Durant, Nichols, Houston, Hodgson v. Dupont

• Decision Date: 06 May 2009
• Docket Number: Docket No. 07-4647-cv.,Docket No. 07-4514-cv.
• Citation: 565 F.3d 56
• Parties: DURANT, NICHOLS, HOUSTON, HODGSON, & CORTESE-COSTA, P.C., Plaintiff-Appellee-Cross-Appellant, v. Ralph P. DUPONT, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

565 F.3d 56

DURANT, NICHOLS, HOUSTON, HODGSON, & CORTESE-COSTA, P.C., Plaintiff-Appellee-Cross-Appellant, v. Ralph P. DUPONT, Defendant-Appellant-Cross-Appellee.

Docket No. 07-4514-cv.

Docket No. 07-4647-cv.

United States Court of Appeals, Second Circuit.

Argued: January 16, 2009.

Final Submissions: March 13, 2009.

Decided: May 6, 2009.

Loraine M. Cortese-Costa, Bridgeport, CT (Michel Bayonne, Durant, Nichols, Houston, Hodgson & Cortese-Costa, Bridgeport, CT, on the brief), for Plaintiff-Appellee-Cross-Appellant.

William H. Clendenen, Jr., New Haven, CT (Nancy L. Walker, Clendenen & Shea, New Haven, CT, Barbara J. Radlauer, Ralph P. Dupont pro se, The Dupont Law Firm, Stamford, CT, on the brief), for Defendant-Appellant-Cross-Appellee.

Before: JACOBS, Chief Judge, KEARSE and HALL, Circuit Judges.

KEARSE, Circuit Judge:

Defendant Ralph P. Dupont appeals from so much of a judgment entered in the United States District Court for the District of Connecticut, Janet B. Arterton, Judge, as confirmed an arbitration award ("Award") that ordered Dupont to pay $94,060.80 to plaintiff Durant, Nichols, Houston, Hodgson, & Cortese-Costa, P.C. ("Durant-Nichols"), based on agreements between the parties. Durant-Nichols cross-appeals from so much of the judgment as denied its requests for prejudgment interest on the amount awarded and for sanctions pursuant to 28 U.S.C. § 1927. At oral argument of this appeal, this Court sua sponte raised the issue of federal subject matter jurisdiction, noting that the appellate briefs do not contain adequate jurisdictional statements and that the complaint initiating this action failed to allege any basis for federal jurisdiction. We have now received additional submissions from the parties, which reveal that the existence of federal jurisdiction cannot be determined without the resolution of factual issues. Accordingly, we dismiss the appeals as premature and remand to the district court for findings of fact as to the existence of subject matter jurisdiction.

I. BACKGROUND

Durant-Nichols is a law firm. Dupont is an attorney who entered into successive "Of Counsel Agreement[s]" with predecessors of Durant-Nichols in 1992 and 1996. Dupont terminated the 1996 agreement in January 1997. The present dispute concerns the claim of Durant-Nichols that it is entitled to a portion of the approximately $2.75 million in fees collected by Dupont in 2003 with respect to his work on law suits begun in 1998 with respect to the hijacking of a Kuwait Airways airplane; the 1998 suits were related to two contingent-fee actions—arising out of that same hijacking—which had been commenced by Dupont in 1985 and were pending while Dupont was of counsel to Durant-Nichols. In August 2003, Durant-Nichols requested a share of the fees collected by Dupont. Dupont did not respond.

A. Durant-Nichols's First Action

Both of the Of Counsel Agreements between Dupont and Durant-Nichols provided that any controversy or claim

arising out of, or relating to any provision of this Agreement or the breach thereof, shall be settled by mediation with the aid of a mediator who is mutually acceptable to the parties or by arbitration in Bridgeport, Connecticut. It is agreed that any party to any award rendered in any such arbitration proceeding may seek a judgment upon the award, and that such judgment may be entered thereon by the court having jurisdiction.

In the summer of 2004, Durant-Nichols commenced an action in Connecticut Superior Court seeking an order compelling Dupont to submit to arbitration ("Durant-Nichols I").

Dupont removed Durant-Nichols I to federal district court, premising federal jurisdiction on diversity of citizenship. Citing 28 U.S.C. § 1332, his notice of removal ("Removal Notice") stated that Durant-Nichols "is a Connecticut professional corporation whose only office is in Connecticut," that Dupont "is a citizen and resident of the State of Hawaii," and that the "amount in controversy, exclusive of interest and costs, exceeds $75,000.00." (Dupont's Removal Notice dated July 7, 2004, ¶¶ 4-7.) In addition, Dupont asserted that the case involved a claim for arbitration under the Federal Arbitration Act ("FAA" or the "Act") and that the district court had jurisdiction under 28 U.S.C. § 1331, which confers jurisdiction over cases raising a federal question. (See Dupont's Removal Notice ¶¶ 8-9.) Because Dupont contended that he had not been properly served with the complaint and summons, Durant-Nichols voluntarily dismissed Durant-Nichols I and began the present action.

B. The Present Action

Durant-Nichols commenced its present action in the district court on August 16, 2004 ("Durant-Nichols II"), again seeking an order compelling arbitration. The complaint alleges that Durant-Nichols "is a professional corporation engaged in the rendering of legal services and whose office is located" in Connecticut, and that Dupont is an attorney "doing business" in Connecticut. (Complaint ¶¶ 1-2.) However, the complaint contains neither a sufficient allegation of Durant-Nichols's citizenship within the meaning of 28 U.S.C. § 1332(c) (for purposes of diversity jurisdiction, a corporation is deemed to be a citizen of both the state of its incorporation and the state where it has its principal place of business), nor any allegation as to Dupont's citizenship. Nor is there any other allegation as to a basis for federal court jurisdiction.

Dupont defaulted in response to the Durant-Nichols II complaint, failing to appear or respond. Durant-Nichols moved successfully for a default order compelling arbitration.

On November 19, 2004, Dupont, proceeding pro se, moved pursuant to Fed. R.Civ.P. 60(b) to vacate the default. Stating that "he is a citizen and resident of the State of Hawaii and has been for several years" (Dupont Memorandum of Law in Support of Motion To Open Default Judgment, dated November 17, 2004 ("Dupont Vacatur Motion Memorandum") at 3), Dupont asserted, inter alia, that he was not properly served with the Durant-Nichols II papers, that they had been improperly left on the ground at a dwelling (at which he was present) in Pound Ridge, New York, on the night of September 29, 2004 (see Affidavit of Ralph P. Dupont dated November 17, 2004 ("2004 Affidavit"), ¶¶ 2-4), and that he had subsequently lost the papers (see id. ¶¶ 7-8, 11; Dupont Vacatur Motion Memorandum at 3). In a reply memorandum dated December 23, 2004 ("Dupont Vacatur Reply Memorandum"), while reiterating that he "is a citizen and resident of the State of Hawaii" (Dupont Vacatur Reply Memorandum at 3, 17), Dupont added the contention that "the Court has no subject matter jurisdiction over this action under the Federal Arbitration Act, 9 U.S.C. § 1, et seq. because the matters [Durant-Nichols] seeks to arbitrate pursuant to the parties [sic] are nonarbitrable." (Dupont Vacatur Reply Memorandum at 35).

The district court denied Dupont's motion to vacate the default judgment, finding that Dupont had failed to demonstrate excusable neglect or improper service, and implicitly rejecting his arbitrability-based challenge to subject matter jurisdiction. In an appeal that was timely as to the order denying Dupont's Rule 60(b) motion but not as to the underlying order of default (the "2005 Appeal"), Dupont challenged the district court's rejections of his contentions that his default was excusable, that he was not properly served, and that the matters as to which arbitration was sought were "not . . . within the scope of the FAA" (Dupont's brief in 2005 Appeal at 1-2). In addition, Dupont made a new attack on federal subject matter jurisdiction on the ground that the amount in controversy was less than $75,000. He stated that "the basis for jurisdiction is presumably[ ] diversity, 28 U.S.C. § 1332, because the Defendant is a citizen of Hawaii" (Dupont's brief in 2005 Appeal at 39; see also id. at 26 ("[Dupont] is a citizen of Hawaii, with a home at 6770 Hawaii Kai Drive, Honolulu. . . . For brief periods of time, and from time to time, Attorney Dupont is present at 14 Peters Lane, Pound Ridge, New York, a short distance from his Stamford[, Connecticut] law office.")); but he argued that "the jurisdictional amount cannot be satisfied" (id. at 39 (emphasis added)). This Court rejected all of Dupont's contentions and affirmed the district court's denial of his motion to vacate the default.

The parties proceeded to arbitration, and the arbitrator ruled in favor of Durant-Nichols, awarding it $94,060.80. Durant-Nichols moved to confirm the Award; Dupont moved to vacate it. The district court granted the motion to confirm, describing the action as a "28 U.S.C. § 1331 federal question fee dispute" that the court had "ordered to be arbitrated . . . under the Federal Arbitration Act, 9 U.S.C. § 1, et seq." Ruling on Plaintiff's Motion To Confirm Arbitration Award, dated September 13, 2007 ("Confirmation Order"), at 1. Although Durant-Nichols also moved for prejudgment interest and the imposition of sanctions against Dupont, the district court denied those motions.

Dupont has appealed the judgment confirming the Award, and Durant-Nichols has cross-appealed the denial of its motions for prejudgment interest and sanctions. At oral argument of these appeals, this Court pointed out that the FAA does not confer federal jurisdiction and that Durant-Nichols's complaint contained no adequate allegation of diversity jurisdiction; we asked whether there was evidence in the record to show that diversity jurisdiction existed. Both sides conceded that diversity had never been properly pleaded, and they proceeded to submit additional papers.

C. The Post-Oral-Argument Submissions on this Appeal

Following oral argument, Durant-Nichols moved to amend its complaint pursuant to 28 U.S.C. § 1653 (authorizing the courts to permit amendment of "[d]efective allegations" of jurisdiction), in order to make proper allegations as to the diverse citizenship of the parties and the...