Opinion
Civil Action No. AW-00-3633.
March 26, 2001.
MEMORANDUM OPINION
This case arises out of the sale of the assets of a company named Fresh Maid Product, Inc. ("Fresh Maid"). In its complaint, Plaintiff, TRI-PARTNERS, LLC ("Tri-Partners") alleges breach of warranty, contract, negligent misrepresentation, and fraud in connection with the sale. Defendants removed the case from the Circuit Court of Prince George's County on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. Currently pending before the Court are Plaintiff's Motion for Leave to File a Second Amended Complaint and Motion for Remand. Plaintiff seeks to add two additional defendants, Fiorenza Enterprises, Inc. and Anthony DiNenna, that will destroy diversity as they and the Plaintiff are citizens of Maryland. Defendants have not filed an opposition. No hearing is deemed necessary. See Local Rule 105.6. Upon consideration of the arguments made in support of, and opposition to, the respective motions, the Court shall grant Plaintiff's motions.
I. FACTUAL BACKGROUND
Tri-Partners is a limited liability company organized under the laws of Maryland. Tri-Partners is owned and operated by Les Shickman, Don Sheldon, and Kie Haghighi. Each owner is a citizen of Maryland. Fresh Maid is a corporation organized under the laws of Maryland. Fresh Maid owned and operated a wholesale business in Maryland. Defendants Carl Fiorenza and Cynthia Fiorenza (collectively "the Fiorenzas") are the shareholders of Fresh Maid. The Fiorenzas are citizens of Florida. Mr. DiNenna is a citizen of Maryland.
In 1999, the Fiorenzas and Fresh Maid sold the business and assets of the corporation to Plaintiff. In connection with the sale of the business, Plaintiff alleges that Defendants misrepresented the financial condition of the company. In particular, Plaintiff alleges that Defendants provided inaccurate and inflated financial statements of Fresh Maid's cash flows, gross margin, and debt service. After filing suit, Plaintiff learned that Defendants are still operating the corporate entity Fresh Maid under the name Fiorenza Enterprises, Inc. ("FEI"). In December 1999, the name of Fresh Maid was changed to CCIC, Inc. In April 2000, the name of CCIC, Inc. was changed to FEI. Plaintiff seeks to add FEI as an additional party since its former assets were the subject matter of the contract that precipitated this suit. Furthermore, Anthony DiNenna is allegedly the party responsible for drafting the erroneous financial statements on the Defendants' behalf.
II. DISCUSSION
In the present case, Tri-Partners seeks to join two nondiverse defendants to this action. For diversity purposes, a corporation is a citizen of both the state in which it was incorporated and the state where its principal place of business is located. By contrast, "a limited liability company is a citizen of the state or states of which its members are citizens." JBG/JER Shady Grove, LLC v. Eastman Kodak Co., ___ F. Supp.2d ___, 2001 WL 32767 (D.Md. Jan 12, 2001); see also Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998); JMTR Enterprises, LLC v. Duchin, 42 F. Supp.2d 87 (D.Mass. 1999). As a limited liability company, the citizenship of Tri-Partners' owners or members controls the determination of whether complete diversity exists. As each of Tri-Partner's members is a citizen of Maryland, the Court shall consider Tri-Partners to be a citizen of Maryland. As a corporation organized under the laws of Maryland, FEI is a citizen of Maryland for diversity purposes. 28 U.S.C. § 1332(c). Mr. DiNenna is a citizen of Maryland. Thus, the addition of FEI and DiNenna destroys this Court's diversity jurisdiction since the defendants and Tri-Partners are citizens of the same state. See Strawbridge v. Cutriss, 7 U.S. 267 (1806).
"When a plaintiff seeks to joins a nondiverse defendant after the case has been removed, the district court's analysis begins with 28 U.S.C. § 1447(e). . . ." Mayes v. Rapoport, 198 F.3d 457, 461 (4th Cir. 1999). The decision whether the permit joinder "is not controlled by a Rule 19 analysis." Id. at 462. "In exercising its discretion under Section 1447(e), the district court [is] entitled to consider all relevant factors, including: `the extent to which the purpose of the amendment is to defeat federal jurisdiction, whether the plaintiff has been dilatory in asking for amendment, whether the plaintiff will be significantly injured if amendment is not allowed, and any other factors bearing on the equities.'" Id. (quoting Gum v. General Electric Co., 5 F. Supp.2d 412, 414 (S.D.W. Va. 1998)).
Here, it is undisputed that the Agreement of Sale attached to Plaintiff's complaint as Exhibit D is a copy of the contract in dispute. The contract expressly states that Fresh Maid is not only a party to the contract but is also identified as the seller. Mr. DiNenna is alleged to be the party responsible for preparing the inaccurate financial statements relied upon by Tri-Partners. From the face of the complaint, it appears the Tri-Partners has viable claims against both Fresh Maid and Mr. DiNenna based upon the same set of facts. Thus, their addition to this action will serve the interests of judicial economy and prevent duplicate litigation. See Morze v. Southland Corp., 816 F. Supp. 369 (E.D.Pa. 1993); Heininger v. Wecare Distributors, Inc., 706 F. Supp. 860 (S.D.Fla. 1989). The Court believes that Plaintiff sought amendment within a reasonable time after learning of Fresh Maid's subsequent name changes and Mr. DiNenna's alleged involvement. The Fiorenzas have filed suit against Tri-Partners and its owners in the Circuit Court for Prince George's County to enforce two contracts related to the instant action. As the Fiorenzas have already sought relief in Maryland's state courts in a related action and have made no objection to amendment or remand, the Court finds that remanding the instant action imposes no undue burden or prejudice to the defendants. Therefore, the Court will grant Plaintiff's motion for leave to amend the complaint to add the nondiverse defendants. Lacking subject matter jurisdiction, the Court must grant Plaintiff's motion to remand the case to state court for further proceedings. See Mayes, 198 F.3d at 461-62. An Order consistent with this Opinion will follow.
ORDER
For the reasons stated in the accompanying Memorandum Opinion dated March ___, 2001, IT IS this ___ day of March, 2001 by the United States District Court for the District of Maryland, hereby ORDERED:
1. That Plaintiff's Motion for Leave to File a Second Amended Complaint [8-1] BE, and the same hereby IS, GRANTED;
2. That Plaintiff's Motion for Remand [9-1] BE, and the same hereby IS, GRANTED;
3. That this Case BE, and the same hereby IS, REMANDED to the Circuit Court for Prince George's County, Maryland;
4. That this Case BE, and the same hereby IS, CLOSED; and
5. That the Clerk of the Court mail copies of this order to all counsel of record.