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&/$< &LUFXLW -XGJH Plaintiff, Charter Township of
Muskegon, appeals from the district court’s order entered on
November 13, 2000, denying its motion for relief from
judgment under Federal Rule of Civil Procedure 60(b)(5), and
sua sponte dismissing in its entirety this action brought
against Defendant, the City of Muskegon, for lack of subject
matter jurisdiction. For the reasons set forth below, ZH
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In 1958, the Charter Township of Muskegon, Michigan
("the Township") issued revenue bonds to finance the

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construction of the Muskegon Township Water Distribution
System No. 2. The Township went into default, and in 1964,
certain out-of-state bondholders filed a diversity action in the
United States District Court for the Western District of
Michigan in order to protect their interests. The case was
docketed as No. 4731. Both the Township and the City of
Muskegon, Michigan ("the City") were named as defendants.
A trial was held in 1969. Excerpts from the proceedings
over which District Judge W. Wallace Kent presided
indicated that the parties were seeking to reach a settlement
and that it was "understood that the decree [settlement] may
include a provision that upon retirement of all the bonds and
upon payment of all the bonds and upon payment of all the
other obligations of the Township system, that the Township
system will then become merged into and become part of the
water system of the City of Muskegon." (J.A. at 78-79.)
Significant to the matter at hand, the excerpts from the
proceedings also indicate that the following colloquy took
place:
THE COURT: Mr. Frederick, did you have something
to say?
FREDERICK: Sir, going back to your last statement on
the City’s assumption of the ownership
of the system, should we have the words,
"existing bond issue."
THE COURT: Yes, existing bond issue.
FREDERICK: There may be more issued in the future,
and this could go on for ever and ever.
THE COURT: Everything as to the bond issue,
reference is made to that which is the
subject of the lawsuit and no other bond
issue. And no obligations except those
required in order to remedy the default,

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except as the income of the % well, no, I
think we can leave it right there, because
from then on you are the operators. So
when those obligations are liquidated,
then the system becomes part of the City
system. It is merged into it.
KNUDSON: Okay, they take over the assets and
liabilities.
THE COURT: Liabilities and everything; it all
becomes part of the City system.
(J.A. at 79.)
On June 15, 1972, judgment was entered by Judge Kent.
The judgment, which provided a method for ensuring that the
bonds would be paid, resulted from efforts by the Township
and the City to reach a settlement. The judgment ordered the
City to assume operation of the water system in the capacity
of trustee and to loan sufficient funds to the water system to
cure any default in its bonded obligations. Paragraphs 7 and
12 of the judgment are relevant to this case and provide,
respectively, that
[t]he rates and charges of the township customers shall
become uniform with the rates and charges throughout
the City when all the outstanding bonds have been fully
paid for the existing bond issue and the City has been
fully reimbursed of any monies it may have obliged to
loan to the Muskegon Township Water Distribution
System No. 2. * * *
The City’s trusteeship and its obligation to maintain
books and records shall continue until all existing bond
and other obligations of the System, including
obligations due the City, are paid in full, at which time
title to the said Muskegon Township Water Distribution
System No. 2 and any future extensions thereto shall vest
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prevent suit in federal court against municipal subdivisions of
a state, as is the case here. See Lawson v. Shelby County,
Tenn., 211 F.3d 331, 335 (6th Cir. 2000).
Having concluded that the district court erred in finding
that it did not have jurisdiction to hear the Township’s motion
brought under Rule 60(b)(5), the question becomes whether
to consider district court’s ruling, albeit made in dicta, that
the Township would not have prevailed with its motion in any
event, or whether to send the matter back to the district court
with instructions for the court to hold a hearing on the motion.
The Township contends that the district court inappropriately
addressed the merits of the case after ruling that it did not
have jurisdiction to hear the matter, particularly without
hearing any evidence on the merits of the motion. The
Township relies upon Rogers v. Stratton Industries, Inc., 798
F.2d 913, 917 (6th Cir. 1986), wherein this Court held that "if
a court does not have jurisdiction, ipso facto, it cannot address
the merits of a case." We agree with the Township, and
therefore find that the Township should be heard before the
district court adjudicates the motion.
CONCLUSION
For the above stated reasons, the district court’s order
dismissing Plaintiff’s claim is REVERSED and the case is
REMANDED with instructions for the court to hold a
hearing on the merits of Plaintiff’s Rule 60(b) motion.
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in the City of Muskegon and shall be merged into the
City Water System. Rates and charges shall thereafter be
uniform throughout the City and Township except where
a differential is justified as hereinbefore provided.
(J.A. at 77-78; emphasis added.)
The City made its final payment on the 1958 bonds in May
of 1998. At that point, all debts and obligations existing in
1972 were paid in full, and according to the City, it
automatically acquired title to the system at that time. In a
June 30, 1998, letter from the City to the Township, the
parties attempted to negotiate a new water service agreement.
In the interim, the arrangement that was in place prior to the
last bond payment by the City was continued. Then, on
August 29, 2000, after no agreement could be reached, the
City gave notice to the Township that effective September 29,
2000, it would assume ownership and operation of the water
system in accordance with the 1972 judgment. The Township
responded by filing a Rule 60(b) motion in district court
under the 1972 case number to enjoin the City from assuming
ownership. The motion was, however, docketed by the clerk
as a new case and given a new case number.
On October 4, 2000, a hearing was held by the district
court, Judge Bell, presiding, regarding the Township’s request
for injunctive relief. The court sua sponte expressed concern
regarding its jurisdiction given that the out-of-state
bondholders were no longer parties to the action, and neither
diversity jurisdiction nor federal question jurisdiction
appeared to be present. The court instructed the parties to
brief the issue, and took the matter under advisement.
Thereafter, on November 9, 2000, the district court entered an
opinion and an order wherein the court ruled "that the prior
judgment vesting title of the Muskegon Township Water
Distribution System must stand," that it did not have "subject
matter jurisdiction over the present controversy of rate setting,
and [that] the parties should seek redress in the appropriate
state forum on those issues." (J.A. at 76-87.)

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In dicta, the district court determined that even if it did
have jurisdiction over the matter, it would deny the Township
the relief that it was seeking. The court began by noting that
the Township was seeking to revisit the 1972 judgment under
Federal Rule Civil Procedure 60(b)(5), which allows a court
to relieve a party from a final judgment when "‘the judgment
has been satisfied, released, or discharged, or . . . it is no
longer equitable that the judgment should have prospective
application.’" (J.A. at 83.) The court noted that any motion
brought under this Rule "‘must be made within a reasonable
time,’" and that the Township’s motion some twenty-eight
years after judgment was entered was not within a reasonable
time, nor did the judgment rise to the level of inequity
necessary for the court to revisit it. (J.A. at 83-84.) The
district court opined that
[t]he Township seems to want to have its cake and eat
it, too. Having struck a bargain with the City in 1972 to
save the Township from financial default, it now wishes
to retain the City’s benefit of the bargain. In dismissing
the current case, this Court allows the Township to
pursue its aims in the appropriate forum % the courts of
the State of Michigan, while at the same time ruling that
the 1972 judgment stands.
* * *
A court should engage in post-judgment consideration
of the equities of the judgment "only under
circumstances when the judgment involves prospective
obligations and effects requiring ongoing court
supervision or execution." The judgment in this case
does not involve prospective obligations, nor does it
require ongoing court supervision. The judgment was
fully executed in 1998 when the original bondholders
were repaid, and title to the water system vested in the
City. Further arbitration contemplated by the judgment
concerning rates can be done through the appropriate
state forum.
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280 F.3d at 271 ("This court has held that ‘[t]he definitional
limitation in subsection (5) is significant in that it empowers
a court to modify a judgment only if it is ‘prospective,’ or
‘executory.’").
The district court viewed this action as completely divorced
from the original suit, finding that it lacked jurisdiction
because the parties were not diverse and no federal question
was involved. The court relied on Evans v. City of Chicago,
10 F.3d 474 (1993), to illustrate why it could not exercise
continuing jurisdiction over the matter. The district court’s
reliance on Evans is misplaced.
In Evans, the court reasoned that "the district court’s
authority to adopt a consent decree comes only from the
statute which the decree is intended to enforce, not from the
parties’ consent to the decree." Id. at 478. (internal quotation
marks and citation omitted). Because the federal law upon
which the original injunction was based had changed, the
original injunction had no force and there was no reason for
the federal court to continue enforcement of the consent
decree. See id.; see also Sweeton v. Brown, Jr., 27 F.3d 1162,
1166 (6th Cir. 1994) ("As in Evans, there is no federal interest
here. Injunctions may be modified ‘when the statutory or
decisional law has changed to make legal what the decree was
designed to prevent.’ Here, the decisional law has changed so
that the enjoined behavior, which once might have been a
violation of federal law, is no longer a matter of federal law
at all.") (quoting Rufo v. Inmates of Suffolk County Jail, 502
U.S. 367 (1992)). In other words, in Evans, the court found
that it could not monitor a consent decree because the law
upon which the decree was based had changed, leaving
nothing to monitor. That is not the case here. Finally, the
district court’s reliance on Pennhurst State School & Hospital
v. Halderman, 465 U.S. 89 (1984) is misplaced inasmuch as
in Pennhurst the Supreme Court held that the Eleventh
Amendment prohibits a federal court from ordering state
officials to conform their conduct to state law; however, it is
well established that the Eleventh Amendment does not

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the district court had jurisdiction when the suit was filed,
it has jurisdiction to entertain a Rule 60(b) motion. This
jurisdiction is not divested by subsequent events."
However, the district court may need independent
jurisdictional grounds if it does anything more than
relieve a party from a judgment already rendered and
entered. The jurisdiction available for a Rule 60
proceeding will not suffice for anything more than relief
from the judgment, because Rule 60 does not authorize
a court to grant any affirmative relief.
12 J AMES WM. M OORE ET AL ., M OORE’S F EDERAL P RACTICE
§ 60.61 (3d ed. 1997) (footnote omitted).
It therefore appears by reading Moore’s Federal Practice
in connection with the above jurisprudence that so long as the
Rule 60 claim is one which seeks relief from judgment, it is
not considered an independent claim, and the district court
has continuing jurisdiction; however, even where an
"independent action" is concerned, so long as the original
case was brought before the district court and does not seek
"reopening of the dismissed suit," jurisdiction is present.
C. Application to the Matter at Hand
In this case, the Township filed what it thought to be a
motion under Rule 60(b)(5) seeking to enjoin the City from
allegedly violating the terms of the 1972 judgment and for
other relief such as preventing the City from taking ownership
of the water distribution system and setting water rates. The
1972 judgment, pursuant to paragraphs seven and twelve as
noted above, clearly provided the terms as to when ownership
of the water system would be vested with the City. As a
result, the district court erred in finding that the Township’s
motion was anything other than a motion for relief from
judgment under Rule 60(b) for which it had continuing
jurisdiction. See 12 J AMES WM. M OORE ET AL ., M OORE’S
F EDERAL P RACTICE § 60.61 (3d ed. 1997); see also Coltec,
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(J.A. at 85-87 (citation omitted).)
The Township filed the instant appeal from the district
court’s order, and also moved before this Court for injunctive
relief pending appeal. In so moving, the Township requested
that the City be enjoined from: (1) taking any action to
assume or exert ownership of Township Water Distribution
System No. 2, including setting water rates for Township
residents; (2) taking control of the assets of the system;
(3) making any decisions associated with connections and
expansions to the system without the Township’s approval;
(4) taking any action that would affect the Township’s rights
in the system including retiring the remaining outstanding
obligations of the system; and (5) violating any other term of
the 1972 judgment. In an order filed on January 26, 2001,
this Court denied the Township’s motion for an injunction
pending appeal, finding that the four-factor test used to
determine whether an injunction should issue did not weigh
in favor of the Township’s request.
The Township’s appeal is now before the Court, wherein
the Township argues that the sole issue on appeal is whether
the district court erred in finding that it lacked subject matter
jurisdiction over the Township’s case. The Township
contends that because the district court held that it lacked
jurisdiction to hear the matter, the court improperly ruled,
albeit in dicta, upon the merits of the Township’s request for
relief from judgment. As a result, the Township urges this
Court to reverse the district court’s decision holding that it
lacked subject matter jurisdiction, and remand the case for a
hearing on the Township’s claim for relief from judgment
under Rule 60(b).
DISCUSSION
We review a district court’s decision regarding subject
matter jurisdiction de novo. See Green v. Ameritech, 200
F.3d 967, 972 (6th Cir. 2000). We review a district court’s
decision on a Rule 60(b) motion for an abuse of discretion.

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See Futernick v. Sumpter Township, 207 F.3d 305, 313 (6th
Cir. 2000).
A. District Court’s Opinion
The district court recognized that for purposes of federal
court jurisdiction, diversity of citizenship is determined at the
time that the action is commenced, and that subsequent
changes in citizenship cannot serve to divest the court’s
jurisdiction over the matter. Despite this rule of law, the
district court found that it did not have jurisdiction over the
matter at hand because it viewed the Township’s actions here
as "a new suit." The court noted the two parties present in
this suit were the non-diverse defendants in the original suit,
and that the subject matter of the instant claim was different
from that in the original suit inasmuch as the original suit
involved the protection of the bondholder’s rights while the
matter at hand involves the ownership of the water system.
In finding that it did not have subject matter jurisdiction
over the matter, the district court first considered the
Township’s claim that under the terms of the 1972 judgment,
title to the water system would not vest in the City until all
financial obligations incurred in the course of managing the
system were paid, including the debt incurred as a result of
the 1994 extension. After examining paragraphs seven and
twelve of the 1972 judgment, and after considering the
parties’ colloquies with Judge Kent, the district court found
it "clear that the intent of the Court and the parties was that at
the date the original bonds were paid off, the entire system,
including any new bond obligations, would transfer to the
City." According to the district court, given the fact that the
judgment was self-executing, title to the water system had
vested in the City and was not open to further discussion.
The district court therefore concluded that because the
Township’s request for relief was, in effect, a new action in
which neither diversity jurisdiction nor federal question
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Atlas Glass Co. v. Hartford-Empire Co., 322 U.S. 238, 244
(1944)).
Indeed, as Moore’s Federal Practice states:
An independent action to set aside a judgment needs,
because it is "independent," its own jurisdictional basis.
However, this is usually not a problem when the action
is filed in the same court that rendered the judgment.
According to the 1884 United States Supreme Court
decision in Pacific RR of Missouri v. Missouri Pacific
Ry. Co., when an independent action for relief from the
judgment is brought in the same court that rendered the
judgment, the rendering court has "ancillary jurisdiction"
to entertain the action. According to the Court, this
"ancillary jurisdiction" is broad enough so that, even
when the original basis for federal jurisdiction no longer
exists, such as when diversity has been destroyed or the
issue to be litigated in no longer a federal question, the
district court that rendered the judgment maintains
jurisdiction to hear an action to set that judgment aside.
Modern courts have generally accepted this ruling
without question. Even the United States Supreme
Court, in ruling that courts that render judgments of
dismissal do not have "ancillary" jurisdiction to enforce
any settlement agreement that prompted the dismissal,
has taken care to note that a different rule, a rule that
jurisdiction does exist, applies when the only relief that
the parties seek is "reopening of the dismissed suit."
12 J AMES WM. M OORE ET AL., M OORE’S F EDERAL P RACTICE
§ 60.84[1][a] (3d ed. 1997) (footnotes omitted).
In this regard, Moore’s Federal Practice also states:
It has been long established that no independent
federal jurisdictional basis is needed to support a Rule
60(b) motion proceeding. A Rule 60(b) motion is
considered a continuation of the original proceeding. "If

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When the matter reached this Court, we rejected the
contention that the federal courts had no jurisdiction over
the bill because the plaintiff and several of the defendants
were from the same State. We first noted that there was
no question as to the court’s jurisdiction over the
underlying suit, and then said:
"On the question of jurisdiction the [subsequent] suit
may be regarded as ancillary to the [prior] suit, so
that the relief asked may be granted by the court
which made the decree in that suit, without regard to
the citizenship of the present parties. . . . The bill,
though an original bill in the chancery sense of the
word, is a continuation of the former suit, on the
question of the jurisdiction of the Circuit Court."
[Pacific, 111 U.S.] at 522.
Even though there was no diversity, the Court relied on
the underlying suit as the basis for jurisdiction and
allowed the independent action to proceed. The
Government is therefore wrong to suggest that an
independent action brought in the same court as the
original lawsuit requires an independent basis for
jurisdiction.
Beggerly, 524 U.S. at 45-46.
The Court then noted that even though the government was
wrong in suggesting that federal jurisdiction was no longer
present because diversity jurisdiction no longer existed
among the parties, "[t]his is not to say, however, that the
requirements for a meritorious independent action have been
met here." Beggerly, 524 U.S. at 46 (emphasis added). The
Court found that "[i]ndependent actions must, if Rule 60(b) is
to be interpreted as a coherent whole, be reserved for those
cases of ‘injustices which, in certain instances, are deemed
sufficiently gross to demand a departure’ from rigid
adherence to the doctrine of res judicata." Id. (citing Hazel-
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jurisdiction was present, subject matter jurisdiction was
lacking. Specifically, the court opined:
It is true, as the Township points out, that diversity
jurisdiction is determined at the time the action is
commenced, and that subsequent changes in state
citizenship will not affect the diversity of that action.
Here, however, the Township has filed what can only be
called a new action. Two of the original parties are in the
present suit, but they were non-diverse defendants in the
original suit. The subject matter is different as well. In
the original suit, the issue was the protection of the rights
of the bondholders. The ownership of the water system
was only ancillary to that. Here, the Township is
bringing suit making the ownership of the water system
the primary reason to bring the suit. Yet ownership of
the system was settled by the court order and agreement
of the parties twenty-eight years ago. Were this court to
revisit the matter in the absence of a clear Rule 60(B)(5)
[sic] mandate, it would throw open the courthouse door
to challenge any order of a court at any time.
(J.A. at 82.) The district court then noted that precedent from
the Seventh Circuit existed to support the conclusion that
jurisdiction does not exist over a consent judgment where the
grounds for federal jurisdiction have been abrogated. Quoting
Evans v. City of Chicago, 10 F.3d 474, 481 (7th Cir. 1993),
the district court opined that "‘principles of respect for a
coordinate sovereign (and in some cases the eleventh
amendment) mean that federal courts should refrain from
adjudicating claims under state law, whether raised directly or
whether used as the springboards for other theories.’" (J.A.
at 82.) The court found that the grounds for federal subject
matter jurisdiction had "vanished" in this case, reasoning that
"[a]part from the 1972 consent judgment there is neither
diversity nor federal question jurisdiction. What remains is
a local disagreement that on the face of the pleadings must
turn to state law for succor." (J.A. at 82.) Relying on
Pennhurst State School & Hospital v. Halderman, 465 U.S.

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89 (1984), the court concluded that it could not interfere with
what was a purely local disagreement between two state
bodies.
B. Rule 60(b) and the Relevant Jurisprudence
"‘The general purpose of Rule 60(b) . . . is to strike a proper
balance between the conflicting principles that litigation must
be brought to an end and that justice must be done.’" Coltec
Indus., Inc. v. Hobgood, 280 F.3d 262, 271 (3d Cir. 2002)
(quoting Boughner v. Sec’y of Health, Educ. & Welfare, 572
F.2d 976, 977 (3d Cir. 1978)). Rule 60(b) provides in
relevant part:
On motion and upon such terms as are just, the court may
relieve a party or a party’s legal representative from a
final judgment, order, or proceeding for the following
reasons: . . . (5) the judgment has been satisfied, released,
or discharged, or a prior judgment upon which it is based
has been reversed or otherwise vacated, or it is no longer
equitable that the judgment should have prospective
application . . . . The motion shall be made within a
reasonable time, and for reasons (1), (2), and (3), not
more than one year after the judgment, order, or
proceeding was entered or taken. A motion under this
subsection (b) does not affect the finality of judgment or
suspend its operation. This rule does not limit the power
of a court to entertain an independent action to relieve a
party from judgment, order, or proceeding . . . . Writs of
coram nobis, coram vobis, audita querela, and bills of
review and bills in the nature of a bill of review, are
abolished, and the procedure for obtaining any relief
from a judgment shall be by motion as prescribed in
these rules or by an independent action.
F ED . R. C IV . P. 60(b). The 1946 amendment to the Rule (as
the language currently reads) "made clear that nearly all of the
old forms of obtaining relief from a judgment, i.e., coram
nobis, coram vobism, audita querela, bills of review, and bills
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in the nature of review, had been abolished. The revision
made equally clear, however, that one of the old forms, i.e.,
the ‘independent action,’ still survived." United States v.
Beggerly, 524 U.S. 38, 45 (1998) (footnote omitted). The
Advisory Committee notes illustrate the survival of the
"independent action" in the 1946 amendment. See id.
Specifically, the Advisory Committee notes state that "‘[i]f
the right to make a motion is lost by the expiration of the time
limits fixed in these rules, the only other procedural remedy
is by a new or independent action to set aside a judgment
upon those principles which have heretofore been applied in
such an action.’" See id. (quoting Advisory Committee’s
Notes on 1946 Amt. to Fed. Rule Civ. P. 60).
The Beggerly Court further expounded on the "independent
action," as continued to be permitted under the 1946 amended
rule, by relying on the case of Pacific Railroad of Missouri v.
Missouri Pacific Railway Co., 111 U.S. 505 (1884), which
the Advisory Committee cited as an example of such a cause.
See Beggerly, 524 U.S. at 45 & n.3. The Beggerly Court
opined:
One case that exemplifies the category [of independent
action] is Pacific R.R. of Mo. v. Missouri Pacific R. Co.,
111 U.S. 505 (1884).
In Pacific the underlying suit had resulted in a decree
foreclosing a mortgage on railroad property and ordering
its sale. This Court enforced the decree and shortly
thereafter the railroad company whose property had been
foreclosed filed a bill to impeach for fraud the
foreclosure decree that had been affirmed. The bill
alleged that the plaintiff in the underlying suit had
conspired with the attorney and directors of the plaintiff
in the subsequent suit to ensure that the property would
be forfeited. The plaintiff in the subsequent suit was a
Missouri corporation, and it named several Missouri
citizens as defendants in its bill seeking relief from the
prior judgment.

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