FTSS Korea v. First Technology Safety Systems, Inc.

254 F.R.D. 78, 2008 U.S. Dist. LEXIS 84232, 2008 WL 4648279
CourtDistrict Court, E.D. Michigan
DecidedOctober 20, 2008
DocketNo. 07-15366
StatusPublished
Cited by1 cases

This text of 254 F.R.D. 78 (FTSS Korea v. First Technology Safety Systems, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Michigan primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
FTSS Korea v. First Technology Safety Systems, Inc., 254 F.R.D. 78, 2008 U.S. Dist. LEXIS 84232, 2008 WL 4648279 (E.D. Mich. 2008).

Opinion

OPINION AND ORDER GRANTING MOTION TO DISMISS WITHOUT PREJUDICE AND GRANTING IN PART DEFENDANT’S MOTION FOR ATTORNEY’S FEES

DAVID M. LAWSON, District Judge.

The plaintiff commenced this action for breach of contract alleging that it is a corporation formed under the laws of the Republic of Korea by one Ken Kim, and invoked this Court’s diversity jurisdiction under 28 U.S.C. § 1332(a)(2). After the defendant had answered the complaint, and during discovery, which included the translation of several documents from Korean to English, counsel for the plaintiff learned that Mr. Kim’s company was not a corporation at all, but rather, Kim operated his business as a sole proprietorship. Because Kim is an American citizen but has no domicile in the United States, the plaintiff filed a motion for voluntary dismissal under Federal Rule of Civil Procedure 41(a)(2) for want of subject-matter jurisdiction. The defendant does not dispute the argument that the case cannot proceed in this Court, but the defendant seeks an award of attorney’s fees as a condition of the dismissal and has filed its own motion to that effect.

The plaintiff is correct that the Court does not have subject-matter jurisdiction over the breach of contract action. “In order to be a citizen of a State within the meaning of the diversity statute, a natural person must both be a citizen of the United States and be domiciled within the State.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989). Stateless citizens, such as Mr. Kim, cannot bring an action in federal court under the diversity statute. See Coury v. Prot, 85 F.3d 244, 248 (5th Cir.1996) (holding that “[a]n American national, living abroad, cannot sue or be sued in federal court under diversity jurisdiction, 28 U.S.C. § 1332, unless that party is a citizen, i.e. domiciled, in a particular state of the United States”) (citing 1 J. Moore, Moore’s Federal Practice § 0.74[4] (1996)). Absent subject matter jurisdiction, the Court has no authority to adjudicate the breach of contract claim.

On the other hand, the Court does have the authority to award reasonable costs, including attorney’s fees, when a matter is dismissed for want of jurisdiction. Rule 41(a)(2) states the Court may dismiss a case at the plaintiffs request “on terms that the court considers proper.” And 28 U.S.C. § 1919 states that “[wjhenever any action ... is dismissed in any district court ... for want of jurisdiction, such court may order the payment of just costs.” See also Brown v. Local 58, Int’l Bhd. of Elec. Workers, AFL-CIO, 76 F.3d 762, 766-67 (6th Cir. 1996).

It is not unusual to award costs and attorney’s fees when a case is voluntarily dismissed under Rule 41(a)(2). See 9 C. Wright & A. Miller, Federal Practice & Procedure § 2366, at 177-80 n. 9 (1971 & Supp. 1984) (collecting cases). The purposes for ‘such awards include reimbursing the defendant for the litigation costs incurred when there is a risk that the same suit will be refiled and will impose duplicative expenses upon him. See Colombrito v. Kelly, 764 F.2d 122, 133 (2d Cir.1985); Smoot v. Fox, 353 F.2d 830, 833 (6th Cir.1965); John Evans Sons, Inc. v. Majik-Ironers, Inc., 95 F.R.D. 186, 191 (E.D.Pa.1982). In this ease, continuation of the present dispute in a state court is a certainty, but only those expenses addressing the federal jurisdictional issue are likely to be wasted, since the fees expended addressing the merits of the claim would have been incurred no matter where the case was pending. It is quite clear that this case was filed in this Court based on the plaintiffs mistake as to its legal status as a corporate [80]*80entity. Therefore, the Court believes that the defendant should be reimbursed for the reasonable expenses incurred in litigating the jurisdiction question. The plaintiff does not dispute that general proposition. The parties clash, however, over how much was reasonably expended to address that singular issue. As the saying goes, it’s not the money, it’s the amount.

The defendant seeks an award of costs and attorney’s fees totaling $23,808.49, which includes legal time for two different attorneys and a paralegal amounting to 68.3 hours, a fee paid to a mediator for a can-celled mediation, and expenses paid to an expert on Korean law. The plaintiff balks at this claim, characterizing it as grossly excessive and patently absurd. Plaintiffs counsel states that he addressed the same issues through investigation and research at a cost of about $1,800. After reviewing the defendant’s attorneys’ billing records and the parties’ submissions, the Court is convinced that plaintiffs counsel is far closer to what was reasonably expended.

This Court set forth the manner of calculating a reasonable attorney’s fee for eases involving lack of jurisdiction in Mehney-Egan v. Mendoza, 130 F.Supp.2d 884 (E.D.Mich.2001), as follows:

[T]he statutory prescription to award “just” costs incorporates the concept of reasonableness in assessing a claim for attorney[’s] fees. The party seeking attorney’s fees has the burden to prove that its request for attorney’s fees is reasonable. To meet its burden, the fee petitioner must “submit evidence supporting the hours worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. 424, 433[, 103 S.Ct. 1933, 76 L.Ed.2d 40] (1983) (deciding fee petition under 42 U.S.C. § 1988). “The most useful starting point for determining the amount of a reasonable fee is the number of hours reasonably expended on the litigation multiplied by a reasonable hourly rate.” Id. See also Adcock-Ladd v. Secretary of Treasury, 227 F.3d 343, 349 (6th Cir.2000). Courts should exclude hours that are not reasonably expended. Hensley, 461 U.S. at 433[, 103 S.Ct. 1933], Hours are not reasonably expended if they are excessive, redundant, or otherwise unnecessary. Id. “A fee is clearly excessive when, after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee is in excess of a reasonable fee.” Mich. R. Profl Conduct (MRPC) 1.5.
After determining the number of hours reasonably expended, the court must examine whether the requested hourly rate is reasonable. Adcock-Ladd, 227 F.3d at 349. Generally, a reasonable hourly rate is to be calculated according to the prevailing market rates in the relevant community. Blum v.

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Bluebook (online)
254 F.R.D. 78, 2008 U.S. Dist. LEXIS 84232, 2008 WL 4648279, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ftss-korea-v-first-technology-safety-systems-inc-mied-2008.