MCDP Phx. Servs. Pte v. First Fin. Int'l Bank Inc.
| Decision Date | 17 May 2021 |
| Docket Number | CIVIL NO. 20-1538(RAM) |
| Parties | MCDP PHOENIX SERVICES PTE. LTD. Plaintiff v. FIRST FINANCIAL INTERNATIONAL BANK INC.; JOHN DOE; RICHARD ROE; CORPORATIONS X, Y AND Z; INSURANCE COMPANIES A, B AND C Defendants v. OFFICE OF THE COMMISSIONER OF FINANCIAL INSTITUTIONS, Respondent v. B HIGH HOUSE INTERNATIONAL PTE LTD, Interested Party |
| Court | U.S. District Court — District of Puerto Rico |
Pending before the Court is putative intervenor's B High House International, PTE, Ltd.'s ("BHHI") Motion to Intervene and to Stay Proceedings as to Disbursal of Funds ("Motion to Intervene"). (Docket No. 40). Plaintiff MCDP Phoenix Services PTE, LTD ("Plaintiff" or "MCDP") opposed the Motion to Intervene ("Opposition") and BHHI subsequently filed a reply to MCDP's Opposition ("Reply"). (Docket Nos. 51 and 60). Having reviewed the parties' submissions, the Court DENIES the motion to intervene and to stay proceedings for lack of subject-matter jurisdiction as explained below.
On October 8, 2020, MCDP filed suit against Defendant First Finance International Bank ("FFIB"), among other defendants ("Complaint"). (Docket No. 1). It averred that FFIB froze money in MCDP's account without prior written notice. Id. at 6. The freeze also affected inbound and outbound wire transfers to several of MCDP's clients and receiving entities. Id. at 5-6. As a result, MCDP had to make payments to its client and vendors to honor its commitments with them. Id. at 6. The Complaint includes the following causes of action against FFIB: 1) breach of contractual and fiduciary obligations; 2) negligence under article 1802 of the Puerto Rico Civil Code; 3) pre-judgment attachment pursuant to Fed. R. Civ. P. 64(B); and 4) costs and attorney's fees due to FFIB's temerity. Id. at 8-12. On November 20, 2020, FFIB filed its answer to the Complaint. (Docket No. 20).
On January 8, 2021, plaintiff-intervenor BHHI filed its Motion to Intervene. (Docket No. 40). Said motion states that there is an ongoing action in Singapore (the "Singapore case") between MCDP and BHHI where BHHI is alleging that MCDP and MichaelCarbonara ("Mr. Carbonara"), MCDP's sole shareholder, misappropriated $2,680,553.21 belonging to BBHI. Id. at 2, 5. This after MCDP, one of BBHI's processing agents entrusted to receive funds from third party customers, "fell into a pattern of making delayed and deficient deposits" to BHHI. Id. at 3-4. On May 4, 2020, the High Court of the Republic of Singapore issued a world-wide injunction and disclosure order for MCDP and Mr. Carbonara's assets and finances, including BHHI's funds, because it found there was a high risk that MCDP will dissipate its assets. Id. at 5. MCDP and Mr. Carbonara allegedly failed to disclose assets at FFIB and which BHHI has "compelling reasons to believe [...] were, in substantial part, funds that should have been paid to BHHI." Id. at 6-7.
BHHI moves to intervene because: 1) it claims to have a legally protected interest in the litigation; 2) disposition of the present case may impede its ability to protect its interest in the funds frozen by FFIB; and 3) FFIB does not adequately represent its interests. Id. at 11-12. Thus, BHHI argues it may intervene as a matter of right under Fed. R. Civ. P. 24(a) or as a permissive intervenor under Fed. R. Civ. P. 24(b). Id. at 9-13. It also requests a stay of the present suit pending the resolution of the Singapore case, because the latter is at a more advanced stage. Id. at 13-18. Furthermore, BHHI's Complaint in Interventionrequests declaratory judgment over the funds held by FFIB as well as the return of funds or property. (Docket No. 40-1 at 10-11).
On February 11, 2021, MCDP filed its Opposition. (Docket No. 51). Among other arguments, it posits that this Court lacks subject-matter jurisdiction over BHHI's claims because BHHI's Complaint in Intervention pleads the same case against MCDP, factually and legally, as in the pending Singapore case. Id. at 8. Hence, it avers that BHHI "impermissibly seeks to litigate a controversy between two foreign aliens." Id.
On February 26, 2021, BHHI filed a Reply. (Docket No. 60). It claims this Court has subject matter jurisdiction over the Complaint in Intervention because the complaint is "properly instituted" against FFIB, given that it is the custodian of the funds at issue. Id. at 3. Likewise, since BHHI has not "asserted any claims against MCDP, the suit is not between two foreign parties" and there is complete diversity. Id. In the alternative, it argues that BHHI can be deemed a defendant-intervenor without depriving the court of jurisdiction. Id. at 4.
Federal courts are courts of limited jurisdiction. See Camacho Ortiz v. Municipio de San Juan, 2021 WL 1202839, at *11 (D.P.R. 2021) (citation omitted). Congress has conferred district courts with original subject-matter jurisdiction in civil casesbetween citizens of different states where the amount in controversy exceeds $75,000 exclusive of interest and costs. See In re Olympic Mills Corp., 477 F.3d 1, 6 (1st Cir. 2007) (citing 28 U.S.C. § 1332). This diversity of citizenship must be complete. Id. Therefore "the presence of but one nondiverse party divests the district court of original jurisdiction over the entire action." Vitalife Inc. v. Keller Med., Inc., 2021 WL 424222, at *1 (D.P.R. 2021) (quotation omitted).
Turning to alienage jurisdiction, Congress also conferred the district courts with jurisdiction over civil actions between citizens of a state and citizens of foreign state. See 28 U.S.C. 1332(a)(2). However, there is no subject-matter jurisdiction over a civil action between a citizen of a state and an alien lawfully admitted for permanent residence in the United States and domiciled in that state. Id. Further limiting alienage jurisdiction, there is no subject-matter jurisdiction over a civil action solely between two aliens. See Hodgson v. Bowerbank, 3 U.S. 303, 304 (1809); Chavez-Organista v. Vanos, 208 F. Supp. 2d 174, 177 (D.P.R. 2002) (); Eggs 'N Things Int'l v. ENT Holdings LLC, 2010 WL 5834799, at *7 (D. Haw. 2010), report and recommendation adopted, 2011 WL 676226 (D. Haw. 2011) (). Lastly, as a leading Civil Procedure treatise explains, "[i]f both the plaintiff and the defendant are aliens, however, it is equally well-settled, as the numerous cases from all levels of the federal judiciary [...] demonstrate, that Section 1332 does not apply and there is no alienage jurisdiction." 14A Arthur R. Miller, Federal Practice and Procedure § 3661 (4th ed. 2021).
Section 1367 confers district courts with supplemental jurisdiction over state-law claims if the federal court has original jurisdiction in the action and claims that "form part of the same case or controversy under Article III of the United States Constitution." 28 U.S.C.A. § 1367(a). This supplemental jurisdiction "shall include claims that involve the joinder or intervention of additional parties." Id. But even supplemental jurisdiction has limits.
Section 1367 recognizes situations in which courts shall not exercise supplemental jurisdiction. Subsection "(b)" of the statute states deprives the district courts of supplemental jurisdiction over claims by non-diverse putative intervenors seeking to intervene as plaintiffs:
(b) In any civil action of which the district courts have original jurisdiction founded solely on section 1332 of this title, the district courts shall not have supplemental jurisdiction under subsection (a) over claimsby plaintiffs against persons made parties under Rule 14, 19, 20, or 24 of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of section 1332.
28 U.S.C.A. § 1367(b) (emphasis added).
The District Court of Puerto Rico has also held that there is consensus by commentators and other courts that the phrasing of this subsection requires a "restrictive interpretation." Lennox Indus., Inc. v. Caicedo Yusti, 172 F.R.D. 617, 622-23 (D.P.R. 1997) (citation omitted). This means that "supplemental jurisdiction is entirely precluded over claims by parties intervening in (or joined to) the action as plaintiffs." Id. (citation omitted) (emphasis added).
When determining the alignment of parties, courts have a duty to "look beyond the pleadings and arrange the parties according to their sides in the dispute." TC Invs., Corp. v. Becker, 733 F. Supp. 2d 266, 284 (D.P.R. 2010) (quotation omitted). Circuit Courts of Appeals have held that " St. Paul Fire & Marine Ins. Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, PA, 890 F.3d 1265, 1269 (11th Cir. 2018) (quoting City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012) (emphasis added). This means that "[w]hether the necessary collision of interest [...] exists, is therefore not to be determined by mechanical rules." Lennox Indus., Inc., 172 F.R.D. at 623 (quoting Indianapolis v. Chase Nat'l Bank, 314 U.S. 63, 69 (1941) (internal citations and quotations marks omitted). Instead, "it...
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