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LLC v. Ernest Bock & Sons, Inc.

United States District Court, D. New Jersey

October 25, 2018

ERNEST BOCK & SONS, INC., Defendant.

          ROBERT J. INCOLLINGO On behalf of Plaintiff



          NOEL L. HILLMAN, U.S.D.J.

         On August 28, 2018, Defendant, Ernest Bock & Sons, Inc., removed Plaintiff's case from New Jersey Superior Court to this Court. Plaintiff claims that Defendant acted as the prime contractor on a middle school construction project and Plaintiff entered into a subcontractor agreement with Defendant to provide landscaping labor, materials, and equipment for the project, but Defendant breached their contract by failing to pay the balance owed to Plaintiff in the amount of $82, 274.83.

         The purported basis for subject matter jurisdiction in Defendant's notice of removal was diversity of citizenship of the parties and an amount in controversy in excess of $75, 000, exclusive of interests and costs, pursuant to 28 U.S.C. § 1332(a). Even though the notice of removal did not properly aver the citizenship of the parties, three days later on August 31, 2018, the parties filed a Joint Certification of the Citizenship of the Parties, which correctly provided the citizenship of both parties: Plaintiff is a citizen of New Jersey because its sole member, Thomas Caucci, is a citizen of New Jersey, [1] and Defendant is a citizen of Pennsylvania because that is where Defendant is incorporated and has its principal place of business.[2] (Docket No. 6.) Thus, at the time Defendant removed Plaintiff's case, the Court properly exercised subject matter jurisdiction over the action.[3]

         On October 15, 2018, Plaintiff filed a “Consent Order Permitting Plaintiff to File Amended Complaint and For Remand of Entire Action to State Court.” (Docket No. 11-2.) By consent, the parties seek to add as Defendants First Arch Insurance Company and Fidelity and Deposit Company of Maryland, which entities hold a labor and material payment bond on the project at issue. Because Arch Insurance Company is a citizen of Missouri (its state of incorporation) and New Jersey (where it has its principal place of business), the parties contend App'x 316, 320 (3d Cir. 2006) (explaining that “[i]n order to adequately establish diversity jurisdiction, a complaint must set forth with specificity a corporate party's state of incorporation and its principal place of business, ” and affirming dismissal of complaint alleging that corporation maintained “a principal place of business, ” rather than “its principal place of business”). The notice of removal states “a” principal place of business instead of “its” principal place of business, but the Joint Certification confirms that Defendant is a citizen of Pennsylvania. that diversity of citizenship is destroyed once Arch Insurance Company is added to the case, and the matter must therefore be remanded. (Docket No. 11-2 at 2.)

         The filing of Plaintiff's amended complaint does not defeat subject matter jurisdiction if such jurisdiction existed at the time Defendant removed Plaintiff's original complaint. It has been long and well-established that in determining whether a federal court may exercise jurisdiction based upon diversity of citizenship, the court must look to “the state of things at the time of the action brought.” Mollan v. Torrance, 22 U.S. 537, 539 (1824), quoted in Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 570 (2004); see also St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 294-95 (1938) (“It uniformly has been held that in a suit properly begun in the federal court the change of citizenship of a party does not oust the jurisdiction. The same rule governs a suit originally brought in a state court and removed to a federal court.”).

In Grupo, the Supreme Court drove home the point:
This time-of-filing rule is hornbook law (quite literally) taught to first-year law students in any basic course on federal civil procedure. It measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship against the state of facts that existed at the time of filing - whether the challenge be brought shortly after filing, after the trial, or even for the first time on appeal.

Grupo, 541 U.S. at 570-71. The Court must therefore determine not whether diversity of citizenship exists by way of Plaintiff's amended complaint, but rather at the time Defendant removed Plaintiff's original complaint.[4]

         “Diversity jurisdiction cannot be conferred upon the federal courts by the parties' own determination of who are plaintiffs and who defendants.” Swanson v. Traer, 354 U.S. 91, 99-100 (1957) (quotations and citations omitted). As noted above, complete diversity of citizenship existed between Plaintiff and Defendant when Defendant removed Plaintiff's complaint. Thus, subject matter jurisdiction in this Court was established under § 1332(a) at that time.

         One exception to the time-of-removal rule is if an indispensable party was missing from the removed complaint. “[W]hen a nondiverse party is added to a federal proceeding and that party's presence is indispensable to the furnishing of complete relief, remand is mandated where federal subject matter jurisdiction depends on diversity jurisdiction, even though removal was originally proper.” Steel Valley Authority v. Union Switch and Signal Div., 809 F.2d 1006, 1010-11 (3d Cir. 1987).

         This analysis is governed by Federal Civil Procedure Rule 19. Under that rule, a court must first must determine whether a party should be joined as “necessary” party under Rule 19(a). General Refractories Co. v. First State Ins. Co., 500 F.3d 306, 312 (3d Cir. 2007). If that party should be joined, but its joinder is not feasible because it would defeat diversity of citizenship, a court must next must determine whether the absent party is “indispensable” ...

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