata and collateral

estoppel in another federal court.                 Kinnear-Weed Corp. v. Humble

Oil & Refining Co., 441 F.2d 631, 637 (5th Cir.), cert. denied, 404

U.S. 941 (1971);           Kentucky Fried Chicken, Corp. v. Diversified

Packaging, 552 F.2d 601, 603 (5th Cir. 1977);                 see also Santopadre

v. Pelican Homestead & Sav. Assn., 937 F.2d 268, 273 (5th Cir.

1991);     18 JAMES WM. MOORE     ET AL.,     MOORE’S FEDERAL PRACTICE ¶ 131.53 (3d

ed. 1997).         Accordingly, a federal court in a Rule 22 interpleader

proceeding may issue an injunction to restrain the parties from

pursuing such issues in another federal court.                   See 7 CHARLES A.

WRIGHT   ET AL.,   FEDERAL PRACTICE   AND   PROCEDURE § 1717, at 616; Pan Am. Fire

& Cas. Co. v. Revere, 188 F. Supp. 474, 484 n.49 (E.D. La. 1960);


                                              8
28 U.S.C.A. § 2283 revision notes (West 1994).               The Eastern

District Court found that the injunction was warranted because

Smith’s delictual claim against New York Life would be barred in a

second action by res judicata and as a compulsory counterclaim that

she failed to bring, as required by Rule 13(a), in the interpleader

proceedings.

                                   A.

     Smith’s principal argument on appeal is that her delictual

action was not barred as a compulsory counterclaim because it had

not accrued or matured at the time she served her pleading in the

interpleader case.     Thus, Smith relies primarily on one of the

explicit exceptions to the compulsory counterclaim requirement of

Federal Rule of Civil Procedure 13(a), viz., that the party need

not assert a counterclaim that has not matured at the time he

serves his pleading. See Cochrane v. Iowa Beef Processors, Inc.,

596 F.2d 254, 264 (8th Cir.), cert. denied, 442 U.S. 921 (1979); 6

WRIGHT, supra § 1411, at 80.

     We agree with the district court that Smith’s delictual claim

against New York Life had ripened into a mature claim at the time

she filed her answer to the interpleader complaint on November 3,

1994.     Therefore,    her    delictual   claim   was   a    compulsory

counterclaim, and her failure to plead it bars her from bringing it

as a later independent action in federal court.          See Dillard v.

Security Pac. Brokers, Inc., 835 F.2d 607, 609 (5th Cir. 1988);

Ake v. Chancey, 149 F.2d 310 (5th Cir. 1945); 3 Moore, supra ¶

13.14;   WRIGHT, supra § 1417, at 129.


                                   9
     Under Louisiana law, a delictual cause of action accrues when

a defendant violates a duty owed to a plaintiff and thereby causes

damage to the plaintiff’s legally protected interest.    LA. CIV. CODE

arts. 2315, 2316.    A wrongful act alone does not suffice.     There

must also be damage caused by the wrongful act.           It is the

combination of the wrongful act, the damage, and the causal link

between them that gives rise to the cause of action. Owens v.

Martin, 449 So. 2d 448, 451 (La. 1984);   Jones v. Texas & Pac. Ry.

Co., 125 La. 542, 544, 51 So. 582, 582-83 (1910).       The one year

prescription applicable to delictual actions does not commence to

run, however, until the date that the injured party discovers or

should have discovered the delict, the damage, and the relationship

between them. LA. CIV. CODE arts. 3536, 3537; see also Branch v.

Willis-Knighton Med. Ctr., 636 So. 2d 211, 216 (La. 1994);    Lott v.

Haley, 370 So. 2d 521, 523 (La. 1979);    R.J. Reynolds Tobacco Co.

v. Hudson, 314 F.2d 776, 783 (5th Cir. 1963).

     Damage to a person’s right or legally protected interest is

sustained “‘when it has manifested itself with sufficient certainty

to be susceptible of proof in a court of justice.’” Rayne State

Bank & Trust Co. v. National Union Fire Ins. Co., 483 So. 2d 987,

996 (La. 1986) (quoting Jones v. Texas & Pac. Ry. Co., 51 So. 582,

583 (La. 1910)).    The cause of action arises, however, before the

plaintiff sustains all or even the greater part of the damage

occasioned by the delict.      Any actual and appreciable injury

flowing from the defendant’s negligence or other wrongful act

establishes a cause of action upon which the plaintiff may sue,


                                 10
even though he may thereafter come to a more precise realization of

the damages he has already incurred or incur further damage as a

result of the tortious act.       Harvey v. Dixie Graphics, Inc., 593

So. 2d 351, 354 (La. 1992);      Braud v. New England Ins. Co., 576 So.

2d 466, 468 (La. 1991);       Rayne State Bank, 483 So. 2d at 996.

       Applying these principles, the Louisiana Supreme Court held

that a bank whose mortgages were challenged as being defective in

bankruptcy court had an accrued legal malpractice cause of action

against the attorney who drafted the mortgages, because “[t]his

attack, which Rayne State Bank was forced to defend, was direct

damage to the bank resulting from the existence of the defects,

regardless of any future determination of further damage resulting

from invalidity of the mortgages.”         Rayne State Bank, 483 So. 2d at

996.    Similarly, that court in Braud v. New England Insurance

Company, 576 So. 2d 466 (La. 1991), held that Braud, who had

obtained a default judgment against Citicorp, acquired a legal

malpractice action against his former attorney when Citicorp sued

Braud   to   annul   the   judgment   because   Braud’s   former   attorney

allegedly engaged in ill practices and negligently failed to

present sufficient evidence in obtaining the default judgment. The

court stated: “Like the client in Rayne State Bank & Trust v.

National Union Fire Ins. Co., supra, Braud sustained appreciable

and actual harm when the validity of his right or asset was

attacked by a third party because of the alleged negligence of his

former attorney and he was compelled to incur and pay attorney’s

fees, legal costs and expenditures.” Id. at 469.              Finally, in


                                      11
Harvey v. Dixie Graphics, Incorporated, 593 So. 2d 351 (La. 1992),

the state supreme court applied the appreciable actual injury test

in holding that Harvey’s malpractice action against an accounting

firm accrued when he was informed by the IRS that he faced tax

liability due to the firm’s negligent tax return preparation after

Harvey had incurred substantial accountant’s and attorney’s fees in

investigating and preparing to defend against the potential tax

assessment.      The court explained that “[t]he mere fact that all of

his damages were not yet suffered because he had not yet written a

check to the IRS does not change the key fact that [Harvey] was

certainly aware that he had suffered appreciable harm from the

allegedly tortious act of [the accounting firm].” Id. at 355.

     We do not agree with Smith’s argument that her delictual

action   based    on    the   alleged     negligence    of    New    York   Life   is

analogous to an action for malicious prosecution and therefore

could    not   accrue    until      the   termination    of    the    interpleader

proceedings.      An action for malicious prosecution in a criminal

proceeding lies when there is a concurrence of the following

elements: (1) the commencement or continuance of an original

criminal   proceeding;        (2)   its   legal   causation     by    the   present

defendant against plaintiff who was defendant in the original

proceeding; (3) its bona fide termination in favor of the present

plaintiff; (4) the absence of probable cause for such proceeding;

(5) the presence of malice therein; and (6) damage conforming to

legal standards resulting to plaintiff. Miller v. East Baton Rouge

Parish Sheriff’s Dept., 511 So. 2d 446, 452 (La. 1987).


                                          12
      The termination of the criminal proceeding in favor of the

accused is an essential element for the accrual of a malicious

prosecution cause of action.               This element and others essential to

a   malicious       prosecution       action       are      required       to     balance   the

individual interest in freedom from unjustifiable litigation and

the social interest in supporting a resort to law.                                 See W. PAGE

KEETON   ET AL.,   PROSSER & KEETON   ON   THE LAW   OF   TORTS § 119, at 871 (5th ed.

1984);     HARPER, JAMES     AND   GRAY, THE LAW     OF   TORTS § 4.2, at 407-408 (2d

ed. 1986).         As we have noted above, the accrual of a delictual

cause of action based on negligence requires only the concurrence

of a wrongful act, damage, and a causal link between them.                                Owens,

449 So. 2d at 451;         Jones, 51 So. at 582-83.                The negligence action

does not require the termination of other litigation and most

other     essential       elements     of    a     malicious        prosecution       action,

probably because it involves a different balance of individual and

societal interests.

      In    the     present        case,    New      York       Life,    pursuant     to    its

interpleader petition under Rule 22, joined Smith and Deshotel as

defendants and required them to interplead their claims.                             Clearly,

their claims are adverse to each other because each claimant

asserts sole rights to the proceeds of Rodney Smith’s insurance

policies.      The interpleader complaint alleges facts that plainly

indicate     that     Jane    Deshotel        is     the    only        validly    designated

beneficiary of the policies because Rodney Smith’s final change of

beneficiary        form   naming      June    Smith        as    beneficiary        was   never

processed or recorded although it had been forwarded to New York


                                              13
Life’s Customer Service Office for that purpose.

     Under these circumstances, Smith’s legal right as beneficiary

to the insurance proceeds was challenged as being defective in a

court of law.    Like the plaintiffs in Rayne State Bank and Braud,

Smith was forced to defend her rights against an attack in a

judicial proceeding. This attack was “direct damage” to her rights

resulting from the existence of the alleged defects, regardless of

any future determination of further damage resulting from the

invalidity of her beneficiary claims.           See Rayne State Bank, 483

So. 2d at 996.     Moreover, just as the Rayne State Bank and Braud

plaintiffs, Smith sustained appreciable and actual harm from the

legal attack upon her rights because she was compelled to incur and

pay attorney fees and legal costs in her defense.

     The   interpleader       complaint    additionally   gave    Smith     clear

notice that her damage likely had been caused by the negligence of

New York Life and its agents in failing to properly handle and

record   the    change   of    beneficiary     form   naming     her   as   sole

beneficiary.     Consequently, Smith’s delictual action against New

York Life accrued or matured no later than the date upon which she

was served in the interpleader proceeding.

     The Federal Rules of Civil Procedure, including their joinder

provisions, apply in interpleader cases just as they would in any

other civil action in federal court. See 4 MOORE, supra ¶ 22.02[5].

Once the stakeholder joins the claimants, a claimant may file a

counterclaim against the stakeholder as an opposing party. Wayzata

Bank & Trust Co. v. A & B Farms, 855 F.2d 590, 592-93 (8th Cir.


                                      14
1988); Liberty Nat’l Bank & Trust Co. v. Acme Tool Div., 540 F.2d

1375, 1380-81 (10th Cir. 1976); Davis v. Prudential Ins. Co., 331

F.2d 346, 348 n.2 (5th Cir. 1964); see also Libby, McNeill, and

Libby v. City Nat’l Bank, 592 F.2d 504, 507-08 (9th Cir. 1978);

Dakota Livestock Co. v. Keim, 552 F.2d 1302, 1307 (8th Cir. 1977).

Counterclaims are either compulsory, if they arise from the same

transaction or occurrence as the underlying dispute, FED. R. CIV. P.

13(a), or permissive, if they are transactionally unrelated to the

underlying dispute, FED. R. CIV. P. 13(b). See Wayzata Bank & Trust

Co., 855 F.2d at 592-93 (claimants’ separate cause of action

against stakeholder for damages for breach of fiduciary duty was a

compulsory counterclaim);     4 MOORE, supra ¶ 22.02[5].

     The compulsory counterclaim rule requires a party to plead any

counterclaim that “arises out of the transaction or occurrence that

is the subject matter of the opposing party’s claim and does not

require for its adjudication the presence of third parties of whom

the court cannot acquire jurisdiction.” FED. R. CIV. P. 13(a);

Reiter v. Cooper, 507 U.S. 258, 263-264 (1993);                McDaniel v.

Anheuser-Busch, Inc., 987 F.2d 298, 303-304 (5th Cir. 1993).               To

determine whether claim and counterclaim arise from the “same

transaction    or    occurrence,”   federal   courts    have   constructed

analyses using as their foundation the logical relationship test

developed by the Supreme Court under former Equity Rule 30.               See

Moore v. New York Cotton Exch., 270 U.S. 593, 609-610 (1926)

(“‘Transaction’ is a word of flexible meaning. It may comprehend a

series   of   many   occurrences,   depending   not    so   much   upon   the


                                    15
immediateness     of    their     connection        as    upon     their    logical

relationship.”).       While using the “logical relationship” concept,

this Circuit gives weight to whether the claim and counterclaim

share an “aggregate of operative facts.” McDaniel, 987 F.2d at

1381-82.

     In the present case, it is readily apparent that New York

Life’s interpleader claim and Smith’s delictual counterclaim share

an aggregate of operative facts and have a logical relationship.

Both logically relate to and arise from the same facts:                     Rodney

Smith purchased life insurance policies from New York Life; he

designated his wife, June Smith, and his friend, Jane Deshotel, his

sole beneficiary on several different occasions; on his final

attempt to change beneficiaries to name June Smith, his signed form

was sent to New York Life, but for some yet undetermined reason,

perhaps    the   company’s      negligence,    it    was     not   processed    and

recorded,   so   that    Jane    Deshotel     was   the     last   duly    recorded

beneficiary upon Rodney Smith’s death.                   Indeed, Smith does not

argue that the claims are not logically and factually related;

instead she contends only that her delictual claim had not matured

at the time she answered the interpleader complaint, an argument we

rejected for the reasons previously assigned.

     It is well settled that a failure to plead a compulsory

counterclaim bars a party from bringing a later independent action

on that claim.     See, e.g., Baker v. Gold Seal Liquors, Inc., 417

U.S. 467, 469 n.1 (1974);          Crutcher v. Aetna Life Ins. Co., 746

F.2d 1076, 1080 (5th Cir. 1984).            Consequently, we conclude that


                                      16
the district court correctly determined that Smith’s delictual

action against New York Life is barred because it was a compulsory

counterclaim    that   she   failed    to    plead   in    the   interpleader

proceeding.

                                      B.

     Smith’s    remaining    arguments      on   appeal   from   the   Eastern

District Court’s judgment may be dealt with readily.

     In its order giving reasons for its summary judgment of

September 7, 1995 awarding the insurance proceeds to Deshotel and

enjoining Deshotel and Smith from proceeding against New York Life

in any court pertaining to the insurance proceeds, the district

court stated that “[n]othing in the injunction prevents Ms. Smith

from bringing any action so long as it is not directed at the

proceeds at issue here.”        Smith argues that, in view of this

statement,     the   district   court’s     later    modification      of   the

injunction to bar, as a compulsory counterclaim, her delictual

action against New York Life in federal court was manifestly

inequitable.    This argument must be rejected.           The district court

did not err in its description of the initial injunction issued on

September 7, 1995.      The district court did not enjoin Smith from

proceeding on her delictual actions until November 26, 1996, after

Smith moved to clarify the court’s judgment and New York Life

responded with a motion to enjoin Smith from prosecuting her

delictual claim in any state or federal court.               Smith does not

demonstrate that the court erred in its September 7, 1995 statement

or explain how she was prejudiced by the statement.


                                      17
     Smith also briefly urges in this appeal an argument that she

presents more    fully   in    the   companion       appeal,   i.e.,    that   her

delictual claims were improperly removed to the Western District

Court, that the Western District Court lacks jurisdiction of them

and must remand the actions to the state court, and that the

Eastern District Court’s injunction, which expressly does not

enjoin   state   actions,     therefore     cannot    affect   the     improperly

removed actions.

                                     III.

     Turning to Smith’s appeal from the judgment of the District

Court for the Western District of Louisiana, we consider (1) sua

sponte an inquiry into the district court’s jurisdiction over

Smith’s negligence action against Linwood Broussard and New York

Life in Smith III, (2) New York Life’s challenge to our appellate

jurisdiction based on Smith’s notice of appeal, and (3) Smith’s

arguments for remanding the removed actions to state court.

                                      A.

     A federal court of appeals has a duty to inquire into the

basis of its jurisdiction and of the jurisdiction of the district

court.   Arizonans for Official English v. Arizona, -- U.S. --, 117

S. Ct. 1055, 1071 (1997).        “‘[I]f the record discloses that the

lower court was without jurisdiction [a federal appellate court]

will notice the defect, although the parties make no contention

concerning it.’”    Id. at 1071-72 (quoting Bender v. Williamsport

Area School Dist., 475 U.S. 534, 541 (1986)) (internal citations

omitted) (brackets added). Our jurisdiction extends “‘not [to] the


                                      18
merits but merely for the purpose of correcting the error of the

lower court in entertaining the suit’” when the district court

lacks jurisdiction.       Id. (same).

      The record discloses that in Smith III complete diversity of

citizenship is lacking because the plaintiff and the defendant

Broussard   are    both   Louisiana     citizens.     The   district     court

erroneously concluded that Broussard’s citizenship did not defeat

diversity because any possibility of recovery against him had been

eliminated by prescription. Prescription had not run, however, but

had been interrupted by the timely filing of the same action

against Broussard in Smith II.

      Delictual actions in Louisiana are subject to a liberative

prescription of one year. LA. CIV. CODE art. 3492.          Prescription is

interrupted, however, when the obligee commences action against the

obligor (e.g., when the tort victim sues the tortfeasor) in a court

of   competent    jurisdiction   and    venue.      Id.   art.   3462.     “An

interruption of prescription resulting from the filing of a suit in

a competent court and in the proper venue . . . continues as long

as the suit is pending.”         Id. art. 3463.      In cases in which a

second suit is filed prior to abandonment, voluntary dismissal, or

failure to prosecute of the first suit, on the same cause of action

between the same parties, the interruption provided by the first

suit is still viable at the time of the filing of the second suit,

and the interruption remains viable during the pendency of the

second suit, even if the first suit is later dismissed.             Deris v.

Lee, 613 So. 2d 962, 962 (La. 1993);        Martin v. Franklin State Bank


                                       19
& Trust Co., 595 So. 2d 371, 373 (La. Ct. App. 2d Cir. 1992);        Levy

v. Stelly, 277 So. 2d 194, 196 (La. Ct. App. 4th Cir. 1973).

     The district court found that prescription commenced on June

14, 1994, when Smith became aware that she had been damaged by

Broussard and New York Life.     Smith filed Smith II on the delictual

claim naming Broussard as a defendant in a state court of competent

jurisdiction and venue on April 26, 1995, within the one year

prescriptive period.    Hence, the timely filing of Smith II caused

an interruption of prescription that was still viable when Smith

III was filed and that remains viable during the pendency of Smith

II or Smith III.3

     Broussard’s non-diverse citizenship cannot be ignored simply

because he was an unserved defendant.          A non-resident defendant

cannot remove an action if the citizenship of any co-defendant,

joined by the plaintiff in good faith, destroys complete diversity,

regardless   of   service   or   non-service   upon   the   co-defendant.

Whenever federal jurisdiction in a removal case depends upon

complete diversity, the existence of diversity is determined from

the fact of citizenship of the parties named and not from the fact


    3
        New York Life argued below that Smith’s filing of Smith II
did not interrupt prescription because at the time she was not yet
properly qualified as succession representative. However, “[i]t is
sufficient to interrupt prescription that a cause of action be
asserted that is adequate to put the defendant on notice of the
nature of the claim against him.” Smith v. Williams, 535 So. 2d
959, 962 (La. Ct. App. 2d Cir. 1988). “It is not necessary that
the action be brought by the correct plaintiff or that he sue in
the proper procedural capacity.” Id. (citing Jones v. Philco-Ford
Corp., 441 So. 2d 1251, on rehearing, 452 So. 2d 370, 371 (La. Ct.
App. 1st Cir. 1983), writs denied, 457 So. 2d 1193, 1198 (La.
1984)).

                                    20
of service.   Pullman Co. v. Jenkins, 305 U.S. 534, 540-41 (1939);

Howell v. Tribune Entertainment Co., 106 F.3d 215, 217 (7th Cir.

1997); Coker v. Amoco Oil Co., 709 F.2d 1433, 1440 (11th Cir.

1983);   Pecherski v. General Motors Corp., 636 F. 2d 1156, 1160 &

n.6 (8th Cir. 1981);    Preaseau v. Prudential Ins. Co., 591 F. 2d

74, 78-79 (9th Cir. 1979);   Clarence E. Morris, Inc. v. Vitek, 412

F.2d 1174, 1176 (9th Cir. 1969);    see also Everett v. MTD Products,

Inc., 947 F. Supp. 441, 442 & n.1 (N.D. Ala. 1996);       In re Norplant

Contraceptive Products Liability Litigation, 889 F. Supp. 271, 273-

76 (E.D. Tex. 1995);   Zaini v. Shell Oil Co., 853 F. Supp. 960, 963

(S.D. Tex. 1994);    Kelly v. Drake Beam Morin, Inc., 695 F. Supp.

354, 357 (E.D. Mich. 1988);      Schwegmann Bros. Giant Super Mkts.

Inc. v. Pharmacy Reports, Inc., 486 F. Supp. 606, 614-15 (E.D. La.

1980);   cf. Cripps v. Life Ins. Co., 980 F.2d 1261, 1265 & n.4 (9th

Cir. 1992).

     Accordingly, the district court’s judgment in Smith III will

be vacated and the case will be remanded to the district court with

directions to remand that case to the state court.       The collateral

effects upon the state court proceedings, if any, of the Eastern

District   Court’s   judgment,   which   we   have   affirmed,   must   be

considered and determined by the state courts.

                                   B.

     Remaining for our consideration is Smith’s appeal from the

judgment of the Western District Court in Smith I.        New York Life

questions the scope of our appellate jurisdiction, contending that

Smith did not preserve for our review alleged errors in the


                                   21
district court’s ruling denying remand.

       In opening briefs, Smith challenged two aspect of the district

court’s order denying remand.           Smith argued New York Life filed

notice of removal out of time. In the alternative, Smith contended

the district court erred in denying her leave to amend to join

Broussard, a non-diverse party, as a defendant.                However, the

notice   of    appeal   designated     “the   order   dismissing    the    above

captioned consolidated actions and the incidental order recognizing

the Motion to Alter Judgment as moot” dated November 22, 1996.                It

did not specifically appeal from the October 3, 1996 order denying

Smith’s motion to remand.        That omission, New York Life argues,

precludes review of these two issues.

       We disagree.      Rule 3(c) of the Federal Rule of Appellate

Procedure requires the appellant to “designate the judgment, order,

or part thereof appealed from” in the notice of appeal.                   FED. R.

APP.   PROC.   3(c).     While   the    requirements    of   Rule   3(c)     are

jurisdictional, and “noncompliance is fatal to an appeal,” courts

construe a notice of appeal liberally to avoid technical barriers

to review.     Smith v. Barry, 502 U.S. 244, 248 (1992).        A mistake in

designating orders to be appealed does not bar review if the intent

to appeal a particular judgment can be fairly inferred and if the

appellee is not prejudiced or misled by the mistake.                 Friou v.

Phillips Petroleum Co., 948 F.2d 972, 974 (5th Cir. 1992).

       Applying this circuit’s precedents, we conclude that Smith

preserved her right to have the district court’s ruling reviewed.

First, the order designated in the notice is the final judgment in


                                       22
this case.    “[A]n appeal from a final judgment preserves all prior

orders intertwined with the final judgment.”           Trust Co., 104 F.3d

at 1485.     Second, the issues in that final order are inextricably

intertwined with the issue of whether the court properly exercised

removal jurisdiction: the final judgment was predicated on the

district court’s decision that removal was proper and that the

cases were properly pending in the Western District Court.                See

Trust Co., 104 F.3d at 1486.         Moreover, any doubts as to Smith’s

intent to appeal these issues are resolved by Smith’s opening

briefs, in which Smith advances arguments on both issues. For these

reasons the notice of appeal coupled with the opening briefs gave

New York Life adequate notice that the matters were at issue in

this appeal.      New York Life fails to demonstrate that it was

prejudiced by any deficiency in the notice of appeal.

      New York Life’s contention that we have no jurisdiction to

review claims on behalf of the estate of Rodney Smith because

Smith’s notice of appeal does not refer to the estate specifically

is contrary to our case law.         “A party’s failure to designate all

of   the   capacities   in   which    he   brings   suit   does   not   defeat

jurisdiction.”    Baker v. Putnal, 75 F.3d 190, 194 (5th Cir. 1996).

                                      C.

      Smith contends that New York Life did not timely file its

notices of removal and that this procedural defect invalidates the

removals and requires that Smith I and Smith III be remanded to the

state court.    We have decided above that Smith III must be remanded

because the district court was without jurisdiction of Smith III


                                      23
due to lack of complete diversity. Accordingly, we address Smith’s

argument that removal was untimely only as it pertains to Smith I.

     Smith filed Smith I against New York Life only in state court

on April 20, 1995.     New York Life removed Smith I on June 4, 1996,

more than one year after Smith I was filed.          However, New York Life

did not receive a copy of Smith’s initial pleading in Smith I until

May 28, 1996, less than thirty days prior to the removal of that

civil action.

     The procedure for removal is set forth by 28 U.S.C. § 1446.

The pertinent part governing timeliness of removal in the present

case, Section 1446(b), provides:

             The   notice   of   removal   of   a   civil      action   or

     proceeding shall be filed within thirty days after the

     receipt by the defendant, through service or otherwise,

     of a copy of the initial pleading setting forth the claim

     for relief upon which such action or proceeding is based,

     or within thirty days after service of summons upon the

     defendant if such initial pleading has then been filed in

     court and is not required to be served on the defendant,

     whichever period is shorter.

             If the case stated by the initial pleading is not

     removable, a notice of removal may be filed within thirty

     days after receipt by the defendant, through service or

     otherwise, of a copy of an amended pleading, motion,

     order    or   other    paper   from   which    it   may    first   be

     ascertained that the case is one which is or has become


                                      24
     removable, except that a case may not be removed on the

     basis of jurisdiction conferred by section 1332 of this

     title more than 1 year after commencement of this action.

28 U.S.C. § 1446(b) (emphasis added).

     Under both Louisiana and federal law, an action “commences”

when it is filed.    LA. CODE CIV. PROC. art 421 (“A civil action is a

demand for the enforcement of a legal right.           It is commenced by

the filing of a pleading presenting the demand to a court of

competent jurisdiction.”);      FED. R. CIV. P. 3 (“A civil action is

commenced by filing a complaint with the court.”); see also Allred

v. Moore & Peterson, 117 F.3d 278, 283 (5th Cir. 1997);               de la

Vergne v. de la Vergne, 479 So. 2d 549, 550 (La. Ct. App. 1st Cir.

1985); Haynie v. Haynie, 452 So. 2d 426, 427 (La. Ct. App. 3d Cir.

1984);     Sims v. Sims, 247 So. 2d 602, 604 (La. Ct. App. 3d Cir.

1971);   Saxon v. Fireman’s Ins. Co., 224 So. 2d 560 (La. Ct. App.

3d Cir. 1969);    accord Martine v. National Tea Co., 841 F. Supp.

1421, 1422 (M.D. La. 1993).      Smith contends that New York Life’s

removal of Smith I well over thirteen months after the action

commenced violated the one-year limitation established by Section

1446(b).

     The question presented is whether the one-year limitation for

removal of diversity cases under Section 1446(b) applies only to

those state court cases that are not initially removable, or to all

diversity cases that a defendant seeks to remove.             The federal

district courts     are   disunited    on   the   issue.   Compare,   e.g.,

Rezendes v. Dow Corning Corp., 717 F. Supp. 1435, 1438-39 (E.D.


                                      25
Cal. 1989) (one-year limit is an absolute bar to removal of all

diversity cases), with, e.g., Breese v. Hadson Petroleum, Inc., 947

F. Supp. 242, 243-44 (M.D. La. 1996) (one-year limit applies only

to cases that are not initially removable), and, e.g., Kinabrew v.

Emco-Wheaton, Inc., 936 F. Supp. 351, 353 (M.D. La. 1996) (one-year

limit applies to all diversity actions with exceptions as equity

demands).     We have not found a Supreme Court or circuit court

decision that resolves the issue.

     In determining the meaning of the statute, we must look not

only to the particular statutory language, but also to the statute

as a whole, including its design, object, and policy.           Crandon v.

United States, 494 U.S. 152, 158 (1990) (citing K Mart Corp. v.

Cartier, Inc., 486 U.S. 281, 291 (1988), and Pilot Life Ins. Co. v.

Dedeaux, 481 U.S. 41, 51 (1987));         Massachusetts v. Morash, 490

U.S. 107, 115 (1989) (citing Pilot Life Ins. Co., 481 U.S. at 51).

“[T]he meaning of statutory language, plain or not, depends on

context.”    King v. St. Vincent’s Hosp., 502 U.S. 215, 221 (1991)

(citing Shell Oil Co. v. Iowa Dept. of Revenue, 488 U.S. 19, 26

(1988);     see   also   id.   (“‘Words   are   not   pebbles   in   alien

juxtaposition; they have only a communal existence; and not only

does the meaning of each interpenetrate the other, but all in their

aggregate take their purport from the setting in which they are

used . . . .’”)(quoting Judge Learned Hand in NLRB v. Federbush

Co., 121 F.2d 954, 957 (2nd Cir. 1941)(quoted in Shell Oil, 488

U.S. at 25 n.6)).

     When read in its entirety with these precepts in mind, Section


                                    26
1446   requires     that    we   interpret   the    one-year   limitation   on

diversity removals as applying only to the second paragraph of that

section, i.e., only to cases that are not initially removable.

Section 1446(b) consists of two single sentence paragraphs.                 The

first paragraph applies only to civil actions in which the case

stated by the initial pleading is removable.              The second paragraph

applies only to civil actions in which the initial pleading states

a case that is not removable.        The dependent phrase -- “except that

a case may not be removed on the basis of jurisdiction conferred by

section 1332 of this title more than 1 year after commencement of

the    action”    --   is   incorporated     into   the    second   paragraph.

Normally, one would read such a phrase as relating only to the

sentence or paragraph of which it is a part.              Section 1446(b) does

not reasonably indicate a contrary intention.              Courts applying the

one-year limitation to the first paragraph of Section 1446(b) can

do so only by distorting its ordinary meaning.              They are forced to

read the words “except that” out of the statute and treat the

remainder of the phrase as if it were an independent one-sentence

paragraph.       They, in effect, must rewrite the statute.         For if the

statute is read as written, it is not plausible that Congress

intended to affect the statement of the first paragraph by creating

an exception to that made by the second paragraph.             If Congress had

intended for the one-year limit to apply to all diversity removals,

it is highly unlikely it would have chosen such an eccentric and

obscure means to accomplish its purpose.              See 14A WRIGHT supra §

3723, at 284 (Supp. 1997).


                                       27
     Although   the    scant     legislative         history     regarding     Section

1446(b) is not completely without ambiguity, it lends substantial

support to this interpretation.           The legislative history provides:

            Subsection (b)(2) amends 28 U.S.C. s 1446(b) to

     establish a one-year limit on removal based on diversity

     jurisdiction as a means of reducing the opportunity for

     removal after substantial progress has been made in state

     court.    The result is a modest curtailment in access to

     diversity jurisdiction. The amendment addresses problems

     that    arise   from    a   change       of    parties    as   an    action

     progresses toward trial in state court.                  The elimination

     of   parties    may    create    for     the     first    time   a     party

     alignment that supports diversity jurisdiction.                        Under

     Section 1446(b), removal is possible whenever this event

     occurs, so long as the change of parties was voluntary as

     to the plaintiff. Settlement with a diversity-destroying

     defendant on the eve of trial, for example, may permit

     the remaining defendants to remove.               Removal late in the

     proceedings      may    result      in        substantial      delay     and

     disruption.

H.R. REP. NO. 100-889 (1988), reprinted in 1988 U.S.C.C.A.N. 5982,

6031-6034;    see also 134 CONG. REC. 31064 (1988).

     The congressional report states that the one-year limit on

removal based on diversity jurisdiction establishes “a means of

reducing the opportunity for removal after substantial progress has

been made in state court.”         Id.    Substantial state court progress


                                         28
cannot occur in cases that are initially removable under the first

paragraph of Section 1446(b), (unless, of course, the defendant

fails to remove, in which event the case will remain in state court

and the expenditure of its resources will not have been wasted).4

The report also states that the legislation addresses problems that

arise from “a change of parties as an action progresses toward

trial in state court,” such as “when the elimination of parties may

create for the first time a party alignment that supports diversity

jurisdiction.”     Id.    Congressional concern is expressed that

“settlement with a diversity-destroying defendant on the eve of

trial, for example, may permit removal by the other defendants,

causing substantial delay and disruption.” Id. These problems are

associated with cases not initially removable on diversity grounds

that are governed by the second paragraph of Section 1446(b), not

with cases dealt with in the Section’s first paragraph, in which

the initial pleading sets forth a case removable on the basis of

diversity jurisdiction.

     In the present case, the initial pleading of Smith I sets

     4
         Even if there are multiple defendants, the general rule is
that “‘[i]f the first served defendant abstains from seeking
removal or does not effect a timely removal, subsequently served
defendants cannot remove . . . due to the rule of unanimity among
defendants which is required for removal.’” Brown v. Demco, Inc.,
729 F.2d 478, 481 & n.11 (5th Cir. 1986)(quoting 1A JAMES WM. MOORE
ET AL., MOORE’S FEDERAL PRACTICE, ¶ 0.168 [3.5-5], 586-87 (2d ed. 1985)
and citing 14A CHARLES A. WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE:
JURISDICTION 2d, § 332 at 531-32));          accord Getty Oil Corp. v.
Insurance Co. of N. Am., 841 F.2d 1254, 1262-63 (5th Cir. 1988);
Brooks v. Rosiere, 585 F. Supp. 351, 353 (E.D. La. 1984);
Friedrich v. Whittaker Corp., 467 F. Supp. 1012, 1013-14 (S.D. Tex.
1979); Jones v. Scogin, 929 F. Supp. 987 (W.D. La. 1996); see
also 16 JAMES WM. MOORE, MOORE’S FEDERAL PRACTICE, ¶ 107.30[3][a] (3d ed.
1997).

                                   29
forth    a   case    that    is   removable     on   the   basis   of   diversity

jurisdiction. The first paragraph of Section 1446(b) provides that

the notice of removal of such a civil action shall be filed within

thirty days after the receipt by the defendant of a copy of the

initial pleading.       The defendant New York Life filed its notice of

removal timely within thirty days of its receipt of the plaintiff’s

initial pleading.      Consequently, there was no procedural defect in

the removal of Smith I, and the district court reached the correct

result in denying Smith’s motion to remand that case to state

court.

     Smith    also    argues      that   the   district    court   erred   in   not

allowing her to amend her petition in Smith I to name Broussard as

a defendant so as to destroy complete diversity and require a

remand of the case.         We do not reach this issue because the Eastern

District Court’s injunction prevents Smith from proceeding further

in Smith I.

     Because Smith I was properly before the Western District

Court, and we have affirmed the judgment of the Eastern District

Court permanently enjoining Smith from proceeding in Smith I, we

find no error in the Western District Court’s decision to dismiss

Smith I based on that injunction.

                                         IV.

     For the reasons assigned, (1) the judgment of the Eastern

District Court in No. 96-31260 is AFFIRMED, (2) the judgment of the

Western District Court in No. 96-31269 with respect to Smith I is

AFFIRMED, and (3) the judgment of the Western District Court in No.


                                         30
96-31269 with respect to Smith III is VACATED, and Smith III is

REMANDED to the district court with instructions to REMAND the case

to the state court.




                                31
