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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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE EASTERN DISTRICT OF CALIFORNIA 10 11 MARCUS HERBRAND, 12 13 No. 1:17-cv-00921-DAD-SAB Plaintiff, v. 14 DITECH FINANCIAL, LLC, 15 ORDER TO SHOW CAUSE WHY CASE SHOULD NOT BE REMANDED FOR LACK OF SUBJECT MATTER JURISDICTION Defendant. 16 17 This case was removed to this federal court by defendant on July 12, 2017. (Doc. No. 1.) 18 The notice of removal cites the federal diversity statute, 28 U.S.C. § 1332, as the basis for this 19 court’s jurisdiction. (Id. at ¶ 5.) Defendant alleges the parties are diverse and the amount in 20 controversy exceeds $75,000, thereby establishing jurisdiction. (Id. at ¶¶ 6–10.) For the reasons 21 that follow, defendant must provide further information about its citizenship in order for the court 22 to establish it has jurisdiction over this action. 23 “Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co. of 24 Am., 511 U.S. 375, 377 (1994). “A suit may be removed to federal court under 28 U.S.C. 25 § 1441(a) only if it could have been brought there originally.” Sullivan v. First Affiliated Secs., 26 Inc., 813 F.2d 1368 (9th Cir. 1987). A district court has “a duty to establish subject matter 27 jurisdiction over the removed action sua sponte, whether the parties raised the issue or not.” 28 United Investors Life Ins. Co. v. Waddell & Reed, Inc., 360 F.3d 960, 967 (9th Cir. 2004). A 1 1 limited liability company (“LLC”) “is a citizen of every state of which its owners/members are 2 citizens.” Johnson v. Columbia Prop. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). 3 Meanwhile, corporations are citizens of their state of incorporation and the state in which their 4 principal place of business—frequently called the “nerve center” and usually the corporate 5 headquarters—is located. 28 U.S.C. § 1332(c)(1); Hertz Corp. v. Friend, 559 U.S. 77, 81, 85–86 6 (2010). 7 The notice of removal in this case states that defendant Ditech Financial, which is an LLC, 8 is comprised of two members: Green Tree Licensing LLC and Green Tree Servicing Corp. (Doc. 9 No. 1 at ¶ 7.) The notice of removal also states that Green Tree Licensing LLC is a citizen of 10 Maryland, Florida, Delaware, and Minnesota, but fails to identify the members of Green Tree 11 Licensing LLC. Without knowing the identity of the members of this entity, the court cannot 12 assess whether defendant has successfully pleaded the citizenship of all defendants, and therefore 13 whether the court has diversity jurisdiction. See Tschakert v. Hart Energy Pub., LLP, No. 14 10CV2598-L (WMC), 2011 WL 3568117, at *2 (S.D. Cal. Aug. 15, 2011) (“Courts may consider 15 the citizenship of the members’ members, and then the members’ members’ members and so on, 16 because an LLC’s members may include other entities, such as partnerships, corporations, or even 17 additional LLCs.”); see also Crescent Silver LLC v. New Jersey Mining Co., No. 2:15-cv-00097- 18 REB, 2015 WL 6958059, at *2–3 (D. Idaho Nov. 10, 2015); Century Surety Co. v. Bruno India 19 Kettner, LLC, No. 14CV2090 BEN (BLM), 2015 WL 12660420, at *1 (S.D. Cal. July 24, 2015) 20 (“A plaintiff must identify the citizenship of all of the members of an LLC and if any member of 21 an LLC is itself an LLC or other non-corporate entity, a plaintiff must state the citizenship of that 22 member.”). 23 Additionally, defendant Ditech Financial’s notice of removal states that Green Tree 24 Servicing Corp. is a citizen of Delaware and Minnesota. (Doc. No. 1 at ¶ 7.) However, the notice 25 fails to identify specifically where Green Tree Servicing Corp. is incorporated or where its 26 principal place of business is located. Because of the limitations on federal jurisdiction, “federal 27 courts have repeatedly held that a complaint must include allegations of both the state of 28 incorporation and the principal place of business of corporate parties.” Harris v. Rand, 682 F.3d 2 1 846, 850 (9th Cir. 2012). Here, defendant Ditech Financial must specifically identify the state(s) 2 of incorporation and the location(s) of the principal place of business for Green Tree Servicing 3 Corp. 4 Therefore, defendant Ditech Financial is directed to show cause within fourteen (14) days 5 of service of this order why this case should not be remanded to Kings County Superior Court. 6 Defendant may discharge this order to show cause by both (1) specifically indicating in which 7 states Green Tree Servicing Corp. is incorporated and in which it maintains a principal place of 8 business; and (2) identifying the members of Green Tree Licensing LLC and detailing their 9 citizenship. If any members of Green Tree Licensing LLC are themselves non-corporate entities, 10 defendant must identify the respective members of that member, and so on for each layer of 11 membership, until citizenship can be readily determined by the court. 12 IT IS SO ORDERED. 13 Dated: August 2, 2017 UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3

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