The plaintiff, General Railway Signal Company (“General Railway”), brought an interpleader action in district court asking the court to decide which of two claimants, James P. Corcoran, the Superintendent of Insurance of the State of New York (“Cor-coran”) and Liquidator for American Fidelity Fire Insurance Company (“AFFI”), or Susan S. Engeleiter, the Administrator of the United States Small Business Administration (“SBA”), is entitled to the interpled fund. The fund consists of $1,070,000 that an Illinois state court previously decided General Railway owed to the Superintendent. Plaintiff asserted subject matter jurisdiction under the federal interpleader statute, 28 U.S.C. § 1335, and asked the
The issue before this Court is whether jurisdiction was properly asserted under Section 1335 so as to support the entry of an injunction under Section 2361. The Superintendent appeals two orders denying his motions to vacate the temporary restraining order.- Section 1335 requires complete diversity amongst at least two claimants in the interpleader action. In the Superintendent’s view, no diversity exists between the two claimants in this case, the SBA and the Superintendent, because the SBA, as an agency of the United States, is a citizen of no state and therefore cannot be sued in diversity. We agree that this case cannot properly be brought under Section 1335. Because the plaintiff must meet the requirements of Section 1335 to obtain an injunction under Section 2361, we vacate the injunction entered by the district court.
I.
The underlying facts are easily stated and are not disputed by the parties for the purposes of this appeal. In 1981, AFFI filed suit against General Railway in Illinois state court, claiming that General Railway had breached a contract with Transit Systems Technology, Inc. (“Transtec”). This breach caused AFFI, as surety on two performance bonds given by Transtec and issued in favor of Transtec’s clients, to pay $803,500 to Transtec’s clients. AFFI sought in state court to recover from General Railway the amounts AFFI had paid to Transtec’s clients.
The trial court, after a jury verdict in favor of AFFI, entered judgment for AFFI on February 17, 1987, in the amount of $827,047 plus post-judgment interest. The Appellate Court of Illinois affirmed the judgment on June 9, 1989. American Fidelity Fire Ins. Co. v. General Railway Signal Co.,
The SBA had entered into Surety Bond Guarantee Agreements with AFFI in connection with the performance bonds issued by Transtec. In these contracts, the SBA agreed to reimburse AFFI for portions of payments made on the Transtec performance bonds. Under the Surety Bond Guarantee Agreements, the SBA paid $732,872 to AFFI to reimburse AFFI for its payments to Transtec’s clients. The agreements also obligated AFFI to pursue all possible sources of recovery. They entitled the SBA to a pro rata share of the “net proceeds” of any recovery “within 90 days of actual receipt by the Surety.”
Before the Superintendent could collect his judgment from General Railway, the SBA notified General Railway that it was claiming the proceeds of the Illinois state court judgment under its Surety Bond Agreements with AFFI. General Railway filed this interpleader action in federal court on December 19, 1989, asserting that it was subject to multiple liability on the same funds. The sole basis of subject matter jurisdiction identified in the complaint was 28 U.S.C. § 1335. General Railway interpled the SBA and the Superintendent, who had been named liquidator of AFFI after it became insolvent in 1985. General Railway posted a bond of $1,070,000. On the same day it filed this claim, it invoked Section 2361 to obtain an order enjoining the Superintendent from trying to collect the Illinois state court judgment.
The Superintendent appeals from two orders of the district court, dated March 21, 1990,
II.
The district court entered its injunction against the Superintendent under Section 2361. That section provides:
In any civil action of interpleader or in the nature of interpleader under section1335 of this title, a district court may issue its process for all claimants and enter its order restraining them from instituting or prosecuting any proceeding in any State or United States court affecting the property, instrument, or obligation involved in the interpleader action until further order of the court. 28 U.S.C. § 2361.
Section 2361 enables a plaintiff meeting the requirements of Section 1335 to obtain a restraining order without following the procedures set forth in Fed.R.Civ.P. 65, which normally governs the issuance of injunctive relief. See Fed.R.Civ.P. 65(e) (“These rules do not modify * * * the provisions of Title 28, U.S.C., § 2361.”). Section 1335 confers subject matter jurisdiction over an interpleader action when the amount in controversy is $500 or more and the case involves “two or more adverse claimants of diverse citizenship as defined in section 1332 of this title_” 28 U.S.C. § 1335.
The injunction entered by the district court must be vacated because the requirements of Section 1335 have not been met. Susan Engeleiter, who is named as the defendant in her official capacity as administrator of the SBA, is a citizen of no state for diversity purposes.
The parties agree that the United States is not a citizen for diversity purposes, Lummis v. White,
The question is whether this suit, which names agency administrator Susan Engeleiter as defendant rather than the SBA, is equivalent to a suit against the agency or the United States. General Railway cites Trans-Bay Engineers & Builders, Inc. v. Hills,
Trans-Bay itself is devoid of any reasoning which might justify viewing a suit against an agency administrator in her official capacity differently than a suit against the agency itself for diversity purposes. Plaintiff propounds a theory for making-such a distinction. 15 U.S.C. § 634(b)(1) provides that “the Administrator may * * * sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court.” Plaintiff believes that the statute singles out the Administrator as the prospective litigant to emphasize the “unique independence” (Br. at 4) of the administrator of the SBA, as opposed to administrators of other agencies. Because the Administrator is in
We decline to interpret Section 634(b)(1), which waives sovereign immunity and establishes federal question jurisdiction over contract suits brought by and against the Administrator,
The notion in Trans-Bay that “[f]or diversity purposes, the Secretary’s residence is properly found in Washington, D.C.,”
Neither of the cases upon which Trans-Bay ultimately relies speaks to the question of whether an agency administrator is a resident of a state for diversity purposes. Questions of service of process and venue are obviously distinct from that of proper subject matter jurisdiction. Seven Oaks holds only that if subject matter jurisdiction is otherwise established, the administrator must be amenable to suit in some federal district. Garden Homes I stands for the proposition that if subject matter jurisdiction and venue are proper, the administrator must be said to reside in some state so that she can be reached in service of process.
We decline to distinguish agencies from their administrators for the purpose of determining diversity jurisdiction. The Trans-Bay case puts forth no reason to consider an agency administrator a resident of the District of Columbia for diversity purposes. In addition, the holding itself mistakenly relies on cases which involve different issues of venue and service of process. The better view is that a suit
Since we hold that the SBA is not a resident of the District of Columbia for diversity purposes, there is no diversity between the SBA and the Superintendent, who is a citizen of New York.
The interpleader action is not necessarily over, however. General Railway rightly points out that even if the federal inter-pleader statute is unavailable, it can alternatively pursue its interpleader action under Fed.R.Civ.P. 22(1). Rule 22(1) provides a procedural framework for interpleader actions, but it confers no subject matter jurisdiction on federal courts. Gelfgren v. Republic Nat’l Life Ins. Co.,
III.
Ordinarily, “jurisdiction may not be sustained on a theory that the plaintiff has not advanced.” Merrell Dow Pharmaceuticals, Inc. v. Thompson,
It is not necessary to look beyond the first basis for federal question jurisdiction advanced by General Railway, since it provides a valid ground for the exercise of federal jurisdiction. 15 U.S.C. § 634(b)(1) creates specific federal question jurisdiction over contract claims against the SBA.
may sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy_ 15 U.S.C. § 634(b)(1).
A “sue and be sued” clause is not necessarily more than a waiver of sovereign immunity. J.C. Driskill, Inc. v. Abdnor,
We align ourselves with the Circuits that have previously considered the question. Section 634(b)(1) is most reasonably read to create federal question jurisdiction over contract claims against the SBA because of the interaction of Section 634(b)(1) with a provision of the Tucker Act, 28 U.S.C. § 1346(a)(2). Section 1346(a)(2) gives district courts concurrent jurisdiction with the Court of Claims over civil actions against the United States, not exceeding $10,000 in amount and founded upon any express or implied contract. If Section 634(b)(1) were not interpreted to grant jurisdiction over similar cases in which the amount in controversy was over $10,000, suits for over $10,000 could be brought only in state courts or the Court of Claims, while suits in which smaller amounts were at stake could be brought in any federal court. We resist such an anomalous result and hold that Section 634(b)(1) extends federal jurisdiction over contract actions against the SBA for money damages in excess of $10,-000.
Because Section 634(b)(1) confers subject matter jurisdiction over this case,
Plaintiff undoubtedly will seek another injunction to prevent the Superintendent from collecting his Illinois state court judgment against General Railway. We have ruled that Section 2361, authorizing the entry of restraining orders in Section 1335 actions, is unavailable to the plaintiff. See discussion supra at 705. As such, any injunction desired by General Railway must be entered only after compliance with the procedures set out in Rule 65. Among other things, this will require that notice be given to defendants before any preliminary injunction is ordered and that the court set forth reasons for granting injunctive relief.
If plaintiff is otherwise qualified for injunctive relief, the Anti-Injunction Act presents no barrier to an injunction sought by General Railway in a Rule 22(1) inter-
“A court of the United States may not grant an injunction to stay proceedings in a State court except as expressly authorized by Act of Congress, or where necessary in aid of its jurisdiction, or to protect or effectuate its judgments.” 28 U.S.C. § 2283.
The Anti-Injunction Act establishes a general rule that “[ejach [state and federal] court is free to proceed in its own way and in its own time.” Kline v. Burke Constr. Co.,
A federal court presiding over an inter-pleader action may stay pending state court proceedings involving the same inter-pled fund under the “necessary in aid of its jurisdiction” exception to the Anti-Injunction Act. As Judge Skelly Wright noted in Pan American Fire & Casualty Co. v. Revere,
Usually interpleader will not be really effective unless all claimants are brought before the same court in one proceeding and restricted to that single forum in the assertion of their claims. To accomplish that end, * * * it is of course essential that the interpleader court enjoin the institution or prosecution of other suits on the same subject matter elsewhere. Id. at 483.
Judge Wright’s reasoning has garnered the support of commentators. See, e.g., 3A Moore’s Federal Practice, ¶ 22.04(3) (1987) (All Writs Act should be construed to permit injunction of state court proceedings in Rule 22 interpleader actions). If the district court finds that effective adjudication of General Railway’s interpleader claim cannot proceed unless the Superintendent is prevented from collecting the Illinois state court judgment, General Railway may obtain the injunction it seeks, provided that Rule 65 requirements are met.
IV.
At least one basis for exercising federal jurisdiction over this interpleader action exists, and the foregoing supplies guidance for future proceedings at the district court level. One further issue deserves comment, however. Even if the district court has jurisdiction over the interpleader action, it may be appropriate in the circumstances presented for the district court to abstain from adjudicating the issues presented.
After this appeal was filed, the district court considered and denied a motion for summary judgment filed by the Superintendent.
“Abstention from the exercise of federal jurisdiction is the exception, not the rule.” Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp.,
Though appellate courts are free to raise and resolve the abstention issue sua sponte,
One issue needing attention is whether the questions presented are those of federal or state law. This case involves questions of contract interpretation which are governed by state law. Plaintiff also has alluded to possible federal law issues, including the relevance of a statute setting a priority for claims made by the U.S. government, 31 U.S.C. § 3713. The existence of federal law questions tends to make abstention less appropriate, see Levy,
Finally, the fact that this case is an interpleader action should not automatically preclude the district court from abstaining. One could argue that a federal court action in which the bankrupt insurer is interpled is less intrusive on the state liquidation proceedings than a direct claim against the assets of the insurer. In a federal interpleader action the Superintendent may be only one of several claimants. If the court decides in such a case that the Superintendent is not entitled to the fund, it could be said that the interests of the defunct insurer were never threatened by the federal court action since the insurer was never entitled to the funds in the first place. In other words, it seems that an interpleader action does not necessarily impinge upon the liquidation proceeding because it does not involve taking an existing asset of the insurer. Instead, it offers the Superintendent the possibility of obtaining an asset which is not yet the insurer’s.
We are doubtful that any distinction between existing assets of the insurance company, over which litigation must be carried out in a state-created liquidation process, and possible claims of the company to assets in the hands of others, over which litigation can proceed in any federal district court, can be supported. The Superintendent is empowered to collect as well as distribute assets of the defunct insurance company. As was noted in Corcoran v. Ardra,
The extent to which the Superintendent is able to collect thus affects the degree to which the insolvent insurer’s estate will have assets sufficient to satisfy the claims of its creditors.842 F.2d at 37 (emphasis supplied).
To deprive the Superintendent of the power to have his claims against others litigated in the New York liquidation proceeding would prevent the Superintendent from executing half of his job.
Also, because this case is not a typical interpleader action, there is a stronger rationale for abstention. Ordinarily in an interpleader case, the court is deciding whether to award the fund directly to one claimant or to the other. Here there is a third possibility: the SBA may be entitled to the fund, but only after it becomes an asset of the insurer. The Surety Bond
If the other Burford factors counsel abstention, the fact that this case proceeds in interpleader should not prevent the Superintendent from adjudicating the SBA’s claim in New York. The Superintendent has never alleged that the SBA is not entitled to any portion of the recovery. He asserts only that any claim made by the SBA should be adjudicated in the New York liquidation proceeding. The Superintendent also never has suggested that he will refuse to pay the SBA under the Surety Bond Guaranty Agreements. The SBA, for its part, apparently has no objection to a state court forum. The SBA did not remove this case to federal court, as it could have under 28 U.S.C. § 1442(a). Like the Superintendent, it asserted in its answer to the interpleader complaint that there was no basis for an exercise of federal jurisdiction over this controversy.
The resolution of the abstention issue awaits reconsideration by the district court, perhaps after further briefing by the parties. We note that should the court decide that abstention is proper, it can choose either to dismiss the case outright or stay the federal proceeding so as to preserve the court’s ability to resolve any federal law issues which are not addressed by the state court. See In re Special March 1981 Grand Jury,
V.
For the foregoing reasons, the orders denying James P. Corcoran’s motions to vacate the restraining order and dissolve the injunction entered by the district court are reversed. The injunction is vacated, and the case is remanded for further proceedings consistent with this opinion.
Notes
. The SBA itself does not assert that federal jurisdiction was proper in this case. In its answer to General Railway’s complaint, it alleged as an affirmative defense that the district court lacked subject matter jurisdiction over the inter-pleader action.
. See discussion infra at 706.
. Plaintiff suggests that the Superintendent also cannot be a citizen for diversity purposes because he is a New York state official. States cannot be sued as citizens in diversity. Moor v. County of Alameda,
. Because plaintiff relied improperly on Section 1335 to bring this interpleader action, the issue of whether the plaintiff met the bond-posting requirements of Section 1335 becomes moot.
.See 5 C. Wright & A. Miller, Federal Practice and Procedure, § 1209 (2d ed. 1990), in which the authors distinguish general federal question jurisdiction from specific federal question cases. General federal jurisdiction exists over cases "arising under” the Constitution, laws, or treaties of the United States. 28 U.S.C. § 1331. Until 1980, Section 1331 required that the amount in controversy in a general federal question case be more than $10,000. Specific federal question cases are cases in which jurisdiction is based on special statutes dealing with particular subjects. Generally, statutes conferring specific federal question jurisdiction were drafted so as to eliminate any amount in controversy requirement.
. Section 634(b)(1) only technically extends federal question jurisdiction to the SBA's dispute with the Superintendent. General Railway asserts no federal claim against the SBA or the Superintendent. In the context of interpleader actions, however, "federal question jurisdiction exists if such jurisdiction would have existed in a coercive action by the defendant." Bell & Beckwith v. United States,
. General Railway argued before this Court that additional federal questions are presented by the case, making Section 1331 jurisdiction appropriate. These arguments were made only in a cursory fashion. General Railway may allege Section 1331 jurisdiction in its amended complaint if it wishes, and we leave it to the district court to determine if jurisdiction is properly stated under the general federal question statute in addition to Section 634(b)(1).
. The Anti-Injunction Act is not at issue when an injunction is issued pursuant to Section 2361. That statute expressly authorizes injunctions to stay state court proceedings.
. This motion was not brought to the attention of this Court by either party on brief or at oral argument. The district court surprisingly did not stay proceedings in the district court pending the outcome of this appeal. The jurisdictional problem should be resolved by the district judge before proceeding further.
. See Burford v. Sun Oil Co.,
. The abstention issue was only mentioned in passing by the appellant (Br. at 24-25). The parties focussed their energies on arguing the appropriateness of granting full faith and credit to a New York Supreme Court order enjoining all possible claimants from instituting or pursuing any claims against the insurance company except by way of the liquidation proceedings. A full faith and credit analysis has been applied to liquidation orders of the kind at issue here. See Superintendent of Insurance v. Baker & Hostetler,
