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United States Court of Appeals, Second Circuit.: Docket No. 01-9107
United States Court of Appeals, Second Circuit.: Docket No. 01-9107
3d 168
PER CURIAM.
Shortly prior to the affirmance, on July 8, 2002, appellant filed with the Clerk a
motion for Clarification of Subject Matter Jurisdiction and asserted that there
was likely a lack of diversity of citizenship among the parties. At the time of
issuance of the summary order on July 17, 2002, the panel members were
unaware of appellant's pending motion. The mandate subsequently issued on
October 16, 2002. We now recall the mandate, vacate our prior summary order,
and remand to the district court to determine whether diversity jurisdiction
exists. In that regard, we instruct the district court to salvage jurisdiction where
possible over the previously litigated claims and judgments. See Universal
Reinsurance Co. v. St. Paul Fire & Marine Ins. Co., Nos. 99-9191 & 01-7759,
312 F.3d 82, 2002 WL 31664744, at *5 (2d Cir. Nov.15, 2002) (Universal IV).
We also invite the district court to consider sanctioning appellant's counsel
pursuant to Fed.R.Civ.P. 11.
DISCUSSION
3
This panel heard oral argument in this appeal on June 17, 2002. On July 8,
2002, appellant filed a motion for Clarification of Subject Matter Jurisdiction,
noting that both Chase Manhattan and Bank of New York have offices,
affiliates, and subsidiaries present in Texas and that 28 U.S.C. 1348 provides
that a national banking association is deemed a citizen of every state in which it
is located.1 Although we do not opine on the presence or absence of diversity
jurisdiction, we conclude that appellant's arguments are sufficient to trigger a
jurisdictional inquiry regarding whether the requisite diversity among the
parties exists, and if not, whether the nondiverse parties are dispensable. See
Universal Reinsurance Co. v. St. Paul Fire & Marine Ins. Co., 224 F.3d 139,
141 (2d Cir.2000) (Universal II); see also Newman-Green, Inc. v. AlfonzoLarrain, 490 U.S. 826, 832, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989) ("
We note that the nature of the jurisdictional inquiry is affected by the fact that a
final judgment issued in the district court. Once a district court has proceeded to
final judgment, "considerations of finality, efficiency, and economy become
overwhelming," Universal IV, 312 F.3d 82, 88 (quoting Caterpillar Inc. v.
Lewis, 519 U.S. 61, 75, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996)), and federal
courts must salvage jurisdiction where possible. See Newman-Green, 490 U.S.
at 836, 109 S.Ct. 2218 ("[R]equiring dismissal after years of litigation would
impose unnecessary and wasteful burdens on the parties, judges, and other
litigants waiting for judicial attention."); see also Penteco Corp. Ltd. P'ship
1985A v. Union Gas Sys., Inc., 929 F.2d 1519, 1523 (10th Cir.1991) ("[W]here
... the action has resulted in a final judgment in the district court, despite an
unnoticed potential jurisdictional defect, we believe the interests of justice,
fairness and judicial economy require some additional opportunity to cure such
pleading defects ...."); cf. Singletary v. Cont'l Ill. Nat'l Bank & Trust Co. of
Chi., 9 F.3d 1236, 1238 (7th Cir.1993) ("[W]hen a plaintiff having elected
federal jurisdiction goes all through the trial and appeal of his case without
breathing any jurisdictional doubts, we think he should be deemed to have
consented to the dropping of nondiverse parties if necessary to preserve federal
jurisdiction. Otherwise a plaintiff who loses on the merits in the court of
appeals could file a petition for rehearing pointing out the presence of the
nondiverse [party] and be able to start over in state court."); Knop v. McMahan,
872 F.2d 1132, 1139 n. 16 (3d Cir.1989) ("To permit a case in which there is
complete diversity throughout trial to proceed to judgment and then cancel the
effect of that judgment and relegate the parties to a new trial in a state court
because of a brief lack of complete diversity at the beginning of the case would
be a waste of judicial resources.").
If the district court determines that a party is nondiverse and dispensable, the
court may sever that party and still preserve its judgment over the claims of the
remaining parties. See Universal IV, 312 F.3d 82, 88. We recognize that
severance may have claim or issue preclusion consequences for appellant, but
this merely reflects the hazards of bringing a diversity action in federal court
without determining that all parties are properly diverse. See id. at 89.
Cir.2000) (recounting cases). We have also urged counsel and district courts to
treat subject matter jurisdiction as a threshold issue for resolution rather than
one, as is too often the practice, to be addressed only when raised by a party or
a court. See id. at 256-57.
7
CONCLUSION
9
We therefore recall the mandate, vacate our prior summary order, and remand
to the district court to determine whether subject matter jurisdiction exists,
whether any nondiverse parties are dispensable, whether some jurisdiction may
Notes:
1