Appeals from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:05-cv-861-LJM-JMS-Larry J. McKinney, Judge.
The opinion of the court was delivered by: Wood, Circuit Judge
Before BAUER, POSNER, and WOOD, Circuit Judges.
Charles Craig worked for Ontario Corporation and participated in its employee stock option plan. Under the plan, he was entitled to transfer some of the shares of the stock he acquired to his wife Barbara, and he did so. The plan also provided for a bonus distribution of stock shares upon the participant's retirement. When Craig retired in 2001, he offered to sell his shares back to Ontario. Ontario accepted, but it paid with three promissory notes rather than cash.
By their terms, these notes were subject to "Standby and Subordination Agreements," which subordinated the Craigs' rights to those of certain senior creditors (Fifth Third Bank and First Merchants Bank). By December 2003, Ontario was facing difficulties in meeting its financial obligations. Eventually it reached an agreement with the Craigs to suspend principal payments until December 2004. The agreement was not renewed, however, and the Craigs sent Ontario a notice of default and sued in the district court for the Southern District of Indiana, to recover on the notes. They contended that their case fell within the district court's diversity jurisdiction, under 28 U.S.C. § 1332(a) and (c).
The Craigs were not the only creditors trying to get money from Ontario. Fifth Third sent Ontario a notice of default; that claim was settled in June 2006. First Mer-chants also asserted that Ontario had defaulted on its notes, but as of the time this case reached the district court, its claim was still outstanding.
The district court entered judgment for the Craigs on the notes, stating that even though the terms seem to prevent any payment to them, they do not bar the Craigs from reducing their claim to judgment. The district court denied a motion for relief from judgment by Ontario in November 2006, and the first appeal before us (No. 06-4409) challenges that ruling.
Subsequently, however, Ontario discovered facts that draw the district court's subject-matter jurisdiction into question. It appears that the parties may not be of diverse citizenship. Ontario moved under FED. R. CIV. P. 60(b)(4) for relief from the judgment on this basis (its second motion under Rule 60, but that detail is unimportant for our purposes), but the district court held that it had no jurisdiction to rule on the motion because the case was before this court on appeal. The court further held that it had no jurisdiction even to conduct a hearing or to review new filings while the appeal was pending. That ruling led to a second notice of appeal, No. 08-1013, which we have consolidated for disposition with the first one.
Naturally, the first question we must confront is that of jurisdiction. Here we pause to note an oddity in the jurisdictional statement that the Craigs filed in their brief before this court. Appellant Ontario, which is contesting jurisdiction, asserts in its jurisdictional statement that the Craigs had said at the outset of the litigation that they were "residents" of Arizona, and that Ontario is an Indiana corporation with its principal place of business in Indiana. In fact, Ontario continues, it has uncovered facts leading it to believe that the Craigs are citizens of Indiana. It thus challenges the authority of the federal courts to hear this case at all. When we looked to the Craigs' brief to see what response they had, all we found was that they "state that the Jurisdictional Statement in Appellant's Brief is complete and correct." This seemed like a concession either that the requirements of diversity jurisdiction have not been satisfied, or at a minimum a concession that a hearing is necessary to get to the bottom of this.
Whether or not there was such a concession, Ontario is correct that the facts relating to subject-matter juris-diction must be explored here. The district court was mistaken that it had lost all authority to do so when the motion under Rule 60(b)(4) was presented to it. We therefore vacate the court's judgment on the merits in No. 06-4409 and reverse the court's order denying the Rule 60(b)(4) motion in No. 08-1013 and remand for an evidentiary hearing on subject matter jurisdiction.
After an appeal has been filed, the district court may still consider a motion for relief from judgment under FED. R. CIV. P. 60(b). See Graefenhain v. Pabst Brewing Co., 870 F.2d 1198, 1211 (7th Cir. 1989). In general, if the motion lacks merit, the court should rule promptly and deny it; if the court finds some merit, it should issue a short memorandum so that the court of appeals can be informed of its views and take appropriate action. See 7TH CIR. RULE 57; Boyko v. Anderson, 185 F.3d 672, 675 (7th Cir. 1999).
Here, the district court declined to express any tentative view of the merits. It explicitly disclaimed jurisdiction "to conduct a hearing or to review new filings while this matter pends on appeal." The Craigs somehow find in this statement an indication that the district court thought that it did have jurisdiction over the case and was intimating a negative view of the motion, but we see nothing of the sort. The district court was aware of Boyko, but it thought that Boyko was limited to habeas corpus proceed- ings. The wording of Boyko does not, however, support any such limitation; in fact, Boyko cites a wide variety of cases for the proposition that a district court has jurisdiction to consider or deny, but not grant, a Rule 60(b) motion. See id. at 675 (collecting cases and discussing the best procedure); see also Bronisz v. Ashcroft, 78 F.3d 632 (7th Cir. 2004) (applying Boyko in immigration context); Williamson v. Indiana University, 345 F.3d 459 (7th Cir. 2003) (mentioning "the procedure we approved in Boyko" in an employment case).
This limited power is all the more important when subject-matter jurisdiction is at stake. "[I]t has been the virtually universally accepted practice of the federal courts to permit any party to challenge or, indeed, to raise suasponte the subject-matter jurisdiction of the court at any time and at any stage of the proceedings." Sadat v. Mertes, 615 F.2d 1176, 1188 (7th Cir. 1980). The Federal Rules of Civil Procedure are no less insistent: "If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." FED. R. CIV. P. 12(h)(3). Subject-matter jurisdiction is so central to the district court's power to issue any orders whatsoever that it may be inquired into at any time, with or ...