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SELECTED RISKS INS. CO. v. KOBELINSKI

October 12, 1976

SELECTED RISKS INSURANCE COMPANY
v.
Mitchell E. KOBELINSKI and Small Business Administration, an Agency of the United States Government



The opinion of the court was delivered by: HANNUM

 HANNUM, District Judge.

 Presently before the Court is plaintiff, Selected Risks Insurance Company's (SRIC) motion to remand this case to the Court of Common Pleas of Montgomery County, Pennsylvania. The present action was commenced in that court on July 27, 1976, and removed here on August 18, 1976 by petition of defendant, Small Business Administration *fn1" (SBA).

 This lawsuit stems from a construction subcontract and related surety bonds made in connection with the Lackawanna River Sewer Basin Authority's construction of a sanitary sewer system in Blakely, Pennsylvania. On March 4, 1974, Mele Construction Company (Mele), the general contractor on the project, entered into a subcontract with Northeastern Sewer Services (Northeastern). In order to obtain funds to perform the job, Northeastern sought a loan from the First National Bank of Peckville (Peckville). As a precondition to any loan, Peckville required Northeastern to obtain surety bonds to insure performance of the subcontract and payment of labor and materialmen. In addition, Peckville wanted to be named as an insured party on these bonds.

 The required bonds were issued by SRIC on April 8, 1974, the closing date of the loan, at which time SRIC entered into an agreement with SBA under which SBA guaranteed 90% of all losses on the bonds. Subsequently, of course, Northeastern defaulted in its performance, triggering liability on the bonds. Initially, Peckville commenced suit against SRIC (plaintiff in the present action) in the Court of Common Pleas of Lackawanna County (No. 716, Jan. Term, 1975). SRIC removed that action to the United States District Court for the Middle District of Pennsylvania, where it became Civil Action No. 75-226, and joined the SBA as Third Party Defendant.

 SBA then moved to dismiss the Third Party Complaint on the grounds, inter alia, that the court lacked subject matter jurisdiction since the claim was in excess of $10,000. *fn2" This motion was granted by Order of Honorable William J. Nealon on September 16, 1975, which dismissed the third party complaint "without prejudice to the right of [SRIC] to reinstate said action . . . in the United States Court of Claims." *fn3"

 SRIC chose not to seek relief in the Court of Claims, but went instead to the Court of Common Pleas of Montgomery County, where it commenced an action on the SBA guarantee identical in substance to the previously dismissed Third Party Complaint. *fn4" Contending now that this court has subject matter jurisdiction, the SBA, represented by the United States Attorney, has removed the action here pursuant to 28 U.S.C. § 1441(a). *fn5" Plaintiff opposes removal and moves to remand, claiming that the SBA should be estopped to deny this court's lack of jurisdiction by its position in the former litigation.

 Subject Matter Jurisdiction -- The Court is satisfied that, were it necessary so to decide, subject matter jurisdiction would exist in this Court. The two statutes bearing on the matter are 28 U.S.C. § 1346(a)(2) which provides in pertinent part that:

 
(a) The district courts shall have jurisdiction, concurrent with the Court of Claims of:
 
(2) Any . . . civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort. (emphasis added)

 and 15 U.S.C. § 634(b)(1) which provides that:

 
(b) In the performance of, and with respect to, the functions, powers, and duties vested in him by this chapter the Administrator [of the SBA] may --
 
(1) sue and be sued in any court of record of a State having general jurisdiction, or in any United States district court, and jurisdiction is conferred upon such district court to determine such controversies without regard to the amount in controversy. . . (emphasis added)

 Thus, the issue is whether § 634 modifies the general jurisdictional requirements of § 1346(a)(2), or more specifically, whether the language, "without regard to amount in controversy," of § 634 speaks to all jurisdictional amount requirements, including § 1346(a)(2)'s requirement of not greater than $10,000 in controversy, or only to the requirements of the general diversity and federal question jurisdictional statutes ...


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