Le Blanc v. Cleveland, PLAINTIFF-APPELLANT

• Decision Date: 09 September 1999
• Docket Number: J,THIRD-PARTY-DEFENDANT-APPELLEE,DEFENDANTS-THIRD-PARTY-PLAINTIFF,Docket No. 98-9020,PLAINTIFF-APPELLANT
• Citation: 248 F.3d 95
• Parties: (2nd Cir. 2001) ETOILE LE BLANC,, STEPHEN OSSEN, PLAINTIFF, v. TERRY CLEVELAND AND ROBERT GRANT, JR.,R.D. RETAILERS LTD, D/B/A SYD AND DUSTY'S OUTFITTERS,August Term 1999 Argued:
• Court: U.S. Court of Appeals — Second Circuit

Page 95

248 F.3d 95 (2nd Cir. 2001)

ETOILE LE BLANC, PLAINTIFF-APPELLANT, STEPHEN OSSEN, PLAINTIFF, v. TERRY CLEVELAND AND ROBERT GRANT, JR., DEFENDANTS-THIRD-PARTY-PLAINTIFFS, J.R.D. RETAILERS LTD, D/B/A SYD AND DUSTY'S OUTFITTERS, THIRD-PARTY-DEFENDANT-APPELLEE.

Docket No. 98-9020

August Term 1999

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Argued: September 9, 1999

May 4, 2001

Appeal from a final order of the United States District Court for the Northern District of New York (Kahn, J.), denying plaintiff's motion to vacate its judgment of October 2, 1997 and to reinstate her complaint.

VACATED AND REMANDED.

[Copyrighted Material Omitted] Paul S. Edelman, Esq., Kreindler & Kreindler, New York, N.Y. (Todd J. Krouner, Esq., Chappaqua, N.Y. on the brief), for Plaintiff-Appellant.

E. David Duncan, Esq., Albany, N.Y., for Third-Party-Defendant-Appellee.

Before: Walker, Chief Judge, Feinberg and Calabresi, Circuit Judges.

Per Curiam

Appellant Etoile LeBlanc appeals from a June 23, 1998 Decision and Order of the District Court for the Northern District of New York (Lawrence E. Kahn, Judge) denying her motions (1) to vacate the judgment of October 2, 1997, which dismissed her action on the basis that admiralty jurisdiction was lacking, and to reinstate her complaint pursuant to Fed. R. Civ. P. 60(b); (2) to amend her complaint pursuant to 28 U.S.C. § 1653 and Fed. R. Civ. P. 15 to allege diversity subject- matter jurisdiction; and (3) to discontinue the action as to the non- essential, non-diverse plaintiff, Stephen Ossen, pursuant to Fed. R. Civ. P. 21. We vacate and remand with instructions to grant plaintiff- appellant LeBlanc's motions in their entirety.

BACKGROUND

On July 4, 1994, plaintiffs Etoile LeBlanc and Stephen Ossen were injured when a motor boat struck the kayak they had rented on the Upper Hudson River. As a result of the accident, LeBlanc suffered serious injuries. On March 29, 1995, LeBlanc and Ossen brought this action in the Southern District of New York against defendants Robert Grant and Terry Cleveland, the owner and operator of the motor boat, respectively. LeBlanc and Ossen alleged negligence and invoked the court's admiralty jurisdiction under 28 U.S.C. § 1333. On September 22, 1995, the action was transferred to the Northern District of New York.

Defendants subsequently filed a third-party complaint against appellees J.R.D. Retailers, Ltd., ("Syd and Dusty's"), the outfitter from whom LeBlanc and Ossen had rented their kayak, life vests, and other equipment. The defendants contended that Syd & Dusty's had contributed to the accident by providing the plaintiffs a darkly colored kayak and life vests, which prevented defendants from seeing plaintiffs on the river. By virtue of the third-party complaint against Syd & Dusty's alleging Syd &amp Dusty's negligence, the case proceeded as if the action had originally been brought against both the initial defendant and the third-party defendant. see 29 James William Moore, Moores Federal Practice (Admiralty) 704.06[1], at 704-74 (1996). On July 22, 1997, on the eve of trial, Syd & Dusty's moved to dismiss the complaint against it for lack of subject-matter jurisdiction.

On October 2, 1997, the district court granted Syd & Dusty's motion to dismiss the complaint. The district court held that it lacked admiralty jurisdiction because the Hudson River was not a navigable waterway at the location where the accident occurred. LeBlanc and Ossen appealed that decision separately, and a panel of this court affirmed. See LeBlanc v. Cleveland, 198 F.3d 353 (2d Cir. 1999).

On November 20, 1997, LeBlanc moved to vacate the district court's judgment; to drop from the lawsuit her co-plaintiff Ossen, a citizen of New York, as a non-diverse, non-essential party; and to reinstate her federal action against Syd & Dusty's, a New York citizen, on the basis of diversity of citizenship. See 28 U.S.C. § 1653; Fed. R. Civ. P. 15, 21, 60(b). When LeBlanc and Ossen brought suit in 1995, LeBlanc, a Canadian citizen residing temporarily in New York, was not a legal permanent resident of the United States. She was therefore diverse from the defendants and from Syd & Dusty's, all of whom were citizens of New York for diversity purposes. See 28 U.S.C. § 1332(a)(2). However, on March 6, 1997, LeBlanc, still a Canadian citizen residing in New York, obtained legal permanent resident status. Thus, at the time of her motion to amend, LeBlanc was deemed a New York citizen for purposes of diversity jurisdiction and therefore was no longer diverse from Syd & Dusty's. See 28 U.S.C. § 1332(a).

By Order filed on June 23, 1998, the district court denied LeBlanc's motion to vacate the judgment and dismissed the case. Characterizing LeBlanc's decision to proceed in tandem with Ossen under admiralty jurisdiction as a deliberate choice, the court held that failure of a deliberate trial strategy did not warrant relief under Rule 60(b)(1) or 60(b)(6). The district court reasoned that even if the judgment were vacated, amendment would be futile because Ossen was a co- plaintiff, and as a result, diversity did not exist at the time the suit was filed. The district court noted that diversity also would be lacking at the time of amendment, because LeBlanc had become a New York citizen for diversity purposes. Based upon its determination that LeBlanc was bound by her defective choice of admiralty jurisdiction, the district court did not reach the merits of either LeBlanc's Rule 21 motion to drop Ossen or her Rule 15 motion to amend the complaint to allege diversity. LeBlanc now appeals.

DISCUSSION

LeBlanc argues first that the district court erred in refusing to dismiss her co-plaintiff Ossen pursuant to Rule 21 so that she could pursue her claim in federal court based on diversity jurisdiction. "Parties may be dropped or added by order of the court on motion of any party or of its own initiative at any stage of the action and on such terms as are just." Fed. R. Civ. P. 21. We agree with LeBlanc that Ossen is dispensable to this suit. See Newman-Green, Inc. v. Alfonzo- Larrain, 490 U.S. 826, 837-38 (1989) (holding that Rule 21 permits even appellate courts to drop a dispensable non-diverse party, and applying Fed. R. Civ. P. 19 to determine whether a party is dispensable); Curley v. Brignoli, Curley & Roberts Assocs., 915 F.2d 81, 89 (2d Cir. 1990). LeBlanc's rights are not inexorably intertwined with Ossen's, she may recover completely in his absence, and LeBlanc would lack an adequate remedy if the action is dismissed. See Jaser v. N.Y. Prop. Ins. Underwriting Ass'n, 815 F.2d 240, 243 (2d Cir. 1987).

Once a party has been dropped under Rule 21, we read the complaint as if he had never been included.

[O]nce subject matter jurisdiction is `cured' by an amendment, courts regularly have treated the defect as having been eliminated from the outset of the action. In other words, where a change in parties, necessary to the existence of jurisdiction, is appropriate and is made (even on or after appeal), appellate courts have acted as if the trial court had jurisdiction from the beginning of the litigation.

E.R. Squibb & Sons, Inc. v. Lloyd's & Co., 241 F.3d 154, 163 (2d Cir. 2001) (citing Newman-Green, 490 U.S. at 829); see also Squibb, 241 F.3d at 163 ("As a general matter, it is widely accepted that amendments to cure subject matter jurisdiction relate back."); Curley, 915 F.2d 81 (recharacterizing lawsuit as a class action rather than a derivative action, dismissing dispensable non-diverse party pursuant to Rule 21, and confirming the existence of subject-matter jurisdiction in the dispensable party's absence); 3 James William Moore, Moore's Federal Practice ¶ 15.15 [3.-2], at 15-154 (1996) ("Even though parties must be dropped to perfect diversity jurisdiction, if they were not indispensable parties the amendment will relate back . . . where this is not prejudicial to the remaining parties. Similarly, although there may not be complete diversity when the action is brought, an amendment dropping non-indispensable parties to cure the jurisdictional defect will relate back." (footnotes omitted)). Accordingly, we read the complaint to present a lawsuit between a single plaintiff, Etoile LeBlanc, and the third-party defendant-appellee, Syd & Dusty's.¹

LeBlanc argues next that the district court should have permitted her to amend her complaint pursuant to Rule 15 and 28 U.S.C. § 1653 to allege diversity jurisdiction. Such an amendment is authorized by statute, so long as diversity jurisdiction actually exists between LeBlanc and Syd & Dusty's. See 28 U.S.C. § 1653 ("Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts."). This section addresses "incorrect statements about jurisdiction that actually exists, and not defects in the jurisdictional facts themselves." Newman-Green, Inc., 490 U.S. at 831.

The district court concluded that such an amendment would be futile because diversity could not be established. The jurisdictional question turns on whether LeBlanc's citizenship for diversity purposes must be assessed as of the time the original complaint was filed or as of the time of the amendment. If it is the former, then diversity exists; if it is the latter, diversity is absent.

LeBlanc contends that a court assesses questions of fact pertinent to its jurisdiction, such as a party's citizenship for diversity purposes, as of the time of the initial complaint. Therefore, because LeBlanc was not yet a legal permanent resident when she filed the complaint, she was diverse from Syd & Dusty's and should be allowed to proceed with her suit. Syd & Dusty's responds that even with Ossen now out of the case, diversity does not presently exist, because when the amendment to allege diversity was filed, LeBlanc had become a legal permanent resident of New York and was thus no longer diverse from Syd & Dusty's.

We hold...