S Freedman Co Inc v. Raab

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
5-10-2006
S Freedman Co Inc v. Raab
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-1138
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-1138
S. FREEDMAN AND COMPANY, INC.,
Appellant
v.
MARVIN RAAB, RAAB ENTERPRISES, INC.
Formerly know as PHILADELPHIA FOODS, INC.
v.
SUSAN FREEDMAN
On Appeal from the United States District Court
for the District of New Jersey
D.C. No. 04-cv-01119
District Judge: Honorable Robert B. Kugler
Submitted Under Third Circuit LAR 34.1(a)
May 9, 2006
Before: BARRY, SMITH and ALDISERT, Circuit Judges
(Filed May 10, 2006)
OPINION OF THE COURT
ALDISERT, Circuit Judge.
Appellant S. Freedman & Co., Inc. (“Freedco”) seeks review of the District
Court’s dismissal of its complaint under Rule 12(b)(1) of the Federal Rules of Civil
Procedure for lack of subject matter jurisdiction. It also seeks review of the denial of two
motions for reconsideration. Because we conclude that the District Court did not err in
determining that Freedco failed to adequately plead the existence of subject matter
jurisdiction, and that we lack jurisdiction to review the denial of the two motions for
reconsideration, we will affirm.
I.
The parties are familiar with the facts and proceedings before the District Court, so
we will only briefly revisit them here. Freedco filed a complaint against Appellees
Marvin Raab and Raab Enterprises, Inc., formerly known as Philadelphia Foods, Inc.
(collectively referred to as “Raab”), in the United States District Court for the District of
New Jersey on March 8, 2004. Jurisdiction was purportedly based on the diversity of the
parties under 28 U.S.C. § 1332(a).
On November 24, 2004, less than a month before discovery was scheduled to end,
the District Court sua sponte questioned whether diversity jurisdiction existed. The
complaint alleged that:
1. Plaintiff, S. Freedman and Company, Inc. (“Freedco”), is a corporation
organized and existing under the laws of Pennsylvania with a principal
place of business at The Dorchester, Suite 205, 226 West Rittenhouse
Square, Philadelphia, Pennsylvania 19103. Freedco is a citizen of
Pennsylvania.
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****
3. Defendant Marvin Raab (“Raab”) is an individual with an address of
429 Coolidge Road, Cherry Hill, New Jersey, 08002. Raab is a citizen
of New Jersey.
4. Defendant, Raab Enterprises, Inc., formerly known as Philadelphia
Foods, Inc. (“Philly Foods”) is a corporation organized and existing
under the laws of the State of New Jersey with a place of business
located at 210 Harvard Avenue, Westville, New Jersey 08083. Philly
Foods is a citizen of New Jersey.
****
6. This Court has diversity jurisdiction over the instant matter pursuant to
28 U.S.C. § 1332(a)(1) because the plaintiff and defendants are citizens
of different states and the amount in controversy exceeds $75,000.00
exclusive of costs and interest.
(Complaint, app. at 18-20 (emphasis added).)
The Court accordingly issued an order (the “November 24, 2004 Order”) directing
Freedco to amend its complaint to state the location of “the principal place of business,”
rather than “a place of business” or “a principal place of business,” for each corporate
party. See 28 U.S.C. § 1332(c). The Order provided seven days for Freedco to make this
amendment.
According to an affidavit filed with the District Court and Freedco’s
representations to this Court, Freedco never received the November 24, 2004 Order and,
therefore, did not comply with the Order’s directives. On December 10, 2004, the Court
issued an order (the “December 10, 2004 Order”) dismissing the complaint for lack of
jurisdiction. After learning of the dismissal from Raab’s counsel on December 15, 2004,
Freedco contacted the District Court via both phone and letter to determine the proper
course of action. On December 17, the Court responded that it “cannot advise [Freedco’s
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counsel] how to proceed.”
On December 23, 2004, Freedco filed a motion to reconsider and vacate the
Court’s December 10, 2004 Order (“First Motion for Reconsideration”) and moved for
leave to file an amended complaint. Attached to the motion was an affidavit from its
attorney of record, Robert S. Levy, explaining the non-receipt of the November 24, 2004
Order. Apparently not realizing that a timely motion for reconsideration tolls the 30-day
time period for filing a notice of appeal, see Rule 4(a)(4), Federal Rules of Appellate
Procedure, Freedco also filed a notice of appeal of the District Court’s December 10,
2004 Order. In a January 18, 2005 order, this Court stayed the appeal pending disposition
of the First Motion for Reconsideration.
By an order dated January 20, 2005 (the “January 20, 2005 Order”), the District
Court dismissed, without prejudice, the First Motion for Reconsideration, concluding that
the notice of appeal deprived it of jurisdiction to decide the motion. Freedco then filed a
second motion to reconsider and vacate the District Court’s January 20, 2005 Order
(“Second Motion for Reconsideration”). On August 2, 2005, the District Court, having
reconsidered whether the notice of appeal deprived it of jurisdiction, granted the Second
Motion for Reconsideration and vacated its January 20, 2005 Order. It proceeded,
however, to deny the First Motion for Reconsideration on the merits, concluding that it
“does not present any factual matters or controlling decisions that this Court overlooked
in dismissing the Complaint; rather Plaintiff merely presents reasons for why it did not
[c]omply with this Court’s Order[.]” (App. at 7.) This appeal followed.
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II.
The majority of Freedco’s arguments are dedicated to whether the District Court
exceeded the permissible bounds of discretion in denying the First Motion for
Reconsideration on the merits. Freedco contends that it presented a valid excuse for its
failure to comply with the November 24, 2004 Order and that the District Court should
have permitted it to make the minor amendment to the complaint.
Unfortunately for Freedco, neither the January 20, 2005 Order nor the August 2,
2005 Order are properly before us. Freedco filed its notice of appeal on January 12,
2005, after the dismissal of the complaint but prior to the disposition of the First Motion
for Reconsideration. Rule 4(a)(4)(B)(i) of the Federal Rules of Appellate Procedure
provides that:
[i]f a party files a notice of appeal after the court announces or
enters a judgment – but before it disposes of any motion listed
in Rule 4(a)(4)(A) – the notice becomes effective to appeal a
judgment or order, in whole or in part, when the order disposing
of the last such remaining motion is entered.
Freedco’s notice of appeal therefore became effective upon the adjudication of
Freedco’s motions for reconsideration. Such notice, however, does not encompass the
January 20 or August 2 motions for reconsideration. Rather, Freedco was required to file
a new notice of appeal or to amend the January 12, 2005 notice of appeal. As stated in
Rule 4(a)(4)(B)(ii):
A party intending to challenge an order disposing of any motion
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listed in Rule 4(a)(4)(A), or a judgment altered or amended upon
such a motion, must file a notice of appeal, or an amended
notice of appeal – in compliance with Rule 3(c) – within the
time prescribed by this Rule measured from the entry of the
order disposing of the last such remaining motion.
Rule 4(a)(4)(B)(ii), Federal Rules of Appellate Procedure (emphasis added).
Here, Freedco never filed an amendment or a new notice of appeal. Our review is
therefore confined to the December 10, 2004 Order dismissing the complaint. See, e.g.,
United States v. McGlory, 202 F.3d 664, 668 (3d Cir. 2000) (holding that we lack
jurisdiction to review the denial of a motion for reconsideration where appellant did not
file a new notice of appeal or amend the previously filed notice of appeal); see also Union
Pac. R.R. v. Greentree Transp. Trucking Co., 293 F.3d 120, 126 (3d Cir. 2002).
III.
We have jurisdiction under 28 U.S.C. § 1291 to review the District Court’s
dismissal of the complaint for lack of subject matter jurisdiction. Our review is plenary.
Gould Electronics, Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). A district
court has a duty to raise doubts about its jurisdiction at any time, and the party asserting
jurisdiction “bears the burden of showing that the case is properly before the court at all
stages of the litigation.” Packard v. Provident Nat’l Bank, 994 F.2d 1039, 1045 (3d Cir.
1993).
We agree with the District Court that Freedco has not met its burden of pleading
the diversity of the parties. Pursuant to 28 U.S.C. § 1332(c), for purposes of diversity
jurisdiction, a corporation is a citizen of both the state of its incorporation and the state in
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which it has its principal place of business. As the District Court observed, Freedco
alleged only that Raab Enterprises has “a place of business” in New Jersey, not that New
Jersey is the location of its “principal place of business.” Freedco also failed to allege
that its own principal place of business is in Pennsylvania, asserting only that it has “a
principal place of business” in Pennsylvania. See J & R Ice Cream Corp. v. California
Smoothie Licensing, 31 F.3d 1259, 1265 n.3 (3d Cir. 1994) (holding that a complaint
stating that defendant had “a” principal place of business in New Jersey left open the
possibility that it had “its” principal place of business in Florida, and thus did not properly
plead diversity jurisdiction). The basis of diversity jurisdiction was therefore not
apparent from the pleadings.
Recognizing these deficiencies, Freedco contends that the last sentence of both
Paragraphs One and Four of the complaint – stating that “Freedco is a citizen of
Pennsylvania” and “Philly Foods is a citizen of New Jersey” – allege as a necessary
implication that Freedco’s principal place of business is in Pennsylvania and Philly
Foods’ principal place of business is in New Jersey. It also argues that the diversity of the
parties was “conclusively establishe[d]” by Raab’s answer to the complaint, in which it
admits the allegations in Paragraph Four.
We disagree. It is well established that “the basis upon which jurisdiction depends
must be alleged affirmatively and distinctly and cannot ‘be established argumentatively or
by mere inference.’” 5 C. Wright & A. Miller, Federal Practice and Procedure § 1206, at
78-79 (1969 & Supp. 2005) (citations omitted); Thomas v. Board of Trustees, 195 U.S.
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207, 210 (1904) (holding that diversity jurisdiction, “or the facts upon which, in legal
intendment, it rests, must be distinctly and positively averred in the pleadings, or should
appear affirmatively and with equal distinctness in other parts of the record”); Joiner v.
Diamond M Drilling Co., 677 F.2d 1035, 1039 (5th Cir. 1982) (“In 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.”). Freedco’s bald
allegations that the corporate parties are “citizens” of certain states are insufficient to
carry its burden of pleading the diversity of the parties. Nowhere in the complaint is the
word “citizen” defined with reference to 28 U.S.C. § 1332, and there is nothing to
indicate that it was being used as a term of art. The District Court therefore did not err in
concluding that the complaint fails to adequately set forth the requirements of diversity
jurisdiction, and it properly ordered Freedco to amend its complaint.
The District Court also did not err in dismissing the complaint. Freedco never
responded to the November 24, 2004 Order to amend the complaint. Judging the District
Court’s actions at the time they were taken – that is, when Freedco failed to respond to
the Order and the Court was unaware that Freedco allegedly never received notice – the
District Court’s dismissal of the complaint was proper. See Rule 12(h)(3), Federal Rules
of Civil Procedure (“Whenever it appears by suggestion of the parties or otherwise that
the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”).1
1
We have repeatedly held that a district court has an obligation to provide the parties with
notice and an opportunity to be heard before dismissing a case for lack of jurisdiction.
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IV.
We have considered all contentions presented by the parties and conclude that no
further discussion is necessary. Although we sympathize with Freedco, whose complaint
could have been saved by minor editing, we must affirm the District Court’s dismissal for
lack of subject matter jurisdiction.
See, e.g., Neiderhiser v. Borough of Berwick, 840 F.2d 213, 216 n.6 (3d Cir. 1988). Here,
the District Court provided the requisite notice and opportunity to be heard; Freedco only
asserts that it did not receive notice. Unlike a district court’s failure to provide notice, a
party’s failure to receive notice does not affect the propriety of a dismissal. That Freedco
may have never received notice is a factual matter that should be raised in a motion for
reconsideration; it is not a proper basis for attacking the underlying order of dismissal on
appeal.
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