Franceskin v. Suisse
| Decision Date | 01 August 1999 |
| Docket Number | Docket No. 98-9376 |
| Parties | (2nd Cir. 2000) GUILLERMO V. FRANCESKIN, Plaintiff-Counter-Defendant-Appellant, v. CREDIT SUISSE, Defendant-Counter-Claimant-Appellee, LLOYDS BANK, Defendant-Appellee, DR. CARLOS MEISCHENGUISER, Executor of The Estate of Eugenio Durante, Interpleader-Counter-Defendant-Appellee, LUIS DURANTE, VINCENTE DURANTE, FRANCISCO DURANTE, NELIDA DURANTE, MARTA DURANTE, BEATRIZ DURANTE, ANTONIA F. CALIGURI, NILDA DE LA CRUZ MENDOZA and VICTORIA ANA LICEN, Counter-Defendants |
| Court | U.S. Court of Appeals — Second Circuit |
Appeal from an order by the United States District Court for the Southern District of New York granting summary judgment and denying leave to amend a complaint (Whitman Knapp, Judge). We vacate the judgment for Credit Suisse and the interpleader-counter defendant because there is no diversity of citizenship jurisdiction. We remand the action against a second bank for a determination whether diversity jurisdiction is lacking there also.
FERNANDO KOATZ, Gleason & Koatz (John P. Gleason, of counsel), New York, New York, for Plaintiff-Counter-Defendant-Appellant.
ALLAN N. TAFFET, Paradise, Alberts & Fisher LLP (Pierre M. Gentin, Credit Suisse First Boston Corporation Legal and Compliance Department, of counsel), New York, New York, for Defendant-Counter-Claimant-Appellee.
ROBERT I. BODIAN, O'Sullivan, Graev & Karabell, LLP (Joan Wharton, of counsel), New York, New York, for Defendant-Appellee.
GEORGE R. BROWN V, Stairs Dillenbeck Finley & Mearle (Pierre F.V. Merle, John J. Finley, of counsel), New York, New York, for Interpleader-Counter-Defendant-Appellee.
Before: WINTER, Chief Judge, KEARSE, and STRAUB, Circuit Judges.
Guillermo V. Franceskin appeals from Judge Knapp's order granting summary judgment to appellees Credit Suisse ("CS"), Lloyds Bank ("Lloyds"), and the Executor of the estate of Eugenio Durante ("the Executor"). A judgment for approximately $530,000 held by CS was awarded to the Executor in an interpleader proceeding. The issues we address on this appeal concern diversity of citizenship jurisdiction, or the lack thereof.
The problem in this case is not uncommon. Plaintiff's counsel has not met the requisites of pleading or proving diversity jurisdiction. Too often we hear appeals in cases in which diversity has not been properly alleged in the complaint and the often extensive proceedings in the district court have not clarified matters. Sometimes, the omission was one that should have been obvious to any lawyer who researched well-established principles of diversity jurisdiction before alleging it. See, e.g., Lee v. Coss, 201 F.3d 431, 1999 WL 1314741, at *1 (2d Cir. Dec. 29, 1999) (unpublished table decision) ()1; Canedy v. Liberty Mutual Ins. Co., 126 F.3d 100, 102-03 (2d Cir. 1997) (); Lupo v. Human Affairs Int'l, Inc., 28 F.3d 269, 273-74 (2d Cir. 1994) (); International Shipping Co. v. Hydra Offshore, Inc., 875 F.2d 388, 390 (2d Cir. 1989) (). Other times, the defect is less obvious. See, e.g., Cresswell v. Sullivan & Cromwell, 922 F.2d 60, 68-69 (2d Cir. 1990) ().
In many such cases, diversity of citizenship sufficient to support federal jurisdiction actually exists, and counsel for the defendants do not bother to move to dismiss because leave to amend will almost surely be granted and the defect cured. However, the failure to put the basis for jurisdiction on the record -- say, through a stipulation -- may lead to unnecessary proceedings on appeal. See, e.g., Canedy, 126 F.3d at 102-03 (). Sometimes, when no party recognizes the failure to allege diversity of citizenship properly, there may be serious consequences. See, e.g., Signal Hill, N.V. v. Altmann, 104 F.3d 350, 1996 WL 537916, at *1-*2 (2d Cir. Sept. 20, 1996) (unpublished table decision) ().
In the present matter, the original complaints stated that CS and Lloyds were "organized under the laws of the state of New York," allegations essential to a proper assertion of diversity jurisdiction in each case. CS denied the allegation as to its state of incorporation in its answer but did not move to dismiss. Subsequent pleadings made it clear that CS is a Swiss corporation. Counsel for CS surely knew that diversity was lacking but apparently decided to see how things went on the merits, holding open the option to raise the lack of jurisdiction at any time. Lloyds never answered the complaint against it, and counsel for Lloyds may have followed a similar strategy with regard to a potential jurisdictional issue.
What the present case and most of those cited above have in common is the waste of litigants' and courts' resources that could have been avoided by the parties or court examining the pleadings and taking the simple steps of establishing diversity jurisdiction or dismissing for lack of it. The present cases have proceeded to judgment on the merits in the district court, even though the pleadings clearly revealed a jurisdictional problem in the action against CS and the interpleader proceeding. As a result, we must vacate the judgments for CS and the Executor because federal courts lack subject matter jurisdiction over state law claims among aliens. We remand the action against Lloyds for a determination whether diversity jurisdiction is also lacking in that matter.
Franceskin and Durante are citizens of Argentina who, in 1983, opened joint checking accounts in New York branches of CS and Lloyds. From the opening of the accounts until Durante's death in April 1997, all correspondence from the banks regarding these accounts was directed to Durante only, at Durante's request. During this time, Franceskin never communicated with either bank regarding the joint accounts.
On October 11, 1992, Durante requested in writing that Lloyds transfer the balance of the Lloyds joint account to another Lloyds account in Durante's name alone. Lloyds honored this request on November 19, 1990 and closed the joint account. Also on October 11, 1992, Durante requested that CS remove Franceskin as a title holder to the joint account in that bank. Sometime between October 11, 1990 and March 29, 1992, CS carried out Durante's instructions by amending the title to the joint account to reflect that Durante was the sole owner.
Durante died on April 19, 1997. Shortly thereafter, Franceskin contacted CS and Lloyds to claim a survivorship interest in the balances of what he claims to have thought were still-existing joint accounts. CS told Franceskin that he was no longer a title holder to the account in which Franceskin claimed an interest, and Lloyds informed Franceskin that the joint account in that bank had been closed in November 1990.
Demanding the balances in the pertinent accounts -- approximately $530,000 in CS and $520,000 in Lloyds -- appellant filed the instant actions against CS and Lloyds, asserting state law claims for breach of contract, conversion, and negligence. Each complaint asserted diversity of citizenship as the basis for subject matter jurisdiction, alleging that the particular defendant bank was a New York corporation. CS thereafter interpleaded the Executor and various beneficiaries under Durante's will, all citizens of Argentina. The Executor interposed a state law claim in interpleader against CS for the $530,000 deposit in Durante's formerly jointly held account.
Both CS and Lloyds moved for summary judgment, with the Executor joining both motions. Lloyds argued that it did not breach its contract with appellant, that N.Y. Banking Law § 675(a) absolved it of liability in tort for the transfer, and that appellant's claims were all time-barred. CS argued that appellant's claims against it were time-barred. Appellant opposed the summary judgment motions and cross-moved for leave to file amended complaints. The proposed amended complaint omitted the allegation that CS was a New York corporation and in fact admitted that CS was a Swiss corporation.
The district court granted the summary judgment motions, denied appellant's cross-motion, and granted judgment to the Executor in the amount of the deposit held in Durante's name by CS. The court thereafter consolidated the actions against CS and Lloyds nunc pro tunc, and this appeal followed.
Neither the parties nor the district court addressed the court's subject matter jurisdiction. Accordingly, we raise the issue sua sponte. See FDIC v. Four Star Holding Co., 178 F.3d 97, 100 n.2 (2d Cir. 1999) .
We discuss the appellees separately.
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