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PENN STATE CONSTR. CO. v. ASSOCIATED-EAST MORTG. C

October 3, 1978

PENN STATE CONSTRUCTION COMPANY, INC., a Pennsylvania Corporation, Plaintiff,
v.
ASSOCIATED-EAST MORTGAGE COMPANY, a New Jersey and Delaware Corporation, Defendant, and Secretary, United States Department of Housing and Urban Development, Defendant, and Philipsburg U. A. W. Housing Company, a Pennsylvania Limited Partnership, Pendent Defendant, and Keystone U. A. W. Housing Corporation, General Partner, Pendent Defendant



The opinion of the court was delivered by: ZIEGLER

I. History of Case

This case grows out of the construction of a housing project in Philipsburg, Pennsylvania. Plaintiff, Penn State Construction Company, is the managing joint venturer of the general contractor, Philipsburg Construction Company. Philipsburg U.A.W. Housing Company is the owner of the project, and Keystone U.A.W. Housing Corporation is the general partner. *fn1" Defendant, Associated-East Mortgage Company, is the lender and the Department of Housing and Urban Development, which insured the loan, is also a defendant.

 Penn State alleges that during the course of its performance various disputes arose with U.A.W. pertaining to payment schedules, changes in site conditions, and installation of street entrances. As a result, delays were encountered which rendered plaintiff's performance impossible.

 The complaint is framed in three counts. Count I is directed against HUD. Penn State avers that the contracts executed by plaintiff, Associated-East, and U.A.W., obligated HUD to exercise supervisory control over the project and to interpret certain contract provisions. *fn2" Plaintiff contends HUD failed to discharge its responsibilities but no damages are claimed. Penn State demands judicial review of the various administrative determinations rendered by HUD in connection with the project.

 Count II is directed against Associated-East. Plaintiff alleges (1) letters of credit in the amount of $ 115,000 were deposited with Associated-East to secure plaintiff's performance; (2) Associated-East converted the funds to its own use; and (3) Penn State was required to pay $ 8,539.23 as a condition precedent to release of the funds following U.A.W.'s alleged default of its obligations to Associated-East. *fn3" Moreover, following this default, Associated-East was required to assure completion of the project, which it allegedly failed to do. In sum, plaintiff seeks damages and an accounting for breach of contract, and conversion by Associated-East.

 Count III requests damages from U.A.W. alleging breach of contract to plaintiff. *fn4"

 Associated-East and U.A.W. have moved to dismiss the complaint under Rule 12(b)(1) for want of subject matter jurisdiction. Although HUD has not moved to dismiss, the court will consider Sua sponte whether subject matter jurisdiction is extant over any of the defendants, including HUD. We are required to do so because the court must assess its jurisdiction even where the parties do not raise the question. See, Carlsberg Resources Corp. v. Cambria Sav. & L., 554 F.2d 1254 (3d Cir. 1977).

 We hold that this court lacks subject matter jurisdiction over plaintiff's complaint and the complaint must be dismissed.

 II. Discussion

 Penn State tenders four independent bases of jurisdiction. They are: (1) diversity of citizenship against Associated-East pursuant to 28 U.S.C. § 1332. (Plaintiff's claims against U.A.W. are alleged to be "pendent" to this claim against Associated-East); *fn5" (2) jurisdiction under 5 U.S.C. §§ 701-706 of the Administrative Procedure Act, which authorizes judicial review of administrative orders; (3) federal question jurisdiction pursuant to 28 U.S.C. § 1331; and (4) jurisdiction over conduct arising under Acts of Congress regulating commerce pursuant to 28 U.S.C. § 1337.

 (A) Diversity of Citizenship

 Diversity jurisdiction is absent for several reasons. First, affidavits submitted by Associated-East establish that, although incorporated in New Jersey, its principal place of business is in Pennsylvania. For example, 11 of its 16 officers maintain offices in Pennsylvania; director and shareholder meetings are conducted here; the corporate headquarters is in the Commonwealth and its bank records are in this state. Under the "nerve center" test, we hold that Pennsylvania is the principal place of business of Associated-East. Kelly v. U. S. Steel Corp., 284 F.2d 850 (3d Cir. 1960); 13 Wright & Miller, Federal Practice & Procedure, § 3625.

 Under 28 U.S.C. § 1332(c), a corporation is a citizen of both its principal place of business and its state of incorporation; therefore, diversity jurisdiction is lacking, since Penn State is a Pennsylvania corporation.

 Secondly, even if Associated-East is a New Jersey citizen only, diversity jurisdiction is lacking over the so-called "pendent parties" because Philipsburg and Keystone U.A.W. are Pennsylvania concerns. Accordingly, the complete diversity requirement of 28 U.S.C. § 1332(a) is absent. See, Owen Equipment and ...


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