Pinson et al v. 45 Development, LLC et al

Filing 4

ORDER directing the Plaintiff to file an amended complaint on or before Monday July 30, 2012. If plaintiffs fail to properly and timely file an Amended Complaint the court will dismiss this action without prejudice for lack of subject matter jurisdiction re 1 Complaint. Signed by Honorable P. K. Holmes, III on July 23, 2012. (sh)

IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
FORT SMITH DIVISION
CURTIS PINSON and CRISTI PINSON,
Individually and as Husband and Wife
v.

PLAINTIFFS

Case No. 2:12-CV-02160

45 DEVELOPMENT, LLC; JEFF PALMER;
JOHN ALFORD; CITI TRENDS, INC.; CITI
TRENDS, INC. d/b/a CITITRENDS; CITITRENDS
DEVELOPMENT COMPANY, LLC; CITITRENDS
GROWTH COMPANY, LLC; and JOHN DOES 1-5

DEFENDANTS

ORDER
The Court, having preliminarily reviewed Plaintiffs’ Complaint (Doc. 1), now raises sua
sponte, the issue of whether this Court has subject matter jurisdiction over the instant matter.
Subject matter jurisdiction and the issue of this Court’s authority to hear this action may be raised
at any time. Fed. R. Civ. P. 12(h)(3).
As a court of limited jurisdiction, a federal court has an affirmative duty to ensure that any
claims before it are within its subject matter jurisdiction. See Sanders v. Clemco Industries, 823 F.2d
214, 216 (8th Cir. 1987) (“The threshold requirement in every federal case is jurisdiction and we
have admonished the district court to be attentive to a satisfaction of jurisdictional requirements in
all cases.”); see also Strange v. Arkansas-Oklahoma Gas Corp., 534 F. Supp. 138, 139 (W.D. Ark.
1981) (noting court’s “obligation and duty to carefully consider the pleadings...to determine whether
subject matter jurisdiction exists”). As the party invoking the Court’s jurisdiction, it is Plaintiffs’
burden to properly plead the existence of diversity jurisdiction. Walker v. Norwest Corp., 108 F.3d
158, 161 (8th Cir. 1997). Parties seeking to invoke federal jurisdiction have long assumed the burden

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of investigating the citizenship of the parties involved. Id. Plaintiffs’ burden of pleading requires
them to plead “with specificity the citizenship of the parties.” Barclay Square Props. v. Midwest Fed.
Sav. & Loan Ass’n of Minneapolis, 893 F.2d 968, 969 (8th Cir. 1990).
In the section of the Complaint captioned “Parties,” Plaintiffs assert that they are both
citizens and residents of the state of Texas. (Doc. 1, ¶¶ 1-2). As to Defendants, Plaintiffs allege that
45 Development, LLC is an Arkansas limited liability company; Jeff Palmer and John Alford are
both residents of Arkansas; Citi Trends, Inc. is a Delaware Corporation; and both Cititrends
Development Company, LLC and Cititrends Growth Company, LLC are Delaware limited liability
companies. Id. at ¶¶ 3-11. The Complaint then alleges, in the section captioned “Jurisdiction and
Venue,” that jurisdiction in this Court is proper based on diversity jurisdiction pursuant to 28 U.S.C.
§ 1332.
Plaintiffs’ pleadings are insufficient to properly allege diversity jurisdiction. First, for
purposes of establishing diversity jurisdiction, “a corporation shall be deemed to be a citizen of every
State and foreign state by which it has been incorporated and of the State or foreign state where it
has its principal place of business . . .” 28 U.S.C. § 1332 (c) (emphasis added). “Where the plaintiff
fails to state the place of incorporation or the principal place of business of a corporate party, the
pleadings are inadequate to establish diversity.” Sanders, 823 F.2d at 216 (internal quotation
omitted). The citizenship of unincorporated business entities must likewise be established according
to applicable legal principles – for instance, an LLC’s citizenship is the citizenship of each of its
members. OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir. 2007).
Second, as to Plaintiffs’ allegations regarding individual defendants Jeff Palmer and John
Alford, an allegation of mere residence is not sufficient to establish citizenship. See Sanders, 823
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F.2d at 216 (differentiating between an allegation of residency and an allegation of citizenship and
emphasizing that “[d]iversity jurisdiction requires that the parties be citizens of different states”
(emphasis in original) (internal quotation omitted)). The state where a person resides is not
necessarily that person’s domicile. Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30,
48 (1989). Rather, citizenship for diversity purposes must be determined by a person’s physical
presence in a state with his or her intent to remain there indefinitely. Yeldell v. Tutt, 913 F.2d 533,
537 (8th Cir. 1990). Plaintiffs must affirmatively plead the citizenship of any individual defendants.
Because Plaintiffs have failed to properly allege Defendants’ citizenship, the Court cannot
discern, from Plaintiffs’ Complaint, whether the Court may properly exercise diversity jurisdiction
in this case. Nor does it appear that Plaintiffs are claiming that the Court could otherwise exercise
jurisdiction in this case due to the existence of a federal question.
The Court therefore directs Plaintiffs to file an amended complaint properly alleging facts
establishing the citizenship of Defendants at the time of the filing of the Complaint. Plaintiffs are
directed to file such amended complaint on or before Monday, July 30, 2012. If Plaintiffs fail to
properly and timely file an amended complaint, the Court WILL dismiss this action without
prejudice for lack of subject matter jurisdiction.
IT IS SO ORDERED this 23rd day of July, 2012.

/s/P. K. Holmes, III
P.K. HOLMES, III
CHIEF U.S. DISTRICT JUDGE

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