                                                                                                                           Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


11-8-2005

Capers v. Smith Barney
Precedential or Non-Precedential: Non-Precedential

Docket No. 05-2587




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                                                                 NOT PRECEDENTIAL

                        UNITED STATES COURT OF APPEALS
                             FOR THE THIRD CIRCUIT

                                       NO. 05-2587
                                    ________________

                              DR. AUGUSTUS CAPERS;
                            GERTRUDE CAPERS JTWROS,
                                           Appellants
                                        v.

                             SMITH BARNEY CITIGROUP
                       ____________________________________

                     On Appeal From the United States District Court
                               For the District of New Jersey
                                (D.C. Civ. No. 05-cv-01237)
                       District Judge: Honorable Faith S. Hochberg
                     _______________________________________

                       Submitted Under Third Circuit LAR 34.1(a)
                                  November 2, 2005

      Before: SLOVITER, SMITH AND VAN ANTWERPEN, CIRCUIT JUDGES

                                 (Filed November 8, 2005)


                               _______________________

                                      OPINION
                               _______________________

PER CURIAM

       Dr. Augustus Capers and Gertrude Capers appeal the order of the United States

District Court for the District of New Jersey, dismissing their complaint without prejudice

for lack of subject matter jurisdiction. We will affirm.
       On March 1, 2005, the Caperses filed a complaint in the United States District

Court for the District of New Jersey, naming “Smith Barney Citigroup” 1 (“Smith

Barney”) as the defendant. The complaint states that the action was “brought pursuant to

U.S.C.A. Title 15 Commerce & Trade §§ 77a to 77bbbb Securities & Trust Indentures,

Chapter 2A Domestic Securities.” (Complaint ¶1.) 2 The Caperses present references and

case citations alluding to, among other things, market prices of stocks, values of

securities, and damages awards. The sole factual allegation in the Caperses’ complaint,

under the heading “Complaint on a Promissory Note,” is that the “[d]efendant on or about

October 18, 2004, executed and delivered to plaintiff a promissory note,” noting that the

copy of the promissory note was attached as an exhibit. (Id. ¶8.) The exhibit consists of a

deposit receipt concerning 100 shares of Thermodynamics, Inc.3 The Capereses contend

that Smith Barney owes them “the amount of said note and interest,” (id. ¶9) and demand

judgment in the amount of $200,000,000.

       Concerning the subject matter jurisdiction of the District Court, the Caperses have

alleged as follows:




       1
        The appellee explains in its brief that Smith Barney is a division of Citigroup
Global Markets Inc., wholly-owned by Citigroup Financial Products, Inc., wholly-owned
by Citigroup Global Markets Holdings, Inc., wholly-owned by Citigroup, Inc.
       2
           The Caperses refer to the same citation in their brief on appeal.
       3
         In their brief on appeal, the Caperses reiterate this lone allegation as the factual
basis of the complaint. Appellants’ Brief at 2.

                                                2
          It is sufficient for subject-matter jurisdiction under this section that
          offers were made within United States without showing that they
          were accepted by actual sale or that alleged misrepresentations were
          in fact successful in inducing sale of securities by reliance thereon.
          Securities and Exchange Commission v. Gulf Intercontinental
          Finance Corp., S.D. Fla. 1963, 223 F. Supp. 987.

[sic] (Complaint ¶6.) By order entered March 11, 2005, the District Court directed the

Caperses to file a submission providing the basis for the court’s jurisdiction. The order

requested information regarding the citizenship of the parties and amount in controversy

if the action was based on diversity jurisdiction, and regarding the federal statute and

specific section providing for a private right of action if the action was based on a federal

question. The Caperses filed a reply, stating that the basis for jurisdiction was “already

stated in the complaint”; that the Caperses were “United States citizens” and Smith

Barney’s “legal dept. is located at 388 Greenwich Street, 16th Floor, New York, NY

10048”; that damages cannot yet be stated with precision; and that the statutory

provisions upon which federal question jurisdiction was based “are referenced in the

complaint.” (Response to March 11, 2005 Order.) The Caperses also cited Article III of

the United States Constitution. By order entered March 17, 2005, the District Court

directed the Caperses to show cause why the case should not be dismissed for failure to

comply with Rule 8(a) of the Federal Rules of Civil Procedure, requiring a short and plain

statement of the claim. In reply, the Caperses referred to the section of the complaint

titled “Complaint on a Promissory Note,” including paragraphs 8 and 9.

       Smith Barney filed a motion to dismiss the complaint under Rules 8(a), 9(b)&(g),

                                              3
and 12(b). By order entered April 20, 2005, the District Court dismissed the complaint

without prejudice, having determined that it lacked subject matter jurisdiction. The

District Court deemed Smith Barney’s motion to be moot.

       The Capereses appeal. We have appellate jurisdiction under 28 U.S.C. § 1291.4

Our review of the District Court’s dismissal for lack of subject matter jurisdiction is

plenary. See Dresser Indus., Inc. v. Underwriter’s at Lloyd’s of London, 106 F.3d 494,

496 (3d Cir. 1997). We may affirm the District Court on any ground supported by the

record. Tourscher v. McCullough, 184 F.3d 236, 240 (3rd Cir. 1999).

       On appeal, the Caperses do not contend that their complaint was premised on

diversity jurisdiction under 28 U.S.C. § 1332. Rather, despite their characterization of the

action as a “complaint on a promissory note,” it appears that they invoke federal securities

statutes as the basis for federal question jurisdiction under 28 U.S.C. § 1331. However,

even if the District Court had subject matter jurisdiction, we conclude that the complaint

does not comply with Rule 8(a). Despite the Caperses’ insistence that the allegations

contained in paragraphs 8 and 9 (noted above) comply with Rule 8(a), we discern nothing

in the complaint that qualifies as a short and plain statement of the claim that shows that




       4
         In Borelli v. City of Reading, 532 F.2d 950, 951-52 (3d Cir. 1976) (per curiam),
this Court, noting the general rule that an order dismissing a complaint without prejudice
is not appealable, stated that “[o]nly if the plaintiff cannot amend or declares his intention
to stand on his complaint does the order become final and appealable.” In light of the
Caperses’ responses to the District Court’s March 2005 orders, we conclude that the
Caperses have declared their intention to stand on their complaint.

                                              4
the Caperses are entitled to relief. For example, the complaint is devoid of any reference

to any transaction regarding securities of Thermodynamics, or to any wrongdoing by

Smith Barney concerning that transaction. There is no explanation or basis given for the

allegation that Smith Barney owes the Caperses “the amount of said note and interest.”

Upon careful review of the record and the parties’ briefs on appeal, we conclude that the

District Court did not err in dismissing the complaint without prejudice.

       Accordingly, we will affirm the District Court’s judgment.




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