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A seller entered a contract with a buyer under which the buyer agreed to purchase certain corporate securities for $500,000. The buyer refused to go through with the purchase, contending that the entire transaction was void because of federal securities statutes. The seller thus sold the securities to another party but was able to sell them for only $420,000. The seller filed an action against the buyer in federal district court, alleging that the transaction did not violate federal securities statutes and seeking $80,000 for the buyer's breach of contract. The seller and the buyer are both citizens of the same state. Does the federal court have subject matter jurisdiction over the action

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Anthougoid

Answer:

Yes.  The federal court has subject matter jurisdiction over the action because it is based on a federal statute.

Explanation:

While the state court will always have subject matter jurisdiction over most cases involving citizens of the same state, the statute under contention is a federal statute, and the defendant is claiming that the transaction violated some federal securities statutes.  Moreover, the amount that the plaintiff is asking for is more than $75,000.  As it is, the federal court has subject matter jurisdiction to hear the case.

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