Proman ex rel. M/Y "Eastbound & Down" v. Gatsby Yacht Grp., LLC
| Decision Date | 22 April 2022 |
| Docket Number | 22-CV-2088 (GRB)(ARL) |
| Citation | 599 F.Supp.3d 127 |
| Parties | Matthew PROMAN, O/B/O the M/Y "EASTBOUND AND DOWN", A 2006 Azimut Benetti manufactured motorized 69.5’ yacht, her boats, engines, tackle, equipment, apparel, furnishings, freights, appurtenances, and all fixtures and other necessaries there unto appertaining and belonging to the vessel, in rem, Petitioner, v. GATSBY YACHT GROUP, LLC, Respondent. |
| Court | U.S. District Court — Eastern District of New York |
Matthew Proman, Pro Se.
Steven D. DiLibero, DiLibero & Associates, Providence, RI, for Respondent.
In the beginning, it seemed simple enough. In 2018, Gatsby Yacht Group, LLC ("Gatsby") invoked this Court's in rem admiralty jurisdiction by filing a mercifully short, three-page complaint, alleging that it had performed $127,000 in repairs to a vessel called the "M/Y ‘East Bound and Down’ " for which the owner, Matthew Proman had not paid. See Gatsby v. M/Y "East Bound and Down," 18-CV-4242 (GRB) ("Gatsby I "), DE 1. A tsunami of litigation ensued – including rampant ad hominin attacks, repeated "emergency" motions, serial applications for sanctions, injunctions and orders to show cause, and even a Second Circuit appeal – that could well serve as a case study in litigative excess.
After nearly four years1 of unrestrained conflict, the case resolved. In March 2021, the parties reached a binding, voluntary settlement before Magistrate Judge Lindsay and an order of dismissal was prompted entered by the Court. Gatsby I , Electronic Orders dated March 22, 2021, April 15, 2021, June 4, 2021. Gatsby immediately launched an unrelenting assault upon the settlement, starting with a letter motion baldly stating that "settlement has not been reached," even though that same attorney expressly consented to the settlement on behalf of his clients. Compare DE 159 with DE 160 at 27. The Court rejected this effort in a detailed order which included a review of the record. Gatsby I , Electronic Order dated June 4, 2021. Cross-motions to compel and for enforcement of the settlement followed, DE 161, 162, neither of which could be resolved before Gatsby filed an appeal of the Court's dismissal order to the Second Circuit which, months later, was voluntarily dismissed. Gatsby I , DE 163, 165. The appeal was voluntarily dismissed after the parties reaffirmed the settlement. DE 1-2 at 6.
Next, Proman filed another motion to enforce the settlement via Order to Show Cause, a procedural mechanism that had become de rigueur in this case. After review, the Court – in a futile attempt to conserve resources and without requiring a response from Gatsby – entered the following order:
ORDER denying Motion for Order to Show Cause. "Enforcement of [a] settlement agreement ... whether through award of damages or decree of specific performance ... requires its own basis for jurisdiction." Kokkonen v. Guardian Life Ins. Co. , 511 U.S. 375, 378 [114 S.Ct. 1673, 128 L.Ed.2d 391] (1994). "Breach of contract claims are typically a matter for state courts, unless the district court retains ancillary jurisdiction over the settlement agreement." Id. at 382 . In order to retain jurisdiction over the enforcement of a settlement agreement, "a district court's order of dismissal must either (1) expressly retain jurisdiction over the settlement agreement, or (2) incorporate the terms of the settlement agreement in the order." Hendrickson v. United States, 791 F.3d 354, 358 (2d Cir. 2015). The Court has neither expressly retained jurisdiction over the parties’ settlement nor incorporated the terms of the settlement agreement in an order. Accordingly, the Order to Show Cause filed on behalf of Defendant for Enforcement of the Parties’ Settlement is hereby denied.
Gatsby I , Electronic Order dated March 10, 2022 (emphasis added).
Proman subsequently filed an action seeking to enforce certain terms of the settlement in the New York State Supreme Court, Nassau County. DE 1-2. That action appears to seek solely the release of certain liens (one of which was issued by a firm not party to this suit) on the vessel to perfect the settlement – implying that the funds to pay the settlement (some of which had been paid into court) have already been disbursed. Id. The state court set a hearing for April 26, 2022. Id. Rather than proceeding, counsel for Gatsby removed the state action to this Court, purportedly invoking diversity jurisdiction.
"Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper."
United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Props. Meriden Square, Inc. , 30 F.3d 298, 301 (2d Cir. 1994). Moreover, removal procedures are to be strictly construed, with doubts resolved against removability. Taylor v. Medtronic, Inc. , 15 F.4th 148, 150 (2d Cir. 2021).
Here, Gatsby predicates its removal petition on propositions which range from dubious to overtly false. First, Gatsby's counsel has the temerity to assert that the Court "previously retained jurisdiction over this settlement." DE 1 at 4. This assertion, shockingly, was unequivocally rejected by the Court just over one month ago. Gatsby I , Electronic Order dated March 10, 2022 ("The Court has neither expressly retained jurisdiction over the parties’ settlement nor incorporated the terms of the settlement agreement in an order."). Thus, absent a demonstration of some ancillary basis for jurisdiction, under the Supreme Court's decision in Kokkonen, supra , the Court lacks jurisdiction to enforce the settlement.
Thus, respondent's petition must rest on a competent demonstration of diversity jurisdiction.2 Respondent first claims complete diversity because Proman is domiciled in New York, while it asserts that Gatsby Yacht Group "is a citizen of Rhode Island." DE 1 at 2. In the petition, Gatsby recognizes the principle that, as an LLC, it "takes the citizenship of all of its members." Platinum-Montaur Life Scis., LLC v. Navidea Biopharmaceuticals, Inc. , 943 F.3d 613, 615 (2d Cir. 2019). Yet nowhere in its petition does Gatsby provide the citizenship of its members, instead seemingly basing its citizenship on its place of incorporation and principal place of business. Id. ; 250 Lake Ave. Assocs., LLC v. Erie Ins. Co. , 281 F. Supp. 3d 335, 341 (W.D.N.Y. 2017) (). Thus, Gatsby failed to adequately demonstrate complete diversity. Platinum-Montaur Life Scis., LLC , 943 F.3d at 615 ().
While that failing, standing alone, would generally warrant the grant of leave to amend the removal petition, 250 Lake Ave. Assocs., LLC , 281 F. Supp. 3d at 341 (), several factors counsel against such an exercise. Equitably, the timing of Gatsby's removal, which seemed designed to defeat a state court's order to show cause, along with the overly contentious history of these proceedings, raise issues of comity and squandering of resources that are difficult to ignore. Equally problematic are Gatsby's false statements about this Court's orders, discussed above. Under other circumstances, the Court would consider striking the removal petition as a sanction for counsel's gross misconduct.
However, that...
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