Opinion
22-1217-DDC-BGS
11-27-2023
DEPOSITORS INSURANCE COMPANY, et al., Plaintiffs, v. EVAN-TALAN HOMES, INC., et al., Defendants.
SHOW CAUSE ORDER
BROOKS G. SEVERSON U.S. MAGISTRATE JUDGE
Plaintiffs filed their Second Amended Complaint on November 13, 2023, alleging diversity jurisdiction in a lawsuit brought under the Federal Declaratory Judgment Act. (Doc. 51.) Therein, Plaintiffs allege they are Iowa corporations with their principal places of business in Des Moines, Iowa. (Id., at 1.) Plaintiffs bring their claims against the corporate Defendant Evan-Talan Homes, Inc. as well as individual Defendants Corey Childress and Patricia Pheffer, individually and as Trustee of the Melvin and Patricia Pheffer Living Trust. The Complaint further alleges that the corporate Defendant is a Kansas corporation with a principal place of business in Kansas while the individual Defendants are alleged to be residents of Kansas. (Id.) In this instance, Plaintiffs have failed to allege facts sufficient to allow the Court to confirm whether diversity of citizenship exists.
The operation of the Federal Declaratory Judgment Act is “‘procedural only'” and does not provide federal question jurisdiction. Franchise Tax Bd. of Calif. V. Construction Laborers Vacation Trust, 463 U.S. 1, 15, 103 S.Ct. 2841, 2849 77 L.Ed.2d 420 (1983) (citation omitted).
In the underlying state court action filed in Johnson County, Kansas, Plaintiff is identified as “Patricia Pheffer individually and as Trustee of the Melvin and Patricia Living Trust dated October 30, 2015[, ] and as personal representative of the Estate of Melvin Pheffer” (Doc. 1-4, at 1.) In the present action, Patricia Pheffer is named individually and as the trustee only.
To establish diversity jurisdiction, a party is only a citizen of the state or foreign state where he or she is domiciled, not where they reside. The organizational structure of a business entity determines its citizenship. For instance, the citizenship of a corporation is both the state or foreign state of incorporation and the state or foreign state where its principal place of business is located. 28 U.S.C. § 1332(c)(1); Newsome v. Gallacher, 722 F.3d 1257, 1267 (10th Cir. 2013). Citizenship for unincorporated associations (such as a limited liability company, general partnership, or limited partnership) is determined by the citizenship of each of its members. Siloam Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233, 1234 (10th Cir. 2015). In addition, “‘a natural person is deemed a citizen of the state in which he or she is domiciled.'” PHH Mortgage Corp. v. Joseph Stuber, et al., 23-1123-DDC-TJJ, 2023 WL 4999153, *2 (D. Kan. 2023) (citation omitted).
It is the independent obligation of the Court to determine that subject matter jurisdiction is proper and that the court “do[es] not exceed the scope of [its] jurisdiction ... .” Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 434, 131 S.Ct. 1197, 179 L.Ed.2d 159 (2011). As such, this Court “must raise and decide jurisdictional questions that the parties either overlook or elect not to press.” Id. (citation omitted). If it becomes apparent that jurisdiction does not exist, the Court, on its own, “must dismiss the cause at any stage of the proceedings ... .” Penteco Corp. Ltd. P'ship v. Union Gas Sys., Inc., 929 F.2d 1519, 1521 (10th Cir. 1991); Fed.R.Civ.P. 12(h)(3).
Pursuant to 28 U.S.C.A. §1332(a), federal courts have original jurisdiction over civil actions where the amount in controversy exceeds $75,000 and is between:
(1) citizens of different States;
(2) citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State;
(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and
(4) a foreign state, defined in section 1603(a) of this title, as plaintiff and citizens of a State or of different States.“Diversity jurisdiction requires complete diversity - no plaintiff may be a citizen of the same state as any defendant.” Grynberg v. Kinder Morgan Energy Partners, L.P., 805 F.3d 901, 905 (10th Cir. 2015). Simply stated, diversity is absent when citizens of the same state are on both sides of the case.
As stated above, the Complaint alleges where the individual Defendants are residents. (Doc. 51, at 1.) “For diversity jurisdiction purposes, ‘a natural person is deemed a citizen of the state in which he or she is domiciled.'” PHH Mortgage Corp., 2023 WL 4999153 at *2 (citation omitted). “A person's residence is not the equivalent of his or her domicile and it is a person's domicile that is relevant for determining citizenship.” (Id.) The information Plaintiffs have provided as to the individual Defendants is insufficient to allow the Court to make a determination regarding diversity jurisdiction.
Further, the District Court is concerned that Plaintiffs have failed to allege sufficient facts establishing that Patricia Pheffer, as the Trustee of the Melvin and Patricia Pheffer Living Trust, is a real party in interest. Without this information, the Court cannot determine the validity of Plaintiffs' claims.
IT IS THEREFORE ORDERED that by December 27, 2023, Plaintiffs shall file a status report, with affidavits attached, properly alleging and demonstrating the citizenship of the individual Defendants, establishing that the trustee is the real party in interest, and showing cause why the undersigned Magistrate Judge should not recommend to the District Court that the case be dismissed for lack of jurisdiction.
IT IS SO ORDERED.