The opinion of the court was delivered by: Robert L. Carter, District Judge.
Plaintiffs Sty-Lite Company ("Sty-Lite") and Eurotex (Saipan),
Inc. ("Eurotex") have instituted this action against defendants
Eminent Sportswear Inc. ("Eminent") and Christina Sportswear Ltd.
("Christina") to recover payment for goods delivered. Plaintiffs
have instituted this action against defendants Hongkong and
Shanghai Banking Corporation Limited ("HSBC") and Bank of China,
New York Branch ("Bank of China") for wrongful authorization of
delivery of merchandise and for fraudulent misrepresentation. All
defendants have moved pursuant to Rule 56, F.R. Civ. P., for
summary judgment on the grounds that there are no genuine issues
of material fact and that the respective defendants are entitled
to judgment as a matter of law.
Plaintiff Sty-Lite is a Hong Kong company having its principal
place of business in Hong Kong. (Second Amended Compl. ¶ 2).
Plaintiff Eurotex is a Saipan corporation with its principal
place of business in Saipan.*fn1 (Id. at ¶ 3). Defendants
Eminent and Christina are both incorporated under the laws of New
York and have places of business in New York. (Pls.' Local Rule
56.1 Stmt. In Resp. To Def. Eminent's & Christina's Stmts., ¶¶
1-2). Defendant HSBC is a bank licensed under the laws of Hong
Kong with its principal place of business in Hong Kong. (Pls.'
Local Rule 56.1 Stmt. In Resp. To Def. Banks' Stmts., ¶ 1). HSBC
has a branch office in New York, New York. (Id.). The Bank of
China is a banking corporation owned by the government of the
People's Republic of China and has a branch office located in New
York, New York. (Pls.' Local Rule 56.1 Stmt. In Resp. To Addtl.
Stmt. By Bank of China, ¶ 1).
The court finds that a detailed exploration into the facts of
this matter is unnecessary for the resolution of this motion. A
review of certain undisputed facts, however, is required.
Plaintiffs manufactured and shipped various articles of women's
clothing to Eminent and Christina in New York. (Pls.' Local Rule
56.1 Stmt. In Resp. To Def. Eminent's & Christina's Stmts., ¶
22). These items were all shipped by Sea-Land Service Inc.
("Sea-Land"). (Pls.' Local Rule 56.1 Stmt. In Resp. To Def.
Banks' Stmts., ¶ 13). The clothing arrived in New York without
the original bill of lading. Plaintiffs appear to have retained
the original bill of lading. (Pls.' Local Rule 56.1 Stmt. In
Resp. To Def. Eminent's & Christina's Stmts., ¶ 23). Eminent then
contacted HSBC and asked that it issue a letter of indemnity to
Sea-Land, requesting that Sea-Land release Eminent's clothing
without the bill of lading and indemnifying Sea-Land for any loss
it sustained from complying with that request. (Pls.' Local Rule
56.1 Stmt. In
Resp. To Def. Banks' Stmts., ¶¶ 6-8). Christina contacted the
Bank of China requesting a letter of indemnity asking Sealand to
release Christina's merchandise under similar conditions. (Pls.'
Local Rule 56.1 Stmt. In Resp. To Addtl. Stmt. By Bank of China,
¶¶ 4-5). HSBC and the Bank of China did issue these letters of
indemnity and Sea-Land did release the goods. (Id. at ¶¶ 5-6;
Pls.' Local Rule 56.1 Stmt. In Resp. To Def. Banks' Stmts., ¶¶
7,13). Plaintiffs allege that they never received payment for the
Subject Matter Jurisdiction
The Amended Complaint states that the court has jurisdiction
pursuant to 28 U.S.C. § 1332(a). It contains no additional
information regarding jurisdiction besides alleging that the
matter satisfies the amount in controversy requirement and
providing the information outlined above relevant to the
citizenship of the parties. None of the parties have addressed
the issue of subject matter jurisdiction in greater detail in any
of their papers. The court is required to consider jurisdiction
and is therefore obligated to raise the issue sua sponte. See
Franceskin v. Credit Suisse, 214 F.3d 253, 257 (2d Cir. 2000).
"[T]he courts have regularly found that there is no subject
matter jurisdiction over actions brought by an alien against
another alien and a citizen of a state." Lloyds Bank PLC v.
Norkin, 817 F. Supp. 414, 417 (S.D.N.Y. 1993) (McKenna, J.)
(citations omitted) (emphasis in original). Complete diversity is
required before federal courts may have subject matter
jurisdiction over a case that does not involve a federal
question. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 2
L.Ed. 435 (1806), overruled on other grounds, Louisville,
Cincinnati & Charleston R.R. Co. v. Letson, 43 U.S. (2 How.)
497, 555, 11 L.Ed. 353 (1844). Having alien parties on both sides
of the litigation destroys complete diversity. See Corporacion
Venezolana de Fomento v. Vintero Sales Corp., 629 F.2d 786, 790
(2d Cir. 1980).
For purposes of determining diversity, 28 U.S.C. § 1332(c)
provides that "a corporation shall be deemed to be a citizen of
any State by which it has been incorporated and of the State
where it has its principal place of business." It establishes a
theory of dual citizenship for corporations and if either the
corporation's place of incorporation or principal place of
business destroys diversity, then the courts will not have
There has been debate in the Second Circuit as to whether §
1332(c) applies to foreign corporations. Recently, the Court of
Appeals had occasion to address this question squarely and
answered it in the affirmative. In Franceskin v. Credit Suisse,
214 F.3d 253, the court found that it lacked diversity
jurisdiction over a lawsuit brought by a citizen of Venezuela
against a bank incorporated in Switzerland. In determining the
foreign bank's citizenship, the Franceskin court, 214 F.3d 253,
258, explicitly applied § 1332(c). Since it was undisputed that
the bank was incorporated in Switzerland, the court found that it
need not decide whether the bank's principal place of business
was in New York because under the dual citizenship theory,
diversity would be destroyed regardless. See id. It is
therefore clear that an alien plaintiff may not obtain diversity
jurisdiction in a federal court while suing a company which is
either incorporated in a foreign country or has its principal
place of business in a foreign country.
The defendant banks' citizenship complicates matters. HSBC is
apparently incorporated under the laws of Hong Kong. In addition,
it is undisputed that HSBC has its principal place of business in
Hong Kong. The fact that it has a branch office in New York and
is licensed in New York does not alter this analysis. See
Lloyds, 817 F. Supp. 414, 415. For purposes of determining
whether diversity exists in this matter, HSBC must be considered
Furthermore, it is the plaintiff's burden to demonstrate that
jurisdiction exists. See Universal Reinsurance Co., Ltd. v. St.
Paul Fire and Marine Ins. Co., 224 F.3d 139, 140 (2d Cir. 2000)
(remanding the case to the district court to address the question
of whether there was diversity jurisdiction where plaintiff
failed to properly identify the citizenship of two parties). Part
of this burden in a diversity case is alleging the citizenship of
all parties. Plaintiffs do not elaborate on the citizenship of
the Bank of China. All logical inferences to be drawn from the
papers submitted in connection with this motion, however, suggest
that the Bank of China is organized under the laws of China and
maintains its principal place of business in that country.*fn2
The court therefore assumes that the Bank of ...