Cohen v. Postal Holdings, LLC

• Decision Date: 11 October 2017
• Docket Number: Docket No. 16-2657 August Term, 2016.
• Citation: 873 F.3d 394
• Parties: Chad E. COHEN and Kirsten Cohen, Plaintiffs–Appellants, v. POSTAL HOLDINGS, LLC, Defendant–Third–Party–Plaintiff–Appellee, United States Postal Service, Third–Party–Defendant–Appellee.
• Court: U.S. Court of Appeals — Second Circuit

873 F.3d 394

Chad E. COHEN and Kirsten Cohen, Plaintiffs–Appellants,

v.POSTAL HOLDINGS, LLC, Defendant–Third–Party–Plaintiff–Appellee,United States Postal Service, Third–Party–Defendant–Appellee.¹

Docket No. 16-2657 August Term, 2016.

United States Court of Appeals, Second Circuit.

Argued: June 13, 2017

Decided: October 11, 2017

Beverly Rogers, Beverly Rogers Law Offices, LLC (Jennifer Cranstoun, on the brief), Ridgefield, CT, for Plaintiffs–Appellants Chad E. Cohen and Kirsten Cohen.

Matthew G. Conway, Conway Stoughton LLC (MaryKate J. Geary, on the brief), West Hartford, CT, for Defendant–Third–Party–Plaintiff–Appellee Postal Holdings, LLC.

Before: CALABRESI and POOLER, Circuit Judges, and COGAN, District Judge.²

CALABRESI, Circuit Judge:

Plaintiffs–Appellants Chad E. Cohen and Kirsten Cohen (the "Cohens") filed a Complaint in the Superior Court for the State of Connecticut against Defendant–Third–Party–Plaintiff–Appellee Postal Holdings, LLC ("Postal Holdings"), stating a claim of private nuisance based on injuries allegedly caused by Postal Holdings's failure to maintain a property it owned that was adjacent to the Cohens' home. Postal Holdings then filed a Third Party Complaint against the United States Postal Service ("USPS"), to which it had leased the relevant property, stating claims of common–law indemnification and contractual indemnification.

The USPS removed the suit to the United States District Court for the District of Connecticut (Thompson, J .), pursuant to 28 U.S.C. § 1442(a)(1), and then moved to dismiss the Third Party Complaint against it for lack of subject–matter jurisdiction. On January 15, 2015, the district court granted the motion, but, without expressly addressing the question, retained supplemental jurisdiction over the Cohens' remaining state–law claims against Postal Holdings. By Order of June 1, 2016, the district court granted summary judgment in favor of Postal Holdings on the Cohens' state–law claims. The Cohens now appeal that Order.

Because a federal district court cannot exercise supplemental jurisdiction over state–law claims unless it has subject–matter jurisdiction over the federal claims originally presented, we VACATE the district court's June 1, 2016 Order and REMAND with instructions to remand the state-law claims to the state court for further proceedings consistent with this opinion.

I. BACKGROUND

A. Factual Background

The Cohens own a house located at 30–32 Catoonah Street in Ridgefield, Connecticut. Next to the Cohens' property, at 26– 28 Catoonah Street, are two lots owned by Postal Holdings.

The USPS is the lessee of 26–28 Catoonah Street under a ground lease entered into by Postal Holdings's predecessors–in–interest and the USPS in 1982. Pursuant to a 2006 amendment to the 1982 ground lease (collectively, the "Lease"), the USPS has possession and control of 26 and 28 Catoonah Street. The Lease provides that the USPS, "at its own cost and expense, shall construct and maintain all buildings, structures[,] and improvements on the ... premises" and that the USPS's "responsibility for maintenance shall be fulfilled at such time and in such manner as [the USPS] considers necessary." App'x at 38–39 ¶ 9. The Lease also provides that the USPS will indemnify Postal Holdings "from all claims, loss, damage, actions, causes of action, expense[,] and liability resulting from the use of the ... property." App'x at 38 ¶ 8.

The USPS owns and operates a postal facility on the 26 Catoonah Street property. The 28 Catoonah Street property, which abuts directly upon the Cohens' property, contains a physical structure that was, since at least 2006, in a state of disrepair. Kirsten Cohen testified that she told the manager of Postal Holdings, Lisa Quattrocchi, in early 2008 that "there were beer bottles strewn everywhere, shingles flying off in the wind, broken glass, and ... the shrubbery just being overgrown, the grass not being taken care of." App'x at 137. Kirsten Cohen also testified that, in response, Quattrocchi said "she would never want her children growing up next to a home like that" and that Kirsten Cohen was "left with the impression that [Quattrocchi] was taking care of it," notwithstanding that Quattrocchi had explained to her that 28 Catoonah Street "was being leased by" USPS at the time. App'x at 138–39. Over the course of an exchange between the Cohens and Quattrocchi that spanned several years, Quattrocchi sent multiple letters to the USPS expressing her concerns about the condition of 28 Catoonah Street. The state of the property, however, apparently did not improve.

B. Procedural History

On October 21, 2013, the Cohens filed a Complaint against Postal Holdings in the Connecticut Superior Court, stating a claim of private nuisance based on Postal Holdings's alleged failure to abate the conditions at 28 Catoonah Street, and seeking at least $15,000 in damages, exclusive of interest and costs.

On May 29, 2014, Postal Holdings filed a Third–Party Complaint in the Connecticut Superior Court against the USPS, impleading it into the action. The Third Party Complaint stated two claims against the USPS—common–law indemnification (Count One), and contractual indemnification (Count Two)—without conceding that there was a private nuisance.

On June 4, 2014, the USPS removed the action to the United States District Court for the District of Connecticut, pursuant to 28 U.S.C. § 1442(a)(1).³

On June 20, 2014, the USPS moved to dismiss the Third Party Complaint against it for lack of subject–matter jurisdiction, pursuant to Federal Rule of Civil Procedure 12(b)(1). The USPS argued that the claims against it fell within the purview of the Contract Disputes Act, 41 U.S.C. §§ 7101 – 7109 ("CDA"), which grants the United States Court of Federal Claims exclusive jurisdiction over contract disputes with executive agencies of the federal government, such as the USPS.

On July 5, 2014, the Cohens filed a First Amended Complaint against Postal Holdings in the district court, restating their claim of private nuisance, adding a separate claim for negligence, and restating their claim for damages. The 1982 ground lease and 2006 amendment are appended to the Cohens' First Amended Complaint.

On January 15, 2015, before any discovery had been undertaken, the district court granted the USPS's motion and dismissed the Third Party Complaint pursuant to Rule 12(b)(1). Cohen v. Postal Holdings, LLC , No. 14CV800, 2015 WL 225051, at *2–*3 (D. Conn. Jan. 15, 2015).

Having dismissed the claims against the USPS for lack of jurisdiction, the district court nonetheless exercised supplemental jurisdiction over the Cohens' remaining state–law claims and, on June 1, 2016, granted Postal Holdings's motion for summary judgment on those claims. The record does not indicate that either of the parties objected to the district court's decision to exercise supplemental jurisdiction over the remaining state–law claims.⁴ Nor do either of the parties now appeal that decision, or the district court's antecedent dismissal of the Third Party Complaint for lack of subject–matter jurisdiction. The Cohens, instead, appeal only the district court's Order granting Postal Holdings's motion for summary judgment on the state–law claims.

II. DISCUSSION

"[E]very federal appellate court has a special obligation to satisfy itself not only of its own jurisdiction, but also that of the lower courts in a cause under review ...." Bender v. Williamsport Area Sch. Dist. , 475 U.S. 534, 541, 106 S.Ct. 1326, 89 L.Ed.2d 501 (1986) (internal quotation marks omitted). "And if the record discloses that the lower court was without jurisdiction," the appellate court has "jurisdiction on appeal, not of the merits but merely for the purpose of correcting the error of the lower court in entertaining the suit." Id .

Thus, before considering the Cohens' appeal on its merits, we must first determine whether the district court properly asserted supplemental jurisdiction over the Cohens' state–law claims against Postal Holdings. To the extent that this inquiry involves a question of subject–matter jurisdiction, we determine nostra sponte whether the district court properly exercised its authority. Joseph v. Leavitt , 465 F.3d 87, 89 (2d Cir. 2006). "The standard of review for determinations regarding subject–matter jurisdiction is clear error for factual findings, and de novo for the legal conclusion as to whether subject matter jurisdiction exists." Lyndonville Sav. Bank & Tr. Co. v. Lussier , 211 F.3d 697, 701 (2d Cir. 2000).

For the reasons explained below, we hold that the district court correctly determined that the CDA deprived it of subject–matter jurisdiction over the claims in the Third Party Complaint. The district court therefore correctly dismissed the Third Party Complaint pursuant to Rule 12(b)(1). Having dismissed all federal claims for lack of subject–matter jurisdiction, however, the district court erred in retaining supplemental jurisdiction over the Cohens' remaining state–law claims.

A. Dismissal of All Federal Claims Pursuant to Rule 12(b)(1) Bars Supplemental Jurisdiction over Related State-Law Claims

Under 28 U.S.C. § 1367(a), "in any civil action of which the district courts have original jurisdiction , the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy ...." Id . (emphases added). This means that a district court "cannot exercise supplemental jurisdiction unless there is first a proper basis for original federal jurisdiction." Nowak v. Ironworkers Local 6 Pension Fund , 81 F.3d 1182, 1187 (2d Cir. 1996). It follows that when a district court correctly dismisses all federal claims for lack of subject–matter jurisdiction pursuant to Rule 12(b)(1), the district court is thereby precluded from exercising supplemental jurisdiction over related state–law claims. See 28 U.S.C. § 1447(c) ("If at any...