Opinion
04 Civ. 9069 (RJH).
November 19, 2004
OPINION ORDER
S.M. Pires and Saul Rudes (collectively "plaintiffs") brought this action in state court asserting, inter alia, state law claims of breach of contract, breach of fiduciary, conversion and fraud against Pires' former lawyer and Rudes' former co-counsel, Kenneth Heller. Heller asserted third party claims of breach of employment contract, loyalty, and fraud against Susan Harmon, who was his former associate and is currently representing Pires. Heller also filed a notice of removal to federal court pursuant to 28 U.S.C. § 1441, contending that this action invokes the exclusive federal jurisdiction afforded to admiralty law. Heller now submits an order to show cause in this Court, seeking to enjoin plaintiffs from bringing any proceeding in seeking attachment of his properties as well as any proceeding in New York State Supreme Court before New York State Supreme Court Justice Karen Smith.
A civil action initially brought in state court may be removed by the defendant to federal court, provided that the "district courts of the United States have original jurisdiction." 28 U.S.C. § 1441(a). In order for "removal to be considered proper, the removing party must demonstrate that this Court is endowed with the requisite subject matter jurisdiction." Frontier Insurance Co. v. MTN Owner Trust, 111 F. Supp. 2d 376, 378 (S.D.N.Y. 2000) (citation omitted). Additionally, the Court has an independent obligation to address, sua sponte, the propriety of subject matter jurisdiction. Oscar Gruss Son, Inc. v. Hollander, 337 F.3d 186, 193 (2d Cir. 2003) ("[f]ailure of subject matter jurisdiction, of course, is not waivable and may be raised at any time by a party or by the court sua sponte").
A federal district court may properly exercise subject matter jurisdiction where complete diversity exists between the parties. Wisconsin Dep't of Corr. v. Schact, 524 U.S. 381, 388 (1998). Alternatively, subject matter jurisdiction is appropriate if the action "arises under" federal law. Bracey v. Bd. of Educ. of City of Bridgeport, 368 F.3d 108, 113 (2d Cir. 2004) (citing 28 U.S.C. § 1331). Because both plaintiff Saul Rudes and defendant Heller are residents of New York, the Court finds that diversity jurisdiction does not exist, and therefore moves to the issue of federal question jurisdiction.
An action "arises under" federal law if "in order for the plaintiff to secure the relief sought he will be obliged to establish both the correctness and the applicability to his case of a proposition of federal law." Bracey, 368 F.3d at 114 (citations omitted). Plaintiffs' complaint seeks an order of attachment of properties owned by Heller based on damages arising from his alleged breach of contract, breach of fiduciary duty, conversion, fraud, and legal malpractice. (Pl.'s Compl. ¶ 16, 19, 23, 28.) These acts allegedly occurred in connection with Heller's legal representation of Pires and retention of Rudes as appellate counsel in a prior personal injury suit against a shipowner in New York State Supreme Court. ( Id. ¶¶ 4, 6-7.) Because that action involved maritime law, Heller asserts that this current action to recover funds that Heller allegedly converted from his client and co-counsel is also "wholly maritime." (Def.'s Notice of Removal ¶ 4.)
While it is true that federal courts have "exclusive jurisdiction over admiralty and maritime claims," Lewis v. Lewis Clark Marine, Inc., 531 U.S. 438, 440 (2001), Heller has failed to demonstrate that either plaintiffs' complaint against Heller or Heller's third party complaint against his former associate contains "maritime" claims. A breach of contract claim will invoke admiralty jurisdiction if the contract "incorporates a uniquely maritime concern." American Home Assur. Co. v. Merck Co., Inc., 329 F. Supp. 2d 436, 440 (S.D.N.Y. 2004) (emphasis added); American Nat. Fire Ins. Co. v. Mirasco, Inc., No. 99 Civ. 12405, 2000 WL 1368009, at *4 (S.D.N.Y. Sept. 20, 2000) (contract is included in admiralty jurisdiction if it relates to the "navigation, business, or commerce of the sea") (citations omitted); Fednav, Ltd. v. Isoramar, S.A., 925 F.2d 599, 601 (2d Cir. 1991) ("[i]f the subject matter of the contract relat[es] to a ship in its use as such, or to commerce or to navigation on navigable waters, or to transportation by sea or to maritime employment it is fairly said to constitute a maritime contract") (quotations omitted). Any claims asserted by plaintiffs, however, arise out of their contracts with Heller regarding his legal fees or Rudes' co-counsel legal fees in connection with the underlying maritime action. (Pl.'s Compl. ¶¶ 4, 6-7.) Similarly, Heller's third party claim against Harmon is a standard breach of employment claim. (Def.'s Third Party Compl. ¶ 13.) In light of Heller's failure to show how these contracts incorporate a "uniquely maritime concern," these claims are too tangential to maritime law to be considered "maritime claims." American Home Assur. Co., 329 F. Supp. 2d at 442-43 (admiralty jurisdiction not warranted based on generalized, non-maritime nature of insurance policy and absence of "justiciable controversy" over a seaborn shipment); Fednav, Ltd., 925 F.2d at 601 (agreement to contribute to settlement agreement arising from maritime contract was not itself a "maritime" contract). As it is unnecessary to analyze or apply federal maritime law in resolving these standard, state law contract claims, no federal question exists. Bracey, 368 F.3d at 114.
It is well settled that "the party seeking to preserve the district court's removal jurisdiction, typically the defendant, not the party moving for remand to state court, typically the plaintiff," bears the burden of showing that removal is appropriate in the first instance. Charles Alan Wright, Arthur R. Miller, Edward H. Cooper, Federal Practice and Procedure, § 3739 at 424 (3d Ed. 1998); Ryan v. Dow Chemical Corp., 781 F. Supp. 934, 939 (E.D.N.Y. 1992). Moreover, removal statutes are to be "strictly construed." State of N.Y. v. Lutheran Center for Aging, Inc., 957 F. Supp. 393, 397 (E.D.N.Y. 1997) (citing cases). If there is any doubt as to whether removal is appropriate, the case should be remanded. Wilds v. United Parcel Service, Inc., 262 F. Supp. 2d 163, 176-77 (S.D.N.Y. 2003); State of N.Y., 957 F. Supp. at 397; Truglia v. KFC Corp., 692 F. Supp. 271, 275 (S.D.N.Y. 1988) (allegations must be construed in light most favorable to plaintiff in evaluating motion to remand); Lance Int'l Inc. v. Aetna Cas. Sur. Co., 264 F. Supp. 349, 356 (S.D.N.Y. 1967).
Heller's third party complaint alleges that Harmon "willfully failed to abide by such terms, covenants, and conditions of her employment relationship by, inter alia, surreptitiously providing attorney work product, confidential and privileged information, and general assistance, to Heller's adversaries during pending litigation matters, all while Harmon continued to work for, and be employed by, Harmon." (Def.'s Third Party Compl. ¶ 19.)
Regarding the claims of breach of fiduciary duty, loyalty, conversion, fraud, and legal malpractice, the propriety of admiralty jurisdiction over particular torts depends on the tort's relationship to "traditional maritime activity." American Home Assur. Co., 329 F. Supp. 2d at 440; Executive Jet Aviation, Inc. v. City of Cleveland, Ohio, 409 U.S. 249, 253-258 (determination as to whether tort is "maritime" may depend on tort's locality or relationship to maritime service, commerce, or navigation). Heller has simply failed to allege how his claims or plaintiffs' claims relate to "traditional maritime activity." Indeed, Heller's alleged tortious conduct in stealing money from his client and co-counsel, as well as any tortious conduct allegedly committed by Harmon, is entirely separate from the underlying maritime action in which Pires suffered leg amputations from his shipowner's denial of maintenance and cure.
Simply labeling these claims as "maritime" does not make them so. Nor can the fact that the previous lawsuit involved maritime claims be sufficient to establish admiralty jurisdiction over any future lawsuits arising between the parties. Accordingly, the Court finds that subject matter jurisdiction is lacking. Heller's order to show cause, leaving aside its gross inadequacies, must be denied for lack of subject matter jurisdiction. This action is remanded to state court.
The Clerk of the Court is directed to close the case.
SO ORDERED.