Itel Containers International Corp. v. Puerto Rico Marine Management, Inc.

108 F.R.D. 96, 3 Fed. R. Serv. 3d 671, 1985 U.S. Dist. LEXIS 14481
CourtDistrict Court, D. New Jersey
DecidedOctober 29, 1985
DocketCiv. No. 83-2673L
StatusPublished
Cited by38 cases

This text of 108 F.R.D. 96 (Itel Containers International Corp. v. Puerto Rico Marine Management, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. New Jersey primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Itel Containers International Corp. v. Puerto Rico Marine Management, Inc., 108 F.R.D. 96, 3 Fed. R. Serv. 3d 671, 1985 U.S. Dist. LEXIS 14481 (D.N.J. 1985).

Opinion

OPINION

LACEY, District Judge.

INTRODUCTION

The underlying action having been terminated, this opinion addresses the issue of what sanctions, if any, should be imposed upon the defendant corporation and its counsel, the Washington, D.C. law firm which was, at the outset of the lawsuit, admitted pro hac vice, and its local New Jersey counsel.

The regrettable necessity for considering sanctions has arisen from the undeniable abuse of the judicial process by the defendant and its counsel. Aware from the time they received the complaint that the plaintiff had mistakenly invoked diversity jurisdiction, 28 U.S.C. § 1332, they wilfully elected to pursue a litigation strategy of actively concealing from the plaintiff and the court as long as possible that this court was without power to hear the matter. To implement this strategy, they not only calculatingly avoided answering the complaint’s assertion of diversity jurisdiction; omitting the Fed.R.Civ.P. 12(b)(1) affirmative defense, they actually asserted a counterclaim against the plaintiff. They also made a motion, which was unsuccessful, to dismiss the complaint on a basis wholly unrelated to a lack of diversity of citizenship. They responded on the merits to plaintiff’s motions for summary judgment (even to the point of moving for reargument on the merits, when the court granted plaintiff partial summary judgment in striking one of the defendant’s affirmative defenses). Finally, they deliberately drafted an unresponsive interrogatory answer to conceal the fact that there was no diversity because the defendant corporation was, like the plaintiff, a Delaware corporation.

Defense counsel have admitted under oath that their strategy from the outset of this suit was to withhold from their adversary and the court for as long as possible the knowledge that subject matter jurisdiction was lacking. Their tendered justification was that, because they thought that plaintiff’s claims were overreaching and baseless, having already been resolved by a previous settlement agreement, they were acting properly in protracting the lawsuit so that the statute of limitations would have barred at least some of these claims when this court, having finally discovered that there was no federal jurisdiction over the suit, dismissed it. Thus, not until almost two years after commencement of the action, and only after a pretrial conference date had been set and a required pretrial memorandum had to be prepared, did the defendant and its counsel decide to reveal that this court lacked the power to do that which until then they had silently required it, or permitted it, to do: review briefs, research the issues, listen to oral arguments, decide motions and direct pretrial proceedings (including setting of dates for pretrial conference and trial).

THE PROCEEDINGS

The plaintiff (Itel) on July 20, 1983, sued the defendant (PRMMI) for breach of contract, asserting it had failed to pay for damage done to containers leased to it by Itel. Diversity jurisdiction was asserted under 28 U.S.C. § 1332, it being alleged that the plaintiff was a Delaware corporation and the defendant a Puerto Rico corporation with offices in Elizabeth, New Jersey. Complaint, ¶¶ 1, 2.

Before answering, and notwithstanding that they knew this court had no subject matter jurisdiction, PRMMI’s counsel moved on September 16, 1983, to dismiss [98]*98for plaintiffs failure to comply with the provisions of N.J.S.A. 14A:13-11 (requiring a plaintiff to have a certificate of authority to do business in New Jersey). This motion was denied following oral argument.

Thereafter PRMMI filed its answer on November 28, 1983. It responded to paragraph 2 of the complaint (which alleged defendant’s citizenship) as follows:

Denies the allegations of paragraph 2 of the Complaint, except admits that PRMMI maintains an office in Elizabeth, New Jersey.

Answer, ¶ 2.

The answer responded to the complaint’s assertion in paragraph 4 that this court had diversity jurisdiction over this case as follows:

The averments of paragraph 4 of the Complaint are statements of the jurisdictional and venue statutes on which the Complaint is based, and defendant need not respond thereto.

Id., ¶ 4. That this was so phrased was not an accident. Counsel hoped thereby to avoid highlighting the absence of jurisdiction.

PRMMI also pleaded in its answer several affirmative defenses and a counterclaim.1 As has been noted, lack of subject matter jurisdiction was not pleaded.

Plaintiff’s first set of interrogatories, served on defendant on August 10, 1983, aimed at the jurisdictional issue among other things, included request no. 1, which drew the response set forth immediately after it, as follows, in answers served on December 23, 1983:

1. Set forth in detail the nature of the following entities (e.g., corporate structure and place of incorporation, status as government agency, etc.): (emphasis supplied)

(a) Defendant;

Defendant, Puerto Rico Marine Management, Inc. (PRMMI), is a stock company which carries out vessel operations, terminal operations and other functions for the Puerto Rico Maritime Shipping Authority (PRMSA). PRMMI is a wholly-owned subsidiary of PRMSA.

(b) The Puerto Rico Marine Shipping Authority (PRMSA);

PRMSA is a non-stock public corporation, an instrumentality of the Government of the Commonwealth of Puerto Rico, created pursuant to the Law of the 10th of June, 1974, no. 62, 23 L.P.R.A. § 3501 et seq. (1978). PRMSA’s purpose is to provide ocean carrier service primarily between certain points in mainland United States and the Commonwealth of Puerto Rico. Ocean trade between the East Coast and Gulf ports of the United States accounts for over 70 percent of Puerto Rico’s total external trade. PRMSA’s ocean vessel operations are conducted between San Juan and the following United States ports: Elizabeth, New Jersey; Baltimore, Maryland; Charleston, South Carolina; Jacksonville, Florida; Miami, Florida; and New Orleans, Louisiana. PRMSA also provides ocean vessel services between San Juan, on the one hand, and the U.S. Virgin Islands, the Dominican Republic, Haiti and Trinidad, on the other.

(c) Navieras de Puerto Rico (“Navieras”).

“Navieras de Puerto Rico” or “Navieras” are abbreviations for the full Spanish-language translation of “Autoridad de las Navieras de Puerto Rico.” Thus, [99]*99Navieras and PRMSA are one the same entity. in [sic]

Counsel consciously and intentionally did not answer the “place of incorporation” portion of the request because they were continuing their efforts to conceal as long as possible the absence of subject matter jurisdiction.

After conducting further discovery, plaintiff filed a motion for summary judgment.

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Bluebook (online)
108 F.R.D. 96, 3 Fed. R. Serv. 3d 671, 1985 U.S. Dist. LEXIS 14481, Counsel Stack Legal Research, https://law.counselstack.com/opinion/itel-containers-international-corp-v-puerto-rico-marine-management-inc-njd-1985.