Business Law 13th Edition by Frank Cross, Kenneth Clarkson, Roger LeRoy Miller

Exercise 5

In the Language of the Court Smith, Circuit Judge. * * * *
Kelley Mala is a citizen of the United States Virgin Islands. * * * He went for a cruise in his powerboat near St. Thomas, Virgin Islands. When his boat ran low on gas, he entered Crown Bay Marina to refuel. Mala tied the boat to one of Crown Bay's eight fueling stations and began filling his tank with an automatic gas pump. Before walking to the cash register to buy oil, Mala asked a Crown Bay attendant to watch his boat. By the time Mala returned, the boat's tank was overflowing and fuel was spilling into the boat and into the water. The attendant manually shut off the pump and acknowledged that the pump had been malfunctioning in recent days. Mala began cleaning up the fuel, and at some point, the attendant provided soap and water. Mala eventually departed the marina, but as he did so, the engine caught fire and exploded. Mala was thrown into the water and was severely burned. His boat was unsalvageable.
* * * Mala sued Crown Bay in the District Court of the Virgin Islands. Mala's * * * complaint asserted * * * that Crown Bay negligently maintained its gas pump. [Negligence is the failure to exercise the standard of care that a reasonable person would exercise in similar circumstances. Negligence is a tort-a breach of a legal duty that proximately causes harm or injury to another-that forms the basis for a claim subject to applicable state law.] The complaint also alleged that the District Court had admiralty and diversity jurisdiction over the case, and it requested a jury trial. * * * *
* * * Crown Bay filed a motion to strike Mala's jury demand. Crown Bay argued that plaintiffs generally do not have a jury-trial right in admiralty cases-only when the court also has diversity jurisdiction. And Crown Bay asserted that the parties were not diverse in this case * * *. In response to this motion, the District Court ruled that both Mala and Crown Bay were citizens of the Virgin Islands. The court therefore struck Mala's jury demand, but nevertheless opted to empanel an advisory jury. [The court could accept or reject the advisory jury's verdict.]
* * * At the end of the trial, the advisory jury returned a verdict of $460,000 for Mala-$400,000 for pain and suffering and $60,000 in compensatory damages. It concluded that Mala was 25 percent at fault and that Crown Bay was 75 percent at fault. The District Court ultimately rejected the verdict and entered judgment for Crown Bay.
This appeal followed.
* * * *
Mala * * * argues that the District Court improperly refused to conduct a jury trial. This claim ultimately depends on whether the District Court had diversity jurisdiction.
The Seventh Amendment [to the U.S. Constitution] creates a right to civil jury trials in federal court: "In Suits at common law * * * the right of trial by jury shall be preserved." Admiralty suits are not "Suits at common law," which means that when a district court has only admiralty jurisdiction the plaintiff does not have a jury-trial right. But [a federal statute] allows plaintiffs to pursue state claims in admiralty cases as long as the district court also has diversity jurisdiction. In such cases [the statute] preserves whatever jury-trial right exists with respect to the underlying state claims.
Mala argues that the District Court had both admiralty and diversity jurisdiction. As a preliminary matter, the court certainly had admiralty jurisdiction. The alleged tort occurred on navigable water and bore a substantial connection to maritime activity.
The grounds for diversity jurisdiction are less certain. District courts have jurisdiction only if the parties are completely diverse. This means that no plaintiff may have the same state or territorial citizenship as any defendant. The parties agree that Mala was a citizen of the Virgin Islands. [Emphasis added.] Unfortunately for Mala, the District Court concluded that Crown Bay also was a citizen of the Virgin Islands. Mala rejects this conclusion. Mala bears the burden of proving that the District Court had diversity jurisdiction. Mala failed to meet that burden because he did not offer evidence that Crown Bay was anything other than a citizen of the Virgin Islands. Mala contends that Crown Bay admitted to being a citizen of Florida, but Crown Bay actually denied Mala's allegation.
Absent evidence that the parties were diverse, we are left with Mala's allegations. Allegations are insufficient at trial. And they are especially insufficient on appeal, where we review the District Court's underlying factual findings for clear error. Under this standard, we will not reverse unless we are left with the definite and firm conviction that Crown Bay was in fact a citizen of Florida. Mala has not presented any credible evidence that Crown Bay was a citizen of Florida- much less evidence that would leave us with the requisite firm conviction. [Emphasis added.]
* * * Accordingly, the parties were not diverse and Mala does not have a jury-trial right.
* * * *
* * * For these reasons we will affirm the District Court's judgment.
Legal Reasoning Questions
1. What is "diversity of citizenship"?
2. How does the presence-or lack-of diversity of citizenship affect a lawsuit?
3. What did the court conclude with respect to the parties' "diversity of citizenship" in this case?
4. How did the court's conclusion affect the outcome?