Nuveen Municipal Trust Ex Rel. Nuveen High Yield Municipal Bond Fund v. WithumSmith Brown, P.C.
692 F.3d 283
| 3rd Cir. | 2012Background
- Nuveen Municipal Trust contracted with Bayonne Medical Center for a $10 million BAN; Bayonne provided an audit by Withum and an opinion by Lindabury.
- Bayonne filed Chapter 11, and a master claim was filed by Bank of New York on behalf of Nuveen and others; Nuveen’s portion totaled about $10.5 million.
- Nuveen filed suit in December 2008 against Withum and Lindabury for fraud, negligent misrepresentation, and malpractice, asserting they concealed Bayonne’s financial issues.
- Bayonne’s bankruptcy settlement fixed Nuveen’s claim against the estate but preserved a right to pursue claims against non-debtors (Withum and Lindabury).
- The District Court dismissed under New Jersey’s Affidavit of Merit (AOM) statute for failure to file timely affidavits; Nuveen appealed, challenging jurisdiction and AOM applicability.
- The Third Circuit held the action was ‘related to’ Bayonne’s bankruptcy and addressed AOM statute applicability, ultimately certifying two questions to the New Jersey Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court had ‘related to’ jurisdiction under 28 U.S.C. § 1334(b). | Nuveen contends jurisdiction lies under Pacor-related standards. | Withum and Lindabury argue related-to jurisdiction exists because the estate's disposition could be affected. | Yes; the action is related to Bayonne’s bankruptcy. |
| Whether the AOM Statute can be applied in federal court without clashing with Rule 8 after Twombly/Iqbal and Shady Grove. | AOM conflicts with Rule 8 and is preempted in federal court. | AOM is substantive state law; it can be applied without conflicting with Rule 8. | AOM can be applied in federal court; no direct Rule 8 collision. |
| Whether the New Jersey procedural protections (Civil Information Sheet reference and Ferreira conference) are substantive or procedural in federal court. | Protections are substantive and must be applied in federal court. | Protections are procedural safeguards not mandated in federal court. | Protections are procedural; not required in federal court. |
| Whether the AOM Statute applies to Nuveen’s action and whether substantial compliance or extraordinary circumstances excused noncompliance. | Nuveen argues exceptions apply; substantial compliance or extraordinary circumstances should excuse noncompliance. | No exceptions apply; dismissal with prejudice should stand unless New Jersey Supreme Court clarifies. | Majority: substantial compliance not shown; extraordinary circumstances lacking; but court certifies two questions to clarify scope; action potentially subject to AOM. |
Key Cases Cited
- Pacor, Inc. v. Higgins, 743 F.2d 984 (3d Cir. 1984) (related-to test for bankruptcy jurisdiction; conceivability standard)
- Celotex Corp. v. Edwards, 514 U.S. 300 (U.S. 1995) (standard for appellate review; none)
- Dole Food Co. v. Patrickson, 538 U.S. 468 (U.S. 2003) (state of filing rule for jurisdiction)
- Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (U.S. 2004) (concreteness of federal jurisdiction rules)
- Chamberlain v. Giampapa, 210 F.3d 154 (3d Cir. 2000) (Erie/Rule 8 collision analysis; affidavit-of-merit not a pleading requirement)
- Couri v. Gardner, 801 A.2d 1134 (N.J. 2002) (when underlying facts require deviation from standard of care; affidavit of merit required)
- Paragon Contrs., Inc. v. Peachtree Condo. Ass’n, 997 A.2d 982 (N.J. 2010) (granting extraordinary circumstances under Ferreira/ Paragon)
- Cornblatt v. Barow, 708 A.2d 401 (N.J. 1998) (substantial compliance doctrine applies to AOM statute)
- Ferreira v. Rancocas Orthopedic Assocs., 836 A.2d 779 (N.J. 2003) (accelerated case management conference; extraordinary circumstances)
- Couri, 801 A.2d 1134, as above (as above) (see Couri)