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.
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.
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);
(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 Erection Co. v. Kroger, 437 U.S. 365, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978).
(B) Administrative Procedure Act
The Administrative Procedure Act
does not create an independent basis of federal jurisdiction. The Act may be employed as a basis for relief only if jurisdiction otherwise obtains. Califano v. Sanders, 430 U.S. 99, 97 S. Ct. 980, 51 L. Ed. 2d 192 (1977). Accordingly, we must examine the remaining contentions of plaintiff to determine whether jurisdiction is extant.
(C) Acts of Congress and Federal Question Jurisdiction
The existence of jurisdiction based on an act of Congress regulating commerce (28 U.S.C. § 1337) is determined by the same standard as federal question jurisdiction. Yancoskie v. Delaware River Port Authority, 528 F.2d 722, 725 (3d Cir. 1975); Molton, Allen & Williams, Inc. v. Harris, 436 F. Supp. 853, 857, n.3 (D.D.C.1977). Therefore, any discussion of federal question jurisdiction is applicable to jurisdiction pursuant to 28 U.S.C. § 1337.
(D) Federal Question Jurisdiction
A careful assessment of plaintiff's complaint, brief and oral argument reveals that only one possible basis for this court's jurisdiction remains. That basis is premised upon the existence of federal question jurisdiction over Penn State's claim against HUD. Thereafter, the nonfederal claims against the remaining parties allegedly attach by virtue of the doctrine of "pendent jurisdiction."
The claims against Associated-East and U.A.W. are contract actions unquestionably grounded on state law. However, the imposition of federal question jurisdiction over HUD is an issue which has engendered conflict among various courts, and is deserving of close examination.
A claim arises under the laws, treaties, or constitution of the United States only when:
(T)he complaint seeks a remedy expressly granted by a federal law or if it requires the construction of a federal statute or a distinctive policy of a federal statute requires the application of federal legal principles for its disposition. Lindy v. Lynn, 501 F.2d 1367, 1369 (3d Cir. 1974).
Penn State's complaint against HUD alleges that, as insurer for the lender, it had supervisory control over the construction project, and the duty to interpret various contract provisions. HUD allegedly failed to perform these duties, and plaintiff seeks judicial review of those administrative determinations.
In Lindy v. Lynn, 501 F.2d 1367 (3d Cir. 1974), plaintiff obtained a loan to finance the construction of an apartment building. The mortgage was insured by the FHA. Pursuant to FHA regulations, the mortgage certificate was issued in the form proscribed by the FHA. An additional sum was deposited by plaintiff with the mortgagee pursuant to an escrow agreement, again in the form proscribed by the FHA. These deposits took the form of two letters of credit. Plaintiff defaulted and HUD notified the mortgagee that the claim would be debited by the amount of the letters of credit. Id. at 1368. Plaintiff sued HUD and the lender alleging that, under the terms of the mortgage certificate and escrow agreement, the letters of credit could not be applied to the claim of the mortgagee.
The Court of Appeals held that the district court was without subject matter jurisdiction. The mere fact that the contract between the mortgagor and mortgagee was subject to federal regulation and control was not sufficient to establish federal question jurisdiction. The Court stated:
(T)he dispute between the parties is purely one as to the correct interpretation and effect of certain contractual documents, an ordinary contract dispute . . . . Id. at 1369.