Article

Notes: In connection with a contract to provide equipment for Tri-County Metropolitan Transportation District of Oregon (Buyer/Beneficiary), Mark Guetzko, Lisa Guetzko, Richard Altorfer, Seedorff Masonry, Inc., Dale Kartman, Susan Kartman, and Seedorff Partnership, L.P. (Sureties) undertook to reimburse KeyBank National Association (Issuer) for its LC in favor of Beneficiary to be drawn in the event of non-performance. After a series of convoluted dealings between Buyer/Beneficiary and Colorado Railcar Manufacturing, LLC (Manufacturer), in which Buyer/Beneficiary sought to assist Manufacturer in producing equipment and avoiding insolvency, Buyer/Beneficiary sought to draw on the LC whereupon Sureties sought and obtained an injunction against this drawing. Later, a separate action was filed in the state of Oregon styled as CRM Collateral II, Inc. v. Tri-County Metropolitan Transportation District of Oregon, 2009 WL 5173495, which is also abstracted in this volume.

After Sureties filed a petition seeking declaratory judgment injunctive relief in the Iowa District Court for Clayton County state courts, the action was removed to the federal U.S. District Court for the Northern District of Iowa. Shortly after, CRM Collateral II, Inc. (Applicant) moved to intervene as a plaintiff. The U.S. District Court for the Northern District of Iowa, Eastern Division, Scoles, J., noted that Applicant had failed to show that it was entitled to intervene as a matter of right pursuant to Federal Rule of Civil Procedure 24(a)(2). The Judge observed that the seven individual plaintiffs were the shareholders of the Applicant company and sought identical relief, and granted the motion based on Fed. R. Civ. P. 24(b)(1)(B), which allows discretion regarding anyone who, inter alia, shares a common claim with the plaintiff.

In a subsequent motion, Sureties and Applicant sought to remand the case to Iowa state District Court for Clayton County, asserting that the amount in controversy did not exceed US$75,000, pursuant to the jurisdictional requirements of 28 USC Section 1332 for federal jurisdiction, because they sought only to maintain the status quo, namely, preventing Issuer from honoring the LC. Issuer argued that Sureties and Applicant sought to avoid paying the reimbursement for the LC in the amount of US$3,000,000, so the amount in controversy was greater than US$75,000. The U.S. District Court for the Northern District of Iowa, Eastern Division, McManus, J., agreed with Issuer, but ruled that Issuer had failed to properly plead jurisdictional citizenship requirements. For that reason, the court ordered the case remanded unless Issuer timely filed a supplemental jurisdictional statement pleading subject matter jurisdiction by a specified date.

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