Opinion
Civil No. 02-4764 (JRT/FLN)
August 24, 2003
Michael A. Rosow and Richard G. Jensen, FABYANSKE WESTRA HART, Minneapolis, MN for plaintiff
Scott M. Rusert, FLYNN GASKINS BENNETT, Minneapolis, MN for Defendant Wells Operating Partnership
Elizabeth A. Price and Paul J. Kaplan, ALSTON BAIRD, Atlanta, GA for defendant Wells Operating Partnership
MEMORANDUM OPINION AND ORDER DENYING PLAINTIFF'S MOTION TO REMAND
This action comes to the Court after having been removed from the district court of Ramsey County, Minnesota. Plaintiff Shoreview Associates ("Shoreview") now moves to remand the case, arguing that this Court is without subject matter jurisdiction because complete diversity does not exist. For the reasons discussed below, the Court denies Shoreview's motion.
BACKGROUND
Plaintiff Shoreview is a corporate citizen of Minnesota. Defendant Wells Operating Partnership ("Wells") is a Maryland corporation with principal place of business in Georgia. Defendant Commercial Partners Title ("CPT") is a corporate citizen of Minnesota. On November 14, 2002, Shoreview sued Wells in Ramsey County District Court to recover $75,000 held in escrow (the "Earnest Money"). Wells placed the Earnest Money in escrow in connection with a purchase agreement between the parties that was never completed. CPT is the escrow agent holding the Earnest Money.On or about November 25, 2002, before receiving Wells's answer in the Ramsey County action, Shoreview's counsel contacted Wells's counsel seeking a stipulation to add CPT as a defendant, apparently so that a court would have jurisdiction over the Earnest Money. Wells's counsel agreed, and around December 4, 2002, Shoreview's counsel sent a stipulation to Wells's counsel. Wells filed its Answer in Ramsey County District Court on December 5, 2002.
On December 10, 2002, Wells filed its notice of removal in federal court. When the case was removed, CPT was not yet a party to the action, and the notice provided that complete diversity existed between the parties. That same day, all three parties filed a stipulation with this Court adding CPT as a defendant. The Court approved the stipulation, which provided that CPT need not answer the Complaint, and that it would hold the Earnest Money until Wells and Shoreview jointly direct CPT to disburse the money or until the Court does so.
Shoreview now seeks to remand, arguing that complete diversity has been destroyed because CPT is a Minnesota citizen.
ANALYSIS
The Court determines diversity of citizenship at the time an action is removed to federal court. Associated Ins. Mgmt. Corp. v. Arkansas Gen. Agency, Inc., 149 F.3d 794, 796 (8th Cir. 1998). A federal court does not have diversity jurisdiction unless there is "complete diversity," that is, diversity between all plaintiffs and all defendants. Iowa Pub. Serv. Co. v. Medicine Bow Coal Co., 556 F.2d 400, 403-04 (8th Cir. 1977) (citing City of Indianapolis v. Chase Nat'l Bank, Trustee, 314 U.S. 63 (1941)). Complete diversity, however, is tested by the citizenship of the "real parties to the controversy." Navarro Savings Ass'n v. Lee, 446 U.S. 458, 461 (1980); Associated Ins. Mgmt., 149 F.3d at 796. A federal court must therefore disregard the citizenship of nominal or formal parties to the case. Navarro, 446 U.S. at 461; Salem Trust Co. v. Manufacturers' Finance Co., 264 U.S. 182, 189-90 (1924); Bumberger v. Insurance Co. of No. Amer., 952 F.2d 764, 767 (3d Cir. 1991).
It is well established that an escrow agent or depository that has been joined merely to perform a ministerial duty is no more than a nominal party, and is therefore disregarded for diversity purposes. See, e.g., Prudential Real Estate Affiliates, Inc. v. PPR Realty, Inc., 204 F.3d 867, 873 (9th Cir. 2000) (holding that citizenship of mere stakeholder need not be considered for complete diversity); Matchett v. Wold, 818 F.2d 574, 576 (7th Cir. 1987) ("The addition to a lawsuit of . . . the holder of the stakes of the dispute between the plaintiff and the original defendant . . . does not affect diversity jurisdiction."); Tune, Entrekin White, P.C. v. Magid, 220 F. Supp.2d 887, 889 (M.D. Tenn. 2002) (holding that escrow agent that had "no interest" in the disputed funds should be disregarded when determining diversity); Hidey v. Waste Sys. Int'l, Inc., 59 F. Supp.2d 543, 546 (D. Md. 1999) (holding party that was "mere depository" for disputed funds had no interest in litigation and therefore need not be considered for diversity purposes); Dempsey v. Transouth Mortgage Corp., 88 F. Supp.2d 482, 484 (W.D.N.C. 1999) (holding party that held title to property at issue in trust for "the sole benefit of the real parties in interest" was nominal party); National Health Laboratories, Inc. v. Upstate Testing Laboratory, Inc., 878 F. Supp. 117, 118 (N.D. Ill. 1995) (holding that escrow agent performing purely ministerial duties is a nominal party that cannot defeat removal to federal court). See 6A Charles A. Wright, Arthur R. Miller, Edward H. Cooper, and Richard D. Freer, Federal Practice Procedure: Federal Rules of Civil Procedure § 3606 (2003) ("In determining whether complete diversity exists, nominal or formal parties who have no interest in the action will be ignored.")
In this case, Shoreview does not dispute that CPT is merely an escrow agent, and has no real interest in the litigation. The record supports this. The parties stipulated that CPT need not answer the complaint, and CPT has apparently not even retained counsel for this case. The Court therefore finds that CPT is a nominal party, and its presence does not destroy the diversity of citizenship between the real parties in interest, Shoreview and Wells. Because the Court's diversity jurisdiction is intact, Shoreview's motion to remand will be denied.
Rather than continue as a party, CPT may wish to deposit the disputed funds with the Court. This may be a better approach, and the Court would entertain a stipulation to this effect should the parties desire to follow this course.
ORDER
Based on the foregoing, all the records, files, and proceedings herein, IT IS HEREBY ORDERED that plaintiff's Motion to Remand [Docket No. 9] is DENIED.