Opinion ID: 609737
Heading Depth: 2
Heading Rank: 1

Heading: Jurisdiction and Choice of Law

Text: 26 The complaint alleges diversity and admiralty jurisdiction. In initial briefing to this Court, all parties recited that subject matter jurisdiction over this dispute was in admiralty, and it is apparent that the district court and the parties assumed that disputes involving marine reinsurance contracts are subject to federal admiralty jurisdiction, an issue never decided by this Court. The face of the complaint, which names alien corporations both as plaintiffs and defendants, presents a question as to the existence of diversity jurisdiction. 27 Since we are obliged to satisfy ourselves that jurisdiction exists, Oneida Indian Nation v. New York, 860 F.2d 1145, 1151 (2d Cir.1988), cert. denied, 493 U.S. 871, 110 S.Ct. 200, 107 L.Ed.2d 154 (1989), at oral argument we asked the parties to submit letters briefing jurisdiction. The Domestic Reinsurers now argue that marine reinsurance contracts are not subject to admiralty jurisdiction, that diversity jurisdiction was defeated by the naming of foreign entities as plaintiffs and as defendants, and that there is therefore no federal subject matter jurisdiction whatsoever. 28 We conclude that diversity jurisdiction does exist. Although the alignment of alien corporations as both plaintiffs and defendants defeats the allegation of diversity jurisdiction (See 28 U.S.C. § 1332(a)(2); Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786 (2d Cir.1980), cert. denied 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804 (1981)), the record as a whole clearly demonstrates that the Foreign Reinsurers were never served with the complaint and have never appeared. Federal Rule of Civil Procedure 4(j) sets the time limit for service of a summons and complaint: 29 If a service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint and the party on whose behalf such service was required cannot show good cause why such service was not made within that period, the action shall be dismissed as to that defendant without prejudice upon the court's own initiative with notice to such party or upon motion. This subdivision shall not apply to service in a foreign country pursuant to subdivision (i) of this rule. 30 The Foreign Reinsurers were not served within 120 days after the filing of the complaint, and Mentor--the party on whose behalf service was required--has not undertaken to show good cause why such service was not made, but is itself requesting that the Foreign Reinsurers be dismissed. Fed.R.Civ.P. 4(j). Had the district court addressed the issue, it would have been required to dismiss the action as to the Foreign Reinsurers. See, e.g., Montalbano v. Easco Hand Tools, Inc., 766 F.2d 737, 740 (2d Cir.1985) (foreign country exception to Rule 4(j) is inapplicable where service is not attempted under subdivision (i)); Shaw v. Rolex Watch U.S.A., Inc., 745 F.Supp. 982, 987-88 (S.D.N.Y.1990) (complete failure to justify the delay warrants dismissal under Rule 4(j)). On this record, however, remand is unnecessary. Pursuant to Rule 4(j), and upon Mentor's request, we hereby dismiss the action as to the Foreign Reinsurers. Cf. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) (Federal Rule of Civil Procedure 21 authorizes a court of appeals to dismiss a dispensable nondiverse party). 31 Having found one basis for jurisdiction, we have no reason to decide whether or not this controversy also arises under the district court's admiralty jurisdiction, except insofar as admiralty jurisdiction might affect choice of law for resolving other issues raised on appeal. See, e.g., State Trading Corp. v. Assuranceforeningen Skuld, 921 F.2d 409, 414 (2d Cir.1990) (basis of jurisdiction, be it in admiralty or diversity, affects the application of choice of law rules). In admiralty cases, federal maritime law applies where it exists. See Pope & Talbot, Inc. v. Hawn, 346 U.S. 406, 409-11, 74 S.Ct. 202, 204-206, 98 L.Ed. 143 (1953); Larios v. Victory Carriers, Inc., 316 F.2d 63, 65 (2d Cir.1963). A federal court sitting in admiralty must apply federal choice of law rules. State Trading Corp., 921 F.2d at 414 (citations omitted). In diversity cases, the choice of law rules of the forum state (in this instance New York) are applied. See Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 1021-22, 85 L.Ed. 1477 (1941); Krauss v. Manhattan Life Insurance Co., 643 F.2d 98, 100 (2d Cir.1981). 32 All parties have presumed the existence of admiralty jurisdiction and have briefed the issues on the basis of federal law. Although parties cannot confer admiralty jurisdiction by consent, parties in a diversity action may be bound by their assumption that admiralty law governs. Under New York law, in the absence of a strong countervailing public policy, the parties to litigation may consent by their conduct to the law to be applied. Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d Cir.1984) (citations omitted). Here all parties have relied on federal law, and no party has asked that any alternative body of law be applied to any issue. See, e.g., Defendants-Appellants' Brief at 39 (state law ... is wholly inapplicable); Plaintiffs-Appellees' Brief at 41 (federal law governs). Under these circumstances, it is unnecessary for us to determine whether or not admiralty jurisdiction was properly invoked, since we will apply federal maritime law, to the extent it exists, in either event.