Opinion
No. 03 C 3340
January 30, 2004
MEMORANDUM OPINION AND ORDER
Plaintiff, Richard Hannenberg ("Hannenberg"), filed this action against defendants, Thomas A. Baker, David F. Turtle, Randall Goiter, Paul Hunsicker, James Knackstedt, Christian Morales, Gary Quick, and Mark Smith (collectively "defendants"), seeking a declaration that (1) defendants are not authorized to control the governance of Balance Concord, Incorporated, an Illinois not-for-profit corporation ("Balance"), as a result of any acts taken at their "irregular" May 3, 2003 meeting; (2) defendants are not authorized to interfere with Hannenberg's service as the duly elected and serving Treasurer of Balance; and (3) defendants are not authorized to demand or retain possession of the books and records of Balance, or to make or circulate any publications under the name of Balance. Defendants have moved to dismiss or, alternatively, transfer venue in this case. For the reasons set forth below, the court grants defendants' motion to dismiss for lack of subject matter of jurisdiction.
Defendants move to dismiss Hannenberg's Complaint on a number of grounds, but the court begins and ends its analysis with the issue of subject matter jurisdiction. See Okoro v. Bohman, 164 F.3d 1059, 1061 (7th Cir. 1999) ("[J]urisdictional issues should be addressed first and if they are resolved against jurisdiction the case is at an end and there is no occasion to address the merits."). Hannenberg attempts to invoke this court's diversity jurisdiction under 28 U.S.C. § 1332(a)(1), which requires complete diversity of citizenship between all plaintiffs and defendants and an amount in controversy exceeding $75,000. While defendants do not make the argument, the Complaint could have been dismissed for failure to properly list the citizenship of the parties. The Complaint merely lists the residence of Hannenberg and the defendants, which is different from a party's citizenship and insufficient to establish diversity jurisdiction under § 1332(a). See, e.g., Macken v. Jensen, 333 F.3d 797, 799 (7th Cir. 2003) ("[C]itizenship may differ from residence. . . ."); Meyerson v. Harrah's East Chicago Casino, 299 F.3d 616, 617 (7th Cir. 2002) ("[R]esidence and citizenship are not synonyms and it is the latter that matters for purposes of the diversity jurisdiction.").
Notwithstanding, defendants do challenge this court's jurisdiction based on the amount in controversy. If the amount in controversy were not contested by the defendants, the court would accept as true Hannenberg's allegations unless it "appear[ed] to a legal certainty that the claim is for less than that required by the rule." NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995) (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)). Since, however, the amount in controversy has been challenged as a factual matter, the burden falls on Hannenberg to provide "competent proof of the amount in controversy. NLFC, Inc., 45 F.3d at 237 (citing McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936)). Competent proof means "proof to a reasonable probability that jurisdiction exists." Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th Cir. 1995).
In a declaratory judgment action, the amount in controversy is measured by the value of the "object of the litigation." Hunt v. Washington State Apple Advertising Comm'n, 432 U.S. 333, 347 (1977). Moreover, under the "either viewpoint rule," the value of the object of the litigation may be calculated from the viewpoint of either party, McCarty v. Amoco Pipeline Co., 595 F.2d 389, 395 (7th Cir. 1979); see also, Macken, 333 F.3d at 799 ("what the plaintiff stands to gain, or what it would cost the defendant to meet the plaintiffs demand."). Hannenberg's Complaint does not specifically explain why the amount in controversy requirement is met, although he does make the three separate requests for relief listed above. Hannenberg fails to elaborate or present proof on how his requests for relief would exceed the amount in controversy requirement from the viewpoint of either himself or the defendants.
In his response Hannenberg suggests that the amount in controversy is satisfied due to the fact that he is empowered to select and execute investments for Balance. He claims that the `Value" of that investment is under his care, and that he purchased a $550,000 annuity insurance contract for Balance. Hannenberg relies on variations of this amount, along with bank account totals of Balance which he contends he controls equaling $40,000.
But the amount of the investments in Balance, or for that matter Balance's value as a corporation, is not at issue. The Seventh Circuit recently addressed an analogous situation in Macken. In that case the plaintiffs, two beneficiaries of a trust and their mother, brought suit against the trustee of the trust seeking an accounting and the lull text of the trust instrument In support of their jurisdictional allegations, the plaintiffs claimed that the trust itself was valued at $300,000, well above the $75,000 amount in controversy threshold. The court easily rejected this claim by noting that "there is no dispute about the value of the assets held in trust or either child's entitlement, so that sum is no more `in controversy' than the value of a Rolls Royce would be relevant to a dispute about the price of new shock absorbers." Id. at 799. Instead, whether the amount in controversy had been met depended on the value of the accounting to either the plaintiffs or defendants or the value of obtaining the full text of the trust instrument. The court noted that the value of the accounting was negligible, and as for the value to the plaintiffs of obtaining the trust instrument, such value was difficult to estimate. Therefore, the court noted that "[w]hen the value of a controversy cannot be estimated, litigation must commence in state court." Id. at 800-801 ("Not until it becomes evident that the information in these trust instruments is worth more than $75,000 should anyone knock on the federal court's door.").
Applied here, Macken requires Hannenberg to show the value, from either his or the defendants' point of view, of his specific requests for relief. The value of any investments he claims to control would simply not be in controversy and add nothing to the analysis. Moreover, none of Hannenberg's requests for relief are supported by competent proof. For example, he seeks a declaration that the defendants are not authorized to control the governance of Balance. Assuming he has standing to make such a request, he fails to even try to establish what the value of that request would amount to. He also seeks a declaration that defendants may not interfere with his job as Treasurer, but he fails to explain what the value of such a declaration would be. Indeed, he fails to even clarify whether his position is in fact paid. Nor is there suggestion as to how the value of Balance's books or records, from the viewpoint of either Hannenberg or the defendants, satisfies the amount in controversy.
Even if the amounts Hannenberg controlled as Treasurer of Balance were relevant, the defendants attach an affidavit (which the court can consider on this Rule 12(b)(1) motion to dismiss, see Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993) ("The district court may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists.") (quoting Grafon Corp. v. Hausermann, 602 F.2d 781, 783 (7th Cir. 1979)) in which one defendant asserts that, assuming Hannenberg is Balance's Treasurer, he only has independent authority to manage funds held in Balance's checking and money market accounts. As of May 20, 2003, this amount is less than $27,000. Other amounts are subject to control by the Trustees and Board of Directors. ( See Compl. Ex. A, By-Laws of Balance Concord, Inc., Art. II(f).) Hannenberg presents no evidence to rebut this.
In any event, the burden of ascertaining the amount in controversy does not lie with the court or the defendants; it lies squarely with Hannenberg. See NLFC, Inc., 45 F.3d at 237. He has not presented sufficient proof to show that the amount in controversy has been met in this case. Accordingly, defendants' motion to dismiss is granted [#7]. This case is dismissed without prejudice for lack of subject matter jurisdiction. All other pending motions are denied as moot.