IVM CORPORATION et al v. ZUELLIG GROUP N.A., INC. et al

Filing 13

MEMORANDUM OPINION & ORDER ADOPTING REPORT AND RECOMMENDATIONS for 10 Report and Recommendations, 7 Remand to State Court filed by IVM CORPORATION; that IVM's Motion for Remand is DENIED; that BIN's Cross-Motion for Costs and Fees is DENIED. Signed by Judge Kevin McNulty on 8/20/13. (jd, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
IVM CORP.,

Civ. No. 2:13-3902 (KM)
Plaintiff,
MEMORANDUM OPINION &
ORDER

:

v.
ZUELLIG GROUP N.A., INC., et

al.,
Defendant.

THIS MATTER having been opened to the Court by Plaintiff IVM
Corporation (“IVM”), through its counsel, Anthony J. Cariddi, Esq., of
Chandless, Weller & Kramer, on a Motion for Remand this case following its
and
1];
No.
[Docket
court
State
from
removal
Defendant/Counterclaimant/Third-Party Plaintiff BI Nutraceuticals, Inc. (as
successor to Zuellig Group N.A., Inc.) (“BIN”), through its counsel, John
Maloney, Esq., of Graham Curtin, P.A., having submitted papers in opposition
to the Motion and a Cross-Motion for Costs and Fees [Docket No. 8]; and IVM
having filed a reply brief and an opposition to the Cross-Motion [Docket No. 9];
and, on July 29, 2013, Magistrate Judge Hammer having submitted a Report
and Recommendation (the “R&R”) [ECF No. 10]; and the parties having filed no
objection to the R&R; and the Court, pursuant to Federal Rule of Procedure 78,
having considered all of the foregoing and other documents in the record; and
for good cause appearing; the Court decides as follows:
(1) The Notice of Removal, filed by defendant BIN, invokes diversity
jurisdiction because (a) IVM is a New Jersey corporation with a
principal place of business in New Jersey and BIN is a California
corporation with a principal place of business in California, and (b)
the amount in controversy exceeds $75,000.’ See 28 U.S.C. § 1332.
The Notice of Removal was timely filed after stipulations of dismissal
had been filed in state court with regard to two individual defendants,
BIN claims that over $788,000 is owed on a mortgage it held on a property
owned by IVM. (Notice of Removal ¶ 16). IVM brought the state court action to have
BIN equitably estopped from claiming any balance due and to compel a discharge of
the mortgage. (R&R at 2).
1

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one of whom, Edward Bond, was a citizen of New Jersey.
(2) I summarize Magistrate Judge Hammer’s decision as follows. IVM and
BIN are citizens of different states and the amount-in-controversy
requirement is plainly met. IVM claims, however, that BIN’s joinder of
Naturex, Inc. (“Naturex”), as a third-party defendant destroys diversity
because Naturex is a Delaware corporation with its U.S. headquarters
in New Jersey. Magistrate Judge Hammer rejected this argument
based on well-established Third Circuit law that a “third-party
defendant
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.” (R&R at 4 (quoting Spring City
Corp. v. American Bigs. Co., 193 F.3d 165, 169 (3d Cir. 1999))).
Similarly, Magistrate Judge Hammer determined that IVM could not
base its argument on 28 U.S.C. § 1441(b)(2) because a third-party
defendant is not considered a defendant for purposes of § 1441. (R&R
at 5 (citing, inter alia, Smith v. Philadelphia Transp. Co., 173 F.3d 721,
724 n.2 (3d Cir. 1999))). Based on finding that diversity jurisdiction
existed, Magistrate Judge Hammer then rejected (a) IVM’s contention
that the lack of federal question jurisdiction required remand and (b)
IVM’s request that the court abstain pursuant to Younger v. Harris,
401 U.S. 37 (1971) because the “pending state action to which IVM
refers is the present action, which is no longer in state court as it has
been removed.” (R&R at 5 (citing Georgia v. Rachel, 384 U.S. 780, 798
(1966))). Because removal was proper and diversity jurisdiction exists,
Magistrate Judge Hammer rejected IVM’s application for fees
pursuant to 28 U.S.C. § 1447(c). (R&R at 6 n.3). As to BIN’s CrossMotion for Costs and Fees pursuant to Federal Rule of Civil Procedure
11, Magistrate Judge Hammer recommended that the Court use its
discretion to deny the cross-motion.
.

.

.

(3) Neither party has filed an objection to the R&R within fourteen days of
July 29, 2013, when it was filed and served. See Local Civil Rule
72.1(c) (14-day deadline for objections).
(4) This Court reviews the Magistrate’s Report and Recommendation
pursuant to 28 U.S.C. § 636 and Fed. R. Civ. P. 72(b)(3). “A judge of
the court may accept, reject, or modify, in whole or in part, the
findings or recommendations made by the magistrate judge.” 28
U.S.C. § 636(b)(1); see also U.S. v. Raddatz, 447 U.S. 667, 680 (1980)
2

(stating that the district court judge has broad discretion in accepting
or rejecting the magistrate’s recommendation).
(5) If there are no objections, the district court has discretion to choose
an appropriate standard of review. See Thomas v. Am, 474 U.S. 140,
154 (1985) (the federal statute neither prohibits nor requires a
particular standard if no objections are filed); Goney v. Clark, 749
F.2d 5, 7 (3d Cir. 1984). At a minimum, “[wihat is not objected to, the
district court reviews under the plain error or manifest injustice
standard.” Megaparts v. Highcom Security, No. 09-4052, 2010 U.S.
Dist. LEXIS 63497, at *4 (D.N.J. June 25, 2010); see, e.g., Banks v.
Gallagher, 686 F. Supp. 2d 499,505 (M.D. Pa. 2009); Cruz v. Chater,
990 F. Supp. 375, 376—78 (M.D. Pa. 1998) (citing Advisory Committee
notes on Federal Rule of Civil Procedure 72(b), implementing 28
U.S.C. § 636(b)(1)(C)).
(6) The standard of review, however, is not critical. I agree with the
reasons put forth by Magistrate Judge Hammer that diversity
jurisdiction exists. Further, as Magistrate Judge Hammer suggested,
awarding BIN costs and fees under Rule 11 would not be appropriate.
The Third Circuit has authorized such sanctions only in the
where a claim or motion is patently
“‘exceptional circumstance’
unmeritorious or frivolous”. Doering v. Union County Bd. of Chosen
Freeholders, 857 F.2d 191, 194 (3d Cir. 1988) (quoting Gaiardo v.
Ethyl Corp., 835 F.2d 479, 483 (3d Cir. 1987)); see also Morristown
Daily Record, Inc. v. Graphic Comm’s Union Local 8N, 832 F.2d 31, 32
n. 1 (3d Cir. 1987) (“Rule 11 is not to be used routinely when the
parties disagree about the correct resolution of a matter in litigation”).
And even where such exceptional circumstances exist, the court is
merely authorized, not required, to impose sanctions. Bensalem Twp.
v. Int’l Surplus Lines Ins. Co., 38 F.3d 1303, 1314 (3d Cir. 1994) (citing
Doering, 857 F.2d at 194). IVM’s Motion to Remand, although denied,
was not vexatious or frivolous; like Magistrate Judge Hammer, I would
exercise my discretion not to impose sanctions under these
circumstances. In short, I adopt the well-reasoned conclusions of
Magistrate Judge Hammer in all respects.
.

.

.

IT IS THEREFORE this 20th day of August, 2013,

3

ORDERED that Magistrate Judge Hammer’s R&R is adopted in full; and

it is therefore
ORDERED that IVM’s Motion for Remand is DENIED; and
ORDERED that BIN’s Cross-Motion for Costs and Fees is DENIED.

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A /W,J

KEVIN MCNULTY, U.S.

4

.J.