Kwak et al v. Island Colony Hotel et al
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
ISLAND COLONY PARTNERS, 445
SEASIDE, INC., AQUA HOTELS
AND RESORTS US/CANADA, and
DOE BUSINESS ENTITIES 1
ISLAND COLONY PARTNERS and
445 SEASIDE, INC.,
Third-Party Plaintiffs, )
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
Island Colony is a condominium project located in
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
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
Jun Sung Kwak, a Korean citizen, stayed at the Island
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.
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.
granted leave to file an amended complaint that drops Island
Colony Partners, a nondiverse dispensable party, to cure the lack
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
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
The court here determines that the party
destroying diversity may, as requested by Jeon, be dismissed,
leaving this court with diversity jurisdiction.
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
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.
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.
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.
See ECF No. 30.
That same day, the AOAO filed a cross-claim against Aqua
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
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
See ECF No. 279.
Complaint dropped Kwak as a direct Plaintiff, and also dropped as
claimants Kwak’s children, Su-Min Kwak and Min-Seung Kwak.
Amended Complaint no longer seeks relief against Island Colony
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
See ECF No. 1 (Jan. 7, 2011).
Although based on
diversity jurisdiction, the Amended Complaint does not allege the
citizenship of any Defendant.
In preparing for the hearing in multiple dispositive
motions, the court became concerned about whether it had subject
On June 1, 2012, the court, sua sponte,
raised the issue of whether this case involved complete
See ECF No. 295 and 296.
The hearings on the
dispositive motions were then continued to allow the parties to
brief the issue.
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.
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
Later that day, the court issued a minute
order indicating that it would not dismiss the case without a
motion giving all parties an opportunity to be heard.
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.
motion also sought dismissal on the factual ground that there
were foreign nationals on both sides of the case, making complete
On July 5, 2012, the AOAO substantively joined in the
motion to dismiss for lack of subject matter jurisdiction.
ECF No. 317.
See also Local Rule 7.9 (discussing “substantive”
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
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.”).
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.
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
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.
party may assert the following defenses by motion: (1) lack of
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.
African Am. Contractors v. City of Oakland, 96 F.3d 1204, 1207
(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
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).
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.
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
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
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
states of which its owners/members are citizens.”) (unpublished
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
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
1332(a)(2) to require complete diversity of parties. . . .
Therefore, aliens on both sides of the litigation will defeat
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
The court agrees that allowing Island Colony
Partners to be dropped as a Defendant is the proper course of
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
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.”).
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
Eggs ‘N Things, 2011 WL 676226, *4 (citations and quotations
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
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
(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
(B) shaping the relief; or
(C) other measures;
(3) whether a judgment rendered in the
person’s absence would be adequate; and
(4) whether the plaintiff would have an
adequate remedy if the action were dismissed
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.”).
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.
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
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
Id. at 111.
The plaintiff in Amboy argued that the
Bank Advisory Group was a necessary party because complete relief
could not be granted in its absence.
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.
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
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
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
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
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.
third-party complaints against Island Colony Partners to recover
all or an appropriate share of damages awarded to Jeon.
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”).
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
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
seeking indemnification from the nondiverse defendant and that
the court could include the nonparty on the special verdict form
to apportion fault.
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.
This case is also very much like Byrd v. Howse
Implement Co., 227 F.R.D. 692, 695 (M.D. Ala. 2005).
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.
noted that Howse would not be prejudiced by Dean’s dismissal, as
Byrd had settled with Dean such that new litigation against Howse
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
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
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.
28 U.S.C. § 1653 (“Defective allegations of jurisdiction may be
amended, upon terms, in the trial or appellate courts.”).
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
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.
possibility appears foreclosed by the Ninth Circuit’s decision in
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.
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
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
Bank of Am., 2010 WL 5110102, *1 (D. Haw. Dec. 9, 2010) (Kay, J)
(“The party asserting diversity jurisdiction bears the burden of
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.
review of the record does not indicate that a new deadline was
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.
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.
(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).
Because diversity jurisdiction is lacking and not
properly alleged, the Amended Complaint is dismissed.
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.
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
Reinstatement may occur by the filing of a short,
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
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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