Source: https://law.justia.com/cases/federal/district-courts/FSupp/906/866/2126846/
Timestamp: 2019-06-24 21:38:30
Document Index: 446228251

Matched Legal Cases: ['§ 1332', '§ 1331', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1332', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 3523', '§ 1367', '§ 1367', '§ 1367', '§ 1367', '§ 1367']

Chase Manhattan Bank, NA v. Aldridge, 906 F. Supp. 866 (S.D.N.Y. 1995) :: Justia
Chase Manhattan Bank, NA v. Aldridge, 906 F. Supp. 866 (S.D.N.Y. 1995)
U.S. District Court for the Southern District of New York - 906 F. Supp. 866 (S.D.N.Y. 1995)
906 F. Supp. 866 (1995)
ARCHER SERVICES INC., and The Chase Manhattan Bank, N.A., Defendants on Counterclaim,
The CHASE MANHATTAN BANK, N.A., Plaintiff, Defendant on Counterclaim and Third-Party Plaintiff,
Richard J. KUH, KBS International Corporation and KBS Brokerage Corporation, Third-Party Defendants.
*867 William Hart, New York City, for Plaintiff.
Joseph K. Powers, Sedgwick, Detert, Morran and Arnold, New York City, for Defendant Aldridge.
Robert A. Calinoff, Calinoff & Katz, New York City, for Defendant Archer Services.
Richard S. Atwater, Lustig & Brown, Buffalo, NY, for Third-party defendants.
The plaintiff, The Chase Manhattan Bank, N.A. ("Chase"), has moved to confirm this Court's subject matter jurisdiction over Chase's third-party action against the third-party defendants Richard J. Kuh, KBS International Corporation, and KBS Brokerage Corporation ("Kuh/KBS"). Kuh takes the equivocal position in response to this motion that "Kuh and KBS do not advocate dismissal of the third-party action. However, based upon case law cited to this court, it appears that a question does exist as to whether there is proper subject matter jurisdiction." (Kuh Mem. at 4) In any event, this Court has an independent obligation to assure that it has subject matter jurisdiction. See Fed. R.Civ.P. 12(h) (3). For the reasons stated below, the Court denies the motion to confirm jurisdiction and dismisses the third-party action for lack of subject matter jurisdiction.
*868 The provision for third-party claims in Rule 14 does not, however, provide an independent and sufficient basis for subject matter jurisdiction. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 370, 98 S. Ct. 2396, 2400-2401, 57 L. Ed. 2d 274 (1977). Accordingly, third-party claims must satisfy ordinary jurisdictional requirements. Recognizing that neither 28 U.S.C. § 1332 (diversity jurisdiction) or 28 U.S.C. § 1331 (federal question jurisdiction) provides jurisdiction over the third-party action, the parties argue that this Court has supplemental jurisdiction over that claim pursuant to 28 U.S.C. § 1367.
Under § 1367(a), courts may exercise 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." 28 U.S.C. § 1367(a). However, § 1367(b) provides that when the court's jurisdiction over the original claim is based on § 1332 (diversity jurisdiction), as it is in this case, the court may not exercise supplemental jurisdiction over "claims by plaintiffs against persons made parties under Rule 14 [third-party practice], 19 [necessary joinder], 20 [permissive joinder], or 24 [intervention] of the Federal Rules of Civil Procedure ... when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332." Because the plaintiff Chase brought in Kuh/KBS under Rule 14, the plain language of § 1367(b) appears to prohibit the Court from exercising supplemental jurisdiction over Chase's third-party action against them.
Many courts have similarly interpreted the plain language of § 1367(b) to prohibit a court's exercise of supplemental jurisdiction over nondiverse parties that a plaintiff attempts to join pursuant to one of the enumerated rules. See, e.g., Krueger v. Cartwright, 996 F.2d 928, 932-33 (7th Cir. 1993) (vacating district court's joinder of dispensable party-plaintiff under Rule 19(a), holding that § 1367(b) would not permit the district court to exercise supplemental jurisdiction over that party); Janney Montgomery Scott, Inc. v. Shepard Niles, Inc., 11 F.3d 399, 412 n. 15 (3d Cir.1993) (noting that under § 1367(b) district court would not have jurisdiction over claims by plaintiff against party impleaded under Rule 14); Dieter v. MFS Telecom, Inc., 870 F. Supp. 561, 563-65 (S.D.N.Y.1994) (holding that § 1367(b) does not permit court to exercise supplemental jurisdiction over defendants present at initiation of lawsuit; noting that plaintiffs could not have joined defendants under Rule 19 or 20 because § 1367 rendered supplemental jurisdiction inapplicable); Guaranteed Systems, Inc. v. American Nat'l Can Co., 842 F. Supp. 855, 857-58 (M.D.N.C.1994) (holding that § 1367(b) prohibits the exercise of supplemental jurisdiction over plaintiff's third-party indemnity claim under Rule 14); 6247 Atlas Corp. v. Marine Ins. Co., Ltd., 155 F.R.D. 454, 459-60 (S.D.N.Y.1994) (finding that § 1367 does not permit supplemental jurisdiction in diversity cases over nondiverse parties to be joined as plaintiffs under Rule 19); United Air Lines, Inc. v. ALG, Inc., No. 94 Civ. 3619, 1994 WL 583324, at *4 (N.D.Ill. Oct. 22, 1994) (denying joinder of party under Rule 19 or 20, holding that in light of § 1367(b), the court would lack jurisdiction over the party); see also Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction 2d § 3523 ("Section 1367(b) casts some doubt on the ability of a plaintiff in a diversity action ... to implead a nondiverse party in response to a defendant's counterclaim.").
Chase candidly concedes that there is no case of which it is aware that has sustained jurisdiction over a claim such as Chase'sa third-party claim by a plaintiff against a nondiverse defendant. In addition, Chase concedes that the closest analogous case, Guaranteed Systems, Inc., supra, found no jurisdiction. Chase nevertheless argues that the Court should not interpret § 1367(b) so narrowly. Chase argues that it functions as a "counterclaim defendant" for the purposes of the third-party action; accordingly, Chase argues that the last clause of § 1367(b) would permit the extension of supplemental jurisdiction over the third-party action because the exercise of supplemental jurisdiction under such circumstances would not be "inconsistent with the jurisdictional requirements of section 1332."
*869 Chase's argument is not persuasive. First, neither Rule 14 nor § 1367 recharacterizes plaintiffs as "counterclaim defendants." Indeed, Rule 14(b) affirmatively refers to the ability of a "plaintiff"not a counterclaim defendantto bring in a third party. Similarly, § 1367(b) explicitly rejects supplemental jurisdiction over claims "by plaintiffs" against persons made parties pursuant Rule 14. Although it is true that Chase functions as a defending party on the counterclaim, Chase remains the original plaintiff subject to the jurisdictional limitations of § 1367(b).
[A]ncillary jurisdiction typically involves claims by a defending party haled into court against his will, or by another person whose rights might be irretrievably lost unless he could assert them in an ongoing action in a federal court. A plaintiff cannot complain if ancillary jurisdiction does not encompass all of his possible claims in a case such as this one, since it is he who has chosen the federal rather than the state forum and must accept its limitations....
... But neither the convenience of the litigants nor considerations of judicial economy can suffice to justify extension of the doctrine of ancillary jurisdiction to a plaintiff's cause of action against a citizen of the same State in a diversity case.
Id. at 376-77, 98 S. Ct. at 2404. Here, the plaintiff itself chose to commence its action in federal court. The plaintiff chose the federal forum and should have been aware of its jurisdictional limitations from the outset. This indemnity action by the plaintiff against a nondiverse party is a stand-alone case for which there is no independent basis for federal jurisdiction and which the plaintiff can bring in state court. Moreover, there is no reason why the plaintiff should be permitted to bring this action against the third-party defendants when it would have been unable to assert a claim against them had Lloyd's sued KBS and Kuh directly. See Owen, 437 U.S. 365, 98 S. Ct. at 2398 (holding that in an action based on diversity of citizenship, any claim asserted by the original plaintiff against the third-party defendant must present an independent jurisdictional basis). It would make no sense to find that Chase could not sue parties who were brought into the case by a defendant, even though Chase had related claims against them, but Chase was free without a jurisdictional basis to bring those parties into the case on its own.