Opinion
Case No. 21-CV-1146-EFM-GEB
2023-04-04
Caleb BOONE, Plaintiff, v. Carl Arthur RANEY, Defendant.
Caleb Boone, Hays, KS, Pro Se. Carl Arthur Raney, Pro Se.
Caleb Boone, Hays, KS, Pro Se. Carl Arthur Raney, Pro Se.
MEMORANDUM AND ORDER
ERIC F. MELGREN, CHIEF UNITED STATES DISTRICT JUDGE
Plaintiff Caleb Boone brings suit against Defendant Carl Arthur Raney alleging promissory fraud and breach of contract claims for payment of unpaid legal fees. Plaintiff also seeks punitive damages. Both Plaintiff and Defendant proceed pro se. This matter comes before the Court on Magistrate Judge Gwynne E. Birzer's Order and Report and Recommendation ("R&R") (Doc. 81). She recommends that the Court grant Defendant's Motion to Dismiss (Doc. 54) for lack of subject matter jurisdiction and deny Plaintiff's Corrected Motion for Default Judgment (Doc. 19) because the Court lacks subject matter jurisdiction. Plaintiff filed an objection to Judge Birzer's R&R. For the reasons stated below, the Court overrules Plaintiff's objection, adopts the recommended decision of Judge Birzer, grants Defendant's Motion to Dismiss, and denies Plaintiff's Motion for Default Judgment.
I. Factual and Procedural Background
Plaintiff filed suit on June 1, 2021. He brings claims for promissory fraud and breach of contract against Defendant for unpaid legal fees. Plaintiff asserts that the Court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332 on the basis of diversity of citizenship. He alleges that he is a citizen of Kansas. Plaintiff also alleges that Defendant is presently living in Belize, Central America, has a Nebraska residence and thus is a citizen and resident of Nebraska.
This case was previously before Judge Sam Crow, but it was reassigned to the undersigned on October 7, 2022.
Plaintiff's allegation of Defendant's Nebraska residence is based in part on a footnote from a January 9, 2020, ruling by District Judge Sam A. Crow in Raney v. Raney in which a question arose regarding Defendant's citizenship. In that case, Defendant inconsistently alleged that he was a resident of Belize and a citizen of Nebraska. After Judge Crow issued a show cause order to determine whether there was diversity jurisdiction, Judge Crow concluded that Defendant's evidence demonstrated that he was a citizen of and domiciled in Nebraska.
No. 19-4071. Defendant Raney was the plaintiff in that case.
See 2020 WL 1009002, at *2 n.2 (D. Kan. 2020).
Id.
In October 2021, approximately four months after Plaintiff filed suit, Plaintiff sought and received a clerk's entry of default. In early 2022, he filed a Motion for Default Judgment and then a Corrected Motion for Default Judgment. In March 2022, Defendant filed an Answer, and Plaintiff sought to strike it.
A Notice of Hearing and Order to Show Cause was set for May 12, 2022 before Judge Birzer to determine whether Plaintiff's Motion for Default Judgment should be granted due to Defendant's untimely Answer. After the hearing was set, Defendant filed an Amended Answer, attaching an affidavit stating that Defendant lives in Belize.
Numerous motions were then filed by both parties. Judge Birzer rescheduled the May 12 hearing to May 24 and indicated that she would hear the pending motions as necessary depending on her ruling on the Notice and Order to Show Cause. Subsequently, Judge Birzer issued another Notice of Hearing and Order to Show Cause directing Plaintiff to show cause by June 1, 2022, as to why the case should not be dismissed for lack of subject matter jurisdiction. She cancelled the May 24 hearing and indicated it would be rescheduled, as necessary, following a determination on whether diversity jurisdiction existed in the case.
At that time, there were 10 pending motions.
Plaintiff filed his response to Judge Birzer's Order to Show Cause. Defendant then filed his reply and a motion to dismiss for lack of subject matter jurisdiction. In this motion, Defendant contends that he is a United States citizen domiciled in Belize, and the Court does not have subject matter jurisdiction. Judge Crow referred the motion to dismiss to Judge Birzer for R&R.
As noted above, this case was reassigned to the undersigned several months later.
In October, Judge Birzer set a hearing for November 14, 2022, on the Show Cause Order, Defendant's motion to dismiss, and Plaintiff's motion to strike answer. The hearing was held on November 14, and both parties appeared via Zoom. Judge Birzer heard evidence from Plaintiff by way of testimony under oath from Defendant, and she heard the parties' extensive argument. After the four-hour hearing, Judge Birzer allowed the parties to simultaneously brief one issue regarding social security and its effect on subject matter jurisdiction. She limited the parties' briefing to three pages each.
After the hearing, Plaintiff filed his supplemental brief. He also filed several additional motions, addendums, and corrections totaling over 100 pages of additional briefing. Plaintiff did not address the social security issue—the only issue that he was permitted to address—in any of this briefing. Defendant filed a supplemental brief but also failed to address the social security issue.
Judge Birzer issued her Order and R&R (Doc. 81) on December 13, 2022. In it, she recommends that Defendant's Motion to Dismiss be granted and Plaintiff's Corrected Motion for Default Judgment be denied. She determined that the evidence demonstrated that Defendant's residence was in Belize and that he had an intention to remain there. Thus, she concluded that the Court lacks subject matter jurisdiction.
Judge Birzer noted in her R&R that she believed Plaintiff would brief and argue the subject matter jurisdiction issue ad infintum. At the time of Judge Birzer's R&R, she stated that she had reviewed 20 filings in the case with 400 pages of argument, caselaw, and exhibits. She also heard approximately four hours of argument and testimony.
Judge Birzer's statement about Plaintiff's extensive briefing proved true. Since Judge Birzer's R&R was filed, Plaintiff has filed six additional motions and numerous documents totaling approximately 100 pages. Plaintiff's motion for protective order, which was denied by Judge Birzer, warrants further discussion, and it will be discussed later in this Order.
Judge Birzer allowed the parties to file objections to the R&R within 14 days. Plaintiff filed his Objection, and Defendant filed a response. Federal Rule of Civil Procedure 72 only allows an objection and a response to the party's objection. Thus, the matter is ripe for the Court's consideration.
The Court allowed Plaintiff an additional three weeks to file his objection.
Plaintiff requested additional time to file a reply, but his motion was denied because Fed. R. Civ. P. 72 does not contemplate a reply. Plaintiff also filed a motion to review the denial of this motion, but the Court denied Plaintiff's motion for review.
II. Legal Standard
A. Motions to Dismiss for Lack of Subject-Matter Jurisdiction
"Federal courts are courts of limited jurisdiction." A presumption exists against jurisdiction and "the burden of establishing the contrary rests upon the party asserting jurisdiction." "Motions to dismiss for lack of subject matter jurisdiction 'generally take one of two forms: (1) a facial attack on the sufficiency of the complaint's allegations as to subject matter jurisdiction; or (2) a challenge to the actual facts upon which subject matter jurisdiction is based.' " If the motion challenges the sufficiency of the complaint's jurisdictional allegations, the district court must accept all factual allegations in the complaint as true.
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).
Id. (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 182-83, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)).
City of Albuquerque v. U.S. Dep't of Interior, 379 F.3d 901, 906 (10th Cir. 2004) (quoting Ruiz v. McDonnell, 299 F.3d 1173, 1180 (10th Cir. 2002)).
Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995) (citation omitted), abrogated on other grounds by Cent. Green Co. v. United States, 531 U.S. 425, 121 S.Ct. 1005, 148 L.Ed.2d 919 (2001).
B. Objections to a Magistrate Judge's Dispositive Order
The Court reviews de novo any part of a magistrate judge's disposition on dispositive motions to which parties properly object. A party's objections to a magistrate's order must be timely and specific. The court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge . . . [or] may also receive further evidence or recommit the matter to the magistrate judge with instructions."
Fed. R. Civ. P. 72(b)(3); see also Summers v. State of Utah, 927 F.2d 1165, 1167 (10th Cir. 1991).
See Fed. R. Civ. P. 72(b)(2) (stating objections must be timely filed within fourteen days of the magistrate judge's issuance of a recommendation).
C. Pro Se Litigants
Both Plaintiff and Defendant appear pro se in this case. Thus, the Court liberally construes both of their pleadings. The Court, however, is not an advocate for a pro se litigant.
See Trackwell v. U.S. Gov't, 472 F.3d 1242, 1243 (10th Cir. 2007) ("Because [the plaintiff] appears pro se, we review his pleadings and other papers liberally and hold them to a less stringent standard than those drafted by attorneys.") (citation omitted).
Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991).
III. Analysis
The Court has reviewed Judge Birzer's R&R. After a de novo determination upon the record, and reviewing Plaintiff's objection to the R&R, the Court agrees with Judge Birzer's proposed disposition of the case. Judge Birzer recommended granting Defendant's Motion to Dismiss and denying Plaintiff's Corrected Motion for Default Judgment because the Court does not have subject matter jurisdiction.
In Judge Birzer's R&R, she stated that the Court must satisfy itself that it has subject matter jurisdiction. Because Defendant denied citizenship in Nebraska, and he had lived outside the United States off and on since 2021, there was a question of his domicile and whether the Court had diversity jurisdiction. Judge Birzer noted that subject matter jurisdiction cannot be conferred or waived by judicial estoppel, and the Court must consider the facts of each case.
See Jones v. Dalrymple, 679 F. App'x 668, 669 (10th Cir. 2017) (noting that "[a] United States citizen domiciled in a foreign country" is "stateless and unable to assert jurisdiction" under the diversity statute).
Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (citing Ins. Corp. v. Compagnie des Bauxites, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982)), abrogated on other grounds by Dart Cherokee Basin Operating Co., LLC v. Owens, 574 U.S. 81, 89, 135 S.Ct. 547, 190 L.Ed.2d 495 (2014).
She then set forth domicile principles such as the relevant time period for determining it is at the time the complaint is filed, and "a person acquires domicile in a state when the person resides there and intends to remain there indefinitely." She explained that Plaintiff has the burden of proof when diversity is challenged, that "[t]here is a presumption favoring an established domicile over a newly acquired one," and that the Court considers the totality of the evidence. Judge Birzer noted that the Court "pays particular attention to objective indicia of intent, 'such as the place of employment, driver's license, automobile registration, bank accounts, tax payments, location of personal property, and voting practices.' " In addition, social attachments, investments in property, and the location of family and belongings are other factors that courts can consider.
Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1238 (10th Cir. 2015) (citation omitted).
Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014).
Crowley v. Glaze, 710 F.2d 676, 678 (10th Cir. 1983).
Marcotte v. State Farm & Cas. Co., 4 F. Supp. 2d 1280, 1281 (D. Kan. 1998) (further citation and quotation omitted).
Id.
Id. (quoting Callicrate v. Farmland Indus., Inc., 1995 WL 463664, at *5 (D. Kan. 1995)).
Id.
She found that Plaintiff initially met his burden of proving diversity jurisdiction because there was a rebuttable presumption that Defendant was domiciled in Nebraska. In 2019, in a different case in the District of Kansas, Defendant alleged that he was a citizen of both Belize and a United States citizen living in Belize. At that time, Judge Crow issued a show cause order for Defendant to establish diversity jurisdiction, and Defendant came forward with evidence that he was a citizen of Nebraska. Thus, there was a presumption that Defendant remained domiciled in Nebraska.
Raney v. Raney, Case No. 19-4071.
Defendant was the plaintiff in Raney v. Raney.
Raney, 2020 WL 1009002, at *2 n. 2 (D. Kan. 2020).
Judge Birzer then found that Defendant rebutted that presumption during the four-hour evidentiary hearing before her. She found Defendant's testimony credible that he was resident of Belize when Plaintiff filed the complaint on June 1, 2001. She noted such evidence that (1) he lived there with his longtime girlfriend and minor daughter, (2) he purchased real estate in Belize in 1993 and does not own any real estate in Nebraska, (3) he is a director, minority shareholder, and founder of Expat Properties which is incorporated in Belize, (4) Expat Properties maintains bank accounts and pays taxes in Belize, (5) Defendant does not pay taxes in Nebraska, (6) he does not vote in either Belize or Nebraska, and (6) he is physically present in Belize and has no plans to relocate.
In addition, Judge Birzer noted Defendant's testimony about why his domicile changed from Nebraska to Belize between 2019 and 2021. Defendant testified that in 2019, he intended to move his teenage daughter to Nebraska to attend high school, but the COVID pandemic began in 2020, and Belize entered an extended lockdown period. Defendant's daughter continued her education in Belize, is in her final year of high school, and will graduate in 2023. Thus, Judge Birzer found that Defendant rebutted the presumption, and the burden to establish diversity jurisdiction returned to Plaintiff.
Plaintiff then set forth evidence that (1) Defendant continues to hold a Nebraska driver's license, (2) he has received mail in care of another person in Nebraska, (3) he has not changed his address with the United States' banks, (4) he has adult children who reside in Nebraska and Kansas, (5) his last United States federal tax return filed in 2010 shows Nebraska as his residence, and (6) Defendant previously asserted in his 2019 case his intention to return to Nebraska. Judge Birzer disagreed that this evidence established Nebraska residency.
She noted case law providing that "[m]ere mental fixing of citizenship is not sufficient" to establish intent, and while a party's statement of intent to remain in his residence is relevant, it is "given little weight in the overall analysis." Judge Birzer determined that Defendant's testimony was credible that he intended to remain in Belize at the time the complaint was filed. She concluded, based on the totality of the evidence, that Plaintiff could not meet his burden to establish diversity jurisdiction. Thus, she recommended that Defendant's motion to dismiss for lack of subject matter jurisdiction be granted, and Plaintiff's corrected motion for default judgment be denied.
Walden v. Broce Constr. Co., 357 F.2d 242, 245 (10th Cir. 1966).
Coffman v. Myers, 2007 WL 1703553, at *2 (D. Kan. 2007) (citing Bair v. Peck, 738 F. Supp. 1354, 1356 (D. Kan. 1990)).
Plaintiff objects to the R&R contending that Judge Birzer's factual and legal conclusions about Defendant's intent to remain in Belize are erroneous in light of all the available evidence. Plaintiff also submits additional evidence in the form of four unsworn declarations of (1) Ebelio Nah, (2) Barbara Clayton, (3) Frederic Descurminges, and (4) Richard Vargas. The Court must discuss this evidence and what is relevant to the Court's determination.
Plaintiff also directs the Court to United States Embassy Travel Alerts regarding repatriation flights from Belize to the United States between April 14, 2020 and September 4, 2020. Presumably, Plaintiff is attempting to establish that Defendant could have returned to the United States during the lockdown period. The option to return, however, is not the same as exercising the option to return. Thus, this evidence is not relevant.
Briefly summarized, Mr. Nah's declaration stated that he had a conversation with Defendant between February and May 2021 in which Defendant stated that he would move back to Nebraska to live when his daughter graduated from high school in Belize. Mr. Nah's declaration was in Spanish, and Mr. Vargas interpreted this Spanish declaration to English.
Approximately a week after Plaintiff filed his Objection, and accompanying declarations, he filed a Motion for Protective Order. In this motion, Plaintiff argued that a person on behalf of Defendant was harassing Mr. Nah and intimidating him in Belize. He sought an order to prevent Defendant, and any persons acting upon Defendant's direction, from contacting, intimidating, or harassing witnesses who signed unsworn declarations. Judge Birzer ruled on Plaintiff's motion denying his request for a protective order finding that Fed. R. Civ. P. 26 was only applicable to protect the parties themselves.
In addition, she cautioned all parties to not intimidate or harass potential witnesses.
In this Order, however, Judge Birzer noted that in Plaintiff's reply to the briefing on the protective order, Plaintiff withdrew the designation of Mr. Nah as a potential witness, declarant, or affiant. The Court has reviewed Plaintiff's reply, and Plaintiff does indeed withdraw the designation of Mr. Nah as a declarant. Thus, Mr. Nah's declaration, as well as Mr. Vargas's declaration (translating Nah's declaration from Spanish to English), are irrelevant and will not be considered as additional evidence. Accordingly, the only additional evidence before the Court are the declarations from Ms. Clayton and Mr. Descurminges.
Ms. Clayton claimed that Defendant had the reputation of being a liar. She also asserted that Defendant told her in 2018 that he would move back to Nebraska after his daughter graduated from high school in Belize. Mr. Descurminges stated that it was his opinion that Defendant was a habitual liar. This evidence does not change the Court's position with regard to Judge Birzer's determination regarding Defendant's intent. She found that Defendant intended to remain in Belize at the time the Complaint was filed in 2021. Ms. Clayton's declaration references Defendant's statement from 2018. That timeframe is not relevant. And as Judge Birzer's order noted, "[w]hat is in another man's mind must be determined by what he does as well as what he says."
Walden, 357 F.2d at 245 (citation omitted).
In addition, although both Ms. Clayton and Mr. Descurminges opined that Defendant is untruthful, Judge Birzer observed Defendant during the hearing and found Defendant's testimony credible. Judge Birzer's determination that Defendant was credible is entitled to more weight than two unsworn declarations—one of which spoke to Defendant's alleged intent three years ago and one of which did not provide any information regarding Defendant's intent to remain in Belize. In sum, the Court overrules Plaintiff's objection, and it finds itself in complete agreement with Judge Birzer's R&R.
IT IS THEREFORE ORDERED that Plaintiff's Objections to Magistrate's Report and Recommendation (Doc. 90) are overruled.
IT IS FURTHER ORDERED that Magistrate Judge Birzer's Order and Report and Recommendation (Doc. 81) is adopted.
IT IS FURTHER ORDERED that Plaintiff's Motion for Default (Doc. 19) is denied.
IT IS FURTHER ORDERED that Defendant's Motion to Dismiss (Doc. 54) is granted.
IT IS SO ORDERED.
This case is closed.
ORDER AND REPORT AND RECOMMENDATION
GWYNNE E. BIRZER, United States Magistrate Judge
This matter comes before the Court on 1) its Order to Show Cause (ECF No. 52), 2) Defendant's Motion for Dismissal for Lack of Subject Matter Jurisdiction Pursuant to Federal Law 28 U.S.C. 1332(a) ("Motion to Dismiss") (ECF No. 54), and 3) Plaintiff's Motion to Strike Answer of the Defendant ("Motion to Strike") (ECF No. 31). On November 14, 2022, the Court heard oral argument and conducted a limited evidentiary hearing. During the hearing, the Court permitted the parties to brief an additional issue raised during the hearing. After careful consideration of all briefing and hearing arguments and evidence from the parties, the Court recommends Defendant's Motion to Dismiss be GRANTED for the reasons set forth below and orders Plaintiff's Motion to Strike be FOUND AS MOOT pending the District Judge's ruling on the undersigned Magistrate Judge's recommendation. I. Procedural Background
Unless otherwise indicated, the information recited in this section is taken from the Complaint (ECF No. 1), Answer (ECF No. 30), Amended Answer (ECF No. 35), and Order to Show Cause (ECF No. 52). This background information should not be construed as judicial findings or factual determinations.
This is a case brought by Caleb Boone ("Plaintiff") against Carl Arthur Raney ("Raney" or "Defendant"), under Kansas law, for payment for unpaid legal fees and punitive damages. Boone's claims sound in promissory fraud and breach of contract. Both parties proceed pro se in this matter. Plaintiff alleges the court has subject matter jurisdiction pursuant to 28 U.S.C. § 1332, based upon the diversity of the parties. Plaintiff alleges he is a citizen and resident of Hays, Kansas, and he alleges Defendant is a citizen and resident of Custer County, Nebraska whose address is c/o Jarrod Connor, 605 South Sixth Avenue, Broken Bow, Nebraska 68822. Plaintiff's allegation of Defendant's citizenship is based, at least in part, on a January 9, 2020 ruling of District Judge Sam A. Crow in Raney v. Raney, where a question arose regarding Raney's citizenship. There, Raney inconsistently alleged he was both, a citizen of Belize, and a United States citizen currently living in Belize. After the issuance of an Order to Show Cause and Response by Raney with evidence he was a citizen of Nebraska, Judge Crow found the show cause order was satisfied.
Raney v. Raney, No. 19-4071, 2020 WL 1009002, at *2, n. 2 (D. Kan. Jan. 9, 2020).
Id.
Id.
In Defendant's Answer here, he "denies every allegation made by the Plaintiff in the Complaint, except for those specifically admitted." Defendant does not specifically admit Plaintiff's allegation that he is a citizen of Nebraska. Thus, based on the language of his Answer, the Court considers it denied. Additionally, Defendant filed an Amended Answer and attaches an affidavit. In his affidavit, Defendant asserts he currently lives in and has his residence in Corazal Town, Belize, Central America. He has lived in Belize since at least 2001.
A question, therefore, arose regarding the domicile of Defendant which could impact subject matter jurisdiction in this case. On May 19, 2022, the Court issued an Order to Show Cause directing Plaintiff to show cause why the case should not be dismissed for lack of subject matter jurisdiction. Defendant in his reply to the Order to Show Cause included a Motion to Dismiss wherein he claims the court is without jurisdiction because he is a United States citizen domiciled in Belize. District Judge Sam A. Crow referred the Motion to Dismiss to the undersigned Magistrate Judge for report and recommendation.
ECF No. 52.
ECF No. 54.
This case was reassigned to Judge Eric F. Melgren on October 7, 2022.
ECF No. 57.
The Court noticed a hearing on Plaintiff's Motion to Strike, the Court's Order to Show Cause, and Defendant's Motion to Dismiss for November 14, 2022. During the hearing, the Court heard evidence from Plaintiff by way of testimony under oath from Defendant, and the parties' argument on the relevant motions. The evidence presented during the hearing raised a singular issue related to Social Security and its effect on jurisdiction which Plaintiff asked the Court leave to brief. The Court granted Plaintiff's request and set a deadline for the parties to simultaneously brief the Social Security issue discussed during the conference. The supplemental briefing was due on November 28, 2022 and limited to three pages in length. Plaintiff filed his Supplemental Brief; a Motion for Reconsideration; a Motion for Leave to File Under Seal seven exhibits to his Motion for Reconsideration; an Addendum to his Motion for Reconsideration, an Amended Addendum to Plaintiff's Motion for Reconsideration, a Correction of Certain Oral Argument and Written Brief Statements, and a Response to Defendant's Supplemental Briefing. Defendant filed his Supplemental Brief which the Court notes complied with its page limitations and an Objection to Reconsideration and Rehearing Requested by Plaintiff. All totaled, Plaintiff submitted over 100 pages of additional briefing and exhibits for the Court's consideration and nowhere therein does Plaintiff address the Social Security issue he was actually given leave to address.
ECF No. 67.
ECF No. 71.
Id.
ECF No. 73.
ECF No. 74.
ECF No. 75.
ECF No. 76.
ECF No. 77.
ECF No. 78
ECF No. 80.
ECF No. 72.
ECF No. 79.
II. Issues Raised in Plaintiff's Supplemental Briefing
A. Plaintiff's Motion for Reconsideration and Post-Hearing Brief
Although titled a motion for reconsideration, the only order stemming from the hearing on the instant motions allowed the parties to simultaneously brief the Social Security issue. Plaintiff's motion seeks neither reconsideration of that order, nor any order of the Court. Instead, Plaintiff in his Motion for Reconsideration and Post-Hearing Brief seeks a second hearing. A second hearing is not necessary.
Plaintiff complains the hearing was not noticed as an evidentiary hearing. It was not. Plaintiff requested oral argument on the Court's Order to Show Cause, Defendant's Motion to Dismiss, Plaintiff's Motion to Strike, and Plaintiff's Motion for Default Judgment. His motion was granted in part and denied in part, as the Court needed to address the jurisdiction issues before turning to the Motion for Default Judgment, if necessary. The Court allowed Plaintiff to present evidence by inquiry of Defendant, under oath. Plaintiff took advantage of the opportunity and questioned Defendant for several hours, the hearing taking nearly four hours. After which the Court heard argument from the parties.
ECF No. 63.
ECF No. 66.
Plaintiff also complains the hearing was held via Zoom. But his Request for Argument contemplated a hearing either by Zoom or in person. Fed. R. Civ. P. 43(a) permits testimony by contemporaneous transmission, such as a Zoom videoconference, to be taken in open court "[f]or good cause in compelling circumstances with the appropriate safeguards." At the time the hearing took place on November 14, 2022, Administrative Order 2022-03 - In re: Covid-19 Pandemic Order Update was in place. It is one of a continuation of Administrative Orders issued by the Court since the start of the Covid-19 pandemic in Kansas in March 2020. The Administrative Order finds "that emergency conditions continue to exist throughout this district, as found by the President and JCUS under the CARES Act" and pursuant to the CARES Act and the Recovery Guidelines gives the presiding judge "discretion to use video and teleconferencing in criminal and civil hearings." Using the Court's discretion and additionally considering the presence of Defendant in Belize, Central America, the Court noticed the hearing via Zoom.
ECF No. 63, at 1.
Eller v. Trans Union, LLC, 739 F.3d 467, 477 (10th Cir. 2013).
See Court's website at www.ksd.uscourts.gov/standing-orders for text of order.
The Court acknowledges both parties had certain technical difficulties during the hearing. At times the audio connection with Plaintiff would cutout and he would have to repeat a portion of his argument or repeat a question. And at most times throughout the conference, Defendant's computer system had a pronounced buzz that all could hear. Defendant would mute his audio when he was not speaking to provide relief from the buzzing sound and frequently had to be reminded to unmute himself when he began to speak again. Although the technology during the hearing was indeed frustrating, the Court was able to grasp full understanding and appreciation of the arguments and testimony of all parties.
Lastly, the Court believes Plaintiff, if permitted, would brief and argue the subject matter jurisdiction issue ad infinitum. The Court has considered all of the post-hearing briefing, although it is well beyond the scope and subject matter of that permitted by the Court's Order, as well as the relevant pre-hearing pleadings, motions, and briefing. All total, the Court has reviewed 20 filings in this case with 400 pages of argument, caselaw, and exhibits and the Court heard approximately 4 hours of argument and testimony. The Court has before it the information necessary to make a recommendation to the District Judge on subject matter jurisdiction.
III. Motion to Strike
Defendant filed his Answer on March 15, 2022, more than 5 months after his extended deadline of October 8, 2021 to answer or otherwise respond. Plaintiff filed a Motion to Strike Defendant's Answer arguing Defendant's delay in response is not due to excusable neglect which would justify a finding of good cause for an extension of time to allow the late Answer. However, federal courts are courts of limited jurisdiction, there is a presumption against the exercise of federal jurisdiction, and "Courts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it." Therefore the Court must lay aside any discussion of Plaintiff's Motion to Strike until there is a determination of whether subject matter jurisdiction exists.
ECF No. 30.
ECF No. 31.
Merida Delgado v. Gonzales, 428 F.3d 916, 919 (10th Cir. 2005).
Id.
Hertz Corp. v. Friend, 559 U.S. 77, 94 (2010).
IV. Order to Show Cause and Defendant's Motion to Dismiss
As set out above, Plaintiff alleges the court has subject matter jurisdiction based upon the diversity of the parties. When a question arose regarding Defendant's domicile which in turn raised a question regarding whether the court had subject matter jurisdiction, the undersigned Magistrate Judge issued an Order to Show Cause. When Defendant filed his Reply to that Order, he also asked the court to dismiss the case for lack of subject matter jurisdiction. Plaintiff in response argues Defendant is judicially estopped to deny he is domiciled in Nebraska.
Defendant brings his Motion to Dismiss pursuant to Fed. R. Civ. P. 12(b)(1) which permits a court to dismiss an action for lack of subject matter jurisdiction. "Rule 12(b)(1) motions generally take one of two forms: (1) a facial attack on the sufficiency of the complaint's allegations as to subject matter jurisdiction; or (2) a challenge to the actual facts upon which subject matter jurisdiction is based." Here, the motion and responsive briefing challenges the facts upon which subject matter jurisdiction is based. The Court, therefore, "may not presume the truthfulness of the complaint's factual allegations" and "has wide discretion to allow affidavits, other documents, and a limited evidentiary hearing to resolve disputed jurisdictional facts" without converting the motion to a motion for summary judgment.
Ruiz v. McDonnell, 299 F.3d 1173, 1180 (10th Cir. 2002) (citing Holt v. United States, 46 F.3d 1000, 1002-03 (10th Cir. 1995)).
Holt v. United States, 46 F.3d 1000, 1003 (10th Cir. 1995) abrogated on other grounds by Cent. Green Co. v. United States, 531 U.S. 425, 437 (2001).
Id. (citing Wheeler v. Hurdman, 825 F.2d 257, 259 n.5 (10th Cir. 1987), cert. denied, 484 U.S. 986 (1987)); see also Coffman v. Meyers, No. 06-2297-CM, 2007 WL 1703553, at *2 (D. Kan. June 12, 2007) and Tallchief v. Haden, No. 12-1093-KGG, 2013 WL 2102885, *2 (D. Kan. May 15, 2013).
A. Legal Standards
Though Plaintiff has formal legal training, both parties are pro se. Therefore, the Court is mindful of considerations for unrepresented parties. " 'A pro se litigant's pleadings are to be construed liberally and held to a less stringent standard than formal pleadings drafted by lawyers,' but the court will not 'assume the role of advocate for the pro se litigant.' "
Smith v. Kansas Dept. for Children and Families, No. 14-2499-EFM, 2015 WL 5032060, at * 2 (D. Kan. Aug. 25, 2015) (citing Hall v. Bellmon, 935 F.2d 1106, 1110 (10th Cir. 1991)).
1. Limitations on Court's Jurisdiction
Federal courts are courts of limited jurisdiction possessing only that power which is authorized by the Constitution and statute. There is a presumption against jurisdiction and the burden of establishing the contrary "rests upon the party asserting jurisdiction." A federal court lacking subject matter jurisdiction "must dismiss the cause at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking." Additionally, "if the parties fail to raise the question of the existence of jurisdiction, the federal court has the duty to raise and resolve the matter."
Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377 (1994).
Id.
Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (citing Tuck v. United Services Auto. Ass'n, 859 F.2d 842, 844 (10th Cir. 1988)).
Tuck, 859 F.2d at 844.
2. Subject Matter Jurisdiction over United States Citizen Domiciled in a Foreign Country
Where Defendant denies citizenship in Nebraska and has lived outside the United States off and on since 2001, Defendant's Answer raises a question of his domicile. "A United States citizen domiciled in a foreign country is not a 'citizen[ ] or subject[ ] of a foreign state,' but is stateless and unable to assert jurisdiction under 28 U.S.C. § 1332(a)(2) or § 1332(a)(1). "Federal courts, then lack jurisdiction over these so-called 'stateless' citizens if the only basis for subject matter jurisdiction is the diversity statute," as is the case here.
Jones v. Dalyrmple, 679 F.App'x 668, 669 (10th Cir. 2017) (quoting Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828-29 (1989) (emphasis added)).
Page v. Democratic Nat'l Comm., 2 F.4th 630, 636 (7th Cir. 2021), cert. denied, No. 21-755, 2022 WL 89383 (U.S. Jan. 10, 2022) (citing Newman-Green, 490 U.S. at 828-29).
3. Judicial Estoppel
"Subject matter jurisdiction cannot be conferred or waived by consent, estoppel, or failure to challenge jurisdiction early in the proceedings." A court in determining diversity jurisdiction, "is concerned with the particular facts applicable to each case, not the prior representations made by a party."
Laughlin v. Kmart Corp., 50 F.3d 871, 873 (10th Cir. 1995) (citing Ins. Corp. v. Compagnie des Bauxites, 456 U.S. 694, 702, (1982)); see also Hahn v. Privilege Underwriters Reciprocal Exchange, No. 20-0502-GFK, 2021 WL 6062902, *3 (N.D. OK Mar. 17, 2021) (citing cases).
Mid-Century Ins. Co. v. Johnson, No. 13-2191-RDR, 2013 WL 3013620, *3 (D. Kan. June 14, 2013).
4. Domicile
"[A] natural person is deemed a citizen of the state in which he or she is domiciled." A person's residence is not the equivalent of his domicile and it is a person's domicile that is relevant for determining citizenship. The relevant time period for determining the existence of diversity is at the time the complaint is filed. "[A]n individual can only have one domicile at a time." But a person's domicile is subject to change. "A change of domicile is valid even if done for the purpose of creating diversity, and no minimum period of residency is required." For diversity jurisdiction, "a person acquires domicile in a state when the person resides there and intends to remain there indefinitely."
Id. at *2 (citing Smith v. Cummings, 445 F.3d 1254, 1260-61 (10th Cir. 2006)).
Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1238 (10th Cir. 2015) (citing Whitelock v. Leatherman, 460 F.2d 507, 514 n. 14 (10th Cir. 1972)).
Id.
Page, 2 F.4th at 635 (citing Williamson v. Osenton, 232 U.S. 619, 625 (1914)).
Stucky v. Bates, 2 F.Supp.2d 1434, 1437 (D. Kan. 1998) (citing Cressler v. Neuenschwander, 930 F.Supp. 1458, 1460 (D. Kan. 1996)).
See Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014).
When a plaintiff's claim of diversity is challenged, the plaintiff has the burden of proof. "There is a presumption favoring an established domicile over a newly acquired one." "In determining where a person is domiciled, the court considers the totality of the evidence." The court "pays particular attention to objective indicia of intent 'such as the place of employment, driver's license, automobile registration, bank accounts, tax payments, location of personal property, and voting practices." Additional factors to consider are the party's "social attachments in both states, whether he retains a place of abode or investments in local property or enterprise in the old state of residence, whether he has taken his family and his belongings with him, and the manner in which he lives (i.e., whether he rents or buys a home)."
Crowley v. Glaze, 710 F.2d 676, 678 (10th Cir. 1983).
Marcotte v. State Farm Fire & Cas. Co., 4 F.Supp.2d 1280, 1281 (D. Kan. 1998) (quoting Stucky v. Bates, 2 F.Supp.2d 1434, 1436 (D. Kan. 1998)).
Id.
Id.
Id.
B. Discussion
1. Judicial Estoppel
Plaintiff initially argued Defendant, because he responded to an Order to Show Cause in another case in this District, indicating at the time he was domiciled in Nebraska, was judicially estopped from alleging he is a domiciled in Belize in this action. Defendant relied on a District of Kansas unpublished March 12, 2010 Memorandum and Order in Multi-Media Int'l, LLC v. Nat. Pub. Servs., Inc., No. 09-2670-KHV, pp. 4-5 where the court discussed a judicial estoppel argument raised by one of the parties, but ultimately found, based on the law of the Tenth Circuit, judicial estoppel was not appropriate. The case there was remanded due to lack of subject-matter jurisdiction. The other cases Plaintiff cites in support of this argument either, lack merit as they do not consider judicial estoppel as it applies to subject matter jurisdiction, or are not from this Circuit.
Raney v. Raney, 19-cv-4071-SAC.
Johnson v. Lindon City Corp., 405 F.3d 1065 (10th Cir. 2005) (arrestees were judicially estopped from asserting civil rights claims contesting the validity of their arrests) and New Hampshire v. Maine, 532 U.S. 742 (2001) (New Hampshire was equitably barred from asserting, contrary to its earlier position, that the inland Piscatagua River boundary ran along the Maine shore).
Kubin v. Miller, 801 F.Supp. 1101 (S.D. NY 1992).
The caselaw in the Tenth Circuit is clear "[s]ubject matter jurisdiction cannot be conferred or waived by consent, estoppel, or failure to challenge jurisdiction early in the proceedings." In determining domicile or citizenship for the purpose of diversity jurisdiction, "the court is concerned with the particular facts applicable to each case, not the prior representations made by a party." A party's prior representations, however, might have some impact on the credibility of later representations. The issue of self-serving statements of domicile will be addressed as the Court turns to the domicile issue.
Laughlin, 50 F.3d at 873; see also Hahn v. Privilege Underwriters Reciprocal Exchange, No. 20-0502-GFK, 2021 WL 6062902, *3 (N.D. OK Mar. 17, 2021) (citing cases).
Mid-Century Ins. Co. v. Johnson, No. 13-2191-RDR, 2013 WL 3013620, *3 (D. Kan. June 14, 2013).
Id.
2. Domicile
Plaintiff, as the party invoking diversity jurisdiction, bears the burden of proving diversity by a preponderance of the evidence. This burden might be met by reliance on the rebuttable presumption that domicile, once established, remains the same until it is shown to have been changed. The party seeking to rebut the presumptions bears only the burden of production, not persuasion. "In other words, the party seeking to rebut the presumption need only produce sufficient evidence suggesting that domicile has changed; the party need not prove it." If the presumption is rebutted, it disappears from the case again leaving the party asserting jurisdiction with the burden of proof. In 2019, in Raney v. Raney, Defendant came forward with evidence he was a citizen of Nebraska and domiciled in that state sufficient to satisfy the court's show cause order. Judge Crow found Defendant was domiciled in Nebraska at the time the complaint in the Raney v. Raney case was filed on August 16, 2019 creating a presumption Defendant remained domiciled in Nebraska at the time Plaintiff filed the complaint in this case on June 1, 2021.
Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014) (citing Mid-Continent Pipe Line Co. v. Whitely, 116 F.2d 871, 873 (10th Cir. 1940)).
Id. (citing Mitchell v. United States, 88 U.S. 350, 353 (1874)).
Id. (citing State Farm Mut. Auto. Ins. Co. v. Dyer, 19 F.3d 514, 519 (10th Cir. 1994)).
Id.
Id.
In the instant case, Defendant, during the evidentiary hearing, came forward with evidence creating a rebuttable presumption of his own. Defendant testified he was a resident of Corozal Town, Belize when Plaintiff filed his complaint on June 1, 2021. Although domicile and residence are not necessarily synonymous, residence creates a rebuttable presumption of domicile. Defendant came forward with additional evidence of his domicile in Belize in June 2021. Defendant testified he became a Permanent Resident of Belize in 2001. Although Defendant does not own a home in Belize, he testified he and his longtime girlfriend live together there with their minor daughter. Their minor daughter has attended school in Belize since 2012. Defendant testified he did not travel to the United States in either 2021 or in 2022.
Bair v. Peck, 738 F. Supp. 1354, 1355 (D. Kan. 1990) (citing Miss. Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989)).
Coffman v. Meyers, No. 06-2297-CM, 2007 WL 1703553, at *1 (D. Kan. June 12, 2007); see also Walden v. Broce Const. Co., 357 F.2d 242, 245 (10th Cir. 1966).
Defendant also testified he purchased real estate in Belize it in 1993. He does not own any real estate in Nebraska. Defendant further testified he has personal property including registered vehicles in Belize, and he no longer has much personal property in Nebraska. Defendant maintains a driver's license in both, Belize and Nebraska.
Evidence was also presented that Defendant is a director, minority shareholder, and founder of Expat Properties Company Limited which was incorporated in Belize in January of 2018. Although not an employee of Expat Properties, Defendant assists in the construction and remodeling work of the company. Expat Properties maintains bank accounts and pays taxes in Belize. But Belize does not have personal property taxes, Defendant does not pay those taxes in Belize. Neither does he pay taxes in Nebraska. Defendant represented he has no personal bank accounts in either Belize or Nebraska. His only personal accounts are in Kansas.
Defendant has attended church services with his family in Belize, although he does not do so on a regular basis. In the past, Defendant belonged to the Rotary Club in Belize, although he is not currently a member. Defendant neither votes in Belize nor Nebraska. The last election Defendant voted in was sometime prior to 2010 when he voted in the United States. Defendant testified he is physically present in Belize and has no plans to relocate.
Defendant testified about why his domicile changed from Nebraska, as he advised Judge Crow in the Raney v. Raney case in 2019, to Belize at the time the Complaint was filed in this action on June 1, 2021. In 2019, Defendant intended at some point to move to Nebraska with his teenage daughter to allow her to attend high school and become familiar with the United States as the family wanted her to attend college here. For Defendant, as for so many others, the Covid pandemic began and changed his plans. Belize entered an extended lockdown period with its borders closed. Classes, however, continued and his daughter has begun her final year of high school, in Belize and she will graduate in 2023. Defendant testified with one of the primary factors in his intent to return to Nebraska gone, by the time Plaintiff filed his Complaint, Defendant no longer considered Nebraska his domicile. Based on the above, Defendant has overcome the rebuttable presumption his domicile is in Nebraska and the burden to establish diversity returns to Plaintiff.
Plaintiff argues evidence which shows Defendant continues to hold a Nebraska driver's license, has received mail related to other cases in Kansas in care of another person in Nebraska, he has not changed his address with United States banks from his prior address in Nebraska, he has adult children who reside in Nebraska and Kansas, his last United States federal tax return filed in 2010 shows Nebraska as Defendant's residence, and previously in the Raney v. Raney case asserted his intention to return to his Nebraska domicile are sufficient to meet that burden. The Court disagrees.
Defendant alleges he was a United States citizen domiciled in Belize, Central America at the time the Complaint in this case was filed. "Mere mental fixing of citizenship is not sufficient." A party's statement of intent to remain in his or her residence is relevant, but given little weight in the overall analysis. "What is in another man's mind must be determined by what he does as well as what he says."
Walden, 357 F.2d at 245.
Coffman, at *2 (citing Bair, 738 F.Supp. at 1355).
Walden, 357 F.2d at 245.
When an allegation of diversity is disputed, the evidence and the inferences and deductions to be fairly drawn from it present a question of fact, it is for the judge who heard and observed the witnesses to decide what inferences and deductions are to be drawn. "The same rule applies when the evidence is undisputed but conflicting inferences or deductions from it are possible." Plaintiff went to great lengths in his post hearing briefing, to provide evidence Defendant has four daughters, rather than the two he testified about during the hearing. Defendant denies this is the case. But even if true, having reviewed the evidence and heard the testimony of Defendant relevant to the issue of his domicile at the time the Complaint was filed in this action, i.e., his residency in Belize and his intention to remain there, the Court finds Defendant's testimony credible to rebut the presumption. Considering the totality of the evidence, the Court finds Plaintiff has not overcome his burden to establish diversity jurisdiction at the time he filed his complaint. Defendant being a United States citizen domiciled in a foreign country is therefore stateless for the purposes of jurisdiction under 28 U.S.C. § 1332(a)(2) or § 1332(a)(1) and the court lacks jurisdiction where the only basis for subject matter jurisdiction is the diversity statute.
Id. at 244-45.
Id.
V. Recommendation
For the reasons outlined above, IT IS THEREFORE RECOMMENDED that Defendant's Motion to Dismiss (ECF No. 54) be GRANTED. Based upon the recommendation the Motion to Dismiss be granted, it is further recommended Plaintiff's Corrected Motion for Default Judgment (ECF No. 19) be DENIED.
IT IS ORDERED this Report and Recommendation be served on the parties via U.S. Mail. Pursuant to 28 U.S.C. § 636(b)(1)(C) and Fed. R. Civ P. 72(b), either party may file written objections to the proposed recommendation with the clerk of the district court within fourteen (14) days after being served with a copy of this report and recommendation. Failure to make a timely objection waives appellate review of both factual and legal questions.
Morales-Fernandez v. I.N.S., 418 F.3d 1116, 1119 (10th Cir. 2005).
IT IS FURTHER ORDERED Plaintiff's Motion for Reconsideration (ECF No. 74) be DENIED.
IT IS FURTHER ORDERED Plaintiff's Motion for Leave to File Under Seal (ECF No. 75) be GRANTED.
IT IS FURTHER ORDERED Plaintiff's Motion to Strike (ECF No. 31), Plaintiff's additional motions at (ECF Nos. 36, 46, and 47), and Defendant's motions at (ECF Nos. 39, 40, 43, and 45) be DENIED AS MOOT pending the District Judge's ruling on the undersigned Magistrate Judge's recommendation.
Motion for Extension of Time to Respond to the Defendant's Amended Answer to Complaint (ECF No. 36), Motion to Supplement Brief in Support of Plaintiff's Motion to Strike Defendant's Answer and Plaintiff's Response/Motion to Strike the Defendant's Amended Answer to Complaint (ECF No. 46), and Motion for Extension of Time to Respond to Defendant's Motion to Strike, Response to Order to Show Cause and Brief, and Motion for Sanctions and Brief (ECF No. 47).
Motion to Strike Plaintiff's Unauthorized Reply to Defendant's Amended Answer (ECF No. 39), Motion for Hearing on Defendant's Motion to Strike (ECF No. 40), Motion to Impose Sanctions Against Plaintiff for Filing of Frivlous (sic) and Abusive Litigation (ECF No. 43), and Motion for Hearing on Motion for Sanctions (ECF No. 45).
IT IS SO ORDERED.