Opinion
22-CV-2088 (GRB)(ARL)
2022-04-22
Matthew PROMAN, O/B/O the M/Y "EASTBOUND AND DOWN", A 2006 Azimut Benetti manufactured motorized 69.5’ yacht, her boats, engines, tackle, equipment, apparel, furnishings, freights, appurtenances, and all fixtures and other necessaries there unto appertaining and belonging to the vessel, in rem, Petitioner, v. GATSBY YACHT GROUP, LLC, Respondent.
Matthew Proman, Pro Se. Steven D. DiLibero, DiLibero & Associates, Providence, RI, for Respondent.
Matthew Proman, Pro Se.
Steven D. DiLibero, DiLibero & Associates, Providence, RI, for Respondent.
MEMORANDUM & ORDER
GARY R. BROWN, United States District Judge:
In the beginning, it seemed simple enough. In 2018, Gatsby Yacht Group, LLC ("Gatsby") invoked this Court's in rem admiralty jurisdiction by filing a mercifully short, three-page complaint, alleging that it had performed $127,000 in repairs to a vessel called the "M/Y ‘East Bound and Down’ " for which the owner, Matthew Proman had not paid. See Gatsby v. M/Y "East Bound and Down," 18-CV-4242 (GRB) ("Gatsby I "), DE 1. A tsunami of litigation ensued – including rampant ad hominin attacks, repeated "emergency" motions, serial applications for sanctions, injunctions and orders to show cause, and even a Second Circuit appeal – that could well serve as a case study in litigative excess.
After nearly four years of unrestrained conflict, the case resolved. In March 2021, the parties reached a binding, voluntary settlement before Magistrate Judge Lindsay and an order of dismissal was prompted entered by the Court. Gatsby I , Electronic Orders dated March 22, 2021, April 15, 2021, June 4, 2021. Gatsby immediately launched an unrelenting assault upon the settlement, starting with a letter motion baldly stating that "settlement has not been reached," even though that same attorney expressly consented to the settlement on behalf of his clients. Compare DE 159 with DE 160 at 27. The Court rejected this effort in a detailed order which included a review of the record. Gatsby I , Electronic Order dated June 4, 2021. Cross-motions to compel and for enforcement of the settlement followed, DE 161, 162, neither of which could be resolved before Gatsby filed an appeal of the Court's dismissal order to the Second Circuit which, months later, was voluntarily dismissed. Gatsby I , DE 163, 165. The appeal was voluntarily dismissed after the parties reaffirmed the settlement. DE 1-2 at 6.
This case, ironically, has outlasted the seemingly interminable Gilligan's Island television series – similarly centered upon a broken-down yacht – which originally ran three seasons. Like that middling production, the continued repetition of this dispute proves humorless and unwelcome.
Next, Proman filed another motion to enforce the settlement via Order to Show Cause, a procedural mechanism that had become de rigueur in this case. After review, the Court – in a futile attempt to conserve resources and without requiring a response from Gatsby – entered the following order:
ORDER denying Motion for Order to Show Cause. "Enforcement of [a] settlement agreement ... whether through award of damages or decree of specific performance ... requires its own basis for jurisdiction." Kokkonen v. Guardian Life Ins. Co. , 511 U.S. 375, 378 [114 S.Ct. 1673, 128 L.Ed.2d 391] (1994). "Breach of contract claims are typically a matter for state courts, unless the district court retains ancillary jurisdiction over the settlement agreement." Id. at 382 . In order to retain jurisdiction over the enforcement of a settlement agreement, "a district court's order of dismissal must either (1) expressly retain jurisdiction over the settlement agreement, or (2) incorporate the terms of the settlement agreement in the order." Hendrickson v. United States, 791 F.3d 354, 358 (2d Cir. 2015). The Court has neither expressly retained jurisdiction over the parties’ settlement nor incorporated the terms of the settlement agreement in an order. Accordingly, the Order to Show Cause filed on behalf of Defendant for Enforcement of the Parties’ Settlement is hereby denied.
Gatsby I , Electronic Order dated March 10, 2022 (emphasis added).
Proman subsequently filed an action seeking to enforce certain terms of the settlement in the New York State Supreme Court, Nassau County. DE 1-2. That action appears to seek solely the release of certain liens (one of which was issued by a firm not party to this suit) on the vessel to perfect the settlement – implying that the funds to pay the settlement (some of which had been paid into court) have already been disbursed. Id. The state court set a hearing for April 26, 2022. Id. Rather than proceeding, counsel for Gatsby removed the state action to this Court, purportedly invoking diversity jurisdiction.
DISCUSSION
"Where, as here, jurisdiction is asserted by a defendant in a removal petition, it follows that the defendant has the burden of establishing that removal is proper." United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Props. Meriden Square, Inc. , 30 F.3d 298, 301 (2d Cir. 1994). Moreover, removal procedures are to be strictly construed, with doubts resolved against removability. Taylor v. Medtronic, Inc. , 15 F.4th 148, 150 (2d Cir. 2021).
Here, Gatsby predicates its removal petition on propositions which range from dubious to overtly false. First, Gatsby's counsel has the temerity to assert that the Court "previously retained jurisdiction over this settlement." DE 1 at 4. This assertion, shockingly, was unequivocally rejected by the Court just over one month ago. Gatsby I , Electronic Order dated March 10, 2022 ("The Court has neither expressly retained jurisdiction over the parties’ settlement nor incorporated the terms of the settlement agreement in an order."). Thus, absent a demonstration of some ancillary basis for jurisdiction, under the Supreme Court's decision in Kokkonen, supra , the Court lacks jurisdiction to enforce the settlement.
Thus, respondent's petition must rest on a competent demonstration of diversity jurisdiction. Respondent first claims complete diversity because Proman is domiciled in New York, while it asserts that Gatsby Yacht Group "is a citizen of Rhode Island." DE 1 at 2. In the petition, Gatsby recognizes the principle that, as an LLC, it "takes the citizenship of all of its members." Platinum-Montaur Life Scis., LLC v. Navidea Biopharmaceuticals, Inc. , 943 F.3d 613, 615 (2d Cir. 2019). Yet nowhere in its petition does Gatsby provide the citizenship of its members, instead seemingly basing its citizenship on its place of incorporation and principal place of business. Id. ; 250 Lake Ave. Assocs., LLC v. Erie Ins. Co. , 281 F. Supp. 3d 335, 341 (W.D.N.Y. 2017) ("Whether or not Plaintiff maintains its principal place of business in New York State is irrelevant to the diversity inquiry for an LLC"). Thus, Gatsby failed to adequately demonstrate complete diversity. Platinum-Montaur Life Scis., LLC , 943 F.3d at 615 (remanding for further proceedings where "notice of removal did not fully specify Platinum-Montaur's citizenship.").
While not invoked in its petition, the removal may not be based upon admiralty jurisdiction. "[U]nder the generally accepted understanding of the ‘saving to suitors’ clause, admiralty and maritime cases filed in state court are not removable by virtue of district courts’ admiralty jurisdiction; rather, such cases require an independent basis for federal jurisdiction, i.e., diversity or federal question jurisdiction." Margaritis v. Mayo , 2021 WL 3472695, at *3 (E.D.N.Y. Aug. 6, 2021).
While that failing, standing alone, would generally warrant the grant of leave to amend the removal petition, 250 Lake Ave. Assocs., LLC , 281 F. Supp. 3d at 341 ("[w]hen diversity ... is defectively alleged, courts typically permit the removing party to amend its notice of removal"), several factors counsel against such an exercise. Equitably, the timing of Gatsby's removal, which seemed designed to defeat a state court's order to show cause, along with the overly contentious history of these proceedings, raise issues of comity and squandering of resources that are difficult to ignore. Equally problematic are Gatsby's false statements about this Court's orders, discussed above. Under other circumstances, the Court would consider striking the removal petition as a sanction for counsel's gross misconduct.
However, that issue need not be reached, as the petition is fatally flawed with respect to the jurisdictional minimum. In the context of removal, the respondent has the burden of proving that it appears to "a reasonable probability that the claim is in excess of the statutory jurisdictional amount." Mehlenbacher v. Akzo Nobel Salt, Inc. , 216 F.3d 291, 296 (2d Cir. 2000) ; Hicks v. Leslie Feely Fine Art, LLC , 2021 WL 982298, at *4 (S.D.N.Y. Mar. 16, 2021) ("In order to invoke diversity jurisdiction under 28 U.S.C. § 1332, a [party] must demonstrate to a ‘reasonable probability that the claim is in excess of the statutory jurisdictional amount’ of $75,000.").
Here, the petition proves woefully inadequate. Gatsby's entire showing regarding the jurisdictional minimum consists of the following statement:
The amount in controversy meets the jurisdictional requirements, as Plaintiffs are seeking to enforce a settlement in the amount of $100,000. Additionally, the lien in question that Plaintiff is basically demanding Defendant to pay is in excess to [sic] $150,000.
DE 1 at 3. The statement regarding "the lien in question that Plaintiff is basically demanding Defendant to pay is in excess to $150,000" is as untrue as it is confusing. The state court filing annexed to the petition states the following:
The principal terms of the settlement were:
(a) Respondent would receive the sum of $100,000 (inclusive of a $75,000 already on deposit with the Court) to be distributed amongst Respondent and any other claimant who had claims as a result of the Federal Court Action; (b) the Vessel would be released to Petitioner Proman free and clear of any liens filed as a result of the Federal Court Action.
DE 1-2 at 6. Indeed, in seeking a conference in this matter, counsel for Proman clarified that his client has a buyer for the boat, and that the state action only seeks the "ministerial act" of providing the releases so that the sale can be executed. DE 6 at 2. Review of the exchanges between counsel, annexed to the petition, suggest that the dispute revolves around the release of the third-party lien and the responsibility for the costs incurred, which is well below the jurisdictional minimum. DE 1-2 at 26-29. Gatsby's counsel appears to confirm this, summarily describing the nature of the controversy as follows: "Case settled in USDC Eastern New York, Plaintiff demanding Defendant release a lien that is not their own and is not a party to the original action." DE 1-1.
Thus, Gatsby has failed to adequately plead diversity jurisdiction, both due to its failure to allege its citizenship as well as its failure to demonstrate that the case meets the jurisdictional minimum. Therefore, the case must be remanded pursuant to 28 U.S.C. § 1447.