NOEL L. HILLMAN, District Judge.
On August 28, 2018, Defendant, Ernest Bock & Sons, Inc., removed Plaintiff's case from New Jersey Superior Court to this Court. Plaintiff claims that Defendant acted as the prime contractor on a middle school construction project and Plaintiff entered into a subcontractor agreement with Defendant to provide landscaping labor, materials, and equipment for the project, but Defendant breached their contract by failing to pay the balance owed to Plaintiff in the amount of $82,274.83.
The purported basis for subject matter jurisdiction in Defendant's notice of removal was diversity of citizenship of the parties and an amount in controversy in excess of $75,000, exclusive of interests and costs, pursuant to 28 U.S.C. § 1332(a). Even though the notice of removal did not properly aver the citizenship of the parties, three days later on August 31, 2018, the parties filed a Joint Certification of the Citizenship of the Parties, which correctly provided the citizenship of both parties: Plaintiff is a citizen of New Jersey because its sole member, Thomas Caucci, is a citizen of New Jersey,
On October 15, 2018, Plaintiff filed a "Consent Order Permitting Plaintiff to File Amended Complaint and For Remand of Entire Action to State Court." (Docket No. 11-2.) By consent, the parties seek to add as Defendants First Arch Insurance Company and Fidelity and Deposit Company of Maryland, which entities hold a labor and material payment bond on the project at issue. Because Arch Insurance Company is a citizen of Missouri (its state of incorporation) and New Jersey (where it has its principal place of business), the parties contend that diversity of citizenship is destroyed once Arch Insurance Company is added to the case, and the matter must therefore be remanded. (Docket No. 11-2 at 2.)
The filing of Plaintiff's amended complaint does not defeat subject matter jurisdiction if such jurisdiction existed at the time Defendant removed Plaintiff's original complaint. It has been long and well-established that in determining whether a federal court may exercise jurisdiction based upon diversity of citizenship, the court must look to "the state of things at the time of the action brought."
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"Diversity jurisdiction cannot be conferred upon the federal courts by the parties' own determination of who are plaintiffs and who defendants."
One exception to the time-of-removal rule is if an indispensable party was missing from the removed complaint. "[W]hen a nondiverse party is added to a federal proceeding and that party's presence is indispensable to the furnishing of complete relief, remand is mandated where federal subject matter jurisdiction depends on diversity jurisdiction, even though removal was originally proper."
This analysis is governed by Federal Civil Procedure Rule 19. Under that rule, a court must first must determine whether a party should be joined as "necessary" party under Rule 19(a).
The "necessary" party analysis consists of three steps:
1. "Under Rule 19(a)(1) we ask whether complete relief may be accorded to those persons named as parties to the action in the absence of any unjoined parties. As should be apparent, we necessarily limit our Rule 19(a)(1) inquiry to whether the district court can grant complete relief to persons already named as parties to the action; what effect a decision may have on absent parties is immaterial."
2. "Under Rule 19(a)(2)(i), the court must decide whether determination of the rights of those persons named as parties to the action would impair or impede an absent party's ability to protect its interest in the subject matter of the litigation."
3. "Under Rule 19(a)(2)(ii), a court must decide whether continuation of the action would expose named parties to the substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest."
If a party is found to be "necessary," a court moves on to the indispensability analysis, which consists of four factors:
In applying Rule 19(b), the Third Circuit has held that parties are indispensable if "in the circumstances of the case [they] must be before the court." Zambelli Fireworks Mfg. Co.,
Here, the parties' consent order to file an amended complaint adding a non-diverse party presents the question of whether that party is "necessary" and "indispensable" under Rule 19. Plaintiff's state court complaint contains a certification of counsel, which provides, in relevant part:
(Docket No. 1 at 9 (emphasis in original).)
In their consent order, the parties represent that the labor and material payment bond "has only recently been permitted to be filed and served upon the expiration of the period prescribed by N.J.S.A. 2A:44-145, as disclosed in plaintiff's (Qualified) Certification." (Docket No. 11-2 at 1.) The consent order further states, "the joinder of the sureties and the claim upon the labor and material payment bond is necessary and desir[]able to afford justice to all the parties." (
Other than the conclusory statement that the joinder of the non-diverse surety is "necessary," the parties have not articulated why the surety is "necessary" under the Rule 19(a) factors, and how that surety is "indispensable" under the Rule 19(b) such that the Court is required to remand the case to state court. Consequently, because subject matter jurisdiction existed at the time Defendant removed Plaintiff's complaint, and the parties have not provided the Court with a valid basis to remand the action,
The parties are accordingly left with several options.
The parties may, instead, choose to follow Fed. R. Civ. P. 41(a)(1)(A), which provides that after a defendant has filed an answer, a plaintiff may dismiss its action without a court order by filing a stipulation of dismissal signed by all parties, after which time Plaintiff may refile its action in state court.
As the case stands now, the Court properly maintains subject matter jurisdiction and the action shall proceed in its normal course. An appropriate Order will be entered.