Hana Financial, Inc. v. Stuarts LLC et al

Filing 22

ORDER TO SHOW CAUSE REGARDING SUBJECT MATTER JURISDICTION by Judge George H. Wu. Response to Order to Show Cause due by 11/19/2015. (kss)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-3392-GW(AGRx)

Title

Hana Financial, Inc. v. Stuarts LLC, et al.

Present: The Honorable

Date

November 16, 2015

GEORGE H. WU, UNITED STATES DISTRICT JUDGE

Javier Gonzalez

None Present

Deputy Clerk

Court Reporter / Recorder

Tape No.

Attorneys Present for Plaintiff:

Attorneys Present for Defendants:

None Present

None Present

PROCEEDINGS (IN CHAMBERS):

ORDER TO SHOW CAUSE REGARDING SUBJECT
MATTER JURISDICTION

Hana Financial, Inc. (“Plaintiff”) sues Stuart’s LLC (“Stuart’s”), Stuart Edelman (“Edelman”),
and Wayne D. Galvin (“Galvin”) (collectively, “Defendants”), asserting seven causes of action: (1)
breach of written factoring agreement, (2) money loaned, (3) money had and received, (4) account stated,
(5) open book account, (6) breach of written continuing guarantee agreement against Edelman, and (7)
breach of written continuing guarantee agreement against Galvin. See generally Compl., Docket No. 1.
Plaintiff asserts diversity jurisdiction pursuant to 28 U.S.C. § 1332. See id. ¶ 7. As the party asserting
jurisdiction, Plaintiff has the burden of establishing that subject matter jurisdiction exists before this
matter proceeds further. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (“It is to
be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary
rests upon the party asserting jurisdiction.”) (citations omitted). Plaintiff’s jurisdictional allegations are
presently insufficient.
First, Plaintiff alleges that Stuart’s “is a New York limited liability company duly organized and
existing under the laws of the State of new York with its principal place of business in the County of
Manhattan, State of New York.” See Compl. ¶ 2. “[L]ike a partnership,” for diversity purposes “an LLC
is a citizen of every state of which its owners/members are citizens.” Johnson v. Columbia Props.
Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). “If any member of a limited liability company . . . is
itself a partnership or association (or another LLC), the federal court needs to know the citizenship of
each submember as well.” Lafountain v. Meridian Senior Living, LLC, No. CV 15-03297-RGK PJWX,
2015 U.S. Dist. LEXIS 84134, at *4, 2015 WL 3948842 (C.D. Cal. June 29, 2015) (citing Johnson, 437
F.3d at 899). As such, Plaintiff must identify each of Stuart’s owners and/or members – and
submembers, if any – and provide each owner/member’s citizenship.

:
Initials of Preparer
CV-90 (06/04)

CIVIL MINUTES - GENERAL

JG
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 15-3392-GW(AGRx)

Date

Title

November 16, 2015

Hana Financial, Inc. v. Stuarts LLC, et al.

Second, Plaintiff alleges that Edelman is “an individual residing in the County of Bedford, State
of New York,” Compl. ¶ 3 (emphasis added), and Galvin is “an individual residing in the County of
Nassau, State of New York,” id. ¶ 4 (emphasis added). For diversity purposes, a person is a “citizen” of
the state in which he or she is domiciled. Kantor v. Wellesley Galleries, Ltd., 704 F.2d 1088, 1090 (9th
Cir. 1983). A person residing in a given state is not necessarily domiciled there, and thus, is not
necessarily a citizen of that state. Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001). A
person’s domicile is the place he or she physically resides with intent to make it a fixed and permanent
home, while residence merely indicates living in a particular locality. Id. Plaintiff has thus failed to
appropriately allege the citizenship of Edelman and Galvin.
Plaintiff is hereby ordered to show cause, in writing and no later than November 19, 2015, as to
why this action should not be dismissed for lack of subject matter jurisdiction. See Arbaugh v. Y&H
Corp., 546 U.S. 500, 514 (2006) (indicating that courts must assure themselves of the existence of
subject matter jurisdiction before proceeding); see also Valdez v. Allstate Ins. Co., 372 F.3d 1115, 1116
(9th Cir. 2004) (same). Failure to cure the jurisdictional deficiencies will result in dismissal.
The Court further orders the Court Clerk promptly to serve this order on all parties who have
appeared in the action.

:
Initials of Preparer
CV-90 (06/04)

CIVIL MINUTES - GENERAL

JG
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