The opinion of the court was delivered by: Gregory G. Hollows United States Magistrate Judge GGH/wvr
ORDER AND FINDINGS AND RECOMMENDATIONS
Plaintiff first initiated this diversity action for malicious prosecution and civil conspiracy to commit malicious prosecution on July 23, 2010 and is currently proceeding with the third amended complaint filed on November 6, 2011. (See Dkt. No. 119.)
Presently pending before the court is defendant Martha Thomas's motion to dismiss plaintiff's third amended complaint for lack of personal jurisdiction, originally filed on December 8, 2011 and noticed for hearing on February 9, 2012. (Dkt. Nos. 131, 141.) In response to that motion, plaintiff filed a motion for leave to conduct jurisdictional discovery, or in the alternative a 30-day extension to respond to defendant Thomas's motion to dismiss, which came on regularly for hearing on January 26, 2012. (Dkt. No. 143.) After hearing oral argument, the court vacated the February 9, 2012 hearing on defendant Thomas's motion to dismiss, granted plaintiff leave to file a response to defendant Thomas's motion no later than February 16, 2012, and permitted defendant Thomas to file a reply brief by February 23, 2012, after which the motion was submitted on the record. (See Dkt. No. 154.) Plaintiff's motion for jurisdictional discovery regarding defendant Thomas was also taken under submission. (Id.) After extensive briefing by the parties, these motions are now ripe for resolution.
However, before the court can reach the merits of the above-mentioned motions, the court is compelled to address the issues raised with respect to subject matter jurisdiction. On January 26, 2012, the court also conducted an initial status conference. In the joint status report, a group of defendants indicated that they dispute federal subject matter jurisdiction based on plaintiff's joinder of U.S. citizen defendants domiciled abroad. (Dkt. No. 149 at 3.) After extensive discussion on the record at the status conference, the court granted plaintiff until February 16, 2012 to either (a) file a brief, limited to 10 pages, addressing the propriety of subject matter jurisdiction in this case, or (b) move to dismiss the U.S. citizen defendants domiciled abroad pursuant to Fed. R. Civ. P. 21. (Dkt. No. 154.) Plaintiff filed a brief regarding subject matter jurisdiction on February 16, 2012 (dkt. no. 157) and another "corrected brief" regarding subject matter jurisdiction on February 21, 2012 (dkt. no. 162).
Finally, plaintiff also filed a response to the court's order to show cause why several defendants should not be dismissed from the action pursuant to Fed. R. Civ. P. 41(b) for plaintiff's failure to prosecute and follow court orders regarding service of process. (Dkt. Nos. 154, 167.)
After consideration of the briefing submitted, the parties' oral arguments, the court's record in this matter, and the applicable law, the court FINDS AS FOLLOWS: BACKGROUND
Before proceeding to the motions and substantive issues raised, a review of the background facts and procedural history is appropriate.
Plaintiff, a citizen of California, is a real estate developer who claims that the defendants purchased lots for a planned unit development on an island in Panama. (See Third Amended Complaint, Dkt. No. 119 ["TAC"] at 2-3.) Plaintiff alleges that defendants did not want to be subject to the Conditions, Covenants, and Restrictions ("CC&Rs") for the development, and so rather than settling the matter by way of a contract dispute, defendants "banded together and launched a barrage of deliberate falsehoods, and engaged in wrongful conduct...aimed at upsetting and intimidating him, destroying his reputation and business, disrupting relations with other lot owners, and discouraging prospective purchasers." (TAC at 3-4.) According to plaintiff, defendants' campaign of defamation was conducted primarily over the Internet. (TAC at 4.) In particular, plaintiff alleges that defendants "posted in excess of 150 messages on the Internet by and through an account with an internet provider based in California and on sites maintained within the State of California...to attract and solicit fellow conspirators." (TAC at 16.) Defendants also allegedly initiated criminal proceedings against him in the Panama courts which were purportedly later dismissed, and which are the subject of plaintiff's malicious prosecution and conspiracy claims in this litigation. (TAC at 4-6.) Plaintiff alleges that he was forced to file for bankruptcy on July 3, 2007 "due in significant part to the false criminal complaints filed by Defendants." (TAC at 5.)
Plaintiff initially filed this lawsuit on July 23, 2010. (Dkt. No. 1.) On October 28, 2010, plaintiff filed a 41-page first amended complaint joining additional defendants and terminating claims against one defendant. (Dkt. No. 5.) Subsequently, on December 23, 2010, plaintiff requested entry of default as to various defendants, (dkt. nos. 9-23) and the clerk entered their default on December 28, 2010 (dkt. no. 24). Shortly after, on January 4, 2011, the trustee over plaintiff's bankruptcy estate filed a motion to intervene on the grounds that the claims asserted by plaintiff in this litigation were property of the bankruptcy estate. (Dkt. Nos. 25, 30.) The trustee simultaneously moved to dismiss the action, contending that plaintiff lacks standing to bring claims that are property of the bankruptcy estate. (Dkt. Nos. 27, 29.) After oral argument and further supplemental briefing, the court ultimately granted the trustee's motion to intervene, but denied the trustee's motion to dismiss, concluding that plaintiff's claims were not part of the bankruptcy estate. (Dkt. Nos. 62, 68.)*fn1 In the meantime, several defendants had moved to set aside the entry of default against them. (Dkt. Nos. 36, 38, 39.)
Subsequently, on July 18, 2011, plaintiff filed a motion for leave to file a second amended complaint. (Dkt. No. 71.) Plaintiff contended that further amendment was required to add 10 additional defendants, clarify that plaintiff's complaint included a separate malicious prosecution cause of action for each of the named defendants, remove legal authorities to simplify the complaint, and to add details to the civil conspiracy cause of action. (Dkt. No. 71 at 3.) On August 23, 2011, the court found that plaintiff failed to properly serve process on several defendants. The court also granted plaintiff leave to file a second amended complaint, and ordered plaintiff to complete service of process within 60 days. In light of plaintiff's improper service and the grant of further leave to amend, the court set aside the defaults previously entered. The court additionally cautioned plaintiff that "amendments to the complaint in this case are at an end." (See Dkt. No. 78.) That same day, plaintiff filed a 69-page second amended complaint, followed by another 69-page "corrected" second amended complaint filed on August 24, 2011. (Dkt. Nos. 79, 80.)
On October 8, 2011, plaintiff filed yet another motion for leave to
file a third amended complaint. (Dkt. No. 111.) Plaintiff argued that
further amendment was necessary to add 6 additional defendants, remove
plaintiff's demand for a jury trial, and clean up typographical
errors. (Dkt. No. 111 at 3.) Plaintiff explained that he only
discovered the identities of additional alleged conspirators in an
e-mail attached to defendant Hermanson's purported motion to dismiss,
which was filed after plaintiff filed his second amended complaint.
(Dkt. No. 111 at 2, 10.) In addition to plaintiff's motion for leave
to amend in this case, plaintiff
also filed a new case including the additional defendants in the event
this court failed to grant plaintiff leave to amend in the instant
case. (See 2:11-CV-02629-KJM-CKD, Dkt. No. 5 at 3.)*fn2
Subsequently, on November 3, 2011, the court granted plaintiff leave to file a third amended complaint, reasoning that the "newly discovered information is sufficient to overcome the court's reluctance to allow another amendment to the complaint." (Dkt. No. 118 at 2.) However, the court also noted that, "as plaintiff himself acknowledges, the case needs to move forward, and leave to amend based on this newly discovered information should not be construed as a license for further amendments." (Dkt. No. 118 at 2-3.) The court further ordered plaintiff to complete service of process on all defendants, including the newly-added defendants, within 28 days. (Dkt. No. 118 at 3.) The court also set a status conference for January 26, 2012 and stayed all discovery until the status conference. (Dkt. No. 118 at 5-7.)
On November 6, 2011, plaintiff filed the operative 69-page third amended complaint. (See Dkt. No. 119.) The third amended complaint joined six additional defendants (Maurine Smith, Judith Cohen, Susan Fine, Kim Parsons, Bobby Hamond, and the Solarte Inn Corporation). Although all individual defendants were alleged to be citizens of the United States, defendants Smith, Cohen, and Fine, were alleged to reside in the Republic of Panama. (See Dkt. No. 119 at 2-3.)
The subject motions followed. Before turning to those motions and other substantive matters, the court, as it is required to do, first addresses the issue of federal subject matter jurisdiction.
FEDERAL SUBJECT MATTER JURISDICTION
Even if a party does not question the court's subject matter jurisdiction, the court is required to raise and address the issue sua sponte. See FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31 (1990) ("The federal courts are under an independent obligation to examine their own jurisdiction...."). In this case, a group of defendants raised the issue in the joint status report by indicating that they dispute federal subject matter jurisdiction based on the presence of U.S. citizen defendants residing abroad. (Dkt. No. 149 at 3.)
The United States Supreme Court held that United States citizens domiciled in a foreign country cannot be parties to a diversity action in federal court. See Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828-29 (1989). In Newman-Green, Inc., an Illinois corporation brought a state-law contract action in federal district court against a Venezuelan corporation, four Venezuelan citizens, and William L. Bettison, a United States citizen domiciled in Venezuela. Id. at 828. The U.S. Supreme Court explained that Bettison's presence destroyed complete diversity in the action:
In order to be a citizen of a State within the meaning of the diversity statute, a natural person must both be a citizen of the United States and be domiciled within the State...The problem in this case is that Bettison, although a United States citizen, has no domicile in any State. He is therefore "stateless" for purposes of § 1332(a)(3). Subsection 1332(a)(2), which confers jurisdiction in the District Court when a citizen of a State sues aliens only, also could not be satisfied because Bettison is a United States citizen. When a plaintiff sues more than one defendant in a diversity action, the plaintiff must meet the requirements of the diversity statute for each defendant or face dismissal...Here, Bettison's "stateless" status destroyed complete diversity under § 1332(a)(3), and his United States citizenship destroyed complete diversity under § 1332(a)(2).
Id. at 828-29 (emphasis in original).
In the instant case, plaintiff alleged that "defendant Maurine E. Smith is a citizen of the United States and resides in the Republic of Panama, defendant Judith A. Cohen is a citizen of the United States and resides in the Republic of Panama, defendant Susan Fine is a citizen of the United States and resides in the Republic of Panama and possibly the state of Oregon." (TAC at 2-3.) While plaintiff acknowledges that the presence of U.S. citizen defendants domiciled abroad would destroy complete diversity, plaintiff argues that residence is not the same as domicile and that there is no evidence that defendants Smith, Cohen, and Fine are domiciled in Panama.
The Ninth Circuit has established several principles to guide the inquiry of where a party is domiciled:
First, the party asserting diversity jurisdiction bears the burden of proof...Second, a person is 'domiciled' in a location where he or she has established a 'fixed habitation or abode in a particular place, and [intends] to remain there permanently or indefinitely.'...Third, the existence of domicile for purposes of diversity is determined as of the time the lawsuit is filed...Finally, a person's old domicile is not lost until a new one is acquired...A change in domicile requires the confluence of (a) physical presence at the new location with (b) an intention to remain there indefinitely."...Courts in other jurisdictions have recognized additional principles relevant to our present analysis. The courts have held that the determination of an individual's domicile involves a number of factors (no single factor controlling), including: current residence, voting registration and voting practices, location of personal and real property, location of brokerage and bank accounts, location of spouse and family, membership in unions and other organizations, place of employment or business, driver's license and automobile registration, and payment of taxes...The courts have also stated that domicile is evaluated in terms of 'objective facts,' and that 'statements of intent are entitled to little weight when in conflict with facts.'
Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986) (internal citations omitted).
Plaintiff correctly points out that domicile is not the same as residency. For example, a United States citizen may be residing in a particular country temporarily for a specific purpose, such as a temporary work assignment, intending to return permanently to a U.S. state after a definite period of time. However, a party's place of residence is prima facie evidence of domicile. State Farm Mut. Automobile Ins. Co. v. Dyer, 19 F.3d 514, 520 (10th Cir. 1994). Moreover, in this case, the language of plaintiff's complaint can only be fairly construed as asserting that the above-mentioned defendants are residing in Panama indefinitely. Indeed, the third amended complaint contains no facts suggesting that these defendants are only in Panama on a temporary basis and intend to return to the United States.
As outlined above, the party asserting diversity jurisdiction generally bears the burden of proving a party's domicile to establish complete diversity. Lew, 797 F.2d at 749. However, in reliance on Lew, plaintiff attempts to shift that burden by arguing that there is insufficient evidence that the above-mentioned defendants changed their domicile to Panama. As will be discussed below, plaintiff's reliance on Lew in this regard is misplaced.
In Lew, the plaintiff filed a diversity action against the defendant on November 1, 1984. Lew, 797 F.2d at 748. The defendant conceded facts showing that his established domicile was California at least until September of 1984 when he moved to Hong Kong, but argued that he was domiciled in Hong Kong at the time the action was filed. Id. at 748, 751. The court reasoned that, because the defendant had conceded that he lived in California at least until September of 1984, a presumption in favor of the defendant's established domicile (California) as against his allegedly newly acquired domicile (Hong Kong) applied. Id. at 751. However, the court noted that the presumption only shifted the burden of production of evidence, and that the plaintiff continued to have the burden of proof. Id. Nevertheless, the court found that the defendant failed to meet his burden of production, because his actions failed to establish that he was physically located in Hong Kong on November 1, 1984 or that he intended to remain there indefinitely. Id. at 752.
By contrast, in this case, defendants Smith, Cohen, or Fine have not conceded to any facts showing that they were domiciled in a particular U.S. state until a specified date.*fn3
Other than plaintiff's conclusory assertions in his current briefing and declaration, there is no clear evidence of these defendants' domicile in a particular U.S. state before the court. Simply put, plaintiff cannot shift the burden of production to these defendants on the basis of a presumption as to "established domicile," because no such domicile has been established. Instead, in this case, the burden of production, as well as the burden of persuasion, remain squarely on plaintiff. Stated differently, it is not defendants Smith, Cohen, or Fine who are required to show that they are domiciled in Panama or that they changed their domicile to Panama; it is plaintiff who has to show that these defendants are domiciled in a U.S. state other than California. Based on plaintiff's allegations in the third amended complaint and the current evidence before the court, it would appear that these U.S. citizen defendants in Panama destroy complete diversity.*fn4
The court recognizes that defective allegations of jurisdiction may ordinarily be cured through amendment. See Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1148 (9th Cir. 1998). However, for the reasons outlined below, the court finds that further amendment would be inappropriate given the posture of this case.
As an initial matter, plaintiff has not shown that he can affirmatively allege, within the strictures of Rule 11, that the above-mentioned defendants are domiciled in a particular U.S. state even if he were given leave to amend. "[T]o avoid dismissal for lack of subject matter jurisdiction, the plaintiff must enlarge the record to show the citizenship of each party as of the date that the complaint was filed." Blue Ridge Ins. Co., 142 F.3d at 1148. Such amended allegations must be supported by prima facie proof. Id. at 1148 n.3. Plaintiff's briefing and declaration make clear that he cannot presently make such a showing.
With respect to defendant Cohen, plaintiff points out that her December 9, 2011 answer to plaintiff's complaint indicated that she "temporarily resides in New Jersey," that "[h]er name is not on any real estate title in the United States nor Panama," and that it makes no reference to Panama residency or domiciliary. (See Dkt. No. 138 (emphasis added).) Plaintiff also states that, to the best of his knowledge, defendant Cohen "was living in and domiciled in Nevada prior to ...