KCE Properties, Inc v. Holy Mackerel, Inc et al
MEMORANDUM ORDER re 31 MOTION to Voluntarily Dismiss pursuant to Rule 41(a)(2) filed by KCE Properties, Inc. The parties are hereby INSTRUCTED to file a supplemental memorandum in response to this Show Cause Order no later than Frida y, February 3, 2017, commenting on the matters referenced in this Order. For the convenience of the parties, the upcoming final Pre-trial conference in this case is CANCELED, and all trial-related deadlines are hereby SUSPENDED pending resolution of the threshold jurisdictional issue. Signed by District Judge Mark S. Davis and filed on 1/25/16. (tbro)
UNITED STATES DISTRICT COURT
eastern DISTRICT OF VIRGINIA
Newport News Division
KCE PROPERTIES, INC.,
HOLY MACKEREL, INC.,
This matter is before the Court on a Rule 41(a) (2) motion
for voluntary dismissal filed by Plaintiff, KCE Properties, Inc.
("KCE Inc."), ECF No. 31, and a motion for summary judgment
filed by Defendants, ECF No. 29.
Portions of both pending
discovered that Plaintiff KCE Inc., a California corporation and
the purported owner/landlord of a premises containing a rental
space previously leased by Defendant Holy Mackerel, Inc., is in
actuality not the owner of such premises/building.
same individuals that control KCE Inc.
also control KCE Old
Towne, LCC (^^KCE LLC"), a Virginia company that is the actual
owner of the premises at issue.
KCE LLC, therefore, is the
legal entity that
should have filed
complaint in this case cannot be amended to substitute KCE LLC
for KCE Inc. because doing so would destroy the diversity of
citizenship that this federal case is predicated upon.
standing to continue in this case,
the parties have vastly
differing viewpoints as to the proper procedural path to follow
in order to terminate this action.
Compare Defs' S.J. Memo 5,
ECF No. 30 (indicating that Defendants seek summary judgment not
only based on Plaintiff's lack of standing but also on the
with Pi's Memo
Opp'n to S.J.
summary judgment should be denied).
Plaintiff opposes a grant
of summary judgement as improper in a case where a plaintiff
a voluntary dismissal
unless this Court predicates such dismissal on Plaintiff paying
Defendants' attorney's fees.
judgment motion, is the proper procedural vehicle for Defendants
to challenge Plaintiff's lack of standing.
50 F.3d 299,
"differing procedural standards of dismissal under Rule 12(b)(1)
and summary judgment under Rule 56(c)," and holding that because
the United States was not liable for the plaintiff's injury,
"the district court should have dismissed the suit for want of
jurisdiction under Rule 12(b)(1) . • • rather than granting
summary judgment pursuant to Rule 56(c)").
Based on the
uncontested threshold facts in this case that clearly reveal a
laclc of standing, it is improper for this Court to reach the
portions of Defendant's summary judgment motion that seek a
ruling on the merits.
However, for similar reasons, the Court
questions whether a Rule 41(a)(2) motion should be granted in
by Plaintiff is
"voluntary," but is instead compelled by this Court's obvious
lack of jurisdiction.^
In light of the above, the parties are hereby instructed to
SHOW CAUSE why the Court should not enter an order:
(1) construing Defendant's motion for summary judgment as a
Rule 12(b)(1) motion to dismiss, as Defendant's first summary
judgment argument attacks Plaintiff's lack of standing, c^
^ The Court's viewpoint is illustrated by the fact that, to the extent
this Court had jurisdiction to consider Defendants' request for attorney s
fees, and ultimately sought to condition a voluntary dismissal on
Plaintiff's payment of a portion of Defendants' fees, the Court would
typically afford Plaintiff the opportunity to elect between continuing
with the case or being subject to a voluntary dismissal on terms that are
more onerous than that sought by Plaintiff.
Procedure § 2366,
9 C. Wright & A.
(explaining that the plaintiff "has an option not to go forward with a
dismissal if the conditions specified by the court seem too onerous ).
course, in this case. Plaintiff cannot "opt" not to proceed with dismissal
because Plaintiff has no standing and cannot continue to litigate this
case in this Court of limited jurisdiction.
(" [Q] uestions
jurisdiction may be raised at any point during the proceedings
and may (or, more precisely, must) be raised sua sponte by the
(2) granting such 12(b)(1) motion and dismissing the case
without prejudice, and without making a merits-based ruling of
any kind, because there is no case or controversy between the
ordering both parties to pay their own costs ^
attorney's fees in light of:
based dismissal does
(a) the fact that a non-merits
party" that is entitled to costs;
the "American Rule"
requiring that each party pay its own attorney's fees; (c) this
Court's apparent lack of jurisdiction to consider an attorney s
fee motion in a case where subject matter jurisdiction over the
case was lacking from the outset of the litigation, see Samsung
Elecs. Co. V. Rambus, Inc., 398 F. Supp. 2d 470, 481 (E.D. Va.
(discussing the "settled precept that lack of subject
matter jurisdiction over a substantive claim serves to bar an
2 It is well-established that "the court may consider the evidence beyond
the scope of the pleadings to resolve factual disputes concerning
jurisdiction" and that "dismissal for jurisdictional defects has no res
Williams, 50 F.3d at 304.
award of attorney's fees where an action was moot at the time of
filing," as contrasted with a case where a court "is divested of
its subject matter jurisdiction over the substantive claim by
virtue of intervening mootness"); and (d) the fact that even if
attorney's fees could be awarded, the current record suggests,
consistent with Plaintiff's counsel's representations on behalf
of KCE Inc.,
that the discovery performed in this case by
Defendants is readily transferable to, and can be utilized in, a
subsequent state-court action filed by KCE LLC, cf^ Davis v. USX
Corp., 819 F.2d 1270, 1276 (4th Cir. 1987)
attorney's fees should not be awarded in a voluntary dismissal
case when federal litigation efforts are readily transferable to
a subsequent state action);^ and
(4) based on the dismissal for lack of jurisdiction: (a)
dismiss Plaintiff's Rule 41(a)(2) motion seeking a "voluntary"
^ While this Court appears to lack jurisdiction to award attorney's fees.
Defendant's argument in support of recovering attorney's fees is grounded
in the contention that Defendants have expended significant resources
litigating a case that Plaintiff should have known from the outset could
not be filed in this Court. Although the Court acknowledges Defendants
position, it notes that the filings before the Court indicate that the
Defendant Daniel Carpenter, a shareholder and officer Iof Defendant Holy
Mackerel, Inc., was also the president of the company that formerly owned
the premises at issue, and who signed the documents transferring such
property to KCE LLC. Accordingly, Plaintiff is not the only party in this
case that should have discovered near the outset of litigation
inc. was not the proper plaintiff.
September of 2015 by "Daniel E. Carpenter" as "president of the Grantor
company not only lists the "Grantee" as "KCE OLD TOWNE, LLC" (rather than
KCE Inc.) but states on its face that KCE OLD TOWNE, LLC is a Virginia
corporation," a fact that would obviously defeat diversity jurisdiction in
ECF No. 30-6.
dismissal as moot; and (b) dismiss the remainder of Defendant's
summary judgment motion as moot.
The parties are hereby INSTRUCTED to file a supplemental
memorandum in response to this Show Cause Order no later than
Friday, February 3, 2017, commenting on the above matters.
the convenience of the parties,
the upcoming final Pre-trial
threshold jurisdictional issue.
The Clerk is REQUESTED to send a copy of this Memorandum
Order to all counsel of record.
IT IS SO ORDERED.
UNITED state's DISTRICT JUDGE
Newport News, Virginia
January 5l5 _, 2017
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?