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Prestige Capital Corp. v. Colt's Manufacturing Co., LLC

United States District Court, D. Connecticut

February 21, 2018

PRESTIGE CAPITAL CORP, Plaintiff,
v.
COLT'S MANUFACTURING COMPANY, LLC, Defendant.

          MEMORANDUM AND ORDER ON SUBJECT MATTER JURISDICTION

          CHARLES S. HAIGHT, JR. SENIOR UNITED STATES DISTRICT JUDGE.

         This action comes before the Court as a breach of contract dispute, filed by Plaintiff Prestige Capital Corp ("Prestige" or "Plaintiff") against Defendant Colt's Manufacturing Company, LLC ("Colt, " "Defendant, " or "Third Party Plaintiff"). Presently, discovery deadlines in this matter are stayed, pursuant to this Court's Order of November 1, 2017. Pending is Plaintiff's Motion for Summary Judgement [Doc. 29]. Defendant Colt has filed a Third Party Complaint [Doc. 26] against Third Party Defendant Chazkat, LLC d/b/a Bold Ideas ("Bold Ideas" or "Third Party Defendant"). Bold Ideas has made no appearance in this matter, and its default was entered by the Clerk on September 5, 2017, pursuant to Federal Rule of Civil Procedure 55(a).

         Reviewing the Complaint [Doc. 1], the Answer and Third Party Complaint [Doc. 12], and the Report of Rule 26(f) Planning Meeting [Doc. 26], the Court finds that the Parties have failed to allege sufficient facts from which this Court may determine the citizenship of the parties for purposes of diversity of citizenship jurisdiction.

         “[I]rrespective of how the parties conduct their case, the courts have an independent obligation to ensure that federal jurisdiction is not extended beyond its proper limits." Wight v. BankAmerica Corp., 219 F.3d 79, 90 (2d Cir. 2000). The Court thus has the obligation to determine sua sponte whether federal subject matter jurisdiction is present. Therefore, as set forth infra, the Court must ascertain whether subject matter jurisdiction exists or this case should be dismissed for lack thereof. It thus follows that the Parties must make additional submissions so the Court may consider the existence vel non of its subject matter jurisdiction.

         Given the exclusively state law claims asserted by Plaintiff, there is no basis upon which this Court may assert "federal question" subject matter jurisdiction under 28 U.S.C. § 1331.[1]Conceptually, diversity of citizenship is an alternative jurisdictional basis. However, as set forth below, Plaintiff has failed to plead sufficient facts to demonstrate "diversity of citizenship" subject matter jurisdiction, pursuant to 28 U.S.C. § 1332(a).[2]

         Accordingly, before the Court may allow this action to proceed, it must determine whether it has "diversity of citizenship" subject matter jurisdiction. To do so, the Court requires additional facts regarding the citizenship of Defendant Colt, a limited liability company.

         Further, this opinion will address some present procedural and jurisdictional uncertainty regarding the Third-Party Complaint and direct Colt to make certain filings if it wishes to maintain that impleader action.

         I. SUBJECT MATTER JURISDICTION OF THE FEDERAL DISTRICT COURTS

         Federal 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").

         In 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 matter jurisdiction).

         Unlike 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.").

         In 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.")

         In the case at bar, upon review of the Complaint it appears that the only potential basis for subject matter jurisdiction is diversity of citizenship, 28 U.S.C. § 1332(a). In other words, there are no claims arising pursuant to federal statute or the United States Constitution. In order for diversity of citizenship to exist as to the Complaint, Plaintiff Prestige must not share citizenship in any state with Defendant Colt. Absent the showing of such complete diversity, this Court may not exercise subject matter jurisdiction over this matter.

         II. DISCUSSION

         A. ...


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