MISSION MOTORCYCLE, INC. v. IP
OPINION. Signed by Judge Kevin McNulty on 1/11/. (DD, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
MISSION MOTORCYCLES, INC.,
No. 13-cv-7684 (KM)(MAH)
Defendant, Counterclaim and
MISSION MOTORCYCLES, INC. MARK
SEEGER, and LOWENSTEIN SANDLER,
Counterclaim and Crossclaim
KEVIN MCNULTY, U.S.D.J.:
This matter comes before the Court on the Court’s own Order to
Show Cause why this action should not be dismissed for lack of subject
matter jurisdiction, citing 28 U.S.C.
§ 1332 and 1367. (ECF No. 98) The
parties were invited to submit briefs, not to exceed 10 pages, on or before
the December 30, 2015; all parties except Mission Motorcycles, Inc., did
so. The Order to Show Cause was made returnable in my courtroom on
January 8, 2016.
Jurisdiction in this action was originally founded on diversity. The
plaintiff, Mission Motorcycles, Inc., is incorporated in Delaware and has
its principal place of business in California; defendant IP is a citizen of
New Jersey; and the complaint, although one for a declaratory judgment,
alleged that more than $75,000 was in controversy. Defendant Ip later
brought counterclaims and cross claims against Mission, Mark Seeger,
and Lowenstein Sandier LLP. (ECF No. 13) As to these parties, complete
diversity is lacking. Seeger is (like Mission) a citizen of California, and
multiple partners of Lowenstein are (like Ip) citizens of New Jersey. See
Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 419 (3d Cir. 2010)
(for purposes of
§ 1332(a), citizenship of limited partnership is that of its
partners). See generally Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267
(1806) (first stating the “complete diversity” rule).
If this action remained in its original configuration, the addition of
claims against nondiverse parties would not necessarily pose a
jurisdictional problem. The supplemental jurisdiction statute, 28 U.S.C.
§ 1367, would permit the court to hear them if they could fairly be
regarded as part of the same “case or controversy.” Id.
But this action does not remain in its original configuration.
Mission has disappeared from the case. A corporation cannot appear pro
Se, but only through counsel.’ Lowenstein, with leave of the Magistrate
Judge, has withdrawn as Mission’s counsel. (ECF No. 73) The Magistrate
Judge repeatedly extended Mission’s time to obtain new counsel, most
recently until October 15, 2015, and authorized a motion to dismiss for
lack of prosecution if no counsel appeared by then. (ECF No. 81) Ip filed
such a motion to dismiss on October 21, 2015 (ECF No. 89); Mission did
not respond. (I administratively terminated pending motions, however,
pending the outcome of this order to show cause.)
See Simbraw v. United States, 367 F.2d 373, 374 (3d Cir. 1966); Einhorn
v. Highway Saftey Sys., Inc., No. CIV. 13-202 1 RBK, 2015 WL 5567303, at *4
(D.N.J. Sept. 22, 2015) (Kugler, J.) (“Because the Defendant is a corporation,
Plaintiff can proceed against it only if Defendant is represented by counsel.”)
Harrington v. All Am. Plazas, Inc., No. CIV.A. 08-3848 (JLL), 2010 WL 2710573,
at *2 (D.N.J. July 7, 2010) (“Corporations cannot represent themselves prose
and must obtain counsel.”), report and recommendation adopted, No. CIV.A. 083848 (tiLL), 2010 WL 2975764 (D.N.J. July 22, 2010) (striking answer where
corporation failed to comply with order to obtain counsel).
Mission then filed in bankruptcy in the Northern District of
California, Case No. 15-3 1262 HLB 7 (see ECF No. 86). Claims against
Mission are of course automatically stayed. See 11 U.S.C.
§ 362. By text
order, Magistrate Judge Hammer ordered that Ip’s still-unopposed
motion to dismiss for lack of prosecution be served on Mission’s trustee
in bankruptcy. (ECF Nos. 92, 93) On November 24, 2015, Mission’s
trustee in bankruptcy responded by filing a notice of intent to abandon
the claims filed by Mission in this action. (ECF No. 95-1) 1 have reviewed
the electronic bankruptcy docket, and I see that no objection has been
My Order to Show Cause why the action should not be dismissed
for lack of jurisdiction had a return date of January 8, 2016. Mission did
not file any papers in opposition, did not appear, and did not state any
intent to appear. (To be fair, counsel for ip, though he filed a letter brief,
inadvertently failed to appear as well.) Two major parties in interest being
absent, I did not hear argument, but out of caution I carried the matter
until January 22, 2016. I have reviewed the briefs, however, and I believe
I may dispose of the matter on the papers. At any rate, I see little point in
having the parties carry on shadowboxing with an unrepresented,
bankrupt, absent adversary.
Mission’s complaint must be deemed abandoned and dismissed. In
dismissing Mission’s complaint, I am only acknowledging the reality that
Mission (impliedly, by failing to respond to the motion to dismiss for lack
of prosecution, and affirmatively, through the statement of its trustee in
bankruptcy) has abandoned its claims.
Thus I distinguish this dismissal from a sanction for failure to obey a
court order, which would require analysis of the Poulis factors. See Poulis u.
State Farm Fire & Casualty Co., 747 F.2d 863 (3d Cir.1984). Where a party
willfully abandons his case, or makes adjudication of a matter impossible,
Poulis balancing is unnecessary. See, e.g., Spain v. Gallegos, 26 F.3d 439, 454—
55 (3d Cir. 1994) (party abandons her case); Seberell ex rel. Seberell v.
It was only based on diversity of citizenship betw
een Mission and
the original defendant, Ip, that this Court had subj
ect matter jurisdiction
in the first place. The other crossclaims and coun
nondiverse parties, were in the case only by virtu
e of supplemental
jurisdiction. Now, that jurisdictional anchor—Miss
ion’s claim against
Lowenstein urges that I dismiss the state law cross
counterclaims, as to which there is no independ
ent basis for jurisdiction.
Ip submits that the court may, and within its discr
etion should, continue
to exercise supplemental jurisdiction over those claim
s pursuant to 28
U.S.C. § 1367. In the alternative, ip requests that
any dismissal be
without prejudice to his reassertion of such claim
s in an appropriate
“The district courts may decline to exercise supp
jurisdiction over a claim under subsection (a) if
(3) the district court
has dismissed all claims over which it has origi
nal jurisdiction.” 28
§ 1367(c). As to the limits of discretion to retain state law claims
after federal claims have been dismissed, the
United States Court of
Appeals for the Third Circuit has given the distr
ict courts some guidance:
[W}here the claim over which the district court has
jurisdiction is dismissed before trial, the district
decline to decide the pendent state claims unle
considerations of judicial economy, convenience
to the parties provide an affirmative justification
for doing so.
Hedges v. Musco, 204 F.3d 109, 123 (3d Cir. 2000
) (quoting Borough of
West Mifflin v. Lancaster, 45 F.3d 780, 788 (3d
Cir. 1995)). In short, the
presumptive rule is that the state claims shall be
reasons of economy and fairness dictate otherwis
Philadelphia Police Dept., 159 F. Appx 371, 373—74
(3d Cir.2005) (party’s
conduct makes adjudication impossible). The Poulis
analysis, however, would
certainly produce the same result.
Thus, where the case has been substantially litiga
ted, it may be a
proper exercise of discretion to retain it. See Grow
th Horizons, Inc. v.
Delaware County, Pa., 983 F.2d 1277, 1284—85 (3d Cir.
(remanding for exercise of discretion as to whether
to retain pendent
claim, noting that where the district court already hear
d all evidence
necessary to decide the state contract claim, it migh
t retain jurisdiction).
Where, on the other hand, the case is nowhere close
to trial, remand is
the proper course. Freund v. Florio, 795 F. Supp. 702,
710 (D.N.J. 1992)
(“[A]t this early stage in the litigation, dismissal of the
claims in a federal forum will result in neither a wast
e of judicial
resources nor prejudice to the parties.”).
I find no substantial basis for retaining jurisdiction over
claims here. This case has not progressed to the poin
t that judicial
economy, convenience and fairness require retention.
The Court has not
committed substantial resources to it. (I do not cons
ider the efforts
expended in dealing with Mission’s failure to prosecute
its claims.) Mr. Ip
points to the exchange of limited discovery and the nego
protective orders. Those efforts, however, are not who
lly sunk, but are
transferable to any subsequently filed state court actio
More generally, this case’s presence in federal cour
t is a procedural
artifact. It is, in substance, a claim by Mr. Ip again
st Mission, Mission’s
CEO, and counsel. One of those three parties (who happ
ens to be diverse
from Ip), no doubt because it anticipated being sued
by ip, brought this
federal court action seeking a declaratory judgment.
Had this action been
brought by Mr. Ip in its natural form, against the three
considers liable, it could only have been filed in state
Jurisdictionally, the tail is wagging the dog here.
I will therefore dismiss Mission’s claims because they have
affirmatively abandoned (and, in the alternative, for
lack of diligent
prosecution). I will further exercise my discretion to dism
remaining state law claims, brought by Mr. Ip, as to which there is no
independent basis for jurisdiction.
Mr. Ip’s request that any such dismissal be without prejudice is a
proper one. See Figueroa v. Buccaneer Hotel, 188 F.3d 172, 182 (3d Cir.
1999. He did not choose this federal forum originally. This adjudication
in not on the merits. IcL And, to be clear, it is the intention of the court
that the statute of limitations be tolled in accordance with 28 U.S.C.
Dated: January 11, 2016
United States District
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