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Marino v. Nery's USA, Inc.

United States District Court, S.D. California

August 11, 2014

FRANK MARINO, an individual; and MICHAEL HENTON, an individual, Plaintiffs,
v.
NERY's USA, INC., a Nevada corporation registered to do business in California; JOHN E. CATHCART, an individual; and DOES 1-25, inclusive, Defendants.

ORDER VACATING ORDER TO SHOW CAUSE

ROGER T. BENITEZ, District Judge.

On June 6, 2014, this Court issued an Order to Show Cause why this case should not be dismissed for lack of subject matter jurisdiction. (Docket No. 13). Defendants Nery's USA, Inc. (Nery's) and John E. Cathcart (Cathcart) filed a timely brief on June 23, 2014. (Docket No. 14). Plaintiffs Frank Marino and Michael Henton responded on July 7, 2014 (Docket No. 15), and Defendants replied on July 14, 2014. (Docket No. 16). Plaintiffs filed a sur-reply on July 18, 2014. (Docket No. 19). Defendants filed an additional brief on July 28, 2014 (Docket No. 21), and Plaintiffs responded (Docket No. 22).

For the reasons stated below, this Court concludes that the evidence before it establishes that this Court has subject matter jurisdiction over this matter. The Order to Show Cause is therefore VACATED.

BACKGROUND

On March 5, 2014, Defendants Cathcart and Nery's filed a Notice of Removal in this Court. (Docket No. 1). The Notice of Removal asserts that this Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because Plaintiffs are residents of California and Defendants are residents of Nevada. (Notice at ¶¶ 2-4, 7). Plaintiffs allege in the Second Amended Complaint (SAC) that Defendant Cathcart is a resident of California. (SAC ¶ 6). They further allege that Nery's is a Nevada corporation which is registered to do business in, and is doing business in, San Diego County, California, and whose California headquarters are in San Diego. ( Id. ¶ 5).

Cathcart filed a Motion to Dismiss based on lack of personal jurisdiction on April 18, 2014. (Docket No. 4). Upon review of the briefing and the complete record in this case, it was apparent that there was a controversy regarding whether Cathcart was a citizen of California or Nevada. If either defendant is a citizen of California, removal would be improper because 1) complete diversity would not exist, and 2) a California defendant cannot remove a case to federal court on diversity grounds. See 28 U.S.C. §§ 1332(a), 1441(b)(2). In their briefing regarding the Order to Show Cause, Plaintiffs argue that both Cathcart and Nery's are citizens of California. (Docket No. 15). Defendants argue that they are not California citizens.

LEGAL STANDARD

Federal courts have original jurisdiction based on diversity of citizenship where the amount in controversy exceeds $75, 000 and the matter 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.

28 U.S.C. § 1332(a).

When a plaintiff files in state court a civil action over which the federal district courts would have original jurisdiction based on diversity of citizenship, the defendant may remove the action to federal court as long as no defendant is a citizen of the State in which such action is brought. 28 U.S.C. §§ 1441(a), (b).

The party asserting diversity jurisdiction bears the burden of proof. Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir. 2001) (citing Lew v. Moss, 797 F.2d 747, 749 (9th Cir. 1986)). For purposes of diversity, citizenship is determined as of the time the lawsuit was filed. Lew, 797 F.2d at 750 (citation omitted).

The citizenship of a natural person is determined by his or her "state of domicile, not her state of residence." Kanter, 265 F.3d at 857. The state of domicile is the person's "permanent home, where she resides with the intention to remain or to which she intends to return." Id. (citation omitted). A change in domicile requires both physical presence at the new location and an intention to remain there indefinitely. Lew, 797 F.2d at 750 (citation omitted).

The Ninth Circuit has noted that other courts have held that determination of domicile "involves a number of factors (no single factor controlling), " including: (1) current residence, (2) voting registration and practice, (3) driver's license and automobile registration, (4) location of personal and real property, (5) location of brokerage and bank accounts, (6) location of spouse and family, (7) place of employment and business, (8) payment of taxes, and (9) membership in unions and other organizations. Id. (citations omitted). "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." Id. (citations and internal quotation marks omitted).

For diversity purposes, a corporation is a citizen of every state and foreign state by which it is incorporated, and of the state and foreign state where it has its principal place of business. 28 U.S.C. § 1332(c)(1). The principal place of business is located in the "nerve center" of the corporation, where the corporation's high level officers direct, control, and coordinate its activities. Hertz Corp. v. Friend, 559 U.S. 77, 80-81 (2010).

If at any time before final judgment it appears that a district court lacks subject matter jurisdiction "the case shall be remanded." 28 U.S.C. § 1447(c); see also Fed.R.Civ.P. 12(h)(3) ("If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.").

DISCUSSION

The parties do not dispute that the amount in controversy exceeds $75, 000. However, the parties dispute whether Defendants Cathcart and Nery's were citizens of California or Nevada when the Complaint was filed on October 18, 2013. As the party ...


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