Opinion
Case No. 2:04-CV-00762 PGC.
December 9, 2004
ORDER DENYING DEFENDANT'S MOTION TO DISMISS AND GRANTING PLAINTIFF'S MOTION TO ALLOW LIMITED DISCOVERY
INTRODUCTION
This matter is before the court on the Defendant William Borghetti's Motion to Dismiss. Despite finding that there is no federal question jurisdiction, the court nonetheless denies Borghetti's Motion to Dismiss because of the possibility that the court has proper jurisdiction based on diversity of citizenship. Due to that possibility, the court grants Plaintiff Sungard SCT Inc.'s and Tyler Thatcher's (collectively "Sungard") request for leave to conduct limited discovery in an effort to better assess wether diversity jurisdiction indeed exists in this case.
ANALYSIS
On August 18, 2004, Sungard filed a complaint alleging a claim for declaratory judgment pursuant to 22 U.S.C. § 2201 et seq. and, through supplemental jurisdiction, a claim for tortious interference with contract. Since the Declaratory Judgment Act does not confer jurisdiction upon federal courts, the "power to issue declaratory judgment must lie in some independent basis of jurisdiction." Here, Sungard asserts that jurisdiction exists because there is both a federal question involved and there is diversity in citizenship among the plaintiffs and defendant.
Cardtoons, L.C. v. Major League Baseball Players Ass'n, 95 F.3d 959, 964 (10th Cir. 1996).
Federal question jurisdiction in this case turns on whether Sungard has sufficiently pleaded a federal question in its complaint that Borghetti may bring against it. For subject matter jurisdiction to exist because of a federal question, the complaint must contain a claim that arises under federal law. "Thus, federal question jurisdiction exists in a declaratory judgment action if the potential suit by the declaratory judgment defendant would arise under federal law."
28 U.S.C. § 1331.
Cardtoons, 95 F.3d at 964.
In supporting its motion, Borghetti submitted an affidavit claiming that he does not intend to bring any federal claims against Sungard and that the state claims he filed are proof that he has no interest in pursuing any federal claim. Responding to that argument, Sungard cites several cases that clearly hold that disputes do not become moot upon one party committing to never assert a federal claim if such an assertion is made "without a binding, judicially-enforceable agreement." This is because nothing forbids the defendant from later recanting the prior non-binding commitment and filing an action against the declaratory judgment plaintiff asserting claims arising under federal law. The court agrees. Nonetheless, the court still finds, based on the four-corners of the complaint, that Sungard has insufficiently pleaded, referenced, or even inferred a federal claim in its declaratory judgment request.
Household Bank v. JFS Group, 320 F.3d 1249, 1260 (11th Cir. 2003).
See id. at 1259-60.
As pointed out in Sungard's brief, the existence of federal question jurisdiction is governed by the "well-pleaded complaint rule," which provides that federal question is presented on the face of the plaintiff's properly-pleaded complaint. While the Tenth Circuit has held that "a motion to dismiss an action for lack of subject matter jurisdiction will be denied even though the allegation of jurisdiction is insufficient or entirely lacking if there are facts pleaded in the complaint from which jurisdiction may be inferred in essence and effect," the Supreme Court, speaking in the context of a declaratory judgment action, held that "a suggestion of one party that the other will or may set up a claim under the Constitution or laws of the United States does not make the suit one arising under that Constitution or those law."
See Garley v. Sandia Corp., 236 F.3d 1200, 1207 (10th Cir. 2001).
Mountain Fuel Supply Co. v. Johnson, 586 F.2d 1375, 1382 (10th Cir. 1978).
Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 672 (1950) (quoting Tennessee v. Union Planters' Bank, 152 U.S. 454, 464 (1894)).
Looking at the four-corners of Sungard's complaint, the only references to a federal claim are two bald assertions asking the court to determine "an actual, justiciable controversy between the parties concerning their respective rights and obligations under the . . . Merger and Escrow Agreements, the statutes or common laws of several states, the federal securities laws or regulations or any other federal or state laws, rules or regulations implicated by the Borghetti letters." Because there are no federal rules or regulations implicated in any of the letters sent by Borghetti, all that is left in Sungard's complaint and its supporting material is a reference to "federal securities laws or regulations or any other federal or state laws."
Complaint, ¶ 40.
Unlike the cases cited by Sungard in its brief, the complaint here does not specifically refer to a federal regulation or law that may be at issue. For example, the Eleventh Circuit found that federal question jurisdiction existed because plaintiff, in its complaint, alleged that the district court had subject matter jurisdiction "under federal law, including the federal Truth in Lending Act." The Tenth Circuit held that subject matter jurisdiction existed because the plaintiff's supporting documents referred to a specific governmental action — the contract dispute centered on a "relationship freeze" imposed by the federal government.
Household Bank, 320 F.3d at 1253 (emphasis added).
Mountain Fuel, 586 F.2d at 1384.
While each of these cases allowed subject matter jurisdiction to exist despite a lack of a ripe and actual federal claim, they each can be distinguished by what was alleged in the complaint or its supporting evidence. Here, unlike the cases referenced above, there is no specificity in the complaint as to what federal securities laws or regulations could be at issue in this case. To establish federal question jurisdiction, Sungard must do more than leave the court guessing as to which law or laws among a vast sea of regulations it anticipates might surface in its dispute with Borghetti. Consequently, because Sungard has not sufficiently pleaded a federal claim or even referenced a specific federal law which may be in dispute, the court finds that there is no federal claim at issue in this case and therefore, no subject matter jurisdiction because of federal question exists.
While the court finds that there is no federal question, the court nonetheless denies Borghetti's motion to dismiss and grants Sungard's request to conduct limited discovery with regard only to whether there is diversity of citizenship. More specifically, Sungard is entitled to conduct discovery during the next 30 days for the sole purpose of determining whether Borghetti is a Utah citizen for the purpose of establishing diversity jurisdiction. Furthermore, Sungard shall file, within forty-five (45) days of this order, a brief showing cause as to why the case should not be dismissed for failure to establish diversity jurisdiction.
CONCLUSION
The court finds that there is no federal claim or question allowing federal question jurisdiction. Nonetheless, the court denies Borghetti's motion to dismiss and grant Sungard's request for leave to conduct limited discovery to determine whether there is subject matter jurisdiction based on diversity of citizenship. The court orders Sungard to show cause within forty-five (45) days as to why the case should not be dismissed for failure to establish diversity jurisdiction.