Dowgiert v. Above Service Company, Inc. et al

Filing 39

///SUMMARY ORDER: This court lacks subject-matter jurisdiction over this action and the case is REMANDED to the Rockingham County Superior Court. So Ordered by Chief Judge Joseph N. Laplante.(jb)

UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Eugene Dowgiert
v.

Civil No. 11-cv-416-JL

Robert Hagopian et al.
SUMMARY ORDER
Eugene Dowgiert commenced this action in Rockingham County
Superior Court, bringing state-law claims of negligence and
strict products liability arising out of burns he suffered when a
gas grill allegedly caught fire.

As defendants, Dowgiert names:

•several corporations that allegedly manufactured the
grill, Dynamic Cooking Systems, Inc., Fisher & Paykel
Appliances, Inc.; and Fisher & Paykel Appliances, USA
Holdings, Inc. (collectively, the “DCS defendants”);
•two corporations that allegedly manufactured the
regulator on the grill, Grand Hall USA, Inc. and Grand
Hall Enterprises Co., Ltd. (collectively, the “Grand
Hall defendants”); and
•Above Service Company (“ASC”) and its principal,
Robert Hagopian, who allegedly serviced the grill at
some point prior to the fire.
The DCS defendants removed the action to this court,
invoking its diversity jurisdiction.

See 28 U.S.C. § 1332(a)(1).

According to the notice of removal, Dowgiert is a citizen of New
Hampshire, Hagopian is a citizen of North Carolina, and the DCS
defendants and the Grand Hall defendants are all foreign
corporations with their principal places of business outside of
New Hampshire.

The notice also states that ASC “was a New

Hampshire corporation that was administratively dissolved by the
Secretary of State on September 1, 2006.”
This court subsequently ordered the DCS defendants to show
cause why the case should not be remanded to Rockingham County
Superior Court for lack of subject-matter (diversity)
jurisdiction.

Order of Feb. 28, 2013, at 3.

The court noted the

“general consensus that ‘state law governs the extent, nature,
and period of liability for dissolved corporations, and hence
whether they are deemed to exist for diversity jurisdiction
purposes.’”

Id. at 2 (quoting 13F Charles Alan Wright et al.,

Federal Practice & Procedure § 3623, at 32 (3d ed. 2009)), and
that “[u]nder New Hampshire law, ‘a corporation administratively
dissolved continues its corporate existence,’” id. (quoting N.H.
Rev. Stat. Ann. § 293-A:14.21(b)).

Thus, the court noted, “[i]f

this view of the law is correct, then there is no diversity
jurisdiction here, because [ASC] still exists under New Hampshire
law, meaning its citizenship counts--and its citizenship is the
same as that of the plaintiff.”

Id. at 2-3.

In response, the DCS defendants filed a memorandum arguing
that “diversity jurisdiction is unaffected by ASC’s presence
because ASC is not an ‘indispensible’ party” in light of its
dissolution.

“Even if a party is not indispensible, however, but

‘merely proper, . . . if in fact he or she has been joined in the
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action, that party’s citizenship must be considered for purposes
whether subject matter jurisdiction exists.’”

Allard v. Foremost

Ins. Co., No. 12-cr-65, 2012 WL 2923186, at *1 (D.N.H. July 18,
2012) (quoting 13E Wright supra, § 3606, at 262-63).

Thus, even

if ASC is not “indispensible” under Rule 19(b) of the Federal
Rules of Civil Procedure (as the DCS defendants argue at length),
it has been joined as a party here, so its citizenship “counts”
for purposes of diversity jurisdiction.

Indeed, while “[i]t

occasionally was said too loosely in some older cases that only
the citizenship of ‘indispensible’--Rule 19(b)--parties will be
considered in determining whether diversity jurisdiction
exists[,] [t]his simply is not the rule.”

13E Wright, supra,

§ 3606, at 262 (emphasis added).
In arguing to the contrary, the DCS defendants rely heavily
on such “older” cases.

See e.g. Salem Trust Co. v.

Manufacturers’ Fin. Co., 264 U.S. 182 (1924); Hann v. City of
Clinton, 131 F.2d 978 (10th Cir. 1942); Stonybrook Tenants Ass’n,
Inc. v. Alpert, 194 F. Supp. 552 (D. Conn. 1961); Leadman v. Fid.
& Cas. Co. of N.Y., 92 F. Supp. 782 (S.D. W. Va. 1950).

In any

event, these cases do not stand for the proposition that
diversity jurisdiction depends on the citizenship of
“indispensible” parties only.

Rather, as the DCS defendants

themselves point out, these cases hold that the diversity inquiry
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disregards the citizenship of “formal” or “nominal” parties,
e.g., a bank holding (but not making any claim to) the funds
which are the subject of the action.
189.

Salem Trust, 264 U.S. at

But the DCS defendants do not argue that ASC is a “formal”

or “nominal” party, and it does not meet the definition of those
terms as they are used in this context.

See 15 James William

Moore et al., Moore’s Federal Practice § 102.15, at 102-32.3 (3d
ed. 2012) (“a nominal defendant is a person who can be joined to
aid the recovery of relief without an additional assertion of
subject matter jurisdiction only because the defendant has no
ownership interest in the property that is the subject of the
litigation”).

Instead, they argue that ASC is not indispensible-

-a status which is not the same as “formal” or “nominal” and, as
just stated, is irrelevant to the jurisdictional inquiry.
The DCS defendants also rely heavily on the decision by the
Court of Appeals in DCC Operating, Inc v. Siaca (In re Olympic
Mills Corp.), 477 F.3d 1 (1st Cir. 2007), but it is not to the
contrary.

Olympic Mills holds that “claims launched by necessary

but dispensible, nondiverse defendant-intervenors do not defeat
the original jurisdiction (diversity) that obtained at the
commencement of the action.”

Id. at 12.

Here, however, the

question is whether diversity “obtained at the commencement of
the action” despite the fact that Dowgiert’s complaint named a
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non-diverse defendant, ASC.

This is not a case, like Olympic

Mills, where the original parties were diverse but a non-diverse
party has since intervened.

Indeed, the Olympic Mills court

specifically recognized that, while “[t]he post-filing context is
more elastic,” the requirement of complete diversity “is most
inflexibly applied at the time of filing, for it has long been
settled that ‘the jurisdiction of the court depends upon the
state of things at the time of the action brought.’”

Id. at 7

(quoting Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S.
567, 570 (2004) (further quotation marks omitted)).
Here, “the state of things at the time of the action
brought” was (and, for that matter, still is) that both the
plaintiff, Dowgiert, and one of the defendants, ASC, are citizens
of New Hampshire.1

So there is no diversity jurisdiction,

whether or not ASC is indispensible under Rule 19(b).

See 13E

Wright, supra, § 3606, at 262.

1

As is the case with nominal defendants, the citizenship of
“fraudulently joined” defendants is disregarded for purposes of
diversity. See, e.g., 16 Moore, supra, § 107.14[2][c][iv][A], at
107-76. But “[w]hen a party seeking removal alleges fraudulent
joinder, the removing party bears the burden of proving the
alleged fraud. [This] burden of persuasion . . . is
substantial.” Id. § 107.14[2][c][iv][B], at 107-84–85. The DCS
defendants have not claimed that Dowgiert fraudulently joined
ACS, let alone attempted to prove it, so the court has not
considered that possibility.
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The DSC defendants protest that this conclusion “ultimately
defeats the purpose of diversity jurisdiction, especially when,
as is the case here, the plaintiff is a local resident and the
defendant seeking the protection of the federal court is a
foreign entity.”

That description, of course, fits nearly every

case removed to federal court on the basis of diversity
jurisdiction; nevertheless, diversity jurisdiction over such a
case exists only where all of the defendants are foreign.
Strawbridge v. Curtiss, 7 U.S. 267 (1806).

See

As Olympic Mills

explains, while “[t]he historic primary function of the diversity
requirement was to provide a neutral forum for the out-of-state
litigant who fears that the state court may be unduly, if
unconsciously and inarticulately, solicitous for the interests of
its own citizens . . . [t]he presence of a nondiverse party
eliminates this concern.”
citation omitted).

477 F.3d at 6-7 (quotation marks and

Although this logic may be open to question

(as law professors are fond of pointing out to their first-year
civil procedure students), this court is bound to take it as
Gospel.

Because this court lacks subject-matter jurisdiction

over this action, it is REMANDED to the Rockingham County
Superior Court.

See 28 U.S.C. § 1447(c).

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SO ORDERED.

____________________________
Joseph N. Laplante
United States District Judge
Dated:
cc:

March 22, 2013

Michael J. Iacopino, Esq.
Robert Hagopian, pro se
William A. Staar, Esq.
Ralph Suozzo, Esq.
Kenneth B. McKenzie, Esq.
Richard A. Ergo, Esq.
R. Matthew Cairns, Esq.

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