Leys v. Lowe's Home Centers, Inc.

601 F.Supp.2d 908

Mark and Naesha LEYS, Plaintiffs, v. LOWE'S HOME CENTERS, INC., Defendant.

Case No. 1:08-cv-1084.

United States District Court, W.D. Michigan, Southern Division.

January 9, 2009.

Ronald J. Kooistra, Kooistra & Dantuma, Wyoming, MI, for Plaintiffs.

Steven F. Stapleton, Law Weathers & Richardson PC, Grand Rapids, MI, for Defendant.

Order

PAUL L. MALONEY, Chief Judge.

Ordering the Defendant to Show Cause Why this Case Should Not Be Remanded to State Court for Lack of Subject-Matter Jurisdiction

Mark Leys and his wife Naesha Leys (together, "Leys") sued Lowe's Home Centers, Inc. ("Lowe's") in Michigan state court, and Lowe's filed a notice purporting to invoke this court's diversity removal jurisdiction.¹ For the reasons that follow, the court determines that the defendant has not yet presented evidence sufficient to permit the factual findings needed for diversity removal jurisdiction.²

Title 28 U.S.C. § 1441 authorizes defendants to remove cases to federal district court if there exists diversity or federal-question jurisdiction. Section 1441 provides, in its entirety:

(a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court for the United States for the district and division embracing the place where the action is pending. For purposes of removal under this chapter, the citizenship of defendants sued under fictitious names shall be disregarded.

(b) Any civil action of which the district courts have original jurisdiction founded on a claim of right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which the action is brought.

"Not only may a court raise subject-matter jurisdiction sua sponte, it must." CMS North America, Inc. v. DeLorenzo Marble & Tile, Inc., 521 F.Supp.2d 619, 632 (W.D.Mich.2007) (Paul L. Maloney, J.) (citing Clarke v. Mindis Metals, Inc., No. 95-5517, 99 F.3d 1138, 1996 WL 616677, *3 (6th Cir. Oct. 24, 1996) ("Neither party has raised the jurisdictional issue this case presents, but it is axiomatic that we must raise issues of subject-matter jurisdiction sua sponte.") (emphasis in original) (citing Cmty. First Bank v. Nat'l Credit Union Admin., 41 F.3d 1050, 1053 (6th Cir. 1994))).

The Supreme Court confirms that the removal statutes permit a district court to remand sua sponte where the removing defendant has not carried its burden of establishing removal jurisdiction:

The statutory section ... deals, not with the question of what is removable, but with the procedures that a federal court is to follow after removal occurs. It is entitled: "Procedure after removal generally." § 1447. In substance, the section differentiates between removals that are defective because of lack of subject-matter jurisdiction and removals that are defective for some other reason, e.g., because the removal took place after relevant time limits had expired. For the latter kind of case, there must be a motion to remand filed no later than 30 days after the filing of the removal notice. § 1447(cc). For the former kind of case, remand may take place without such a motion and at any time. Ibid.

Wisconsin DOC v. Schacht, 524 U.S. 381, 392, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998) (emphasis added). Exercising this authority, this court has previously raised sua sponte the lack of definitive pleading or proof of the amount in controversy needed for diversity removal. See Pellowe v. Conseco Senior Health Ins. Co., 2006 WL 1308094, *1 (W.D.Mich. May 9, 2006) (Enslen, J.) ("Plaintiffs Motion to Remand focuses exclusively on removal procedure, arguing specifically that Defendant's removal was untimely under 28 U.S.C. § 1446(b). While this may be so, the Court perceives another ready defect in Defendant's Notice of Removal: the amount in controversy in this action does not exceed $75,000.").

Indeed, failure to remand sua sponte in the absence of clear subject-matter removal jurisdiction can be reversible error. See Probus v. Charter Comms., LLC, 234 Fed. Appx. 404, 406 (6th Cir.2007) (district court erred by failing to remand sua sponte for lack of diversity removal jurisdiction) ("[D]espite Probus's failure to move to remand, the district court should have sua sponte addressed the issue of subject matter jurisdiction.") (citing Curry v. U.S. Bulk Transp., Inc., 462 F.3d 536, 539-41 (6th Cir.2006)); Lexington-Fayette Urban Cty. Gov't Civil Comm'n v. Overstreet, 115 Fed.Appx. 813, 817-18 (6th Cir. 2004) (district court erred by failing to remand sua sponte for lack of federalquestion removal jurisdiction).

The allegations of the Leys' complaint are insufficient to permit three of the findings needed for diversity removal jurisdiction: a finding that the parties are diverse, a finding that Lowe's is not a citizen of Michigan, and a finding that more than $75,000 is in controversy exclusive of counterclaims, fees and costs, and interest. Moreover, even if the court considered Lowe's notice of removal as a supplement to the complaint, the notice fails to supply competent evidence which would permit the court to make these three jurisdictional findings.

The first obstacle to diversity removal jurisdiction is that the court cannot be confident that the parties are citizens of different States, as required by 28 U.S.C. § 1332. The complaint does not specify the citizenship of the plaintiffs, Mark and Naesha Leys. The complaint alleges only that they are "residents of the City of Wyoming, County of Kent, State of Michigan." Complaint dated Oct. 13, 2008 and filed Oct. 17, 2008 in Kent County Circuit Court ("Comp") ¶ 1.

"For purposes of diversity jurisdiction, residency does not necessarily prove citizenship."³ Wolf v. Bankers Life & Cas. Co., 519 F.Supp.2d 674, 676 n. 1 (W.D.Mich.2007) (Maloney, J.) (citing Deasy v. Louisville & Jefferson Cty. Metro. Sewer Dist., 47 Fed.Appx. 726, 728 (6th Cir.2002)). For this purpose, state citizenship is a matter not of residency but of domicile. Nat'l City Bank v. Aronson, 474 F.Supp.2d 925, 931 (S.D.Ohio 2007) (citing, inter alia, Gilbert v. David, 235 U.S. 561, 35 S.Ct. 164, 59 L.Ed. 360 (1915)). See also Wolf, 519 F.Supp.2d at 676 n. 1 (quoting Deasy, 47 Fed.Appx. at 728 ("`To establish the citizenship required for diversity jurisdiction, Deasy must show more than mere Tennessee residence. He must show that Tennessee is his domicile. To acquire a domicile within a particular state, a person must be physically present in the state and must have either the intention to make his home there indefinitely or the absence of an intention to make his home elsewhere.'") (citations omitted)); see, e.g., Deese v. Hundley, 232 F.Supp. 848 (D.S.C.1964) (remanding for lack of diversity) (although plaintiff was a South Carolina native, had a valid South Carolina driver's license, and stated that he was a citizen of South Carolina, the court found that Florida was his domicile because, inter alia, he and his wife had contracted to buy a home in Florida).

Considering the allegations of the complaint and the notice of removal and its attachments, then, the court cannot rule out the possibility that the Leys and Lowe's are citizens of the same state, and the court cannot simply assume that they are not. See Ellis v. Kaye-Kibbey, 2008 WL 2696891, *2 (W.D.Mich. July 1, 2008) (Maloney, J.) ("On the present record, then, the court cannot rule out the possibility that Ellis and Kaye are citizens of the same state, and the court cannot simply assume that they are not.") (citing Tsesmelys v. Dublin Truck Leasing Corp., 78 F.R.D. 181, 182 (E.D.Tenn.1976) ("[A]llegations of the citizenships of the parties ... is of the essence of jurisdiction and, being so essential, their absence can neither be overlooked nor supplied by inference.") (citations omitted)).

Accord Royal Ins. Co. of America v. Caleb V. Smith & Sons, Inc., 929 F.Supp. 606, 608 (D.Conn.1996) ("Allegations of complete diversity must be apparent from the pleadings.") (citing FED. R. CIV. P. 8(a)(1) and John Birch Society v. NBC, 377 F.2d 194, 197-99 (2d Cir.1967)).

Likewise, the complaint does not allege facts sufficient to establish the citizenship of defendant Lowe's. The caption calls Lowe's "a foreign corporation", but the body of the complaint alleges only that Lowe's "is a foreign corporation conducting business and having business locations in the metropolitan Grand Rapids area, including the City of Grandville, County of Kent, State of Michigan." Comp ¶ 2. The complaint does not allege Lowe's principal place of business ("PPB").

Even if the court considered the assertions of Lowe's removal notice, Lowe's fails to allege its own PPB. It asserts only, "Plaintiffs are citizens of the State of Michigan and Defendant Lowe's is a corporation incorporated under the laws of the State of North Carolina." Removal Notice ¶ 4.

In any event, even if Lowe's counsel had asserted in the removal notice that Lowe's had its PPB in some State other than Michigan, such an assertion by counsel alone would not be competent evidence on the issue. Cf. Nickelberry v. Daimler-Chrysler Corp., 2006 WL 997391, *1 (N.D.Cal. Apr. 17, 2006) (in trying to show that removal based on diversity was proper, "DCC relies exclusively on an unsworn statement, made by counsel ..., that such defendant has its principal place of business in Oklahoma. Such unsworn statement is inadmissible to prove ... citizenship ....") (citing EOTT Energy Operating Ltd. P'ship v. Winterthur Swiss Ins. Co., 257 F.3d 992, 998 (9th Cir.2001) (holding that counsel's unsworn assertions that defendant was an instrumentality of a...