United States District Court, D. Connecticut
ORDER REGARDING SUBJECT MATTER JURISDICTION
CHARLES S. HAIGHT, JR., Senior United States District Judge
S Rock Partners, LLC ("S Rock") brings this action
against Defendant Aleskei Kiselev (a/k/a Alex Kiselev) for
fraudulently inducing S Rock to invest the sum of $400, 000
in a limited liability company ("LLC") by
representing that he would fund the company with
"thousands of shares of valuable stock in an
engineering, utility, and power company known as Soyuz
Holding S.A. ("Soyuz")." Doc. 1, ¶1.
Pursuant to an Equity Purchase Agreement, entered on October
8, 2015, S Rock purchased 100% of the membership interests of
that LLC, which was allegedly created "for the sole
purpose of receiving the Soyuz Shares." Id.,
¶ 3. According to Plaintiff these shares were
"intended to be the LLC's sole asset, and the reason
for S Rock's purchase of the LLC." Id.
However, Kiselev never transferred the Soyuz Shares to the
LLC. Id., ¶ 2. Upon receiving S Rock's
$400, 000 investment, Kiselev sold his home in Alexandria,
Virginia, and left the United States to live in Ukraine.
Id., ¶¶ 2, 11.
is evidence in the record that Plaintiff served Kiselev with
the summons and complaint in this action in New York City on
October 5, 2017. Doc. 6. Despite said service, Kiselev
never appeared or responded to the Complaint. S Rock moved
for entry of default by the Clerk, which was granted. Doc. 7,
8, & 9. Thereafter, pursuant to Federal Rule of Civil
Procedure 55(b), S Rock moved for default judgment. Doc. 10
(filed February 8, 2018). However, before the Court may
consider whether it would be proper to enter judgment, it
must confirm its subject matter jurisdiction based on
diversity of citizenship. To do so, the Court must have
additional facts regarding the citizenship of the parties and
the amount in controversy. It thus follows that Plaintiff
must make additional submissions so the Court may consider
the existence vel non of its subject matter
Subject Matter Jurisdiction
district courts are courts of limited jurisdiction under
Article III, Section 2, of the United States Constitution.
See, e.g., Chicot Cnty. Drainage Dist. Baxter State
Bank, 308 U.S. 371, 376 (1940), reh'g
denied, 309 U.S. 695 (1940). The question of subject
matter jurisdiction is fundamental so that a court must raise
the issue sua sponte, of its own accord, when the
issue is not addressed by the parties. Mansfield, C.
& L.M. Ry. Co. v. Swan, 111 U.S. 379, 382 (1884).
See also Joseph v. Leavitt, 465 F.3d 87, 89
(2d Cir. 2006) ("Although neither party has suggested
that we lack appellate jurisdiction, we have an independent
obligation to consider the presence or absence of subject
matter jurisdiction sua sponte."), cert.
denied, 549 U.S. 1282 (2007); Univ. of S. Alabama v.
Am. Tobacco Co., 168 F.3d 405, 410 (11th Cir. 1999)
("[I]t is well settled that a federal court is obligated
to inquire into subject matter jurisdiction sua
sponte whenever it may be lacking").
general, a federal district court may exercise subject matter
jurisdiction over an action only if there is either: (1)
"federal question" jurisdiction, applicable to
"all civil actions arising under the Constitution, laws,
or treaties of the United States, " 28 U.S.C. §
1331; or (2) there exists "diversity of citizenship,
" complete diversity of citizenship between the
plaintiff and all defendants and the amount in controversy
exceeds "the sum or value of $75, 000, exclusive of
interest and costs, " 28 U.S.C. § 1332(a). See
also Strawbridge v. Curtiss, 7 U.S. 267, 267-68 (1806);
Da Silva v. Kinsho Int'l Corp., 229 F.3d 358,
363 (2d Cir. 2000) (delineating two categories of subject
personal jurisdiction, "failure of subject matter
jurisdiction is not waivable." Lyndonville Sav. Bank
& Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir.
2000). If subject matter jurisdiction is lacking, the action
must be dismissed. See Fed. R. Civ. P. 12(h)(3); 211
F.3d at 700-01. See also, e.g., Cortlandt St. Recovery
Corp. v. Hellas Telecomms., S.À.R.L., 790 F.3d
411, 416-17 (2d Cir. 2015) ("A district court properly
dismisses an action . . . for lack of subject matter
jurisdiction if the court lacks the statutory or
constitutional power to adjudicate it . . . .") (quoting
Makarova v. United States, 201 F.3d 110, 113 (2d
Cir. 2000)); Manway Constr. Co. v. Housing Auth. of
Hartford, 711 F.2d 501, 503 (2d Cir. 1983) ("It is
common ground that in our federal system of limited
jurisdiction any party or the court sua sponte, at
any stage of the proceedings, may raise the question of
whether the court has subject matter jurisdiction; and, if it
does not, dismissal is mandatory.").
order for diversity of citizenship to exist, the
plaintiff's citizenship must be diverse from that of all
defendants. See, e.g., St. Paul Fire and Marine
Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80
(2d Cir. 2005) ("Diversity is not complete if any
plaintiff is a citizen of the same state as any
defendant.") (citing Owen Equip. & Erection Co.
v. Kroger, 437 U.S. 365, 373-74 (1978)). Moreover, such
diversity must exist at the time the action is
commenced." Universal Licensing Corp. v. Lungo,
293 F.3d 579, 581 (2d Cir. 2002). See also Wolde-Meskel
v. Vocational Instruction Project Comm. Servs., Inc.,
166 F.3d 59, 62 (2d Cir.1999) ("Satisfaction of the
§ 1332(a) diversity requirements (amount in controversy
and citizenship) is determined as of the date that suit is
filed - the 'time-of-filing' rule.").
case at bar, there appears to be no basis for the Court to
exercise "federal question" jurisdiction -
i.e., no claim arising under the Constitution or
federal law. See 28 U.S.C. § 1331. Plaintiff S
Rock has brought exclusively state law claims arising from
Defendant Kiselev's alleged breach and/or failure to
perform under the Equity Purchase Agreement. These claims
include breach of contract, fraud, conversion, unjust
enrichment, and specific performance. Doc. 1, at 12-15.
Consequently, Plaintiff's sole asserted jurisdictional
basis is "diversity of citizenship" pursuant to 28
U.S.C. § 1332(a), because, according to Plaintiff,
"Plaintiff and Defendant are residents of different
states and the amount in controversy . . . exceeds $75, 000,
exclusive of interest and costs." Doc. 1, ¶
12. At the outset, the Court notes that this allegation is
insufficient to establish diversity of citizenship in that it
is the domicile of the parties, as opposed to
residence, that is the basis for determining
citizenship for diversity purposes. This distinction is
discussed more fully below.
order for diversity of citizenship to exist, Plaintiff S
Rock's citizenship must be diverse from that of Defendant
Kiselev. See, e.g., St. Paul Fire & Marine
Ins. Co., 409 F.3d at 80. Moreover, the
"time-of-filing" rule dictates that "diversity
must exist at the time the action is commenced, " in
this case October 3, 2017. Universal Licensing
Corp., 293 F.3d at 581.
to invoke "diversity of citizenship" jurisdiction,
there must be a minimum amount in controversy exceeding
"$75, 000, exclusive of interest and costs, " 28
U.S.C. § 1332(a). The burden is on the plaintiff to
allege in good faith that it sustained the mandatory minimum
in damages. See, e.g., Scherer v. Equitable Life
Assurance Soc'y of U.S., 347 F.3d 394, 397 (2d Cir.
2003) ("A party invoking the jurisdiction of the federal
court has the burden of proving that it appears to a
'reasonable probability' that the claim is in excess
of the statutory jurisdictional amount.") (quoting
Tongkook Am., Inc. v. Shipton Sportswear Co., 14
F.3d 781, 784 (2d Cir.1994)). The amount in controversy must
"appear on the face of the complaint or be established
by proof." Miller v. European Am. Bank, 921
F.Supp. 1162, 1167 (S.D.N.Y. 1996).
Citizenship of the Parties