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HAGGERTY v. COMSTOCK GOLD CO.

August 21, 1991

ROBERT H. HAGGERTY, ROBERT C. GRAHAM, AND KIRK PARRISH, INDIVIDUALLY AND ON BEHALF OF ALL OTHER PERSONS WHO ARE CLASS I LIMITED PARTNERS OF COMSTOCK GOLD COMPANY, L.P., PLAINTIFFS,
v.
COMSTOCK GOLD COMPANY, L.P., UNITED MINING CORPORATION, RAYNHAM HALL CONTRACTING, INC., TIMOTHY COLLINS, MAURICE CASTAGNE, GEORGE WERK AND ALICE WERK, DEFENDANTS. HOWARD T. BELLIN, M.D. AND ROBERT M. GILLER, M.D., INTERVENOR-PLAINTIFFS, V. COMSTOCK GOLD COMPANY, L.P., UNITED MINING CORPORATION, RAYNHAM HALL CONTRACTING, INC., TIMOTHY COLLINS, MAURICE CASTAGNE, GEORGE WERK AND ALICE WERK, DEFENDANTS.



The opinion of the court was delivered by: Leisure, District Judge:

ORDER AND OPINION

This is an action for violation of § 10(b) of the Securities Exchange Act of 1934, 15 U.S.C. § 78j(b), and Rule 10b promulgated thereunder, as well as state law claims for fraud, rescission, and breach of contract and fiduciary duties. On May 29, 1991, 765 F. Supp. 111, this Court granted a motion for summary judgment made by defendants Comstock Gold Company, L.P., United Mining Corporation, Raynham Hall Contracting, Inc., Timothy Collins and Maurice Castagne (collectively "the Moving Defendants")*fn1 with respect to plaintiffs' federal securities fraud claim (the "May 29 Order"). Plaintiffs have now moved, pursuant to Local Civil Rule 3(j), for reargument of the May 29 Order. Plaintiffs have also moved, pursuant to Fed.R.Civ.P. 21, to dismiss defendant Comstock Gold Company L.P. ("Comstock") from this action in order to restore the Court's diversity jurisdiction over the remaining state law claims.

Background*fn2

In its May 29 Order, the Court granted the Moving Defendants' motion for summary judgment, dismissing plaintiffs' federal securities fraud claim. The Court then dismissed plaintiffs' remaining state law claims, pursuant to United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), for lack of subject matter jurisdiction over those claims.

Plaintiffs have now moved for reargument of the Court's May 29 Order, arguing that the Court erred in dismissing the state law claims as "pendent" because the amended complaint alleges both federal question jurisdiction, under 28 U.S.C. § 1331, and diversity of citizenship jurisdiction, under 28 U.S.C. § 1332. In addition, and apparently in contradiction to the logic underlying their motion for reargument, plaintiffs concede that this Court does not have diversity jurisdiction over this action, and thus move, pursuant to Fed.R.Civ.P. 21, to dismiss Comstock from this action so as to restore such jurisdiction.

The Moving Defendants object to plaintiffs' motion to dismiss Comstock as a defendant in this action. The Moving Defendants argue that this motion is untimely, and that, in any event, Comstock is a necessary party that should not be dismissed from this action. In addition, the Moving Defendants argue that the findings of fact made by the Court in its May 29 Order apply with equal force to plaintiffs' state law fraud claim, and require dismissal of that claim. Finally, the Moving Defendants have cross-moved for sanctions, pursuant to Fed.R.Civ.P. 11, on the ground that plaintiffs' instant motion is frivolous.

Discussion

I.  Motion for Reargument

Motions for reargument will be granted only if the Court overlooked "matters or controlling decisions" which, if considered by the Court, would have mandated a different result. See Litton Industries Inc. v. Lehman Brothers Kuhn Loeb, Inc., 1989 WL 162315, at 4, 1989 U.S.Dist. LEXIS 9145, at 9-10 (S.D.N.Y. 1989); Moll v. U.S. Life Title Insurance Co., 700 F. Supp. 1284, 1286 (S.D.N.Y. 1988) (Leisure, J.); Bozsi Limited Partnership v. Lynott, 676 F. Supp. 505, 509 (S.D.N Y 1987). "The standard for granting a motion for reargument is strict in order to dissuade repetitive arguments on issues that have already been considered fully by the Court." Ruiz v. Commissioner of Dept. of Transportation, 687 F. Supp. 888, 890 (S.D.N.Y. 1988).

In the case at bar, plaintiffs do not seek reargument of that part of the May 29 Order granting summary judgment dismissing plaintiffs' federal securities fraud claim.*fn3 Rather, plaintiffs argue that the Court erroneously described the state law claims in this action as "pendent." Implicit in this argument is the notion that this Court has jurisdiction over the state law claims on the basis of diversity of the citizenship of the parties. However, plaintiffs concede, as they must, that diversity of citizenship of the parties does not exist. This fact is obvious from the face of the amended complaint, including the caption of this action, in which plaintiffs are suing, inter alia, a limited partnership in which they are limited partners. See Carden v. Arkoma Associates, 494 U.S. 185, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) (citizenship of a limited partnership is determined by reference to the citizenship of its limited, as well as its general, partners). Because there clearly existed no basis for the Court's subject matter jurisdiction over the non-federal claims other than pendent jurisdiction, the Court's characterization — and dismissal — of those claims as "pendent" was correct. Accordingly, plaintiffs' motion for reargument is denied.

II. Dismissal of Comstock as a Defendant

Plaintiffs have also moved, pursuant to Fed.R.Civ.P. 21, to dismiss Comstock as a defendant in this action. The purpose of this motion is to eliminate the non-diverse party, and thus restore the Court's diversity jurisdiction over plaintiffs' state law claims.*fn4

As a threshold matter, the Court notes that it is questionable whether Rule 21 is the proper procedural vehicle for plaintiffs' motion. The Second Circuit has held in a similar context:

  Rule 21 was adopted to obviate the harsh common
  law adherence to the technical rules of joinder,
  and not in order to deal with problems of
  defective federal jurisdiction. Here the plaintiff
  is not seeking to drop a party in order to cure
  defects of misjoinder or nonjoinder. The motion
  more properly is an amendment of the pleadings
  under Rule 15(a) which would result in the
  dismissal of the complaint against [the
  ...

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