Welk Resort Group, Inc. et al v. Reed Hein & Associates, LLC et al

Filing 4

ORDER DISMISSING Complaint with Leave to Amend for Lack of Subject Matter Jurisdiction. If Plaintiffs choose to file an amended complaint, they must do so no later than August 11, 2017. Signed by Judge M. James Lorenz on 7/26/2017.(sjt)

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UNITED STATES DISTRICT COURT

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SOUTHERN DISTRICT OF CALIFORNIA

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WELK RESORT GROUP, INC. et al.,

Case No.: 17cv1499-L(AGS)

Plaintiffs,

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v.

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ORDER DISMISSING COMPLAINT
WITH LEAVE TO AMEND

REED HEIN &ASSOCIATES, LLC, et
al.,

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Defendants.

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In this action arising from alleged violations of California Vacation Ownership and
Time-Share Act and related claims, Plaintiffs claim federal jurisdiction based on diversity
of citizenship under 28 U.S.C. §1332. (Compl. at 7.) Because the complaint does not
sufficiently allege citizenship of all the parties, the action is dismissed with leave to
amend.
Unlike state courts,
Federal courts are courts of limited jurisdiction. They possess
only that power authorized by Constitution and statute, which is
not to be expanded by judicial decree. 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.

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17cv1499-L(AGS)

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Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted).

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Federal courts are constitutionally required to raise issues related to federal subject matter

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jurisdiction and may do so sua sponte. Arbaugh v. Y&H Corp., 546 U.S. 500, 514

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(2006). A federal court must satisfy itself of its jurisdiction over the subject matter

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before proceeding to the merits of the case. Ruhrgas AG v. Marathon Oil Co., 526 U.S.

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574, 577, 583 (1999).

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The plaintiff bears the burden of demonstrating that jurisdiction is properly before

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the Court. See Thornhill Publ'g Co. v. General Tel. & Elec. Corp., 594 F.2d 730, 733

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(9th Cir. 1979). Plaintiffs rely on 28 U.S.C. §1332, which requires complete diversity of

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citizenship between plaintiffs and defendants. The complaint must affirmatively allege

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the state of citizenship of each party. Bautista v. Pan Am. World Airlines, Inc., 828 F.2d

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546, 552 (9th Cir.1987); see also Kanter v. Warner-Lambert, Co., 265 F.3d 853 (9th Cir.

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2001).

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The complaint names Welk Resort Group, Inc. and Welk Resort Platinum Owners

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Association as Plaintiffs, and Reed & Hein Associates, LLC dba Timeshare Exit Team,

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Schroeter Goldmark & Bender P.S., and Ken B. Privett, PLC as Defendants. For

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diversity purposes, the citizenship of a corporation is determined by its state of

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incorporation and the state of its principal place of business. 28 U.S.C. § 1332(c). The

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citizenship of a non-corporate business entity is determined by the citizenship of each of

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its members. Carden v. Arkoma Assoc., 494 U.S. 185, 195-96 (1990). Except for Welk

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Resort Group, Inc., Plaintiffs do not adequately allege the citizenship of any named party.

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(See Compl. at 6-7.) In addition, Plaintiffs do not state whether Schroeter Goldmark &

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Bender P.S., and Ken B. Privett, PLC are corporations or non-corporate entities. The

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complaint is insufficient to establish that the parties meet all the requirements of diversity

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jurisdiction.

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Because Plaintiffs do not allege the facts necessary to establish diversity, the

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complaint is dismissed for lack of subject matter jurisdiction. Plaintiffs are granted leave

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to file an amended complaint to supplement the jurisdictional allegations. See 28 U.S.C.
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17cv1499-L(AGS)

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§1653. If Plaintiffs choose to file an amended complaint, they must do so no later than

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August 11, 2017.

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IT IS SO ORDERED.

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Dated: July 26, 2017

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17cv1499-L(AGS)