Court Opinion

ID: 989030
Source: CourtListenerOpinion
Date Created: 2013-07-03 23:01:07.224997+00
Date Added: 2024-06-11T13:21:31.105613
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

BANCA DEL SEMPIONE,
Plaintiff-Appellant,

v.

PROVIDENT BANK OF MARYLAND,
Defendant-Appellee,
                                                                No. 94-2276
JEANNE FARNAN,
Party in Interest.

UNITED STATES COUNCILON
INTERNATIONAL BANKING,
INCORPORATED,
Amicus Curiae.

On Motion to Dismiss Suriel Finance, N.V.

Submitted: March 11, 1996

Decided: April 17, 1996

Before LUTTIG and WILLIAMS, Circuit Judges, and BUTZNER,
Senior Circuit Judge.

_________________________________________________________________

Motion granted by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

Warren Lewis Dennis, Alec W. Farr, Thomas H. Brock, PROS-
KAUER, ROSE, GOETZ & MENDELSOHN, Washington, D.C., for
Appellant. James Meriweather Smith, James T. Heidelbach, GEB-
HARDT & SMITH, Baltimore, Maryland, for Appellee. Richard A.
Lash, BUONASSISSI, HENNING, CAMPBELL & MOFFETT, P.C.,
Fairfax, Virginia; William F. Connell, CONNELL & TAYLOR, New
York, New York, for Amicus Curiae.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

In its petition for rehearing, Provident Bank of Maryland (Provi-
dent) moved to dismiss this action for lack of subject matter jurisdic-
tion. Banca del Sempione (BDS) responded by moving to dismiss
Suriel Finance, N.V. (Suriel), alleging that it was a dispensable party.
We find that Suriel's presence in the case destroys diversity and that
dismissal of Suriel is proper. We grant the motion to dismiss Suriel
and deny the motion to dismiss this case for lack of jurisdiction.

BDS is a bank chartered under the laws of Switzerland, with its
principal place of business in Lugano, Switzerland. Suriel is a foreign
corporation organized under the laws of the Netherlands Antilles,
with its principal place of business in the United States located in
Vienna, Virginia. Provident is a bank chartered under the laws of
Maryland, with its principal place of business in Baltimore, Maryland.

BDS brought this diversity action against Provident and Suriel
under 28 U.S.C. §§ 1332, 2201, and 2202. Since Strawbridge v.
Curtiss, 7 U.S. (3 Cranch) 267 (1806), courts have interpreted section
1332 to require complete diversity between all parties. Diversity juris-
diction exists between BDS and Provident under 28 U.S.C.
§ 1332(a)(2). Yet no diversity jurisdiction exists when BDS, an alien
corporation, sues Suriel, another alien corporation. See, e.g.,
Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629
F.2d 786, 790 (2d Cir. 1980).

                    2
With respect to the controversy between BDS and Provident, the
parties, without questioning jurisdiction, engaged in discovery that
produced an appendix of over 1,100 pages, full briefing, oral argu-
ment before the district court, and postargument briefing. After this
expenditure of judicial resources, the district court granted summary
judgment in favor of Provident against BDS. See Banca del Sempione
v. Suriel Finance, N.V., 852 F. Supp. 417 (D. Md. 1994). On appeal
this court reversed the district court's grant of summary judgment and
remanded the case for trial. See Banca del Sempione v. Provident
Bank of Maryland, 75 F.3d 951 (4th Cir. 1996).

In its petition for rehearing, Provident for the first time questioned
the jurisdiction of the court. BDS responded with a motion to dismiss
Suriel as a dispensable party. Provident answered that the case should
be dismissed for lack of jurisdiction and that Suriel's dismissal would
not remedy this defect without prejudicing Provident. Nevertheless,
apparently recognizing that Suriel is dispensable, Provident seeks
Suriel's dismissal if rehearing restores the district court's summary
judgment in its favor. Provident alternatively seeks a remand to the
district court for a decision on the jurisdictional issue.

Federal Rule of Civil Procedure 21 authorizes a district court to
drop a party at any stage of the proceedings on such terms as are just.
In Caperton v. Beatrice Pocahontas Coal Co., 585 F.2d 683, 691 (4th
Cir. 1978), we observed: "There is, of course, sound authority for the
view that non-diverse parties whose presence is not essential under
Rule 19 may be dropped to achieve diversity between the plaintiffs
and the defendants . . . ."

In Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 837
(1989), the Supreme Court held that a court of appeals has the author-
ity to dismiss a dispensable, nondiverse party. The Court emphasized
that such authority should be exercised sparingly. It cautioned that an
appellate court should carefully consider whether a dismissal of the
nondiverse party would prejudice any of the parties. As the Court
observed, "the presence of the nondiverse party[may have] produced
a tactical advantage for one party or another." 490 U.S. at 838.

In this case, there can be no doubt that Suriel is a dispensable party.
In its complaint, BDS did not allege in any count that Provident and

                     3
Suriel were codefendants. BDS sued Provident to recover damages
based on a letter of credit Provident issued. BDS's cause of action
against Suriel was based on Suriel's breach of its obligation to repay
a loan that BDS had made to Suriel. Suriel did not answer or other-
wise defend the case, and the district court granted a default judgment
against it in favor of BDS. Suriel did not appeal.

Provident bases its claim for dismissal for lack of jurisdiction on
the allegation that BDS and Suriel conspired to defraud Provident. In
Provident's view it will be prejudiced and BDS will be granted a tac-
tical advantage at trial if the case is allowed to proceed. Provident
also argues that factual disputes regarding prejudice should be
resolved by the district court.

We perceive no reason for a remand. This case has been pending
since November 6, 1991. Since that time, Provident has never filed a
cross-claim or a third-party action against Suriel or a counterclaim
against BDS. As far as the record discloses, Provident's difficulty
arose primarily because one of its former vice presidents wrongfully
disbursed cash collateral securing the letter of credit that Provident
had issued at the request of its customer, Rock Solid Investments, Ltd.
It was this customer that sought the disbursal of the collateral that it
had posted, and Provident's former vice president acted to accommo-
date its customer. Provident's former vice president also wrote several
letters that add to the controversy about the letter of credit. This
court's opinion at 75 F.3d 951 narrates the facts giving rise to this
suit.

In any event, some of Suriel's employees, BDS's employees, Prov-
ident's employees, its customer, and its former vice president are
among the many witnesses concerning the letter of credit. Their testi-
mony has been preserved by deposition. They may be called as wit-
nesses in the trial that we ordered on remand. Dismissal of Suriel will
not prejudice any of the parties. Provident will be afforded a full
opportunity to present relevant evidence, if any, concerning its
charges of fraud. The district court in effect removed Suriel from the
case by granting a default judgment against it. Under these circum-
stances, it is appropriate for us to follow Newman-Green, 490 U.S.
826, and to dismiss Suriel, preserving diversity jurisdiction.

                    4
The motion to dismiss Suriel is granted. The clerk is directed to
issue the mandate forthwith.

                    5