Opinion ID: 790117
Heading Depth: 2
Heading Rank: 2

Heading: Post-Privilege Log Proceedings and Dismissal

Text: 20 Long after the privilege log saga had closed, Emerald discovered that complete diversity of citizenship was lacking for its action brought under 28 U.S.C. § 1332. Emerald, a limited partnership, realized in 2004 that, at the time it filed the suit in 2000, one of its limited partners was a trust that had one trustee who was a citizen of New York. Emerald was thus a citizen of New York. Equitable also happened to be a citizen of New York, and, therefore, there was no subject matter jurisdiction. 21 By the time Emerald discovered its error, the one non-diverse individual no longer served as a trustee for the trust/limited partner at issue and was replaced by a diverse individual. Accordingly, at that point, Emerald was no longer a citizen of New York. Emerald decided to address its jurisdictional dilemma by filing a new civil action that was substantively similar to the original action but which accurately invoked diversity jurisdiction. Emerald's new action is currently pending before the same district court and the same magistrate judge. 22 Additionally, there is another related case pending before the same district court and magistrate judge. Early in the original action, Equitable attempted to file a counterclaim against Emerald; however, the filing was untimely, and the district court denied Equitable leave to file an untimely counterclaim. Equitable then filed a separate civil action against Emerald, alleging that Emerald fraudulently induced Equitable to enter into the contract in question. We will refer to Equitable's action as the counter action. 23 Turning back to the original action (which is the only action on appeal), the district court dismissed it, without prejudice, for lack of subject matter jurisdiction two weeks after Emerald instituted the new action. The district court's order of dismissal and accompanying judgment explicitly stated that the complaint and suit are dismissed, without prejudice. R.471. 24 At the time of dismissal, the district court also terminated all pending motions in the original action, including one that will be of import below: Emerald's motion for reasonable expenses regarding the privilege log motions and related events. That motion sought an additional discovery sanction against Equitable and claimed more than $235,000.00 in attorneys' fees and costs incurred during the privilege log proceedings. Emerald filed the motion nearly seventeen months after the magistrate judge had struck Equitable's privilege log, which is why the motion was still pending in 2004 when the action was dismissed. 25 Viewing the dismissal as a final decision from which it could appeal the magistrate judge's sanction and the corresponding denial of its objections to the sanction under 28 U.S.C. § 1291, Equitable filed this appeal. In response, Emerald, in addition to defending the sanction, argues that we lack jurisdiction to hear the appeal. In the event we reject its jurisdictional attack, Emerald has cross-appealed the denial of its motion for reasonable expenses. We will first address jurisdiction and then turn to the substance of the appeal and cross-appeal.