Prospect Funding Holdings (NY) v. Ronald J. Palagi, P.C., L.L.C., No. 22-1871 (8th Cir. 2023)
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Prospect Funding Holdings (NY), LLC, won arbitration awards against Ronald Palagi and his law firm, Ronald J. Palagi, P.C., LLC. Palagi and his firm filed an application to vacate the awards in federal court, which the district court granted.
The Eighth Circuit vacated the district court’s order and remanded with instructions to dismiss for lack of subject matter jurisdiction. The court reasoned that applicants seeking to vacate or confirm awards under Section 9 and Section 10 must identify an “independent jurisdictional basis” for their actions. The court wrote that the dispute between Prospect and Palagi and his firm does not contain a federal question, so diversity of citizenship between the parties must exist. Here, the application to vacate the 2021 awards does not identify any jurisdictional basis whatsoever. Crucially, Palagi and his firm failed to plead the parties’ citizenship in the application. Palagi’s individual citizenship has never been pleaded before the court. Diversity of citizenship has not been established so the district court lacked jurisdiction over the case.
Court Description: [Kobes, Author, with Grasz and Melloy, Circuit Judges] Civil case - Arbitration. The application to vacate the arbitration awards, which the district court granted, failed to plead the parties' citizenship; as a result, the district court's judgment is vacated, and the matter is remanded with directions to dismiss for lack of jurisdiction.
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