San Joaquin College of Law
Civil Procedure – December 2006 /Cartier
QUESTION 1:
Professor Paulette (“Prof:”), a French teacher at San Diego University, was injured when she was struck by a truck while crossing a street in Mexico. Prof, a citizen of France who is a permanent resident alien, continues to reside in San Diego. The truck that ran over Prof was owned and operated by Diamond Trucking, Inc. (“DT”). The truck driver, Don, is a Mexican national who was working in the United States illegally. He regularly transported materials for DT between Arizona and Mexico. DT, a Nevada corporation, operates its trucks out of a terminal in Tucson, Arizona. DT maintains small business offices in Tucson and San Diego. DT operates its trucks in Arizona, California, Nevada, and Mexico. An investigation of the accident suggests brake failure was the cause.
Prof filed this diversity action against DT and Don in the United States District Court in San Diego. After being properly served at its corporate offices in Arizona, DT filed an answer that included objections to subject matter jurisdiction and venue. DT also filed a third-party claim (under Rule 14) joining Tom’s Brakes, a local Tucson business, that replaced the brakes on the truck days before the accident. After being properly served. Tom filed a motion to dismiss the third-party claim for want of personal jurisdiction. Don was never served and has not appeared in this action.
Considering all relevant facts, how should the court rule on the following:
A. DT’s motion to dismiss
1) for want of subject matter jurisdiction? Discuss.
2) for improper venue? Discuss.
B. Tom’s motion to dismiss
3) for want of personal jurisdiction? Discuss.
QUESTION 2:
Purchaser, a citizen of New York, in the course of buying a shopping mall in upstate New York from Developer, sought financing from Financier. Developer is a citizen of New York. Financier is a Delaware corporation that conducts its business operations solely in Maryland. All negotiations between the parties took place in Maryland. The suit claims that Developer and Financier conspired to defraud Purchaser in the shopping mall transaction. Purchaser filed suit in the United States District Court for the Southern District of New York. The suit alleges violation of the federal Racketeer Influenced and Corrupt Organizations Act (“RICO”) as well as violations of state law against both Developer and Financier. Both defendants were properly served.
A RICO action requires that there be a prior or concurrent criminal prosecution. While the U. S. Attorney is conducting an investigation, no criminal prosecution is underway. In lieu of filing an answer, Financier filed a motion to dismiss 1) for failure to state a claim since the complaint failed to satisfy the state’s code pleading requirements in the presentation of the state law claims for fraud and 2) for improper venue. After filing an answer, Developer filed a motion to dismiss for want of subject matter jurisdiction.
Considering all relevant matters, how should the court rule on the following:
A. Financier’s motion to dismiss
1) for failure to state a claim? Discuss.
2) for improper venue? Discuss.
B. Developer’s motion to dismiss
3) for want of subject matter jurisdiction? Discuss.
San Joaquin College of Law
Civil Procedure – Sketch Answer Dec 2006 / Cartier
QUESTION 1
Prof filed this diversity action in federal court in San Diego for injuries sustained when she was hit by a truck operated by DT Trucking in Mexico. After being properly served, DT filed a motion to dismiss for want of subject matter jurisdiction and improper venue. DT also filed a third-party claim against Tom’s Brakes since the accident apparently resulted from brake failure. Tom object to personal jurisdiction.
1. DT’s motion to dismiss for want of SMJ. Subject matter jurisdiction is the power of the court to decide a particular kind of case. Federal courts have limited jurisdiction. For the court to have jurisdiction over this diversity action, there must be complete diversity (no plaintiff is a citizen of the same state as any defendant) and the amount in controversy must exceed $75,000. Prof is a permanent resident alien and, as such, is a citizen of California, the state in which she resides. DT, a corporation, has dual citizenship – its state of incorporation (Nevada) and in its principal place of business. While DT does business in several states, it appears its principal place of business is in Arizona where it has an office and a terminal. Complete diversity of citizenship is satisfied so long as DT’s principal place of business is not in California. Note: Don, who is also an alien, was never served and so he is not a party to this action. So long as the amount in controversy exceeds $75K, diversity jurisdiction is proper.
2. Venue establishes the proper place for trial within a court system. Generally, venue is good where the defendant resides OR where a substantial amount of event related to the action occurred. Here the event took place in Mexico not in California. Venue will only be appropriate in San Diego if DT resides in the district that includes San Diego. A corporation is deemed to reside in any district where it would be subject to personal jurisdiction AT THE TIME THE ACTION WAS COMMENCED. Since California’s long-arm statute is coextensive with the U.S. Constitution, for DT to be subject to personal jurisdiction in San Diego, it must be established that DT has minimum so that being held to answer will not offend traditional notions of fair play and substantial justice. DT maintains an office in San Diego which constitutes a continuous activity. If this contact is related to the suit (arising from or related to trucking), it would be foreseeable that DT could be hailed into court in California. If the contact is unrelated, jurisdiction might be based on general jurisdiction – a “pervasive presence” so that it is not unfair to hold the defendant to answer. An application of the fairness factors would be appropriate here. I would probably conclude that jurisdiction is proper based on a continuous, systematic and related.
3. Personal jurisdiction is the power to make a binding order against a party and is obtained by giving notice within the grasp of the state’s long-arm statute. Although Tom was properly served, personal jurisdiction requires that he have certain minimum contacts with California so the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. Nothing in the facts suggests that Tom has any business contacts in California. He operates a local business in Arizona where he worked on DT’s brakes. If there are no contacts, ties or relations with California, there is no personal jurisdiction here. None of the traditional bases (domicile, consent, appearance, presence at time of service) are presented in the facts. Tom made an objection under Rule 12(b)2. So long as this objection is made as part of his first filing, the objection is timely. Since Tom was joined under Rule 14 for contribution or indemnity, he might be subject to personal jurisdiction under the “bulge rule” IF he was served within a judicial district of the U.S. not more than 100 miles from the court where the summons issued. San Diego is more than 100 miles form Tucson so the bulge rule does not apply. Tom’s motion to dismiss should be granted.
QUESTION 2
1. A motion to dismiss for failure to state a claim asserts that, even if everything in the complaint is true, the plaintiff still cannot prevail. Here Financier asserts Purchaser’s claim fails since it does not adhere to state’s code pleading rules. Under the Erie doctrine, when a state law claim is filed in federal court, the federal court applies state substantive law and federal procedural rules. While state pleading rules require code pleading (a statement of the facts establishing the cause of action), federal rules generally permit notice pleading (a short, plain statement of the facts showing the pleader is entitled to relief) except that allegations of fraud must be set forth with particularity. When a federal rule of procedure is on point, the federal court will apply the federal rule. While code pleading is not required, the allegations of fraud must be set forth with particularity. If Purchaser’s complain tails to meet the federal standard, he will be given leave to amend.
2. Financier also filed a motion to dismiss for improper venue. Venue establishes the appropriate district for trial. Generally, venue is proper where any defendant resides IF all defendants reside in the same state. This rule will not apply her since Developer appears to reside in New York and Financier, a corporation resides in any district where it would be subject to personal jurisdiction if that district was a state. From the facts, it might be inferred Financier is subject to personal jurisdiction in one or more districts in Delaware or Maryland. Personal jurisdiction might also exist in the norther district of New York since the development is in upstate New York. Nothing in the facts suggest any minimum contact in the southern district where this action was filed. Venue is also proper where the cause of action arose. Here the negotiations took place in Maryland and the land is located in upstate New York. Nothing suggests any substantial events occurred in the southern district where this action was filed. Note: the fall-back provision (in diversity – where defendant is subject to personal jurisdiction or in federal question --where the defendant can be found) will not apply since Maryland would be a proper venue. If an action is filed in a district where venue is improper, the court may dismiss the action or may transfer it to a place where the action could have been filed (Maryland).
3. After filing an answer, Developer filed a motion to dismiss for want of subject matter jurisdiction. Since federal courts have limited jurisdiction, the court must obtain original jurisdiction based on federal question (a case that arises under federal law) OR based on diversity (complete diversity of citizenship + an amount in controversy in excess of $75,000). Here, Purchaser alleges a violation of RICO along with state law claims for fraud. If the RICO claim is valid, the court would have federal question jurisdiction and could then exercise supplemental jurisdiction over any related state law claims that arise form the same transaction or occurrence. The problem is that RICO requires criminal prosecution that does not exist. If there is no federal question (and the RICO claim is dismissed on jurisdictional grounds), the court cannot exercise supplemental jurisdiction over state law claims. If the RICO claim was dismissed on other than jurisdictional grounds, the court could hear related state law claims but would have discretion not to. The court could also obtain jurisdiction based on diversity if no plaintiff comes from the same state as any defendant if the amount in controversy exceeds $75,000. Here, Purchaser is from New York, Developer is also from New York (which destroys diversity even though Financier, a corporation, is a citizen of its state of incorporation (Delaware) and of its principal place of business (Maryland). Even if the amount in controversy is met, complete diversity is lacking and this case cannot be heard based on diversity jurisdiction.