Herbrand v. Ditech Financial, LLC

Filing 7

ORDER to SHOW CAUSE Why Case Should Not be Remanded for Lack of Subject Matter Jurisdiction, signed by District Judge Dale A. Drozd on 8/2/2017. (Defendant Ditech Financial is directed to show cause within fourteen (14) days of service of this order why this case should not be remanded to Kings County Superior Court.)(Gaumnitz, R)

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UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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MARCUS HERBRAND,

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No. 1:17-cv-00921-DAD-SAB

Plaintiff,
v.

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DITECH FINANCIAL, LLC,

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ORDER TO SHOW CAUSE WHY CASE
SHOULD NOT BE REMANDED FOR LACK
OF SUBJECT MATTER JURISDICTION

Defendant.

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This case was removed to this federal court by defendant on July 12, 2017. (Doc. No. 1.)

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The notice of removal cites the federal diversity statute, 28 U.S.C. § 1332, as the basis for this

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court’s jurisdiction. (Id. at ¶ 5.) Defendant alleges the parties are diverse and the amount in

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controversy exceeds $75,000, thereby establishing jurisdiction. (Id. at ¶¶ 6–10.) For the reasons

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that follow, defendant must provide further information about its citizenship in order for the court

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to establish it has jurisdiction over this action.

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“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of

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Am., 511 U.S. 375, 377 (1994). “A suit may be removed to federal court under 28 U.S.C.

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§ 1441(a) only if it could have been brought there originally.” Sullivan v. First Affiliated Secs.,

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Inc., 813 F.2d 1368 (9th Cir. 1987). A district court has “a duty to establish subject matter

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jurisdiction over the removed action sua sponte, whether the parties raised the issue or not.”

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United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d 960, 967 (9th Cir. 2004). A
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limited liability company (“LLC”) “is a citizen of every state of which its owners/members are

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citizens.” Johnson v. Columbia Prop. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).

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Meanwhile, corporations are citizens of their state of incorporation and the state in which their

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principal place of business—frequently called the “nerve center” and usually the corporate

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headquarters—is located. 28 U.S.C. § 1332(c)(1); Hertz Corp. v. Friend, 559 U.S. 77, 81, 85–86

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(2010).

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The notice of removal in this case states that defendant Ditech Financial, which is an LLC,

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is comprised of two members: Green Tree Licensing LLC and Green Tree Servicing Corp. (Doc.

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No. 1 at ¶ 7.) The notice of removal also states that Green Tree Licensing LLC is a citizen of

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Maryland, Florida, Delaware, and Minnesota, but fails to identify the members of Green Tree

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Licensing LLC. Without knowing the identity of the members of this entity, the court cannot

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assess whether defendant has successfully pleaded the citizenship of all defendants, and therefore

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whether the court has diversity jurisdiction. See Tschakert v. Hart Energy Pub., LLP, No.

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10CV2598-L (WMC), 2011 WL 3568117, at *2 (S.D. Cal. Aug. 15, 2011) (“Courts may consider

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the citizenship of the members’ members, and then the members’ members’ members and so on,

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because an LLC’s members may include other entities, such as partnerships, corporations, or even

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additional LLCs.”); see also Crescent Silver LLC v. New Jersey Mining Co., No. 2:15-cv-00097-

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REB, 2015 WL 6958059, at *2–3 (D. Idaho Nov. 10, 2015); Century Surety Co. v. Bruno India

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Kettner, LLC, No. 14CV2090 BEN (BLM), 2015 WL 12660420, at *1 (S.D. Cal. July 24, 2015)

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(“A plaintiff must identify the citizenship of all of the members of an LLC and if any member of

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an LLC is itself an LLC or other non-corporate entity, a plaintiff must state the citizenship of that

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member.”).

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Additionally, defendant Ditech Financial’s notice of removal states that Green Tree

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Servicing Corp. is a citizen of Delaware and Minnesota. (Doc. No. 1 at ¶ 7.) However, the notice

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fails to identify specifically where Green Tree Servicing Corp. is incorporated or where its

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principal place of business is located. Because of the limitations on federal jurisdiction, “federal

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courts have repeatedly held that a complaint must include allegations of both the state of

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incorporation and the principal place of business of corporate parties.” Harris v. Rand, 682 F.3d
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846, 850 (9th Cir. 2012). Here, defendant Ditech Financial must specifically identify the state(s)

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of incorporation and the location(s) of the principal place of business for Green Tree Servicing

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Corp.

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Therefore, defendant Ditech Financial is directed to show cause within fourteen (14) days

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of service of this order why this case should not be remanded to Kings County Superior Court.

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Defendant may discharge this order to show cause by both (1) specifically indicating in which

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states Green Tree Servicing Corp. is incorporated and in which it maintains a principal place of

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business; and (2) identifying the members of Green Tree Licensing LLC and detailing their

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citizenship. If any members of Green Tree Licensing LLC are themselves non-corporate entities,

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defendant must identify the respective members of that member, and so on for each layer of

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membership, until citizenship can be readily determined by the court.

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IT IS SO ORDERED.

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Dated:

August 2, 2017
UNITED STATES DISTRICT JUDGE

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