Nakakuki v. Bello

Background

Emma Patricia Nakakuki, a licensed attorney proceeding without a lawyer, filed a petition seeking to vacate a $13,400 arbitration award issued by the Brooklyn Bar Association on March 23, 2019. The award arose from a fee dispute between Nakakuki and her former client, Kristian Bello. The opinion states that Nakakuki resides in Kansas and Bello resides in New York.

Nakakuki invoked diversity jurisdiction under 28 U.S.C. § 1332 and alleged that the parties were diverse and that the amount in controversy exceeded $75,000. Bello filed an answer on October 3, 2019. After a case-management conference, Magistrate Judge Barbara Moses ordered Nakakuki to explain why the case should not be dismissed for lack of subject-matter jurisdiction. After Nakakuki did not address jurisdiction in a December 2019 letter, Judge Moses issued a second order requiring her to address both jurisdiction and her failure to prosecute the case.

On March 19, 2020, Nakakuki said she wanted to file a notice of voluntary dismissal. She then filed a notice signed only by her, stating that the action was voluntarily dismissed without prejudice. Because Bello had already filed an answer, the court explained that Nakakuki could not dismiss the case unilaterally through that notice. Without a stipulation by both parties, dismissal required a court order.

Jurisdictional Analysis

Subject-matter jurisdiction is the court’s legal authority to hear a case. The court explained that diversity jurisdiction requires, among other things, that the amount in controversy exceed $75,000. It also noted that Nakakuki’s reliance on the Federal Arbitration Act did not independently establish federal-question jurisdiction because that statute does not itself give federal district courts jurisdiction.

The court discussed two approaches used by courts in the district to determine the amount in controversy in proceedings seeking to confirm or vacate arbitration awards: the value of the relief requested in the underlying arbitration and the value of the arbitration award. Under the first approach, the relevant demand was the amount sought in the arbitration; under the second, it was the amount awarded.

Here, the arbitration award stated that the total amount in dispute was $18,900 in legal fees, of which Nakakuki was entitled to $5,500. The resulting amount to be refunded was $13,400. The court held that the amount in controversy was below $75,000 under either approach.

Disposition

Because the court lacked subject-matter jurisdiction, it dismissed the action without prejudice under Federal Rule of Civil Procedure 12(h)(3). Judge Paul A. Engelmayer directed the Clerk of Court to close the case and stated that copies would be mailed to Nakakuki.