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GenoSource, LLC v. Inguran, LLC

United States District Court, N.D. Iowa, Cedar Rapids Division

May 22, 2019

GENOSOURCE, LLC, Plaintiff/Counter-Defendant,
v.
INGURAN, LLC, d/b/a SEXING TECHNOLOGIES, Defendant/Counter-Plaintiff. INGURAN, LLC, d/b/a SEXING TECHNOLOGIES, Third-Party Plaintiff,
v.
HAWKEYE BREEDER SERVICES, INC., Third-Party Defendant.

          MEMORANDUM OPINION AND ORDER

          C.J. WILLIAMS UNITED STATES DISTRICT JUDGE.

         TABLE OF CONTENTS

         I. BACKGROUND ........................................................................... 3

         II. SECTION 1653 AND RULE 15 .......................................................... 5

         III. JUDICIAL ADMISSIONS ................................................................ 14

         IV. RELATION BACK ........................................................................ 17

         V. CONCLUSION ............................................................................. 24

         This matter is before the Court on GenoSource, LLC's (“plaintiff”) Motion for Leave to File Amended Complaint (Doc. 112), and on plaintiff's amended Motion for Leave to File Amended Complaint (Doc. 143). Inguran, LLC, doing business as Sexing Technologies, timely resisted both motions (Docs. 117, 166), and plaintiff timely filed replies to both motions to amend (Docs. 130, 172). On April 11, 2019, the Court ruled on plaintiff's amended Motion for Leave to File Amended Complaint (Doc. 143) in part and held the motion in abeyance in part. GenoSource, LLC v. Inguran, LLC, No. 18-CV-113-CJW-KEM, 2019 WL 2041661 (N.D. Iowa Apr. 11, 2019). The Court also held plaintiff's first motion to amend (Doc. 112) in abeyance. Id. In that same Order, the Court set a briefing schedule to permit the parties to address certain issues. Id., at *7. Plaintiff and defendant timely submitted their supplemental briefs and accompanying exhibits in support. (Docs. 188, 190, 198, 199, 208).

         Also before the Court is the issue of whether diversity jurisdiction is proper in this case. The Court issued a Show Cause Order directing the parties to address whether the Court should dismiss this case for lack of jurisdiction. (Docs. 137, 161). The same briefs enumerated above also address the issues raised in the Show Cause Order. Defendant Hawkeye Breeder Services, Inc. (“Hawkeye”) was not required to file any pleadings in connection with the issues currently before the Court, and Hawkeye opted not to file any pleadings. On May 17, 2019, the Court heard oral argument on the pending motions to amend and on the Court's Show Cause Order. Each party to this action was represented at the hearing. For the following reasons, plaintiff's Motion for Leave to File Amended Complaint (Doc. 112) is denied, and plaintiff's amended Motion for Leave to File Amended Complaint (Doc. 143) is denied. Plaintiff's complaint (Doc.1) is dismissed. See People of United States ex. rel. Kelly v. Bibb, 255 F.2d 772 (7th Cir. 1958) (distinguishing between dismissing a complaint and dismissing an action).

         I. BACKGROUND

         The Court previously set out a brief summary of the proceedings in this case, as those proceedings pertain to the current motions and jurisdictional issue. A portion of that summary is repeated here.

Plaintiff filed its original complaint on October 25, 2018, which asserted a single count of conversion. (Doc. 1). In support of invoking the diversity jurisdiction of this Court, plaintiff pled that the parties were completely diverse and that the amount in controversy was in excess of $75, 000.00. (Id., at 2). In both its answer and amended answer, defendant “admit[ted] [p]laintiff's allegation of diversity jurisdiction solely for the purposes of this proceeding.” (Docs. 83, at 3; 113, at 3). The Court, however, sua sponte raised a concern about whether diversity jurisdiction exists. See White v. Nix, 43 F.3d 374, 376 (8th Cir. 1994) (holding that even when “the parties did not raise any jurisdictional issues [the] court is obligated to raise such jurisdictional issues if it perceives any” (internal quotation marks and citation omitted)). The Court required the parties to provide more information about their citizenship, and it appears that there is a legitimate question as to whether diversity jurisdiction exists.[1] (See Docs. 134, 136 (purporting to identify members of plaintiff's and defendant's companies that are citizens of the same state)). . . .
Plaintiff filed its first motion to amend, which seeks to add new common law claims, before any question about jurisdiction arose. (See Doc. 112-1). After the Court raised concerns about whether diversity jurisdiction exists, plaintiff filed an amended motion to amend its complaint in an effort to assert federal question jurisdiction. The amended motion seeks to add, among other claims, two claims based on federal statutes, and plaintiff seeks to invoke the Court's federal question jurisdiction based on the addition of the two federal claims. (Docs. 143, at 2; 143-1, at 3, 42-48).

GenoSource, 2019 WL 2041661, at *1 (footnote in original).

         In the Court's previous Order, the Court noted that “[p]laintiff's motions to amend are brought under Federal Rule of Civil Procedure 15(a)(2), ” but that “defendant's resistance to the plaintiff's amended motion is argued under both Rule 15 and Title 28, United States Code, Section 1653.” Id., at *2. In the previous Order, the Court stated that it would consider whether either Rule 15 or Section 1653 would permit plaintiff to amend its complaint. Id. The Court ultimately determined “that plaintiff cannot properly amend its complaint under Section 1653 to assert federal question jurisdiction based on the addition of the two new federal claims.” Id., at *5 (footnote omitted). The Court denied plaintiff's amended motion under Section 1653. Id.

         The Court proceeded, however, to consider whether plaintiff could properly amend its complaint under Rule 15. The Court found that plaintiff's second motion to amend should be granted on the merits under Rule 15(a)(2), but the Court held the motion in abeyance. In doing so, the Court stated as follows, with respect to the second motion:

It is unclear to the Court whether the amendments plaintiff seeks would relate back to the date of filing the initial complaint under Rule 15(c). If the amendments would relate back, perhaps those amendments would resolve any jurisdictional issues that may exist. If they would not relate back, the Court's jurisdiction to hear this case may be wholly lacking. The Court has set a briefing schedule to address the current jurisdictional issues, and the Court will defer ruling on plaintiff's amended motion under Rule 15 until after the parties file their briefs.

Id., at *7. The Court directed plaintiff and defendant to brief the issue of whether the amended complaint would relate back to the date of the original complaint under Rule 15(c), and the parties did so. The relation back issue is the only issue remaining to be considered under plaintiff's amended motion, and the Court will now address that issue, as well as the parties' arguments surrounding the Court's authority to rule, and the arguments raised in response to the Show Cause Order.

         II. SECTION 1653 AND RULE 15

         Defendant offers two separate arguments that address ruling under Rule 15. First, defendant argues that the Court lacks the authority to rule on plaintiff's motions to amend under Rule 15 because, defendant reasons, the Court is wholly without subject matter jurisdiction, which renders the Court incapable of taking any action other than dismissing the case. (Doc. 198, at 12-16). In support, defendant cites to numerous out of circuit cases that, defendant argues, stand for the proposition that a court cannot rule on a Rule 15 motion to amend if the Court lacks subject matter jurisdiction, even if the proposed amendments would cure the jurisdictional defect. Defendant does not, however, cite to any authority from the Eighth Circuit Court of Appeals to support that proposition.

         Defendant cites to only two Eighth Circuit cases in discussing the Court's authority to rule under Rule 15. The first, Associated Insurance Management Corp. v. Arkansas General Agency, Inc., 149 F.3d 794, 796-97 (8th Cir. 1998), is cited for the proposition that a “district court cannot retroactively create diversity jurisdiction if it did not exist when the complaint was filed.” (Doc. 198, at 13). Aside from the fact that, here, the Court is presented with a situation seeking to establish federal question jurisdiction, not diversity jurisdiction, Associated Insurance Management is not on point. That case resulted in dismissal because the Eighth Circuit found that the jurisdictional deficiency was not cured by permitting a non-diverse real party in interest to ratify the lawsuit under Rule 17(a) instead of remaining a party to the lawsuit. 149 F.3d at 797. That situation is markedly different from the situation in this case because plaintiff is not seeking to change the parties to the suit, but, rather, is seeking to change the basis for jurisdiction in this Court.

         Associated Insurance Management also did not address whether the district court had the authority to rule on the merits of the case. Finally, the holding in Associated Insurance Management was narrow and does not encompass the situation at issue here. The Eighth Circuit held that “[i]f diversity jurisdiction is lacking when a lawsuit is started . . . it cannot be created later when defendants use third-party practice to sue a nondiverse real party on their counterclaim.” Id. at 798 (citation omitted). Plaintiff is not seeking to use third-party practice to cure the jurisdictional deficiencies in this case. Associated Insurance Management is, thus, of no benefit in determining either the merits of the current issues, or in determining whether the Court has the authority to reach the merits of the issues currently before the Court.

         Next, defendant cites to Scottsdale Insurance Co. v. Universal Crop Protection Alliance, LLC, 620 F.3d 926, 931 (8th Cir. 2010), and Fenner v. Wyeth, 912 F.Supp.2d 795, 801 n.6 (E.D. Mo. 2012), as part of defendant's argument that jurisdiction cannot be created retroactively. (Doc. 198, at 13-14). Scottsdale addressed whether the amount-in-controversy requirement set forth in Title 28, United States Code, Section 1332(a) was satisfied and did not address a district court's authority to rule when subject matter jurisdiction is uncertain. Again, the Court notes that prohibiting the retroactive creation of jurisdiction does not necessarily equate to prohibiting consideration of a motion that could cure jurisdictional deficiencies, if granted. Scottsdale is, thus, not relevant to a determination of the Court's authority to rule.

         Fenner cites to the same provision in Scottsdale that the Court has rejected as being irrelevant. The cited portion of Fenner addresses facts specific to that case. Those facts are not implicated here. Although Fenner does go on to discuss the limited circumstances in which a jurisdictional defect can be cured, the discussion addresses the validity of a judgment when the jurisdictional defect has been cured by the time of final judgment. 912 F.Supp.2d at 802-03. This ...


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