TM MARKETING v. ART & ANTIQUES ASSOCIATES, Civ. A. No. 92-1889 (AJL).

Citation803 F. Supp. 994
Decision Date14 September 1992
Docket NumberCiv. A. No. 92-1889 (AJL).
PartiesTM MARKETING, INC., Plaintiff, v. ART & ANTIQUES ASSOCIATES, L.P., Defendant.
CourtUnited States District Courts. 3th Circuit. United States District Courts. 3th Circuit. District of New Jersey

Lynn F. Miller, Miller & Littman, P.A., New Brunswick, N.J., for plaintiff.

Steven R. Klein, Cole, Schotz, Bernstein, Meisel & Forman, Hackensack, N.J., Gary J. Mennitt, Cadwalader, Wickersham & Taft, New York City, for defendant.

OPINION

LECHNER, District Judge.

Currently before the court is the motion of plaintiff TM Marketing, Inc. ("TM Marketing") to confirm an arbitration award (the "Award") in favor of TM Marketing, and to direct that judgment be entered requiring defendant Art & Antiques Associates, L.P. ("A & A Associates") to pay all amounts due under the Award and to pay attorneys' fees and costs incurred by TM Marketing in bringing this motion.1

Jurisdiction is alleged pursuant to Section 9 of the United States Arbitration Act (the "Arbitration Act"), 9 U.S.C. §§ 1 et seq. For the reasons that follow, this action is dismissed for lack of subject matter jurisdiction.

FACTS

TM Marketing is a New Jersey corporation with its principal place of business in Hackensack, New Jersey. Petition, ¶¶ 1-2; Moving Brief at 2. A & A Associates, now a defunct entity,2 was a New York limited partnership with offices in New York City, New York. Petition, ¶ 3; Moving Brief at 2; Mennitt Aff., ¶ 5. A & A Associates was the publisher of a magazine entitled Art & Antiques. Petition, ¶ 3. The general partner of A & A Associates was Mutual Benefit Financial Service Management Company, Inc. ("MBFSMC"), a New Jersey corporation. Id. ¶ 4; Moving Brief at 2. The owner of A & A Associates was Mutual Benefit Life Insurance Company ("MBL").3 Mennitt Aff., ¶ 6.

On 16 August 1989, TM Marketing and A & A Associates entered into a contract (the "Contract") for the publication of a physician's edition of Art & Antiques magazine. Petition, ¶ 5; Moving Brief at 2. The Contract required the parties to submit to arbitration any differences arising from performance of the Contract.4 Petition, ¶ 5; Mennitt Aff., Ex. B at 11 (copy of Contract and arbitration clause). The arbitration clause stated that the prevailing party would be entitled to reimbursement of costs, including attorneys' fees, incurred in connection with arbitration. Mennitt Aff., Ex. B at 11.

In 1990, a dispute concerning the terms of the Contract arose between the parties. Moving Brief at 2. Pursuant to the Contract, TM Marketing demanded arbitration on 31 October 1990. Petition, ¶ 6. The parties thereafter entered into arbitration (the "Arbitration") with a mutually-selected arbitrator (the "Arbitrator") under the aegis of the American Arbitration Association (the "AAA"). Id., ¶¶ 6-7.

On 6 September 1991, the Arbitrator rendered the Award in favor of TM Marketing. Id., ¶ 8, Ex. A (Award of Arbitrator, dated 6 September 1992). Under the Award, A & A Associates was required to pay seventy-one thousand seven hundred eighty-nine dollars to TM Marketing. Id. In addition, A & A Associates was required to pay five hundred dollars to compensate the Arbitrator and nine hundred five dollars to satisfy its share of the AAA's administrative fee and expenses. Id. Payment of the Award was required within thirty days. Id., Ex. A.

On 10 October 1991, TM Marketing requested a modification of the Award to include interest and attorneys' fees and costs incurred by TM Marketing in the Arbitration. Mennitt Aff., ¶ 3, Ex. A (Arbitrator's Disposition of Application for Modification of Award of Arbitration, dated 7 November 1991). The Arbitrator denied the request for modification on 7 November 1991. Id.; Opp. Brief at 2. On 20 November 1991, TM Marketing commenced a second arbitration to recover the attorneys' fees and costs denied by the Arbitrator. Mennitt Aff., ¶ 4, Ex. B (TM Marketing's Demand For Arbitration dated 20 November 1991); Opp. Brief at 2. This second arbitration is currently pending before a second arbitrator. Mennitt Aff., ¶ 4; Opp. Brief at 2.

On 10 July 1992, TM Marketing filed this motion to confirm the Award. Petition at 3. TM Marketing alleges that, "despite due demand," A & A Associates has failed to pay the amount owed under the Award. Id., ¶¶ 9-10; Moving Brief at 2. TM Marketing contends that failure to comply with the Award violates the arbitration clause embodied in the Contract. Petition, ¶ 10. TM Marketing seeks to have judgment entered against A & A Associates, directing A & A Associates to pay all amounts due under the Award, as well as the attorneys' fees and costs incurred by TM Marketing in bringing this motion.5 Id. at 3.

In response, A & A Associates neither objects to the confirmation of the Award, nor denies that it has failed to pay the Award. Mennitt Aff., ¶¶ 2, 6; Opp. Brief at 1. A & A Associates does object, however, to the request of TM Marketing for attorneys' fees and costs, as well as to a provision in Proposed Judgment submitted by TM Marketing ordering judgment to be paid within ten days of entry.6 Mennitt Aff., ¶¶ 2, 6; Opp. Brief at 1-2.

DISCUSSION

TM Marketing argues that subject matter jurisdiction exists in this action. Petition, ¶ 1. TM Marketing states: "This Petition to confirm the Award is made pursuant to the Arbitration Act and the jurisdiction of this court is based upon the Act." Id. A & A Associates does not contest the existence of subject matter jurisdiction.

A. Subject Matter Jurisdiction

The Constitution does not permit federal courts to adjudicate cases which do not fall within the jurisdiction conferred by Article III of the United States Constitution and by Congress. See New Orleans Pub. Serv., Inc. v. Council of New Orleans, 491 U.S. 350, 359, 109 S.Ct. 2506, 2513, 105 L.Ed.2d 298 (1989) hereinafter "NOPSI"; Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 372, 98 S.Ct. 2396, 2401, 57 L.Ed.2d 274 (1978). A federal court is presumed to lack jurisdiction in a particular case unless the contrary is affirmatively shown. Penteco Corp. Ltd. Partnership-1985A v. Union Gas Sys., Inc., 929 F.2d 1519, 1521 (10th Cir.1991); Stock West, Inc. v. Confederated Tribes of Colville Reservation, 873 F.2d 1221, 1225 (9th Cir.1989); Commodity Futures Trading Comm'n v. Nahas, 738 F.2d 487, 492 n. 9 (D.C.Cir.1984).

A federal court must, at the outset, determine whether jurisdiction exists before proceeding to the merits; a duty exists to raise the issue sua sponte when the parties have not raised it themselves. Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982); Employers Ins. of Wausau v. Crown Cork & Seal Co., 905 F.2d 42, 45 (3d Cir.1990); Trent Realty Assocs. v. First Fed. Sav. & Loan Ass'n, 657 F.2d 29, 36 (3d Cir.1981); see also Thomas v. Basham, 931 F.2d 521, 522-23 (8th Cir.1991); A.G. Edwards & Sons, Inc. v. Public Bldg. Comm'n, 921 F.2d 118, 120-21 n. 2 (7th Cir.1990); Haamid v. United States Postal Serv., 754 F.Supp. 54, 55 (E.D.Pa.1991); McDonough v. Blue Cross of Northeastern Pennsylvania, 131 F.R.D. 467, 469 (W.D.Pa.1990).

As a corollary to this rule, parties can neither waive nor consent to subject matter jurisdiction when it does not exist. In re Wolverine Radio Co., 930 F.2d 1132, 1137-38 (6th Cir.1991); Jader v. Principal Mut. Life Ins. Co., 925 F.2d 1075, 1077 (8th Cir.1991); AAMCO Transmissions, Inc. v. Smith, 756 F.Supp. 225, 228 (E.D.Pa.1991); Pennsylvania, Dep't of Pub. Welfare v. United States H.H.S., 729 F.Supp. 1518, 1522 (W.D.Pa.1990), aff'd, 915 F.2d 1559 (3d Cir.1990); see also Bauxites, 456 U.S. at 702, 102 S.Ct. at 2104 (no action of parties can confer subject matter jurisdiction upon a federal court).

When it becomes apparent that subject matter jurisdiction is lacking, the court must dismiss the action regardless of the stage of the litigation. Fed.R.Civ.P. 12(h)(3); Trent Realty, 657 F.2d at 36; Carney v. Dexter Shoe Co., 701 F.Supp. 1093, 1100 (D.N.J.1988) (citing Cameron v. Hodges, 127 U.S. 322, 8 S.Ct. 1154, 32 L.Ed. 132 (1888)); see also Penteco Corp., 929 F.2d at 1521; Randazzo v. Eagle-Picher Indus., Inc., 117 F.R.D. 557, 558 (E.D.Pa. 1987).

Generally, there are three bases for federal subject matter jurisdiction: (1) jurisdiction under a specific statutory grant, (2) federal question jurisdiction pursuant to 28 U.S.C. § 1331 and (3) diversity jurisdiction pursuant to 28 U.S.C. § 1332(a). Klein v. Drexel Burnham Lambert, Inc., 737 F.Supp. 319, 321 (E.D.Pa.1990). As explained below, none of these bases apply in the case at bar.

B. Section 9 of the Arbitration Act as a Specific Statutory Grant of Jurisdiction

Section 9 of the Arbitration Act states:

If the parties in their agreement have agreed that a judgment of the court shall be entered upon the award made pursuant to the arbitration, and shall specify the court, then at any time within one year after the award is made any party to the arbitration may apply to the court so specified for an order confirming the award, and thereupon the court must grant such an order unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this title. If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made....7

9 U.S.C. § 9.

Despite this language, courts have uniformly held that neither the Arbitration Act as a whole nor Section 9 by itself confer subject matter jurisdiction on a federal court. See General Atomic Co. v. United Nuclear Corp., 655 F.2d 968, 969 (9th Cir.1981), cert. denied, 455 U.S. 948, 102 S.Ct. 1449, 71 L.Ed.2d 662 (1982); Castelan v. M/V MERCANTIL PARATI, No. 91-1351, 1991 WL 83129 *5 n. 3, 1991 U.S. Dist. LEXIS 6472 *13-14 n. 3 (D.N.J. 8 May 1991); Klein, 737 F.Supp. at 322; Quick & Reilly, Inc. v. Saglio, 717 F.Supp. 822, 824 (S.D.Fla.1989); Higgins v. United States Postal Serv., 655 F.Supp. 739, 741 (D.Me....

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