934 F. Supp. 2d 827
E.D. Va.2013Background
- Harvard moves to dismiss under Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction.
- Plaintiffs Shore Bank and Hampton Roads Bankshares seek a declaratory judgment regarding the Allowance under Harvard’s Employment Agreement.
- Harvard’s Employment Agreement provides a 60-monthly-severance, equal payments totaling 2.99x base amount, triggered by a Change in Control.
- Hampton Roads Bankshares participated in TARP; a December 31, 2008 Letter conditioned compensation changes and prohibited golden parachute payments during CPP.
- Plaintiffs contend TARP prohibits the Allowance; Harvard contends the prohibition may be a defense or the Letter may amend the Agreement.
- Court dismisses for lack of independent basis for jurisdiction, finding no affirmative federal claim and no substantial federal question properly arising.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the DJ action has an independent basis for jurisdiction | Plaintiffs argue for federal question jurisdiction via TARP. | Harvard argues there is no independent basis; DJ is procedural only. | Lacks independent basis; DJ dismissed. |
| Whether a substantial federal question exists in the complaint | Complaint raises federal question by interpreting TARP. | No affirmative federal claim; federal question arises only as a defense. | Does not arise under federal law; no substantial federal question. |
| Whether Harvard’s threatened breach-of-contract claim could support jurisdiction | Breached claim would implicate federal issue via TARP; thus jurisdiction. | State-law contract claim; federal issue only defense; not enough for jurisdiction. | Not sufficient to support jurisdiction; state-law breach remains non-federal. |
| Whether a potential 12 U.S.C. § 5229 judicial-review action could support jurisdiction | Judicial review of Treasury position could bring in federal question. | §5229 action is speculative and not the reverse of the requested relief. | Not sufficient to support jurisdiction. |
Key Cases Cited
- Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308 (U.S. 2005) (substantial federal question required for arises under jurisdiction)
- Franchise Tax Bd. v. Construction Laborers Vacation Trust for California, 463 U.S. 1 (U.S. 1983) (federal question jurisdiction; defense cannot create jurisdiction)
- Columbia Gas Transmission Corp. v. Drain, 237 F.3d 366 (4th Cir. 2001) (well-pleaded complaint rule; declaratory action approach)
- Gunn v. Minton, 133 S. Ct. 1059 (U.S. 2013) (special and small category for arising-under federal questions)
- Merrell Dow Pharm., Inc. v. Thompson, 478 U.S. 804 (U.S. 1986) (narrow scope of federal question jurisdiction; depending on basis)