                                                                                                                           Opinions of the United
2006 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


5-10-2006

S Freedman Co Inc v. Raab
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-1138




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                                              NOT PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT


                     No. 05-1138


       S. FREEDMAN AND COMPANY, INC.,

                                           Appellant

                          v.

    MARVIN RAAB, RAAB ENTERPRISES, INC.
   Formerly know as PHILADELPHIA FOODS, INC.

                          v.

                SUSAN FREEDMAN




    On Appeal from the United States District Court
             for the District of New Jersey
                 D.C. No. 04-cv-01119
      District Judge: Honorable Robert B. Kugler


      Submitted Under Third Circuit LAR 34.1(a)
                    May 9, 2006

Before: BARRY, SMITH and ALDISERT, Circuit Judges

                 (Filed May 10, 2006)


              OPINION OF THE COURT
ALDISERT, Circuit Judge.

       Appellant S. Freedman & Co., Inc. (“Freedco”) seeks review of the District

Court’s dismissal of its complaint under Rule 12(b)(1) of the Federal Rules of Civil

Procedure for lack of subject matter jurisdiction. It also seeks review of the denial of two

motions for reconsideration. Because we conclude that the District Court did not err in

determining that Freedco failed to adequately plead the existence of subject matter

jurisdiction, and that we lack jurisdiction to review the denial of the two motions for

reconsideration, we will affirm.

                                              I.

       The parties are familiar with the facts and proceedings before the District Court, so

we will only briefly revisit them here. Freedco filed a complaint against Appellees

Marvin Raab and Raab Enterprises, Inc., formerly known as Philadelphia Foods, Inc.

(collectively referred to as “Raab”), in the United States District Court for the District of

New Jersey on March 8, 2004. Jurisdiction was purportedly based on the diversity of the

parties under 28 U.S.C. § 1332(a).

       On November 24, 2004, less than a month before discovery was scheduled to end,

the District Court sua sponte questioned whether diversity jurisdiction existed. The

complaint alleged that:

       1.     Plaintiff, S. Freedman and Company, Inc. (“Freedco”), is a corporation
              organized and existing under the laws of Pennsylvania with a principal
              place of business at The Dorchester, Suite 205, 226 West Rittenhouse
              Square, Philadelphia, Pennsylvania 19103. Freedco is a citizen of
              Pennsylvania.

                                              2
                                        ****
       3.     Defendant Marvin Raab (“Raab”) is an individual with an address of
              429 Coolidge Road, Cherry Hill, New Jersey, 08002. Raab is a citizen
              of New Jersey.

       4.     Defendant, Raab Enterprises, Inc., formerly known as Philadelphia
              Foods, Inc. (“Philly Foods”) is a corporation organized and existing
              under the laws of the State of New Jersey with a place of business
              located at 210 Harvard Avenue, Westville, New Jersey 08083. Philly
              Foods is a citizen of New Jersey.
                                           ****
       6.     This Court has diversity jurisdiction over the instant matter pursuant to
              28 U.S.C. § 1332(a)(1) because the plaintiff and defendants are citizens
              of different states and the amount in controversy exceeds $75,000.00
              exclusive of costs and interest.

(Complaint, app. at 18-20 (emphasis added).)

       The Court accordingly issued an order (the “November 24, 2004 Order”) directing

Freedco to amend its complaint to state the location of “the principal place of business,”

rather than “a place of business” or “a principal place of business,” for each corporate

party. See 28 U.S.C. § 1332(c). The Order provided seven days for Freedco to make this

amendment.

       According to an affidavit filed with the District Court and Freedco’s

representations to this Court, Freedco never received the November 24, 2004 Order and,

therefore, did not comply with the Order’s directives. On December 10, 2004, the Court

issued an order (the “December 10, 2004 Order”) dismissing the complaint for lack of

jurisdiction. After learning of the dismissal from Raab’s counsel on December 15, 2004,

Freedco contacted the District Court via both phone and letter to determine the proper

course of action. On December 17, the Court responded that it “cannot advise [Freedco’s

                                              3
counsel] how to proceed.”

       On December 23, 2004, Freedco filed a motion to reconsider and vacate the

Court’s December 10, 2004 Order (“First Motion for Reconsideration”) and moved for

leave to file an amended complaint. Attached to the motion was an affidavit from its

attorney of record, Robert S. Levy, explaining the non-receipt of the November 24, 2004

Order. Apparently not realizing that a timely motion for reconsideration tolls the 30-day

time period for filing a notice of appeal, see Rule 4(a)(4), Federal Rules of Appellate

Procedure, Freedco also filed a notice of appeal of the District Court’s December 10,

2004 Order. In a January 18, 2005 order, this Court stayed the appeal pending disposition

of the First Motion for Reconsideration.

       By an order dated January 20, 2005 (the “January 20, 2005 Order”), the District

Court dismissed, without prejudice, the First Motion for Reconsideration, concluding that

the notice of appeal deprived it of jurisdiction to decide the motion. Freedco then filed a

second motion to reconsider and vacate the District Court’s January 20, 2005 Order

(“Second Motion for Reconsideration”). On August 2, 2005, the District Court, having

reconsidered whether the notice of appeal deprived it of jurisdiction, granted the Second

Motion for Reconsideration and vacated its January 20, 2005 Order. It proceeded,

however, to deny the First Motion for Reconsideration on the merits, concluding that it

“does not present any factual matters or controlling decisions that this Court overlooked

in dismissing the Complaint; rather Plaintiff merely presents reasons for why it did not

[c]omply with this Court’s Order[.]” (App. at 7.) This appeal followed.

                                             4
                                                II.

       The majority of Freedco’s arguments are dedicated to whether the District Court

exceeded the permissible bounds of discretion in denying the First Motion for

Reconsideration on the merits. Freedco contends that it presented a valid excuse for its

failure to comply with the November 24, 2004 Order and that the District Court should

have permitted it to make the minor amendment to the complaint.

       Unfortunately for Freedco, neither the January 20, 2005 Order nor the August 2,

2005 Order are properly before us. Freedco filed its notice of appeal on January 12,

2005, after the dismissal of the complaint but prior to the disposition of the First Motion

for Reconsideration. Rule 4(a)(4)(B)(i) of the Federal Rules of Appellate Procedure

provides that:

                 [i]f a party files a notice of appeal after the court announces or
                 enters a judgment – but before it disposes of any motion listed
                 in Rule 4(a)(4)(A) – the notice becomes effective to appeal a
                 judgment or order, in whole or in part, when the order disposing
                 of the last such remaining motion is entered.

       Freedco’s notice of appeal therefore became effective upon the adjudication of

Freedco’s motions for reconsideration. Such notice, however, does not encompass the

January 20 or August 2 motions for reconsideration. Rather, Freedco was required to file

a new notice of appeal or to amend the January 12, 2005 notice of appeal. As stated in

Rule 4(a)(4)(B)(ii):

                 A party intending to challenge an order disposing of any motion

                                                 5
               listed in Rule 4(a)(4)(A), or a judgment altered or amended upon
               such a motion, must file a notice of appeal, or an amended
               notice of appeal – in compliance with Rule 3(c) – within the
               time prescribed by this Rule measured from the entry of the
               order disposing of the last such remaining motion.

Rule 4(a)(4)(B)(ii), Federal Rules of Appellate Procedure (emphasis added).

         Here, Freedco never filed an amendment or a new notice of appeal. Our review is

therefore confined to the December 10, 2004 Order dismissing the complaint. See, e.g.,

United States v. McGlory, 202 F.3d 664, 668 (3d Cir. 2000) (holding that we lack

jurisdiction to review the denial of a motion for reconsideration where appellant did not

file a new notice of appeal or amend the previously filed notice of appeal); see also Union

Pac. R.R. v. Greentree Transp. Trucking Co., 293 F.3d 120, 126 (3d Cir. 2002).

                                              III.

         We have jurisdiction under 28 U.S.C. § 1291 to review the District Court’s

dismissal of the complaint for lack of subject matter jurisdiction. Our review is plenary.

Gould Electronics, Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). A district

court has a duty to raise doubts about its jurisdiction at any time, and the party asserting

jurisdiction “bears the burden of showing that the case is properly before the court at all

stages of the litigation.” Packard v. Provident Nat’l Bank, 994 F.2d 1039, 1045 (3d Cir.

1993).

         We agree with the District Court that Freedco has not met its burden of pleading

the diversity of the parties. Pursuant to 28 U.S.C. § 1332(c), for purposes of diversity

jurisdiction, a corporation is a citizen of both the state of its incorporation and the state in

                                               6
which it has its principal place of business. As the District Court observed, Freedco

alleged only that Raab Enterprises has “a place of business” in New Jersey, not that New

Jersey is the location of its “principal place of business.” Freedco also failed to allege

that its own principal place of business is in Pennsylvania, asserting only that it has “a

principal place of business” in Pennsylvania. See J & R Ice Cream Corp. v. California

Smoothie Licensing, 31 F.3d 1259, 1265 n.3 (3d Cir. 1994) (holding that a complaint

stating that defendant had “a” principal place of business in New Jersey left open the

possibility that it had “its” principal place of business in Florida, and thus did not properly

plead diversity jurisdiction). The basis of diversity jurisdiction was therefore not

apparent from the pleadings.

       Recognizing these deficiencies, Freedco contends that the last sentence of both

Paragraphs One and Four of the complaint – stating that “Freedco is a citizen of

Pennsylvania” and “Philly Foods is a citizen of New Jersey” – allege as a necessary

implication that Freedco’s principal place of business is in Pennsylvania and Philly

Foods’ principal place of business is in New Jersey. It also argues that the diversity of the

parties was “conclusively establishe[d]” by Raab’s answer to the complaint, in which it

admits the allegations in Paragraph Four.

       We disagree. It is well established that “the basis upon which jurisdiction depends

must be alleged affirmatively and distinctly and cannot ‘be established argumentatively or

by mere inference.’” 5 C. Wright & A. Miller, Federal Practice and Procedure § 1206, at

78-79 (1969 & Supp. 2005) (citations omitted); Thomas v. Board of Trustees, 195 U.S.

                                              7
207, 210 (1904) (holding that diversity jurisdiction, “or the facts upon which, in legal

intendment, it rests, must be distinctly and positively averred in the pleadings, or should

appear affirmatively and with equal distinctness in other parts of the record”); Joiner v.

Diamond M Drilling Co., 677 F.2d 1035, 1039 (5th Cir. 1982) (“In order to adequately

establish diversity jurisdiction, a complaint must set forth with specificity a corporate

party’s state of incorporation and its principal place of business.”). Freedco’s bald

allegations that the corporate parties are “citizens” of certain states are insufficient to

carry its burden of pleading the diversity of the parties. Nowhere in the complaint is the

word “citizen” defined with reference to 28 U.S.C. § 1332, and there is nothing to

indicate that it was being used as a term of art. The District Court therefore did not err in

concluding that the complaint fails to adequately set forth the requirements of diversity

jurisdiction, and it properly ordered Freedco to amend its complaint.

       The District Court also did not err in dismissing the complaint. Freedco never

responded to the November 24, 2004 Order to amend the complaint. Judging the District

Court’s actions at the time they were taken – that is, when Freedco failed to respond to

the Order and the Court was unaware that Freedco allegedly never received notice – the

District Court’s dismissal of the complaint was proper. See Rule 12(h)(3), Federal Rules

of Civil Procedure (“Whenever it appears by suggestion of the parties or otherwise that

the court lacks jurisdiction of the subject matter, the court shall dismiss the action.”).1


1
 We have repeatedly held that a district court has an obligation to provide the parties with
notice and an opportunity to be heard before dismissing a case for lack of jurisdiction.

                                               8
                                             IV.

       We have considered all contentions presented by the parties and conclude that no

further discussion is necessary. Although we sympathize with Freedco, whose complaint

could have been saved by minor editing, we must affirm the District Court’s dismissal for

lack of subject matter jurisdiction.




See, e.g., Neiderhiser v. Borough of Berwick, 840 F.2d 213, 216 n.6 (3d Cir. 1988). Here,
the District Court provided the requisite notice and opportunity to be heard; Freedco only
asserts that it did not receive notice. Unlike a district court’s failure to provide notice, a
party’s failure to receive notice does not affect the propriety of a dismissal. That Freedco
may have never received notice is a factual matter that should be raised in a motion for
reconsideration; it is not a proper basis for attacking the underlying order of dismissal on
appeal.

                                              9
