Universal Licensing Corp. v. Paola Del Lungo

• Citation: 293 F.3d 579
• Decision Date: 21 May 2002
• Docket Number: Docket No. 01-7150.
• Parties: UNIVERSAL LICENSING CORP., Plaintiff-Appellant, v. PAOLA DEL LUNGO S.P.A., Paola Del Lungo, and John Does 1 Through 5, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

293 F.3d 579

UNIVERSAL LICENSING CORP., Plaintiff-Appellant, v. PAOLA DEL LUNGO S.P.A., Paola Del Lungo, and John Does 1 Through 5, Defendants-Appellees.

Docket No. 01-7150.

United States Court of Appeals, Second Circuit.

Submitted: May 9, 2002.

Decided: May 21, 2002.

Michael S. Kimm, Hackensack, NJ, for Plaintiff-Appellant.

Before: FEINBERG, KEARSE, and B.D. PARKER, JR., Circuit Judges.

KEARSE, Circuit Judge.

Plaintiff Universal Licensing Corp. ("Universal") appeals from a final judgment of the United States District Court for the Southern District of New York, William H. Pauley III, Judge, dismissing its breach-of-contract suit against defendants Paola del Lungo, S.p.A., an Italian corporation, and Paola del Lungo, an Italian citizen (collectively "PDL"), along with other unidentified persons, for lack of diversity jurisdiction. In an order entered January 31, 2001 ("January 2001 Order"), the district court found that Universal was a foreign corporation, incorporated in Korea, and that, as the only parties to this action were foreign entities, diversity, within the meaning of 28 U.S.C. § 1332, was lacking. The court also admonished plaintiff's attorney for, inter alia, repeatedly violating the court's instructions not to file a motion for a preliminary injunction until the court had resolved the threshold question of subject matter jurisdiction. On appeal, Universal contends principally that the dismissal was erroneous because Universal was a citizen of the State of New Jersey. In addition, Universal's attorney contends that the court's "admonishment" of him should be reversed. For the reasons that follow, we affirm the judgment dismissing the complaint for lack of diversity jurisdiction. The attorney's contentions are rejected for lack of appellate jurisdiction.

A. The Dismissal for Lack of Diversity

The pertinent legal principles with respect to diversity jurisdiction are clearly established. To the extent relevant here, diversity is present when the action is between "citizens of a State and citizens or subjects of a foreign state," 28 U.S.C. § 1332(a)(2), or between "citizens of different States and in which citizens or subjects of a foreign state are additional parties," id. § 1332(a)(3). However, diversity is lacking within the meaning of these sections where the only parties are foreign entities, or where on one side there are citizens and aliens and on the opposite side there are only aliens. See, e.g., Romero v. International Terminal Operating Co., 358 U.S. 354, 381, 79 S.Ct. 468, 3 L.Ed.2d 368 (1959) (dictum); Dassigienis v. Cosmos Carriers & Trading Corp., 442 F.2d 1016, 1017 (2d Cir.1971) (per curiam).

For diversity purposes, a corporation is deemed to be a citizen both of the state in which it has its principal place of business and of any state in which it is incorporated. See 28 U.S.C. § 1332(c)(1). For purposes of §§ 1332(a)(2) and (3), "`[e]ven if a corporation organized under the laws of a foreign nation maintains its principal place of business in a State, and is considered a citizen of that State, diversity i[s] nonetheless defeated if another alien party is present on the other side of the litigation.'" Franceskin v. Credit Suisse, 214 F.3d 253, 258 (2d Cir.2000) (quoting International Shipping Co., S.A. v. Hydra Offshore, Inc., 875 F.2d 388, 391 (2d Cir.), cert. denied, 493 U.S. 1003, 110 S.Ct. 563, 107 L.Ed.2d 558 (1989)); see also Creaciones Con Idea, S.A. de C.V. v. Mashreqbank PSC, 232 F.3d 79, 82 (2d Cir.2000) (per curiam) (diversity lacking in suit by a Mexican corporation against a corporation organized under the laws of the United Arab Emirates, even if the defendant's principal place of business was in New York); Corporacion Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 790 (2d Cir.1980) (diversity lacking in suit by a Venezuelan corporation against a Swiss corporation that had its principal place of business in New York), cert. denied, 449 U.S. 1080, 101 S.Ct. 863, 66 L.Ed.2d 804 (1981).

In an action in which jurisdiction is premised on diversity of citizenship, diversity must exist at the time the action is commenced, see, e.g., Linardos v. Fortuna, 157 F.3d 945, 947 (2d Cir.1998), and "[i]t is... hornbook law that the party invoking federal jurisdiction bears the burden of proving facts to establish that jurisdiction," id. (citing 13 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3522, at 62-65 (2d ed.1984); 15 J. Moore, Moore's Federal Practice § 102.14, at 102-24 (3d ed.1998)). "That party must allege a proper basis for jurisdiction in his pleadings and must support those allegations with `competent proof' if a party opposing jurisdiction properly challenges those allegations ... or if the court sua sponte raises the question...." Linardos v. Fortuna, 157 F.3d at 947.

In the present case, which was commenced in November 1999, the only identified defendants were, and were alleged in the complaint to be, citizens of Italy. The complaint premised subject matter jurisdiction solely on diversity of citizenship and alleged that Universal was incorporated in, and had its principal place of business in, New Jersey. PDL moved to dismiss on the ground that Universal was in fact incorporated only in Korea. In support of its motion, PDL presented (a) an October 1999 Korean document entitled "Registration of Corporation" for the "establishment" of Universal, and (b) a March 2000 report from the New Jersey Department of the Treasury showing that Universal was not a New Jersey corporation because its New Jersey charter had been revoked in December 1998. "The entirety of plaintiff's response" to this evidence was that "`Universal never intended to close its [New Jersey] charter,' and the revocation was `a mistake.'" January 2001 Order at 7 (quoting affidavit submitted by Universal). The district court correctly ruled that Universal could not be considered to be incorporated in a state that had revoked its corporate charter, and that Universal's response was insufficient to rebut PDL's evidence that, at the time this suit was commenced, Universal was incorporated in Korea and not in New Jersey. Universal plainly failed to carry its burden of proving facts that would establish diversity of citizenship within the meaning of 28 U.S.C. §§ 1332(a)(2) or (3).

Accordingly, the district court correctly determined that this action was solely between foreign parties and that diversity was lacking. We affirm the judgment of dismissal substantially for the reasons stated in the January 2001 Order.

B. The District Court's Admonition to Universal's Attorney

In its January 2001 Order, the court also admonished Universal's attorney Michael S. Kimm that he must comply with the procedural rules governing federal civil actions. Kimm asks this Court to reverse this admonition. The record reflects that the background of the court's admonition included the following.

The present action was commenced on November 23, 1999. Universal, represented throughout by Kimm, duly filed its complaint but attempted to serve PDL by delivering papers to PDL's marketing agent, who was not authorized to accept service. Universal then immediately sought a temporary restraining order ("TRO") and a preliminary injunction against PDL. The district court refused to grant a TRO, noting that PDL had not been served with process and stating, inter alia, that the papers did not reveal any likelihood of irreparable injury or any emergency circumstances. (See Hearing Transcript, November 23, 1999, at 4-8.) The court invited Universal to return to court six days later, after service of process had been properly effected on PDL, at which time the court would entertain a motion for a preliminary injunction; the court stated, however, that the motion should not include any reference to a TRO. (See id. at 8-10.) Universal did not return to court as invited; instead it served on PDL the motion papers, including the unsigned TRO.

A month later, Universal made another request for a TRO. Its submission consisted only of a two-page order, unaccompanied by proof of service, and its request was unsupported by any affidavit or memorandum of law. The court chastised Kimm for having served PDL with papers that included reference to a TRO (see Hearing Transcript, December 22, 1999, at 3), given the court's earlier instruction to remove all such references (see Hearing Transcript, November 23, 1999, at 9 ("you are going to strike all references to temporary restraining orders")); and it declined to sign the new TRO, noting that there was no affidavit of service and that no grounds for injunctive relief were stated (see Hearing Transcript, December 22, 1999, at 8-9). The court advised Kimm to conform his papers to the Federal Rules of Civil Procedure. (See id. at 10-11.)

In early March 2000, PDL, by then represented by counsel, raised the question of subject matter...