Opinion
3:02-CV-1329-D
November 15, 2002
MEMORANDUM OPINION AND ORDER
Plaintiff DTC Telecom, L.L.C.'s ("DTC's") motion to remand this removed case to county court on the ground that the parties are not completely diverse presents the question whether defendant ISP Technologies, Inc. ("ISP") has established that one of its members is not a citizen of the same state as is plaintiff Concluding that ISP has not met this burden, the court remands the case to county court.
I
DTC sued ISP in Dallas county court for breach of contract and tortious interference with business relations. ISP removed the case to this court based on diversity jurisdiction. ISP is a Florida corporation. DTC is a limited liability company composed of two other limited liability companies, ITMG, L.L.C. ("ITMG") and Garant Investments, L.L.C. ITMG is a limited liability company composed of individual members, one of whom is Leonard I. Desser ("Desser"). DTC moves to remand the case on the ground that Desser is a Florida citizen, thereby precluding complete diversity since DTC is also a citizen of Florida.
II
To have diversity jurisdiction, there must be complete diversity of citizenship between all plaintiffs and all defendants. Owen Equip. Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978); Freeman v. Northwest Acceptance Corp., 754 F.2d 553, 555 (5th Cir. 1985). This means that no plaintiff can be a citizen of the same state as even one defendant. The parties agree that if Desser is a citizen of Florida, complete diversity is lacking. The only dispute is whether Desser is a Florida citizen.
The parties agree that limited liability companies do not carry their own independent citizenship, just as partnerships do not. In the case of a partnership, citizenship is determined by examining the citizenship of all partners. See Carden v. Arkoma Assocs., 494 U.S. 185, 189 (1990) ("While the rule regarding the treatment of corporations as `citizens' has become flnnly established, we have . . . just as firmly resisted extending that treatment to other entities."). "[A] limited liability company . . . should be treated as a partnership for purposes of determining diversity jurisdiction." June 27, 2002 Order at 1.
The citizenship of an individual is synonymous with the person's domicile. Freeman, 754 F.2d at 555. "The definition of 'domicile' has not changed from that set forth more than a century ago by the Supreme Court." Id. The Court long ago set the standard for citizenship to be "`residence at a particular place accompanied with positive or presumptive proof of an intention to remain there for an unlimited time.'" Mitchell v. United States, 88 U.S. (21 Wall) 350, 352 (1874). Although residence is an important element in the determination of citizenship and domicile, see Freeman, 754 F.2d at 555-56, residence and citizenship are not synonymous. More than physical presence must be demonstrated to establish citizenship. The determination of citizenship is a matter of federal common law and is not determined by the laws of a particular state. Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996) ("Federal common law, not the law of any state, determines whether a person is a citizen of a particular state for purposes of diversity jurisdiction.").
Accordingly, New York case law on which ISP relies regarding the tax consequences of moving to Florida is inapposite and need not be addressed.
"A person's domicile persists until a new one is acquired or it is clearly abandoned." Id at 250 (citing Lew v. Moss, 797 F.2d 747 (9th Cir. 1986); Mas v. Perry, 489 F.2d 1396 (5th Cir. 1974)). Although this rule places some burden on the party who seeks to establish citizenship, it creates only a burden of production; the ultimate burden of proof still falls on the party who asks the court to exercise subject matter jurisdiction.
There is a presumption in favor of the continuing domicile which requires the party seeking to show a change in domicile to come forward with enough evidence to that effect to withstand a directed verdict. While some opinions seem to imply that the burden of persuasion rests with the party attempting to show a change of domicile, this is an overstatement. The proper rule is that the party attempting to show a change assumes the burden of going forward on that issue. The ultimate burden on the issue of jurisdiction rests with the plaintiff or the party invoking federal jurisdiction.Id. (citations omitted) (emphasis added).
In ascertaining domicile, courts must make a fact intensive, case-by-case determination, looking for evidence of intent to remain in a state for an unlimited length of time.
Words may be evidence of a man's intention to establish his domicile at a particular place of residence, but they cannot supply the fact of his domicile there. In such circumstances, the actual fact of residence and a real intention of remaining there, as disclosed by his entire course of conduct, are the controlling factors in ascertaining his domicile.Freeman, 754 F.2d at 555-56.
Factors to be examined include "places where the litigant exercises civil and political rights, pays taxes, owns real and personal property, has driver and other licenses, maintains bank accounts, belongs to clubs and churches, has places of business or employment, and maintains a home for his family." Coury, 85 F.3d at 251. In making a determination and examining relevant factors, this court may examine almost any evidence available to it. The court "is not limited to the pleadings; it may look to any record evidence, and may receive affidavits, deposition testimony or live testimony concerning the facts underlying the citizenship of the parties." Id. at 249 (citing Jones v. Landry, 387 F.2d 102 (5th Cir. 1967); 1 J. Moore, Moore's Federal Practice § 0.74[1] (1996)). "The court has wide, but not unfettered, discretion to determine what evidence to use in making its determination of jurisdiction." Id. (citing Ray v. Bird Son Asset Realization Co., 519 F.2d 1081 (5th Cir. 1975)).
ISP objects on several grounds to evidence that DTC has presented in support of its remand motion. ISP filed motions to strike on August 30, 2002 and September 14, 2002. After the motions to strike were filed, DTC filed on September 16, 2002 an appendix to the previous exhibits that included more detailed affidavits and a frill transcript of Desser's deposition.
The court denies ISP's motions to strike on the merits or as moot. DTC has adduced evidence that is reliable and relevant to the determination of citizenship. By necessity, proof of this type takes into consideration a wide variety of factors. Most of ISP's objections assert without basis that the affidavit evidence does not definitively prove Desser's Florida citizenship; that Desser's affidavit testimony that he visited doctors in Florida, paid property taxes in Florida, and so on, is hearsay; and that statements in the affidavit, such as, "I am a citizen of the State of Florida," are merely legal conclusions and not evidence. While the objections to legal conclusions may have some basis, the court has not relied on conclusory statements, such as "I am a citizen of Florida," except as proof of Desser's expressed intent to be a Florida citizen, a fact that carries little weight in determinations of citizenship for diversity purposes. See Freeman, 754 F.2d at 555-56.
III
There are facts that support a finding of Maryland citizenship. Desser rents an apartment there, practices law in Maryland, is a member of the Maryland Bar, and does not solicit clients or attempt to practice law in Florida. Desser owned a house in Maryland until 1999. Upon selling the house, he moved many of the household items and possessions to his apartment in Maryland. He has paid Maryland income taxes in the past several years, and his primary accountant is located in Maryland. A number of bills are sent to his home in Maryland. Desser owns bank accounts in Maryland and none in Florida. Desser executed his will in Maryland, and his corporate American Express card is billed to his Maryland apartment.
On the other hand, Desser owns a house in Florida, he votes in Florida, has a driver license in Florida, and both of his cars are registered in Florida. He pays property taxes in Florida, belongs to a country club there, and has personal credit cards that are billed to his home in Boca Raton, Florida. He has a cell phone plan based in Florida, owes a mortgage on his Florida home, has visited doctors in Florida, and has purchased medication there. In his affidavit, Desser indicates his intent to be a citizen of Florida and to return to Florida when away. Desser divides his time each year between Maryland and Florida, residing in Maryland from the end of May to October, and in Florida from October through May. He therefore annually spends slightly more time in Florida than in Maryland.
Desser did not file, or does not remember filing, for domicile status in Florida. Such a filing is usually made for tax purposes. This fact is not controlling, however, because citizenship is a matter of federal common law and does not require specific compliance with the laws of a specific state. See Coury, 85 F.3d at 248.
While such intent does not carry significant weight and should be disregarded when in conflict with objective evidence of intent, see Coury, 85 F.3d at 251, here, where the evidence is relatively balanced, expressed intent can be taken into consideration.
Although the evidence in the case is close, federal courts are courts of limited jurisdiction. Sarmiento v. Texas Bd. of Veterinary Med. Exam'rs, 939 F.2d 1242, 1245 (5th Cir. 1991). They are to presume that they lack jurisdiction. Edwards v. Selective Serv. Local Bd. No. 111, 432 F.2d 287, 290 (5th Cir. 1970). The burden of establishing this court's jurisdiction on removal is upon ISP as the removing party. See Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988) (citing Wilson v. Republic Iron Steel Co., 257 U.S. 92 (1921)). In the present case, ISP has failed to meet its burden. The court finds that Desser is a citizen of Florida. Desser is registered to vote in Florida, has a Florida driver license, his cars are registered there, he owns a home there, and he lives there more than six months of the year. This evidence evinces a conscious effort to create a home base and a life in Florida.
The facts regarding possible citizenship in Maryland, on the other hand, indicate either the residue of previous Maryland citizenship or a business relationship within the state. Desser maintains an apartment there so that he can easily conduct business. He is a member of the Maryland Bar so that he may continue his previous business relations. He has a corporate American Express card billed to his apartment in Maryland. He has bank accounts and an accountant in Maryland, and he executed his will there.
* * *
Accordingly, the court grants DTC's July 26, 2002 motion to remand. The court holds that it lacks subject matter jurisdiction and, pursuant to 28 U.S.C. § 1447(c), remands this case to County Court at Law No. 2 of Dallas County, Texas. The clerk of court shall effect the remand according to the usual procedure.