Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_08-cv-08166/USCOURTS-azd-3_08-cv-08166-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Declaratory Judgment

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

OHIO CASUALTY INSURANCE

COMPANY, an Ohio corporation, 

Plaintiff, 

vs.

BIKERS WORLD US, INC., et al., 

Defendants. 

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No. CV-08-8166-PHX-GMS

ORDER

Pending before the Court is the Motion for Default Judgment of Plaintiff Ohio

Casualty Insurance Company. (Dkt. # 16.) In the motion, Plaintiff requests an entry of

judgment against Defendant Bikers World US, Inc. (“Bikers World”). When considering

whether to enter a default judgment, a court has “an affirmative duty to look into its

jurisdiction over both the subject matter and the parties.” In re Tuli, 172 F.3d 707, 712 (9th

Cir. 1999) (“To avoid entering a default judgment that can later be successfully attacked as

void, a court should determine whether it has the power, i.e., the jurisdiction, to enter

judgment in the first place.”).

Because federal courts are courts of limited jurisdiction, federal subject mater

jurisdiction must exist at the time an action is commenced. See Morongo Band of Mission

Indians v. Cal. State Bd. Of Equalization, 858 F.2d 1376, 1380 (9th Cir. 1988). “A party

invoking the federal court’s jurisdiction has the burden of proving the actual existence of

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In the setting of injunctive or declaratory actions, “it is well-settled that the amount

in controversy is said to be measured for subject matter jurisdiction purposes by the value

of the right that the plaintiff seeks to enforce or to protect against the defendant or the value

of the object that is the subject matter of the action.” 14B C. Wright, A. Miller, & E. Cooper,

Federal Practice and Procedure § 3708, at 236 (3d ed. 1998); see also Jackson v. Am. Bar

Ass’n, 538 F.2d 829, 831 (9th Cir. 1976) (“Where the complaint seeks injunctive or

declaratory relief and not monetary damages, the amount in controversy is not what might

have been recovered in money, but rather the value of the right to be protected or the extent

of the injury to be prevented.”).

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“Nor may these claims be aggregated with the others so as to come within the amount

in controversy requirement. As we have stated, the tests for aggregating claims of one

plaintiff against multiple defendants and of multiple plaintiffs against one defendant are

‘essentially the same . . . : the plaintiff’s claim against the defendants must be common and

undivided so that the defendants’ liability is joint and not several.’” Libby, McNeill, & Libby

v. City of Nat. Bank, 592 F.2d 504, 510 (9th Cir. 1978) (quoting United States v. S. Pac.

Transp. Co., 543 F.2d 676, 683 n.9 (9th Cir. 1976)).

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subject matter jurisdiction.” Thompson v. McCombe, 99 F.3d 352, 353 (9th Cir. 1996). “If

the court determines at any time that it lacks subject-matter jurisdiction, the court must

dismiss the action.” Fed. R. Civ. P. 12(h)(3).

In the Complaint, Plaintiff alleges that jurisdiction is proper pursuant to 28 U.S.C. §

1332. (Dkt. # 1 ¶ 7.) Section 1332 provides: “The district courts shall have original

jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of

$75,000, exclusive of interest and costs, and is between . . . citizens of different States.” 28

U.S.C. § 1332(a)(1). While it appears that the complete diversity requirement of § 1332 is

satisfied for all named defendants, the Court is concerned that the amount in controversy,

with respect to Defendant Bikers World, is insufficient to satisfy the jurisdictional

requirement.1

 (See Dkt. # 1 ¶ 36 (seeking a declaratory judgment that Plaintiff is not

obligated to satisfy Defendant Bikers World’s $17,400.00 bond claim).) 

If the amount in controversy between Plaintiff and Defendant Bikers World does not

independently exceed $75,000.00, subject matter jurisdiction would be lacking unless the

federal supplemental jurisdiction statute, 28 U.S.C. § 1367, applies to Plaintiff’s claim

against Defendant Bikers World.2

 Pursuant to 28 U.S.C. § 1367(a):

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Federal Rule of Civil Procedure 20 provides that “[p]ersons . . . may be joined in one

action as defendants if: (A) any right to relief is asserted against them jointly, severally, or

in the alternative with respect to or arising out of the same transaction, occurrence, or series

of transactions or occurrences; and (B) any question of law or fact common to all defendants

will arise in the matter.” Here, Plaintiff has filed declaratory judgment claims against

multiple defendants whose only apparent connection stems from each defendant’s use of

Prescott Motor Group, a financing intermediary who acted as bond principal under Plaintiff’s

statutory vehicle dealer bond, to secure financing for each of defendants’ customers. While

the common question of law or fact requirement appears to be satisfied, it is doubtful whether

the claims against each defendant arise out of the same transaction, occurrence, or series of

transactions or occurrences sufficient to satisfy the requirements of Rule 20.

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Except as provided in subsections (b) and (c) or as expressly

provided otherwise by Federal statute, in any civil action of

which the district courts have original jurisdiction, the district

court shall have supplemental jurisdiction over all other claims

that are so related to claims in the action within such original

jurisdiction that they form part of the same case or controversy

under Article III of the United States Constitution. Such

supplemental jurisdiction shall include claims that involve the

joinder or intervention of additional parties.

Assuming that the joinder of defendants in this action was effectuated pursuant to

Federal Rule of Civil Procedure 20(a)(2), Permissive Joinder of Parties,3

 and assuming that

the claims against the various defendants form part of the same case or controversy, §

1367(a) seems to indicate that supplemental jurisdiction may exist over Plaintiff’s claims that

do not independently have a jurisdictional basis. Section 1367(b), however, specifically

restricts the applicability of supplemental jurisdiction in this situation:

In any civil action of which the district courts have original

jurisdiction founded solely on section 1332 of this title, the

district courts shall not have supplemental jurisdiction under

subsection (a) over claims by plaintiffs against persons made

parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil

Procedure . . . when exercising supplemental jurisdiction over

such claims would be inconsistent with the jurisdictional

requirements of section 1332.

28 U.S.C. § 1367(b) (emphasis added).

While the Court recognizes that Plaintiff’s claim against Defendant FreedomRoad

satisfies the amount in controversy requirement such that there exists proper jurisdiction

between Plaintiff and Defendant FreedomRoad, this does not then permit Plaintiff to defeat

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the jurisdictional requirements of § 1332 by joining additional defendants pursuant to Rule

20 and asserting claims that do not, in an of themselves, satisfy the amount in controversy

requirement of § 1332. See generally 16 James Wm. Moore et al., Moore’s Federal Practice

§ 106.45[3] (3d ed. 2002) (“The courts that have decided this issue have uniformly held that

the supplemental jurisdiction statute does not provide supplemental jurisdiction for the

insufficient claim . . . .”). 

IT IS THEREFORE ORDERED directing Plaintiff to show cause as to why the

Court should not dismiss Defendant Bikers World from the action for lack of subject matter

jurisdiction. Plaintiff shall file a memorandum on or before March 6, 2009 addressing: (1)

the legal basis for joining the defendants; (2) whether the claims against each defendant

satisfy the same case or controversy requirement of § 1367(a); and (3) the basis for subject

matter jurisdiction over Defendant Bikers World. 

DATED this 20th day of February, 2009.

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