The opinion of the court was delivered by: Lucy H. Koh United States District Judge
ORDER DENYING DEFENDANT'S MOTION TO DISMISS OR ABSTAIN
Defendant Wu-Fu Chen moves to dismiss this action for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1), or, in the alternative, to dismiss or stay the action 19 in deference to a dissolution proceeding currently underway in state court. Pursuant to Civil Local Rule 7-1(b), the Court concludes that this motion is appropriate for determination without oral 21 argument and vacates the hearing set for March 17, 2011. Having considered the submissions of 22 the parties and the relevant law, the Court DENIES Defendant's motion. The Court will hold a 23 case management conference on April 6, 2011 at 2 p.m. 24
Plaintiff Shyh-Yih Hao ("Hao") is the brother-in-law of Defendant Wu-Fu Chen ("Chen"). Second Amended Compl. ("SAC") ¶ 4. Chen is a Silicon Valley venture capitalist who co-founded 28 Ardent Communications Corp., a successful IT company acquired by Cisco Systems in the 1990s.
SAC ¶ 4; Decl. of Wu-Fu Chen in Supp. of Mot. to Dismiss ("First Chen Decl.") ¶ 5(a), ECF 2 No. 7. Through this venture and others, Chen "amassed a considerable personal fortune." SAC 3 ¶ 4. In the mid-1990s, Chen began dating Hao's sister, Ellen Hao Chen ("Ellen"), and in 2000 they 4 married. First Chen Decl. ¶ 5(b). Chen and Ellen are currently involved in marriage dissolution 5 proceedings in the Santa Clara County Superior Court. Decl. of Christina Chen in Supp. of Mot. to 6
On February 26, 2010, Hao initiated this action against Chen, alleging conversion, breach of fiduciary duty, and unjust enrichment and seeking an accounting and other forms of relief. The 9 facts underlying Hao's allegations are highly contested. The Second Amended Complaint alleges 10 that Plaintiff Hao invested millions of dollars into two venture fund companies -- Chens, LLC, and
Dismiss ("Christina Chen Decl.") ¶ 1, ECF No. 40. 7
WFChen, LLC -- established by Defendant in July 1998 and April 2000, respectively. SAC ¶ 5.
Sometime thereafter, these companies were transferred to Cascade Capital Management, LLC, a 13 company formed in the Cayman Islands and allegedly managed by Defendant. SAC ¶ 9. Plaintiff 14 alleges that he was unaware of this transfer until sometime in 2009; that his signature was forged 15 on the Interest Transfer Agreement that transferred his ownership interest in Chens, LLC, and 16
Agreement. SAC ¶¶ 8-9. He therefore seeks an accounting of transactions relating to Chens, LCC, 18 and WFChen, LCC, as well as actual and punitive damages, restitution, disgorgement of profits, 19 and imposition of a constructive trust.
declarations filed in this action. According to Chen, Hao never invested any of his own money in 22 the venture funds. Rather, Chen alleges that while he and Hao's sister, Ellen, were dating, he 23 placed stock into a Charles Schwab account for Ellen to manage. First Chen Decl. ¶ 5(b). At the 24 time, Ellen was divorcing her first husband, and Chen alleges that he created the Schwab account 25 in Hao's name in order to prevent Ellen's first husband from learning about the transaction. First 26
Chen Decl. ¶ 5(c). Chen claims that the funds in the Schwab account were not a gift and that, 27 although held in Hao's name, the funds were expressly intended to be the community property of 28
WFChen, LLC; and that he never received the $7,084,808 he was due under the Interest Transfer 17
Defendant Chen has provided a very different account of the facts in the moving papers and Ellen and Chen when they married. Id. According to Chen, the money used to pay for Hao's interest in Chens, LLC, as well as allegedly unauthorized capital contributions to WFChen, LLC, 2 came from the funds in the Schwab account. First Chen Decl. ¶ 5(k). He therefore alleges that any 3 interest Hao claims in the venture funds was merely "a fiction intended to describe the interest of 4 Ellen." First Chen Decl. ¶ 5(l). 5
the federal district court had subject matter jurisdiction over the action pursuant to 28 U.S.C.
Hao initiated this action in federal court on February 26, 2010. The Complaint alleged that § 1332(a)(2), as an action between a United States citizen and a citizen of a foreign state. Compl. 9 at 1. In his first motion to dismiss, Chen urged the Court to dismiss this action for lack of subject 10 matter jurisdiction, on grounds that (1) diversity of citizenship was improperly pled, and (2) the action was subject to the domestic relations exception to diversity jurisdiction. In the alternative,
Chen requested that the Court abstain from exercising jurisdiction based on the overlap between 13 this action and the state-court domestic relations proceeding, or under the doctrines of Younger or 14
Colorado River abstention. In its order of October 5, 2010, the Court concluded that the domestic 15 relations exception to diversity jurisdiction did not apply, but agreed that the Complaint did not 16 adequately allege Chen's state citizenship. Accordingly, the Court granted the motion to dismiss 17 with leave to amend to cure the jurisdictional defect and deferred consideration of abstention until 18 the threshold issue of jurisdiction could be properly resolved. 19
Hao filed a Second Amended Complaint*fn1 on November
4, 2010, which contains facially
sufficient allegations regarding Chen's state citizenship. See SAC
¶ 2. In his second motion to 21 dismiss, Chen argues that the Court
should dismiss the case for lack of subject matter jurisdiction 22
because Chen is actually domiciled in Taiwan and therefore diversity
of citizenship does not exist. 23
Alternatively, Chen argues that the Court should abstain from exercising jurisdiction based on the 24 close relationship between the issues in this case and those involved in the state-court dissolution 25 proceeding. The Court will first address the threshold issue of subject matter jurisdiction and then 26 turn to the question of abstention. 27
II.Diversity Jurisdiction 2
action because he is a United States citizen domiciled in Taiwan and thus a "stateless" person for 4 purposes of the diversity statute. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 5 (1989). "In order to be a citizen of a State within the meaning of the diversity statute, a natural 6 person must both be a citizen of the United States and be domiciled within the State." Id. Thus, if 7 Chen is indeed a United States citizens domiciled in Taiwan, he is neither a citizen of a state, nor 8 an alien, and his presence necessarily destroys diversity. See Brady v. Brown, 51 F.3d 810, 815 9
As discussed below, however, the Court finds that Chen was domiciled in California at the outset of this action, and therefore diversity jurisdiction exists.
As a threshold matter, Chen argues that the Court lacks subject matter jurisdiction over this (9th Cir. 1995) (presence of foreign-domiciled U.S. citizen defendant destroys complete diversity).
It is axiomatic that federal courts are courts of limited jurisdiction. Vacek v. U.S. Postal Service, 447 F.3d 1248, 1250 (9th Cir. 2006). "A federal court is presumed to lack jurisdiction in a 15 particular case unless the contrary affirmatively appears." A-Z Int'l v. Phillips, 323 F.3d 1141, 1145 16
Rule 12(b)(1), the party asserting jurisdiction ordinarily has the burden of establishing that subject 18 matter jurisdiction is proper. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). 19
(9th Cir. 2003). Accordingly, on a motion to dismiss for lack of subject matter jurisdiction under 17 A Rule 12(b)(1) motion may be either a facial or factual attack on jurisdiction. Wolfe v. Strankman, 392 F.3d 358, 362 (9th Cir. 2004). In a facial attack, the defendant "asserts that the 21 allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction." 22
Id. In considering a facial attack, a court must take the allegations in the Complaint as true and 23 draw all reasonable inferences in the plaintiff's favor. Id. In contrast, a factual attack challenges 24 the truth of the allegations establishing federal jurisdiction. Id. "Once the moving party has 25 converted the motion to dismiss into a factual motion by presenting affidavits or other evidence 26 properly brought before the court, the party opposing the motion must furnish affidavits or other 27 evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Savage v. 28
Glendale Union High School, Dist. No. 205, Maricopa County, 343 F.3d 1036, 1039 n.2 (9th Cir. 2003). A district court may hear evidence and make findings of fact necessary to rule on the 2 subject matter jurisdiction question, so long as the jurisdictional facts are not intertwined with the 3 merits. Rosales v. United States, 824 F.2d 799, 803 (9th Cir. 1987); accord Safe Air for Everyone 4 v. Meyer,373 F.3d 1035, 1039 (9th Cir. 2004). 5
citizen of California for purposes of diversity jurisdiction. Plaintiff claims that this Court has 8 jurisdiction pursuant to 28 U.S.C. § 1332(a)(2), which confers jurisdiction over cases between 9
In this case, Defendant Chen presents a factual attack challenging the allegation that he is a "citizens of a State and citizens or subjects of a foreign state" in which the amount in controversy 10 exceeds $75,000. It is undisputed that Plaintiff is a citizen of Taiwan and that the amount in controversy exceeds $75,000. The only question is whether Defendant is a citizen of California or any other State for purposes of the diversity statute.*fn2
749 (9th Cir. 1986). For purposes of diversity jurisdiction, domicile is determined as of the time 16 the lawsuit is filed. Id. at 750. A person is domiciled "in a location where he or she has 17 established a fixed habitation or abode in a particular place, and [intends] to remain there 18 permanently or indefinitely." Id. at 749-50 (quotation makes and citations omitted). A person 19 residing in a particular state is not necessarily domiciled there. Kanter v. Warner-Lambert Co., 20
265 F.3d 853, 857 (9th Cir. 2001). Rather, a person's domicile is determined by a number of 21 factors, none of them controlling, including: "current residence, voting registration and voting 22 practices, location of personal and real property, location of brokerage and bank accounts, location 23 of spouse and family, membership in unions and other organizations, place of employment or 24
"To demonstrate citizenship for diversity purposes a party must (a) be a citizen of the United States, and (b) be domiciled in a state of the United States." Lew v. Moss, 797 F.2d 747, 15 business, driver's license and automobile registration, and payment of taxes." Lew, 797 F.2d at 2 750. The courts evaluate domicile based on "objective facts" and accord little weight to statements 3 of intent that conflict with those facts. Id. 4
sharply dispute whether he was domiciled in California at the time this lawsuit was filed, in 6 Here, the parties agree that Chen is a dual citizen of the United States and Taiwan, but
February 2010. In order to establish Chen's domicile, Chen relies almost exclusively on his own 7 declaration, while Hao relies largely on statements made by Chen in his filings and deposition 8 testimony in the state-court dissolution proceeding.*fn3 The Court notes, as an initial matter, that it is 9 troubled by the number of inconsistencies between Chen's declaration in support of this motion 10 and the statements he has made in the state court action. While some of the apparent 11
confusion regarding the meaning of certain legal
inconsistencies may be attributable to Chen's 12 terms, other
discrepancies are straightforward and rather inexplicable.*fn4
The Court attempts to 13 make sense of these apparent
inconsistencies as it evaluates the Lew factors below. 14
undisputed that Chen owned property in both California and Taiwan at the time this action was 18 initiated, and both sides concede that he spent time in both places. The parties' dispute centers on 19
Wu-Fu Chen in Supp. of Mot. to Dismiss SAC ("Third Chen Decl.") ¶ 2. In his deposition testimony in the state-court proceeding, however, Chen stated that he earned a masters degree from 24 the University of Florida-Gainsville and was thereafter enrolled in a PhD program at the University of California-Berkeley in 1975. Decl. of Ellen Hao Chen In Supp. of Def.'s Mot. to Dismiss 25
("Ellen Decl.") Ex. O, 14:19-15:13. The deposition testimony indicates that Chen then worked continuously in the United States, with the exception of a one- or two-year period around 1990 26 when he commuted between Boston and Taiwan. Decl. of Ellen Hao Chen In Supp. of Def.'s Mot. to Dismiss ("Ellen Decl.") Ex. O, 15:15-27:25. Based on this information, it appears that Chen 27 either studied or worked in the United States from the mid-1970s until at least 2004, when he allegedly accepted full-time employment in Taiwan. Reply Decl. of Wu-Fu Chen Re: Mot. to 28
Dismiss ("Fourth Chen Decl.") ¶ 2(i). Other discrepancies are described in the analysis below.
1. Factors Supporting Domicile in California
Chen's residence in February 2010 is the Lew factor most contested by the parties. It is
the location of his primary residence at the time the lawsuit was filed. Chen acknowledges that 2 from 1998 until the break-up of his marriage with Ellen, his primary residence was their home in 3
Los Altos Hills, California.*fn5 The parties agree that Chen has not lived at the Los Altos Hills house 4 since early 2009, when he and Ellen began divorce proceedings. However, Chen also owns a 5 second house in Cupertino, California. Hao contends that this Cupertino house has been Chen's 6 primary residence since 2009. Chen acknowledges that he stays at the Cupertino home while in 7
Inconsistencies in Chen's representations make the question of primary residence somewhat difficult to resolve. In his opening brief, Chen submitted a declaration, signed under penalty of 10 perjury, claiming that he purchased a condominium in Taipei (the "Taipei Condominium") in 2005, the title to which was held jointly by him and Ellen. Third Chen Decl. ¶ 3(c). The declaration
states that beginning in 2006, Chen spent approximately 70 percent of his time in Taiwan and Asia, 13 and the Taipei Condominium became his primary residence. Id. ¶ 3(e). He claims that since 2006, 14 he has spent approximately 70 percent of his time in Taiwan; 10 percent in other countries in Asia; 15
15 percent in California; and 4 percent in Massachusetts. Id. ¶ 3(e), (g). He claims, further, that 16 had he not been required to travel to California to deal with the dissolution proceedings in state 17 court, he would not have spent any time in California, except for possible brief trips to visit his 18 children. Id. ¶ 3(h). The declaration states twice that the Taipei Condominium is now ...