In J.A. Masters v. Beltramini, No. 23-20292 (5th Cir. Sept. 9, 2024), the Fifth Circuit finds itself returning a fully-tried case to the district court – for a second time – to adjudicate whether it had diversity jurisdiction. Judge Haynes files a dissent.
“This appeal comes to us following a five-day jury trial. Plaintiffs J.A. Masters Investments and K.G. Investments raise a multitude of issues, all of which arise from state-law claims of fraud and breach of contract. The parties fully litigated the case on the jurisdictional premise, accepted by the capable district court, that the action was between ‘citizens of different States’ under 28 U.S.C. § 1332(a)(1).”
Unfortunately, the only allegations in the pleadings concerned the residence rather than the citizenship of the parties, which was insufficient for the Fifth Circuit to determine whether there was subject-matter jurisdiction over the matter. So it directed the parties to submit a joint letter setting forth whatever evidence there was of the parties’ citizenship.
“The parties submitted a joint letter, expectedly insisting that jurisdiction existed and citing various cases in support of their position. And, for good measure, the parties concluded their letter by purporting to ‘stipulate to any and all facts which would confirm that the parties have complete diversity of citizenship’ . . . . What the letter did not contain, however, were any citations to the record establishing the citizenship of each party. At most, the letter simpl confirmed that the parties have repeatedly conflated residency with citizenship and have litigated this case on the understandable yet mistaken belief that allegations of the former were sufficient to establish subject-matter jurisdiction.”
Accordingly, the panel remands the matter to the district court “for the limited purpose of allowing the parties to supplement the record as necessary. See 28 U.S.C. § 1653.”
The panel notes that the parties, trying to get ahead of the problem, has already jointly submitted a motion in the district court “on their own accord and filed a so-called ‘Motion to Clarify Citizenship,’ reiterating much of what they asserted in their joint letter before this court. The district court then ‘granted’ the motion, finding that the parties were diverse. We take no position on that finding, but given our reservations thus far articulated about the record, along with the one-court-at-a-time rule, see United States v. Willis, 76 F.4th 467, 471–72 (5th Cir. 2023), we are unconvinced of its legal significance.”
“The parties and the distinguished district court have undoubtedly poured much time and many resources into this case, and we can appreciate how our strict observance of a technical point of jurisdiction will likely not come as welcome news at this late stage in the litigation. But without full assurance that this case falls within the strictures of our limited jurisdiction, any resolution we would purport to provide would be a nonbinding advisory opinion at best and an ultra vires act at worst. We decline to risk transgressing
our Article III power absent a sound basis in the record supporting the exercise of federal jurisdiction.”
Briefly dissenting, Jusge Haynes would hold that the district court’s findings on the parties’ joint motion were conclusive and that diversity existed.
Paul Mollica's Federal Courts Blog 