Marshall Wealth Management Group, Inc. et al v. Santillo

Filing 10

ORDER TO SHOW CAUSE. If Plaintiffs do not, by 6/8/2018, file a written response that demonstrates the basis for this court's subject matter jurisdiction in a manner consistent with the discussion above, the court will dismiss this action without prejudice. Signed by Judge Edward J. Davila on 6/5/2018. (ejdlc1S, COURT STAFF) (Filed on 6/5/2018)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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MARSHALL WEALTH MANAGEMENT
GROUP, INC., et al.,
Plaintiffs,

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United States District Court
Northern District of California

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Case No. 5:18-cv-03051-EJD
ORDER TO SHOW CAUSE

v.
PERRY C. SANTILLO,
Defendant.
Plaintiffs Marshall Wealth Management Group, Inc. and David T. Marshall commenced

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the instant action directly in this court against Defendant Perry C. Santillo. Plaintiffs assert six

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causes of action under California state law.

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As is its obligation, this court has reviewed the Complaint to determine whether Plaintiffs

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included allegations sufficient to establish federal jurisdiction and has been guided by the

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principles that govern such an inquiry. See Henderson v. Shinseki, 562 U.S. 428, 434 (2011)

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(“[F]ederal courts have an independent obligation to ensure that they do not exceed the scope of

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their jurisdiction, and therefore they must raise and decide jurisdictional questions that the parties

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either overlook or elect not to press.”); see also Mashiri v. Dep’t of Educ., 724 F.3d 1028, 1031

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(9th Cir. 2013) (“[F]ederal courts have a continuing, independent obligation to determine whether

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subject matter jurisdiction exists.”). In short, they have not done so.

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To begin, the court is mindful that, in contrast to state courts, “[f]ederal courts are courts of

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limited jurisdiction.” Kokkonen v. Guardian Life Ins. Co of Am., 511 U.S. 375, 377 (1994).

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Federal jurisdiction can generally arise in two ways: (1) from the presence of a federal question, or

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(2) from diversity of the parties. 28 U.S.C. §§ 1331, 1332.

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Case No.: 5:18-cv-03051-EJD
ORDER TO SHOW CAUSE
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For jurisdiction based on a federal question under § 1331, the court looks to the face of a

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“well-pleaded complaint” to determine whether a cause of action is created by federal law or

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whether the plaintiff’s right to relief necessarily depends on the resolution of a substantial question

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of federal law. Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 808 (1988) (citing

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Franchise Tax Bd. of California v. Constr. Laborers Vacation Trust, 463 U.S. 1, 27-28 (1983)).

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For subject matter jurisdiction to arise on the basis of diversity under § 1332, “there must

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be complete diversity of citizenship between the parties opposed in interest.” Kuntz v. Lamar

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Corp., 385 F.3d 1177, 1181 (9th Cir. 2004). The amount in controversy must also exceed

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$75,000. Naffe v. Frey, 789 F.3d 1030, 1039 (9th Cir. 2015). For jurisdictional purposes,
individuals are citizens of their states of domicile. Kanter v. Warner-Lambert Co., 265 F.3d 853,

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United States District Court
Northern District of California

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857 (9th Cir. 2001) (“The natural person’s state citizenship is [] determined by her state of

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domicile, not her state of residence.”). In contrast, “[a] corporation is a citizen of (1) the state

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under whose laws it is organized or incorporated; and (2) the state of its ‘principal place of

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business.’” Davis v. HSBC Bank Nev., N.A., 557 F.3d 1026, 1028 (9th Cir. 2008). “Absent

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unusual circumstances, a party seeking to invoke diversity jurisdiction should be able to allege

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affirmatively the actual citizenship of the relevant parties” in order to confirm that all parties are

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diverse. Kanter, 265 F.3d at 857.

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In addition, the court observes that it must look to the Complaint’s jurisdictional

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allegations because “[a] party invoking the federal court’s jurisdiction has the burden of proving

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the actual existence of subject matter jurisdiction.” Thompson v. McCombe, 99 F.3d 352, 353

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(9th Cir. 1996). To that end, Federal Rule of Civil Procedure 8 requires the plaintiff to provide “a

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short and plain statement of the grounds for the court’s jurisdiction.”

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Applying these rules to Plaintiffs’ Complaint, jurisdiction cannot arise based on a federal

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question because, as noted, the causes of action each arise under state law. As such, they are not

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created by federal law, nor do they require the resolution of a substantial question of federal law.

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Furthermore, Plaintiffs have not adequately established a basis for diversity jurisdiction.

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As to Marshall Wealth Management, Inc., Plaintiffs allege it “was a California corporation

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Case No.: 5:18-cv-03051-EJD
ORDER TO SHOW CAUSE
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conducting business in Monterey County, California.” Compl., at ¶ 4. This allegation is

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insufficient because rather than revealing the company’s principal place of business, Plaintiffs

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have only disclosed a location where Marshall Wealth Management, Inc. was “conducting

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business.” Those concepts are not necessarily equivalents, but for jurisdictional purposes

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Plaintiffs must confirm a principal place of business.

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Moreover, Plaintiffs have not alleged the states of domicile for David T. Marshall and

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Perry C. Santillo. Allegations merely describing where these individuals “reside” are not enough.

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See Kanter, 265 F.3d at 857 (“A person residing in a given state is not necessarily domiciled there,

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and thus is not necessarily a citizen of that state.”).
Because Plaintiffs have not satisfied their obligation to affirmatively demonstrate federal

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United States District Court
Northern District of California

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subject matter jurisdiction, the court issues an order to show cause why this action should not be

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dismissed. If Plaintiffs do not, by June 8, 2018, file a written response that demonstrates the basis

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for this court’s subject matter jurisdiction in a manner consistent with the discussion above, the

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court will dismiss this action without prejudice. See Freeman v. Oakland Unified Sch. Dist., 179

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F.3d 846, 847 (9th Cir. 1999).

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No hearing will be held on the Order to Show Cause unless ordered by the court.

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IT IS SO ORDERED.
Dated: June 5, 2018
______________________________________
EDWARD J. DAVILA
United States District Judge

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Case No.: 5:18-cv-03051-EJD
ORDER TO SHOW CAUSE
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