Kwak et al v. Island Colony Hotel et al

Filing 330

ORDER (1) DISMISSING AMENDED COMPLAINT WITH LEAVE TO AMEND, AND (2) AMENDING RULE 16 SCHEDULING ORDER TO ALLOW THE FILING OF DISPOSITIVE MOTIONS NO LATER THAN OCTOBER 22, 2012 re 315 ; 317 ; 318 - Signed by CHIEF JUDGE SUSAN OKI MOLLWAY on 8/31/ 12. -- "Jeon is given leave to file a Second Amended Complaint for the purpose of dropping any party that destroys diversity and of properly alleging the citizenship of remaining parties and the amount in controversy to demonstrate diversity jurisdiction. Any such Second Amended Complaint must be filed by September 21, 2012, and may not add any new claims. All pending motions set for hearing on September 24,2012, are terminated given the dismissal of t he Amended Complaint to which they refer." (terminating the following motions: 102 ; 104 ; 106 ; 108 ; 110 ; 112 ; 114 ; 117 ; 119 ; 128 ; 129 ; 130 ; 131 ; 132 ; 136 ; 137 ; 298 ; 311 ; 319 ) (emt, )CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry Modified on 8/31/2012 (emt, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
NAM SOON JEON, individually
and as Estate administrator
of her deceased husband, Jun
Sung Kwak,

)
)
)
)
)
Plaintiff,
)
)
vs.
)
)
ISLAND COLONY PARTNERS, 445
)
SEASIDE, INC., AQUA HOTELS
)
AND RESORTS US/CANADA, and
)
DOE BUSINESS ENTITIES 1
)
through 5,
)
)
Defendants.
)
_____________________________ )
)
ISLAND COLONY PARTNERS and
)
445 SEASIDE, INC.,
)
)
Third-Party Plaintiffs, )
)
vs.
)
)
ASSOCIATION OF APARTMENT
)
OWNERS OF ISLAND COLONY,
)
)
Third-Party Defendants. )
)

CIVIL NO. 11-00015 SOM/BMK

ORDER (1) DISMISSING AMENDED
COMPLAINT WITH LEAVE TO AMEND,
AND (2) AMENDING RULE 16
SCHEDULING ORDER TO ALLOW THE
FILING OF DISPOSITIVE MOTIONS
NO LATER THAN OCTOBER 22, 2012

ORDER (1) DISMISSING AMENDED COMPLAINT WITH LEAVE TO AMEND, AND
(2) AMENDING RULE 16 SCHEDULING ORDER TO ALLOW THE FILING OF
DISPOSITIVE MOTIONS NO LATER THAN OCTOBER 22, 2012
I.

INTRODUCTION.
Island Colony is a condominium project located in

Waikiki.

Its association of apartment owners, Third-Party

Defendant Association of Apartment Owners of Island Colony

(“AOAO”), is supposedly responsible for maintaining and repairing
its common elements, including its swimming pool.
Defendant Island Colony Partners is a limited
partnership that facilitates the rental of some of the Island
Colony apartments to guests who reserve rooms at what is called
“Island Colony Hotel.”

Island Colony Partners’ general partner

is Defendant 445 Seaside, Inc.

Island Colony Partners’ limited

partners are those apartment owners who participate in the hotel
rental program.
Defendant Aqua Hotels and Resorts, LLC, misidentified
in the Complaint and Amended Complaint as “Aqua Hotels and
Resorts US/Canada,” supposedly operated and managed the Island
Colony Hotel.
Jun Sung Kwak, a Korean citizen, stayed at the Island
Colony Hotel.

While swimming in the pool there, he had a medical

emergency and drowned.

This case is brought by his widow, Nam

Soon Jeon, in her individual capacity and as Kwak’s estate
representative, and seeks damages arising out of his death.

Jeon

is also a Korean citizen.
Because Jeon fails to properly assert diversity
jurisdiction on the face of the Amended Complaint and as a
factual matter, the Amended Complaint is dismissed.

Jeon is

granted leave to file an amended complaint that drops Island
Colony Partners, a nondiverse dispensable party, to cure the lack

2

of subject matter jurisdiction.

Jeon may not file the form of

amended complaint she presently proposes, ECF No. 319-3, as that
document is defective in not alleging the citizenship of any
Defendant.
II.

BACKGROUND.
The court here considers whether it has subject matter

jurisdiction over this action.

This was a concern that the court

itself raised with the parties.

They initially filed position

papers responsive to the court’s concern, but eventually the
court received a motion to dismiss for lack of subject matter
jurisdiction.

The court here determines that the party

destroying diversity may, as requested by Jeon, be dismissed,
leaving this court with diversity jurisdiction.

The Amended

Complaint, however, has pleading defects that, while not
destroying diversity jurisdiction, cause this court to dismiss
the pleading, with leave to amend.
Specifically, the court denies Jeon’s request to file
the proposed amended complaint attached to her cross-motion,
because, like the existing Amended Complaint, it fails to allege
the citizenship of any Defendant.

The court therefore dismisses

the Amended Complaint, but gives Jeon leave to file a Second
Amended Complaint that drops Island Colony Partners as a
Defendant and includes the required jurisdictional allegations.
Because the Amended Complaint is dismissed, all pending motions

3

are terminated without prejudice to being reactivated at the
appropriate time without the need for refiling.
On January 7, 2011, “Plaintiffs Jun Sung Kwak[,]
decedent, by his estate representative and wife, Nam Soon Jeon,
Su-Min Kwak, Min-Seung Kwak, and Nam Soon Jeon” filed suit
against Island Colony Hotel, Island Colony Partners, 445 Seaside,
Inc., and Aqua Hotels and Resorts US/Canada.

The Complaint

sought damages arising out of Kwak’s drowning in the swimming
pool at the Island Colony Hotel.

See ECF No. 1.

On February 18, 2011, Island Colony Partners and 445
Seaside, Inc., filed a Third Party Complaint against the AOAO.
See ECF No. 10.
The Third-Party Complaint seeks a determination that,
if Plaintiffs obtain a judgment against Island Colony Partners
and 445 Seaside, the AOAO is liable to Island Colony Partners and
445 Seaside for the full amount of the judgment.

The Third-Party

Complaint also seeks a determination that the AOAO is a joint
tortfeasor or otherwise liable based on the AOAO’s relative
degree of fault.

See id. ¶¶ 1-2.

Island Colony Partners and 445

Seaside seek “indemnification, subrogations, reimbursement[,]
and/or contribution” from the AOAO.

Id. ¶ 3.

On March 29, 2011, the AOAO filed a counterclaim
against Island Colony Partners and 445 Seaside.
Id.

See ECF No. 30.

That same day, the AOAO filed a cross-claim against Aqua

4

Hotels.

Id.

Both the counterclaim and the cross-claim seek to

hold other Defendants responsible for any and all damages awarded
to Jeon and to have the relative degree of fault apportioned
among Defendants.

Id.

On June 6, 2012, Island Colony Partners and 445 Seaside
filed a cross-claim against the AOAO, seeking to hold the AOAO
responsible and to apportion the relative fault among Defendants.
See ECF No. 303-2.

The AOAO has moved to dismiss this cross-

claim on the grounds that the claim is untimely and that the AOAO
owed no duty to Kwak.

See ECF No. 311.

On May 23, 2012, Jeon, individually and in her capacity
as the estate administrator for Kwak, filed an Amended Complaint
against Island Colony Partners, 445 Seaside and Aqua Hotels
(collectively, “Defendants”).

See ECF No. 279.

The Amended

Complaint dropped Kwak as a direct Plaintiff, and also dropped as
claimants Kwak’s children, Su-Min Kwak and Min-Seung Kwak.

The

Amended Complaint no longer seeks relief against Island Colony
Hotel.

Id.

The Amended Complaint alleges that the remaining

Defendants were responsible for Kwak’s drowning in the Island
Colony Hotel pool and asserts four claims: negligent maintenance
of pool facility (Count 1); negligent security (Count 2);
negligent failure to warn (Count 3); and wrongful death (Count
5).

See ECF No. 1 (Jan. 7, 2011).

5

Id.

Although based on

diversity jurisdiction, the Amended Complaint does not allege the
citizenship of any Defendant.

Id.

In preparing for the hearing in multiple dispositive
motions, the court became concerned about whether it had subject
matter jurisdiction.

On June 1, 2012, the court, sua sponte,

raised the issue of whether this case involved complete
diversity.

See ECF No. 295 and 296.

The hearings on the

dispositive motions were then continued to allow the parties to
brief the issue.

Id.

On June 4, 2012, the court invited the

parties to research the effect on diversity jurisdiction of
having foreign citizens on both sides of the case.

See ECF No.

297.
On June 20, 2012, Island Colony Partners and its
general partner, 445 Seaside, filed a “position statement”
regarding the court’s diversity jurisdiction.

See ECF No. 307.

This “position statement” noted that Aqua Hotels is a Delaware
corporation, the AOAO is a Hawaii nonprofit corporation, 445
Seaside is a Hawaii corporation, and Island Colony Partners is a
limited partnership whose general partner is 445 Seaside and
whose limited partners include Fujiya Co., Ltd, a Japan
corporation, and Toa Biru Kogyo Kabushiki Kaisha, a Japan
corporation.

Id.

Later that day, the court issued a minute

order indicating that it would not dismiss the case without a

6

motion giving all parties an opportunity to be heard.

See ECF

No. 308.
On July 3, 2012, Island Colony Partners and 445 Seaside
filed the motion to dismiss for lack of subject matter
jurisdiction, arguing that the Amended Complaint fails to allege
the citizenship of any Defendant and therefore fails to allege
facts indicating complete diversity.

See ECF No. 315.

The

motion also sought dismissal on the factual ground that there
were foreign nationals on both sides of the case, making complete
diversity impossible.

Id.

On July 5, 2012, the AOAO substantively joined in the
motion to dismiss for lack of subject matter jurisdiction.
ECF No. 317.

See

See also Local Rule 7.9 (discussing “substantive”

joinder).
On July 6, 2012, Aqua Hotels and Resorts, LLC, also
substantively joined in the motion to dismiss.

See ECF No. 318.

On July 13, 2012, Jeon filed her opposition to the
motions to dismiss for lack of subject matter jurisdiction,
together with a cross-motion for leave to file an amended
complaint dropping Island Colony Partners for the purpose of
creating complete diversity.

See ECF No. 319.

There is no dispute that Island Colony Partners is a
limited partnership with foreign limited partners.

See Motion to

Dismiss Amended Complaint for Lack of Subject Matter Jurisdiction

7

at 5, ECF No. 315-1 (indicating that Island Colony Partners is a
limited partnership whose general partner is 445 Seaside and
whose limited partners include foreign citizens: Fujiya Co., Ltd,
a Japan corporation, and Toa Biru Kogyo Kabushiki Kaisha, a Japan
corporation); Certificate of Limited Partnership for Island
Colony Partners, ECF No. 315-4; Certificate of Amendment of
Limited Partnership, ECF No. 315-5 (indicating that Stahl, Inc.
is Island Colony Partner’s general partner); Articles of
Amendment to Change Corporate Name, ECF No. 315-6 (changing name
of Stahl, Inc., to 445 Seaside, Inc.); Assignment of Condominium
Conveyance Document, ECF No. 315-9 (assigning apartment 2114 of
the Island Colony to Fujiya Co., Ltd., a Japan corporation);
Assignment of Interest in Limited Partnership, ECF No. 315-10
(assigning limited partnership interest in Island Colony
Partnership to Fujiya Co., Ltd., a Japan corporation);
Application for Certificate of Authority from State of Hawaii
Department of Commerce and Consumer Affairs, ECF No. 315-12
(indicating that Toa Biru Kogyo Kabushiki Kaisha was incorporated
in Japan); Certificate of Authority for Toa Biru Kogyo Kabushiki
Kaisha, ECF No. 315-13 (same); Assignment of Condominium Document
for Apartment 2512 of Island Colony Condominium, ECF No. 315-14
(same); Opposition and Cross-Motion at 4, ECF No. 319-1 (“ICP, a
limited partnership, is an entity in which some limited partners
appear to have an overseas address.”).

8

Because Jeon is a citizen of Korea, see Amended
Complaint at 2, foreign nationals are on both sides of the case.
The parties agree that this prevents diversity.

Rather than

dismiss this action because foreign nationals are on both sides
of the case, the court agrees with Jeon that Island Colony
Partners may be dropped from this action to cure the lack of
diversity.
III.

STANDARD.
Rule 12(b)(1) of the Federal Rules of Civil Procedure

states: “Every defense to a claim for relief in any pleading must
be asserted in the responsive pleading if one is required.

But a

party may assert the following defenses by motion: (1) lack of
subject-matter jurisdiction.”
A motion to dismiss for lack of subject matter
jurisdiction under Rule 12(b)(1) may either attack the
allegations of the complaint as insufficient to confer upon the
court subject matter jurisdiction, or attack the existence of
subject matter jurisdiction in fact.

Thornhill Publ’g Co. v.

Gen, Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979).
When the motion to dismiss attacks the allegations of the
complaint as insufficient to confer subject matter jurisdiction,
all allegations of material fact are taken as true and construed
in the light most favorable to the nonmoving party.

Fed’n of

African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207

9

(9th Cir. 1996).

When the motion to dismiss is a factual attack

on subject matter jurisdiction, however, no presumptive
truthfulness attaches to the plaintiff’s allegations, and the
existence of disputed material facts will not preclude the trial
court from evaluating for itself the existence of subject matter
jurisdiction in fact.

Thornhill, 594 F.2d at 733.

The motion to dismiss and substantive joinders therein
are both factual and facial attacks on this court’s subject
matter jurisdiction.

Accordingly, with respect to the factual

attack, the court may accept and evaluate evidence to determine
whether jurisdiction exists.

See McCarthy v. United States, 850

F.2d 558, 560 (9th Cir. 1988) (“when considering a motion to
dismiss pursuant to Rule 12(b)(1) the district court is not
restricted to the face of the pleadings, but may review any
evidence, such as affidavits and testimony, to resolve factual
disputes concerning the existence of jurisdiction”); Biotics
Research Corp. v. Heckler, 710 F.2d 1375, 1379 (9th Cir. 1983)
(consideration of material outside the pleadings does not convert
a Rule 12(b)(1) motion into a motion for summary judgment).

With

respect to the facial attack on this court’s subject matter
jurisdiction, the court limits itself to the allegations of the
Amended Complaint, taking all allegations of material fact as
true and construing them in the light most favorable to Jeon.
See Fed’n of African Am. Contractors, 96 F.3d at 1207.

10

IV.

ANALYSIS.
For a case to qualify for federal jurisdiction under 28

U.S.C. § 1332(a), there must be complete diversity of citizenship
between the parties opposed in interest.

Kuntz v. Lamar Corp.,

385 F.3d 1177, 1181 (9th Cir. 2004).
The Amended Complaint names Island Colony Partners, a
limited partnership, as a Defendant.

The Supreme Court has

stated that, in determining the citizenship of a limited
partnership for diversity purposes, courts examine the
citizenship of all its “members.”
U.S. 185, 195-96 (1990).

Carden v. Arkoma Assocs., 494

Courts therefore look at the

citizenship of the general partners as well as of all of the
limited partners in determining the citizenship of a limited
partnership.

See Johnson v. Columbia Props. Anchorage, LP, 437

F.3d 894, 899 (9th Cir. 2006) (“We therefore join our sister
circuits and hold that, like a partnership, an LLC is a citizen
of every state of which its owners/members are citizens.”);
Schnabel v. Lui, 302 F.3d 1023, 1030 n.3 (9th Cir. 2002) (“a
partnership is a citizen of every state of which its partners are
citizens”).

Accord Lindley Contours, LLC v. AABB Fitness

Holdings, Inc., 414 Fed. Appx. 62, 64 (9th Cir. 2011) (“For
purposes of diversity jurisdiction, a limited partnership is a
citizen of all of the states of which its partners are citizens,
and a limited liability corporation is a citizen of all of the

11

states of which its owners/members are citizens.”) (unpublished
memorandum decision).
There is no dispute that Island Colony Partners has
foreign limited partners.
a citizen of Korea.

Nor is there any dispute that Jeon is

This combination of citizenships robs this

court of diversity jurisdiction over the Amended Complaint, ECF
No. 279, as diversity of citizenship cannot exist between a
foreign plaintiff and a foreign defendant.

It does not matter if

the foreign plaintiff and the foreign defendant are citizens of
different jurisdictions.

See Craig v. Atl. Richfield Co., 19

F.3d 472, 476 (9th Cir. 1994) (noting in dicta that diversity is
defeated in a case with a single foreign plaintiff and numerous
foreign defendants in addition to United States defendants);
Faysound Ltd. v. United Coconut Chems., Inc., 878 F.2d 290, 294
(9th Cir. 1989) (“‘Diversity jurisdiction does not encompass
foreign plaintiffs suing foreign defendants.’” (quoting Cheng v.
Boeing Co., 708 F.2d 1406, 1412 (9th Cir. 1983))); Eggs ‘N Things
Int’l v. ENT Holdings LLC, Civ. No. 10-00298 JMS/LEK, 2010 WL
5834799, *7 (D. Haw. Dec. 16, 2010) (“diversity jurisdiction does
not include suits between a foreign plaintiff and a foreign
defendant, even if there are also citizen defendants”); Evolution
Capital Mgmt., LLC. v. Mayus, Civ. No. 06-00494 SOM/KSC, 2007 WL
1771581, *2 (D. Haw. June 18, 2007) (citing Faysound, 878 F.2d at
294 and stating: “The Ninth Circuit has interpreted Section

12

1332(a)(2) to require complete diversity of parties. . . .
Therefore, aliens on both sides of the litigation will defeat
diversity jurisdiction.”).
Having determined that the court lacks subject matter
jurisdiction over the Amended Complaint, the court must now
decide how to proceed.

Defendants argue that dismissal of the

Amended Complaint is appropriate.

Jeon, on the other hand,

requests leave to file another amended complaint that drops
Island Colony Partners as a party, thereby creating diversity
jurisdiction.

The court agrees that allowing Island Colony

Partners to be dropped as a Defendant is the proper course of
action.
In seeking to drop Island Colony Partners, Jeon relies
on Rule 21 of the Federal Rules of Civil Procedure, which allows
the court “at any time, on just terms, [to] add or drop a party.”
The Supreme Court has noted that Rule 21 provides courts with the
authority “to allow a dispensable nondiverse party to be dropped
at any time, even after judgment has been rendered. . . . Indeed,
. . . courts of appeals also have the authority to cure a
jurisdictional defect by dismissing a dispensable nondiverse
party.”

Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S.

567, 573 (2004); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1154
(9th Cir. 1998) (“First, Rule 21 specifically allows for the
dismissal of parties at any stage of the action.”).

13

This court looks to Rule 19(b) of the Federal Rules of
Civil Procedure to determine whether Island Colony Partners is
dispensable such that it may be dropped pursuant to Rule 21.
See, e.g., Sams v. Beech Aircraft Corp., 625 F.2d 273, 276 n.6
(9th Cir. 1980) (noting that the district court had failed to
consider whether a party was dispensable under Rule 19(b) so that
she could be dropped pursuant to Rule 21); Eggs ‘N Things Intl.,
2011 WL 676226, *4 (“In other words, the court may drop a
non-diverse party, at any time, so long as the party is not
“indispensable” under Rule 19(b).”); 7 Charles Alan Wright,
Arthur R. Miller, & Mary Kay Kane, Federal Practice and
Procedure, § 1685 (3d ed 2001) (“Courts frequently employ Rule 21
to preserve diversity jurisdiction over a case by dropping a
nondiverse party if the party’s presence in the action is not
required under Rule 19.”).
Rule 21 provides the court this flexibility
because the alternative of dismissing the
action for lack of subject matter
jurisdiction would result in the plaintiff
simply refiling the action without the
non-diverse party, which would waste the time
and resources of all involved. Accordingly,
Rule 21 allows practicality to prevail over
logic so that the court may dismiss a
dispensable, non-diverse party in order to
perfect retroactively the district court's
original jurisdiction.
Eggs ‘N Things, 2011 WL 676226, *4 (citations and quotations
omitted).

14

Dismissal of dispensable nondiverse parties should be
exercised sparingly after careful consideration of whether such a
dismissal will prejudice any of the parties in the litigation.
Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 837-38
(1989).
A party is indispensable when, in equity and good
conscience, the action should not be allowed to proceed without
the presence of the party.

Dawavendewa v. Salt River Project

Agric. Improvement & Power Dist., 276 F.3d 1150, 1155 (9th Cir.
2002); Eggs ‘N Things, 2011 WL 676226, *5.

Whether a party is

indispensable involves a practical, fact-specific inquiry
designed to avoid the harsh results of rigid application.
Dawavendewa, 276 F.3d at 1154.

Under Rule 19(b),

the court must determine whether, in equity
and good conscience, the action should
proceed among the existing parties or should
be dismissed. The factors for the court to
consider include:
(1) the extent to which a judgment rendered
in the person’s absence might prejudice that
person or the existing parties;
(2) the extent to which any prejudice could
be lessened or avoided by:
(A) protective provisions in the
judgment;
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the
person’s absence would be adequate; and
15

(4) whether the plaintiff would have an
adequate remedy if the action were dismissed
for nonjoinder.
Fed. R. Civ. P. 19(b).
The Amended Complaint seeks to hold Defendants jointly
and severally liable for negligent maintenance of the pool (Count
1), negligent security (Count 2), negligent failure to warn
(Count 3), and wrongful death (Count 4).
¶¶ 26, 28, 30, and 32, ECF No. 279.

See Amended Complaint

As noted in the Advisory

Committee Notes to Rule 19, “a tortfeasor with the usual
‘joint-and-several’ liability is merely a permissive party to an
action against another with like liability.”
19(a) Advisory Comm. Notes.

Fed. R. Civ. P.

“It has long been the rule that it

is not necessary for all joint tortfeasors to be named as
defendants in a single lawsuit.”

Temple v. Synthes Corp., 498

U.S. 5, 7 (1990); Union Paving Co. v. Downer Corp., 276 F.2d 468,
471 (9th Cir. 1960) (“And it is well established that a joint
tort-feasor is not an indispensable party.”).

Accord Pujol v.

Shearson/Am. Express, Inc., 877 F.2d 132 (1st Cir. 1989) (“unlike
a person vicariously liable in tort, a person potentially liable
as a joint tortfeasor is not a necessary or indispensable party,
but merely a permissive party subject to joinder under Rule 20.”
(citations omitted)); Behrens v. Donnelly, 236 F.R.D. 509, 515
(D. Haw. 2006) (Seabright, J.) (“Joint tortfeasors, however, are
not necessary and indispensable parties.”).
16

This court considers

Island Colony Partners merely a permissive party, not a necessary
or indispensable party.
The court is unpersuaded by the AOAO’s citation of
section 663-10.9 of the Hawaii Revised Statutes and Amboy
Bancorporation v. Bank Advisory Group, 432 Fed. Appx. 102, 111-12
(3d Cir. 2011).

In relevant part, section 663-10.9 abolishes

joint and several liability, with exceptions.

Recovery of

noneconomic damages involving injury or death remains available
against “tortfeasors whose individual degree of negligence is
found to be twenty-five per cent or more under section 663-31.”
However, when a “tortfeasor’s degree of negligence is less than
twenty-five per cent,” that tortfeasor is not jointly and
severally liable.

Instead, “the amount recoverable against that

tortfeasor for noneconomic damages shall be in direct proportion
to the degree of negligence assigned.”

The AOAO analogizes this

limit on joint and several liability to comparative negligence,
discussed in Amboy.
Amboy involved a party, the Bank Advisory Group, that
had filed for bankruptcy.

The Bankruptcy Court modified the

automatic stay to allow the district court to determine whether
the plaintiff and other defendant could be afforded complete
relief if the Bank Advisory Group were severed or dismissed from
the action.

Id. at 111.

The plaintiff in Amboy argued that the

Bank Advisory Group was a necessary party because complete relief

17

could not be granted in its absence.

Id.

The Third Circuit

noted that, under New Jersey law, a tortfeasor found less than
60% responsible for the total damages was only responsible for
damages directly attributable to that tortfeasor.

Id. at 112.

The Third Circuit determined that, because the other defendant
could be less than 60% responsible for plaintiff’s damages, the
Bank Advisory Group’s presence was necessary to accord the
plaintiff complete relief.

Id.

Amboy is distinguishable on its facts.

In that case,

the court was concerned with possible prejudice to the plaintiff
in the absence of the Bank Advisory Group.

If the Bank Advisory

Group had been dismissed from the action, and if the remaining
defendant had been found less than 60% responsible, the
plaintiff’s recovery would have been limited to the remaining
defendant’s percentage of fault, meaning that the plaintiff would
not have had an adequate remedy.
Unlike Amboy, dismissal of Island Colony Partners will
not deny any party adequate relief.

Quite the contrary, Jeon

will be prejudiced if Island Colony Partners is not dismissed.
Jeon has conceded that the applicable two-year statute of
limitations has run on her claims, as Kwak died in January 2009.
See Reply in Support of Cross-Motion at 4, ECF No. 328 (“The
court further held that the greatest prejudice in dismissing the
non-diverse parties (who had settled) would be to plaintiffs if

18

the court were to dismiss for lack of diversity jurisdiction
because the statute of limitations on plaintiff’s claims had run,
similar to this case here.” (emphasis added)); See Amended
Complaint ¶ 3, ECF No. 279 (alleging that Kwak died on or about
January 13, 2009); Haw. Rev. Stat. § 657-7 (“Actions for the
recovery of compensation for damage or injury to persons or
property shall be instituted within two years after the cause of
action accrued, and not after,” unless tolled by infancy,
insanity, or imprisonment as set forth in section 657-13).1

This

means that, if this court were to dismiss this action, Jeon,
barred from filing a state-court action, would be left with no
remedy at all.

It is true that Jeon will not be able to recover

from Island Colony Partners if it is dismissed from this case.
But Jeon will have no potential recovery at all if Island Colony
Partners remains and destroys diversity jurisdiction.
Defendants make no showing of prejudice to them if
Island Colony Partners is dismissed.

Because the statute of

limitations has run on Jeon’s claims, Defendants need not fear
another action by Jeon.2

The remaining Defendants may also file

1

If Jeon is not conceding that any newly filed claim would
be barred by the applicable statute of limitations, or if Jeon is
planning on filing a state-court action against Island Colony
Partners, Jeon must so notify this court no later than September
4, 2012.
2

This court’s analysis of prejudice to the remaining
Defendants might well be different if they were subject to a
state-court action in addition to the present case.
19

third-party complaints against Island Colony Partners to recover
all or an appropriate share of damages awarded to Jeon.

See

Union Paving Co., 276 F.2d at 470 (diversity jurisdiction is not
destroyed by lack of diversity with a third-party defendant);
accord Spring City Corp. v. Am. Bldgs. Co., 193 F.3d 165, 169 (3d
Cir. 1999) (“a third-party defendant joined under Federal Rule of
Civil Procedure 14 does not become a defendant as against the
original plaintiff, so that federal jurisdiction is not destroyed
where those parties are citizens of the same state”).

If

appropriate, the special verdict form submitted to the jury may
ask whether and to what extent Island Colony Partners is
responsible for Jeon’s damages.

See In re Haw. Fed. Asbestos

Cases, 960 F.2d 806, 819 (9th Cir. 1992) (affirming district
court’s inclusion of nonparty on special verdict form seeking
apportionment of fault under Hawaii law).

Accordingly, the court

is unpersuaded by the argument that Defendants’ rights to
contribution will be prejudiced if Island Colony Partners is
dismissed.

See ECF No. 323 at 5-6.
The decision reached in Wheelock v. Sport Kites, Inc.,

839 F. Supp. 730, 734 (D. Haw. 1993) (Fong, J.), applies the
reasoning outlined here.

In that case, the plaintiff sought to

dismiss a nondiverse defendant, arguing that it was dispensable.
The court agreed, reasoning that the defendants were not
prejudiced because they could file a third-party complaint

20

seeking indemnification from the nondiverse defendant and that
the court could include the nonparty on the special verdict form
to apportion fault.

Id.

The court noted that the greatest

prejudice would be to the plaintiff if the case were dismissed
for lack of diversity jurisdiction because the statute of
limitations had run on the claims.

Id.

This case is also very much like Byrd v. Howse
Implement Co., 227 F.R.D. 692, 695 (M.D. Ala. 2005).

Byrd sued

Howse Implement Company and Ray Dean Farm Equipment Auction
Company, claiming diversity jurisdiction.

It turned out that

both Byrd and Dean were Alabama citizens.

Byrd settled with Dean

and sought dismissal of Dean.

Howse objected to Dean’s

dismissal, arguing that the court lacked diversity jurisdiction
and that the action should be dismissed.

The Alabama district

court ruled that Dean was a dispensable nondiverse party that
could be dropped from the case to ensure jurisdiction.

The court

noted that Howse would not be prejudiced by Dean’s dismissal, as
Byrd had settled with Dean such that new litigation against Howse
was unlikely.

The court stated that, because the allegations

were that Howse and Dean were joint tortfeasors, Byrd could have
filed the case against only Howse or only Dean.

The court also

reasoned that, if it dismissed the case for lack of diversity
jurisdiction, Byrd would not have an adequate remedy as

21

contemplated by Rule 19(b) because any state-court action against
Howse might have been time-barred.

Id. at 695.

Like the nondiverse parties in Wheelock and Byrd,
Island Colony Partners is a dispensable party that may be
dropped.

No Defendant will be prejudiced, while Jeon will be

prejudiced if Island Colony Partners remains.
Having concluded that Island Colony Partners may be
dropped from the Amended Complaint, the court turns to Jeon’s new
proposed amended complaint, ECF No. 319-3.

Because this proposed

amended complaint fails to allege the citizenship of any
Defendant, it fails to properly allege diversity of citizenship.
This is a mere pleading defect, not a jurisdictional issue.

See

28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be
amended, upon terms, in the trial or appellate courts.”).

See

also Kanter v. Warner-Lambert Co., 265 F.3d 853, 858 (9th Cir.
2001) (citing Jacobs v. Patent Enforcement Fund, Inc., 230 F.3d
565, 568 n.3 (2d Cir. 2000), for the proposition that an
inadequate pleading is not a jurisdictional defect).
Nevertheless, the pleading defect requires dismissal of the
Amended Complaint, with leave to amend (but not through the
presently proposed amended pleading).
The court has considered whether the pleading defect
may be excused.

In Rilling v. Burlington N. R. Co., 909 F.2d

399, 400 (9th Cir. 1990), the Ninth Circuit held that a district

22

court could not exercise diversity jurisdiction over a complaint
containing no allegations concerning the citizenship of a
defendant or the amount in controversy.

However, that case does

not appear to have had a factual record establishing whether
diversity did or could have existed.

This court therefore

contemplated the possibility that the factual record in the
present case might permit the court to exercise diversity
jurisdiction notwithstanding Jeon’s pleading defect.

Alas, that

possibility appears foreclosed by the Ninth Circuit’s decision in
Kanter.
In Kanter, the Ninth Circuit noted that “the party
asserting diversity jurisdiction bears the burden of proof” with
respect to jurisdiction.

265 F.3d at 858 (citations omitted).

As Kanter was a removed case, the burden of establishing
diversity jurisdiction was on the removing defendant.

That

party’s notice of removal, like the complaint in that case, had
referred only to the plaintiff’s residency, not citizenship.
Even though the existence of diversity of citizenship was
undisputed, the Ninth Circuit, noting that the notice of removal
could be amended, said that the removing defendant’s “failure to
specify Plaintiffs’ state citizenship was fatal to Defendants'
assertion of diversity jurisdiction.”3
3

Id.

Accord Marzan v.

There was, in addition, an issue as to the amount in
controversy, and the Ninth Circuit could have found a lack of
jurisdiction on that ground alone. The Ninth Circuit’s reference
to the fatal failure to assert diversity of citizenship, which
23

Bank of Am., 2010 WL 5110102, *1 (D. Haw. Dec. 9, 2010) (Kay, J)
(“The party asserting diversity jurisdiction bears the burden of
proof.

Therefore, if the plaintiff makes no allegations in the

complaint respecting the citizenship of the defendant(s) or the
plaintiff(s), the district court cannot properly exercise
diversity jurisdiction over the claim.” (citation omitted)).
Although compelled to dismiss the Amended Complaint
given the pleading defect, the court grants Jeon leave to file a
Second Amended Complaint no later than September 21, 2012, that
properly alleges diversity of citizenship.
The court notes that the Magistrate Judge vacated the
original deadline for filing an amended complaint and then later
allowed Jeon to file her existing Amended Complaint.

The court’s

review of the record does not indicate that a new deadline was
set.

Unless otherwise informed by the parties, this court will

proceed on the assumption that the Magistrate Judge intended that
the new deadline for amending the complaint was the same as the
deadline for filing the existing Amended Complaint.
deadline for amendments has passed.

Thus, the

Although the court does

allow the filing of a Second Amended Complaint to remove a party
and add jurisdictional allegations, any Second Amended Complaint
may not add new claims against any remaining Defendant, given the
passage of the deadline.

See Lopez v. Smith, 203 F.3d 1122, 1131

was undisputed, is all the more notable.
24

(9th Cir. 2000) (cautioning courts to allow amendment of a
dismissed complaint if it appears possible that the plaintiff can
correct the defect in the complaint).

This limitation on issues

will alleviate potential prejudice to Defendants that could arise
if Defendants were forced to litigate new claims just because
Jeon is allowed to drop Island Colony Partners as a Defendant.
See Fed. R. Civ. P. 19(b).
V.

CONCLUSION.
Because diversity jurisdiction is lacking and not

properly alleged, the Amended Complaint is dismissed.

Jeon is

given leave to file a Second Amended Complaint for the purpose of
dropping any party that destroys diversity and of properly
alleging the citizenship of remaining parties and the amount in
controversy to demonstrate diversity jurisdiction.

Any such

Second Amended Complaint must be filed by September 21, 2012, and
may not add any new claims.
All pending motions set for hearing on September 24,
2012, are terminated given the dismissal of the Amended Complaint
to which they refer.

However, if Jeon files a Second Amended

Complaint, Defendants may, as appropriate, reinstate any
previously filed motion (with accompanying documents, including
concise statements) without refiling any previously filed
document or providing new courtesy copies of materials previously
submitted.

Reinstatement may occur by the filing of a short,

25

simple document that states that the filing party wishes to
reinstate motions (identifying the reinstated motions and
reinstated documents by their document numbers in the electronic
case file). Upon the reinstatement of a motion, any opposition
memorandum (and accompanying material, such as a concise
statement of facts), as well as any reply memorandum, shall be
automatically deemed reinstated.
The parties are not required to reinstate any motion
and may instead file new dispositive motions.

Any statement of

reinstatement or any new motion must be filed no later than
October 22, 2012.
In all future motions filed with this court, the
parties shall not attempt to skirt the Local Rules regarding
length of motions by filing multiple motions when a composite
motion will suffice.

Although reinstatement of the parties’

multiple motions filed to date is allowed, the court notes that

26

they were repetitive and have created logistical problems, given
the difficulty of tracking all of the documents filed.

IT IS SO ORDERED.
DATED: Honolulu, Hawaii, August 31, 2012.

/s/ Susan Oki Mollway
Susan Oki Mollway
Chief United States District Judge

Jeon v. Island Colony Partners, Civ. No. 11-00015 SOM/BMK; ORDER (1) DISMISSING
AMENDED COMPLAINT WITH LEAVE TO AMEND, and (2) AMENDING RULE 16 SCHEDULING ORDER TO
ALLOW THE FILING OF DISPOSITIVE MOTIONS NO LATER THAN OCTOBER 22, 2012

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