Metro Foundation Contractors, Inc. v. Arch Insurance
498 F. App'x 98
2d Cir.2012Background
- Metro sued Arch in federal court under 28 U.S.C. §1332, seeking recovery on a surety bond issued to MMA.
- Arch filed a third-party complaint seeking indemnification; MMA answered with breach claims against Metro.
- MMA sought sanctions for Metro’s discovery noncompliance; district court imposed costs and attorneys’ fees on Metro.
- Metro’s later motion to dismiss MMA’s claims was denied; district court retained supplemental jurisdiction over MMA’s claims.
- A default judgment against Metro and a final partial judgment awarding costs/fees followed; Metro appeals.
- Metro argues lack of subject matter jurisdiction, improper exercise of supplemental jurisdiction, and improper sanctions without contemporaneous time records.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had supplemental jurisdiction over MMA's claims. | Metro asserts §1367(b) bars, as MMA is a nonoriginal plaintiff under Rule 14. | Arch/MMA contend §1367(a) allows supplemental jurisdiction; §1367(b) does not apply to third-party defendants. | District court had supplemental jurisdiction. |
| Whether §1367(b) bars MMA's claims as a nondiverse third party or similar to a plaintiff. | Metro claims MMA is a plaintiff under §1367(b). | §1367(b) limits only plaintiffs, not defendants or third parties; MMA is not a Rule 19/24 joinder/intervention case. | §1367(b) does not bar MMA's claims. |
| Whether Viacom supports that the district court could exercise supplemental jurisdiction over MMA’s claims. | Metro argues Viacom limits supplemental jurisdiction for nondiverse parties. | Viacom permits supplemental claims by nondiverse third parties; district court properly exercised jurisdiction. | Viacom supports district court’s jurisdiction. |
| Whether the district court abused its discretion in declining to exercise or exercising supplemental jurisdiction under §1367(c). | District court should decline because state-law issues are duplicative and parallel proceedings exist. | Courts may exercise jurisdiction; parallel NY state case does not require remand; no novel state-law issues. | No abuse; exercised supplemental jurisdiction. |
| Whether the sanctions award requires contemporaneous time records. | Time records required for fee shifting; lack invalidates award. | Time-records omission should have been raised below; not preserved on appeal. | Sanctions award affirmed; issue waived. |
Key Cases Cited
- Viacom Int’l, Inc. v. Kearney, 212 F.3d 721 (2d Cir. 2000) (limits on §1367(b) for nondiverse defendants/third parties; downsloping vs upsloping claims)
- Viacom, 212 F.3d 721 (2d Cir. 2000) (See Viacom above)
- Itar-Tass Russian News Agency v. Russian Kurier, Inc., 140 F.3d 442 (2d Cir. 1998) (discusses supplemental jurisdiction considerations)
- SST Global Tech. LLC v. Chapman, 270 F. Supp. 2d 444 (S.D.N.Y. 2003) (exceptional circumstances for declining jurisdiction under §1367(c)(4))
- Thomas E. Hoar, Inc. v. Sara Lee Corp., 900 F.2d 522 (2d Cir. 1990) (time-records and fee-shifting concerns; preservation issue)
- Dev. Fin. Corp. v. Alpha Hous. & Health Care, Inc., 54 F.3d 156 (3d Cir. 1995) (1367(b) scope for joinder/claims by plaintiffs)
- United Capitol Ins. Co. v. Kapiloff, 155 F.3d 488 (4th Cir. 1998) (interpretation of §1367(b) scope)
- State Nat’l Ins. Co. v. Yates, 391 F.3d 577 (5th Cir. 2004) (plaintiff vs defendant focus under §1367(b))
- Grimes v. Mazda N. Am. Operations, 355 F.3d 566 (6th Cir. 2004) (plaintiff/defendant distinction under supplemental jurisdiction)