Marel v. Lks Acquisitions, Inc.
| Decision Date | 09 November 2009 |
| Docket Number | No. 08-3072.,08-3072. |
| Citation | 585 F.3d 279 |
| Parties | Playa MAREL, P.M., S.A.; Elden J. Heinz, Individually; Elden J. Heinz Revocable Living Trust; Alvero Martin, Individually, Plaintiffs-Appellees, v. LKS ACQUISITIONS, INC.; Leonard K. Snell, Individually, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Appeal from the United States District Court for the Southern District of Ohio at Dayton. No. 06-00366 — Thomas M. Rose, District Judge.
ARGUED: Jeffrey Joseph Harmon, Cors & Bassett, LLP, Cincinnati, Ohio, for Appellants. Walter Reynolds, Porter Wright Morris & Arthur LLP, Dayton, Ohio, for Appellees. ON BRIEF: Robert
Joseph Hollingsworth, Jesse Romuald Lipcius, Cors & Bassett, LLP, Cincinnati, Ohio, for Appellants. Walter Reynolds, Tami Hart Kirby, Porter Wright Morris & Arthur LLP, Dayton, Ohio, for Appellees.
Before MARTIN, ROGERS, and COOK, Circuit Judges.
In this declaratory judgment action, plaintiffs sought a declaration that defendants were not entitled to compensation under an alleged contract involving real estate development. Plaintiffs asserted a number of grounds for the lack of entitlement to compensation, one of which was that the defendants had violated federal securities law. Because this federal securities law claim — the only federal issue in the case — would arise only as a claimed defense to a state law cause of action, the district court lacked federal subject matter jurisdiction.
Plaintiffs own approximately 256 hectares of unimproved real property in Costa Rica. They engaged defendants, self-described builder-developers, to create a strategic plan to develop their property in a series of five alleged agreements. Under disputed circumstances, defendants introduced plaintiffs to a third party. Plaintiffs and this third party eventually formed a joint venture to develop the property, an event that defendants argue entitled them to compensation. Plaintiffs originally filed this action in Ohio state court, requesting a declaratory judgment that defendants were not entitled to compensation because defendants had violated federal and Ohio securities laws and Ohio real estate licensing laws. Defendants removed to federal court, invoking federal question jurisdiction on the basis of the federal securities-related allegations. The district court granted summary judgment to plaintiffs, declaring that defendants were not entitled to any compensation because they lacked a required Ohio real estate license. See Playa Marel, P.M., S.A. v. LKS Acquisitions, Inc., No. C-3-06-366, 2007 WL 3342450, at *3 (S.D.Ohio Nov. 6, 2007). Defendants timely appealed.
There is no federal subject matter jurisdiction over this case because, looking behind the declaratory judgment form of this action, the only federal issue in this case arises as a possible defense to a state law claim. The federal Declaratory Judgment Act did not expand the scope of federal subject matter jurisdiction. Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Thus, an action seeking a declaratory judgment that no compensation is owed on a contract is only within federal question jurisdiction if the action could have been filed in federal court by the party seeking compensation. Id. at 672, 70 S.Ct. 876. Here, such a suit would have merely been a state law contract or implied contract action. Thus, in this case as in Skelly Oil, "[w]hatever federal claim [plaintiffs] may be able to urge would in any event be injected into the case only in anticipation of a defense to be asserted by [defendants]." Id. This is insufficient to grant federal jurisdiction. See id. (citing Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 53 L.Ed. 126 (1908)).
This conclusion is not altered by the...
To continue reading
Request your trial
-
Chase Bank U.S., N.A. v. City of Cleveland
...See Vaden v. Discover Bank, --- U.S. ----, 129 S.Ct. 1262, 1278, n. 19, 173 L.Ed.2d 206 (2009); Playa Marel, P.M., S.A. v. LKS Acquisitions, Inc., 585 F.3d 279, 280 (6th Cir.2009). Thus, to utilize the Declaratory Judgment Act, a plaintiff must demonstrate that the district court already ha......
-
Manning v. Merrill Lynch Pierce Fenner & Smith, Inc.
...three of Grable (substantiality) after the necessarily raised issue was resolved. 258 F.3d at 104.6 See also Marel v. LKS Acquisitions, Inc., 585 F.3d 279, 280–81 (6th Cir.2009) (“As the controversy in this case ... was one to enforce a state law claim, this grant of exclusive jurisdiction ......
-
Graminex, L. L.C. v. Cernelle
...exists, the Sixth Circuit advises us to "look behind the declaratory judgment form of this action." Marel v. LKS Acquisitions, Inc. , 585 F.3d 279, 280 (6th Cir. 2009). "A useful question to ask in determining whether an actual controversy exists is what, if any, cause of action the declara......
-
Palermo Gelato, LLC v. Pino Gelato, Inc., Civil Action No. 2:12-cv-00931
...Northwest Century Pipeline Corp. v. Mesa Petroleum Co., 576 F, Supp. 1495, 1500 (D. Del. 1983) (same); see also Marel v. LKS Acquisitions, Inc., 585 F.3d 279 (6th Cir. 2009).4 Therefore, it is no wonder that at first blush it is difficult to determine which category Palermo's lawsuit more d......