Giangrande v. Shearson Lehman/EF Hutton, Civ. A. No. 89-2858-T.
Decision Date | 15 September 1992 |
Docket Number | Civ. A. No. 89-2858-T. |
Citation | 803 F. Supp. 464 |
Parties | Elaine E. GIANGRANDE, Plaintiff, v. SHEARSON LEHMAN/E.F. HUTTON, Defendant. |
Court | U.S. District Court — District of Massachusetts |
Paul H. Merry, Garrity & Levin, Boston, Mass., for plaintiff.
Elaine Giangrande, pro se.
David C. Boch, Bingham, Dana & Gould, Boston, Mass., for defendant.
Magistrate Judge Cohen's Report and Recommendation is hereby accepted and adopted by this court. Plaintiff's complaint, therefore, is dismissed.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION ON DEFENDANT'S MOTION TO DISMISS
August 13, 1992
Defendant's motion to dismiss (# 10) was referred to this court for report and recommendation. For the reasons which follow, this court recommends that that motion1 be allowed for want of subject matter jurisdiction.
This is an action to vacate an arbitration award.2 See 9 U.S.C. § 10. In her original pro se complaint (# 01), plaintiff alleged that — because of alleged claims of unsuitable trading — she submitted the matter to arbitration by a three judge arbitration panel. Before that three judge arbitration panel, plaintiff sought "only the amount of the principal investment lost ($24,000)." (Emphasis in original by plaintiff). Complaint, ¶ 2. She contended that she was entitled to have the decision of the arbitration panel vacated for a host of reasons. Complaint, ¶¶ 3-5.3
Defendant moved to dismiss for want of subject matter jurisdiction — to wit: that the amount in controversy was less than the required jurisdictional amount of $50,000 — and for failure to state a claim upon which relief may be granted.
Upon receipt of the motion to dismiss, plaintiff moved to amend the complaint. That motion, as indicated above, footnote 1, has been allowed by this court. In her amended complaint, plaintiff alleges — no doubt in an effort to show the jurisdictional amount required — that she had been injured by the conduct of the defendant to the tune of something in excess of $50,000.4 The only relief she seeks, however, in the amended complaint is the same relief as sought before, to wit: vacation of the arbitration award.5
See also Harry Hoffman Printing, Inc. v. Graphic Comm., Int'l Union, Local 261, 912 F.2d 608, 611 (2d Cir.1990) ().
In this case, therefore, subject matter jurisdiction exists — if at all — on the basis of diversity, 28 U.S.C. § 1332, or on the basis of an independent basis for federal jurisdiction.
To invoke the diversity jurisdiction of this court under Section 1332, plaintiff must make some sort of showing that the amount in controversy is $50,000 or more.6
In attempting to establish the jurisdictional amount, a plaintiff is entitled to "rely upon the actual or threatened injury ... in establishing the jurisdictional amount," Local Division No. 714, Amalgamated Transit Union v. Greater Portland Transit Dist., 589 F.2d 1, 9 (1st Cir. 1978), citing Hunt v. Washington Apple Advertising Commission, 432 U.S. 333, 346, 97 S.Ct. 2434, 2443, 53 L.Ed.2d 383 (1977). If, however, it appears "to a legal certainty", assuming all that is alleged by plaintiff is true, that the plaintiff cannot recover $50,000 or more, then dismissal is required. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).7
Insofar as this court can determine, no court has applied the St. Paul test to an action to vacate a negative8 award under Section 10 of the FAA.
It has been universally held, however, that in an action to compel arbitration under Section 4 of the Act, the amount in controversy involved is the greatest amount that the moving party might recover in the sought for arbitration hearing. See e.g., Davenport v. Proctor & Gamble Manufacturing Co., 241 F.2d 511, 514 (2d Cir.1957);9Marcy Lee Manufacturing Company v. Cortley Fabrics Co., Inc., 354 F.2d 43, 43 (2d Cir.1965).10 So too with an action to enforce an arbitration award under Section 9 of the Act. Quick & Reilly, Inc. v. Saglio, 717 F.Supp. 822 (S.D.Fla. 1989).11 And that same rationale has been applied in a proceeding to vacate an arbitration award. In Hough v. Merrill Lynch, Pierce, Fenner & Smith, 757 F.Supp. 283 (S.D.N.Y.1991), plaintiffs filed a Statement of Claim against the defendant brokerage firm with the National Association of Securities Dealers, seeking damages totalling some $3 million, more or less. That statement of claim was referred to an arbitration panel. After arbitration, an award was made in favor of plaintiffs in the amount of $17,500 — far less than the $3 million sought. Plaintiffs then brought an action in the United States District Court for the Southern District of New York, alleging, among other things, that the arbitrators were partial, that the arbitrators abused their authority, and that the arbitrators denied plaintiffs due process of law. Because of this, plaintiffs sought an order from the federal court modifying or vacating the arbitrators' award, and remanding the matter to the arbitrators for rehearing.
Defendant moved to dismiss for want of subject matter jurisdiction — i.e., for want of an appropriate amount in controversy12 supporting diversity jurisdiction13 — and for failure to state a claim upon which relief may be granted.
In this court's view, the Hough rationale applies equally here, and precludes subject matter jurisdiction. In her claim before the arbitration panel, plaintiff sought damages in the amount of $24,000 — and nothing more. In her original complaint — as well as in her amended complaint — plaintiff's challenge is limited solely to the amount of the award15 made by the arbitration panel. In the words of Hough, supra, "the amount in controversy may be regarded as either the value to plaintiff of the relief sought or the loss to defendant if the relief is granted." Computed either way, the amount remains the same — $24,000. Under plaintiff's best case, if this court were to grant the relief requested, and plaintiff, after rehearing before arbitration panel, obtained all that she sought, that would still amount only to $24,000, far less than the $50,000 required by the provisions of 28 U.S.C. § 1332.
This court accordingly does not have subject matter jurisdiction under the diversity statute (28 U.S.C. § 1332).
Although not argued by plaintiff, given the fact that the subject matter before the arbitration panel could be liberally viewed as one involving "unsuitability"16 — and, hence, in another context, one which might be alleged as sounding as a Rule 10b-5 claim, this court, sua sponte, directed defendant to address the matter of subject matter jurisdiction based on the presence of a federal question. See 28 U.S.C. § 1331. Defendant has, consistent with a Procedural Order entered by this court, addressed the issue, and contends that Section...
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