Held v. Silver et al

Filing 74

ORDER (see attached) - In order to determine whether it has subject matter jurisdiction in this action, the Court hereby ORDERS Plaintiff to establish, by affidavit, both his own citizenship and the citizenship of Defendant Scott Silver for diversity purposes as of the date this action was commenced by the filing of Plaintiff's initial Complaint, 1 , i.e., June 24, 2010. If counsel for Plaintiff require discovery from Defendants on this jurisdictional question, the Court will on motion ma ke an appropriate Order. The Court also ORDERS Plaintiff to establish, by affidavit, that Silver and Associates, LLC is indeed a limited liability company, and that its sole member on June 24, 2010 was Defendant Scott Silver. Plaintiff shall file a nd serve such affidavit regarding citizenship on or before Tuesday, October 15, 2013. All case deadlines shall be stayed pending the Court's review of this affidavit. If, upon review, the Court determines that it possesses subject matter jurisdiction, the action may proceed. Otherwise, in the absence of such jurisdiction, the Court shall dismiss the action without prejudice. Signed by Judge Charles S. Haight, Jr on 9/23/13.(Hornstein, A)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF CONNECTICUT
ERIC HELD,
Plaintiff,
v.

3:10-cv-00992 (CSH)

SCOTT SILVER and SILVER AND
ASSOCIATES, LLC,
Defendants.

ORDER

HAIGHT, Senior District Judge:
I.

INTRODUCTION
In this action for breach of contract and related clams, motions are currently pending on

behalf of Plaintiff Eric Held (hereinafter "Plaintiff") to strike the individual Defendant Scott Silver's
counterclaim for libel per se, to compel discovery, and to move the Court for sanctions against
Defendants Scott Silver and Silver and Associates, LLC (hereinafter collectively "Defendants").
Plaintiff's Amended Complaint, filed on October 28, 2010, alleges as a basis for subject matter
jurisdiction in this Court a complete diversity of citizenship between the parties as of that date. [Doc.
18] at ¶ 4. Plaintiff also alleges that subject matter jurisdiction is present "pursuant to 28 U.S.C. §
1343," a statute which pertains to civil rights actions. Id. However, as none of the six causes of
action which Plaintiff brings against Defendants in Plaintiff's Amended Complaint – i.e., breach of
contract; fraud; failure to pay wages in violation of C.G.S.A. § 31-72; unjust enrichment; quantum
meruit; and promissary estoppel, see [Doc. 18] at ¶¶ 61-114 – are related to civil rights, it appears

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that the sole means by which Plaintiff can establish subject matter jurisdiction is diversity of
citizenship.
Decision on the pending motions is accordingly deferred until the existence vel non of the
Court's subject matter jurisdiction is clarified. Clarification is required because the Amended
Complaint does not sufficiently allege complete diversity of citizenship.
As for the individual parties, ¶ 1 of the Amended Complaint alleges that Plaintiff Eric Held
"resides at 1411 N Harper Avenue #5, West Hollywood, California 09946 and is a citizen of the
State of California." ¶ 2 alleges that Defendant Scott Silver "resides at 12 Baldwin Farms South,
Greenwich, Connecticut and is a citizen of the State of Connecticut." These allegations may
reasonably be read to say that the individual parties are citizens of the specified states solely because
they are residents of those states. That assertion is insufficient in law, because for purposes of
diversity jurisdiction residence and citizenship are not synonymous.
As for the second Defendant, Silver and Associates, LLC, the Amended Complaint alleges
at ¶ 3 that this entity "is a closely[] held limited liability corporation founded and at all relevant times
controlled exclusively by Defendant Scott Silver, located and operating out of Scott Silver's home
at 12 Baldwin Farms South, Greenwich, Connecticut 06831 ... with a mailing address of P.O. Box
7855, Greenwich, Connecticut 06836." The Amended Complaint also alleges at ¶ 2 that "Defendant
Scott Silver is the Chairman, sole member and full owner of [Defendant] Silver and Associates,
LLC."
The Amended Complaint's failure to sufficiently allege the parties' diversity of citizenship
is clearly established by authority that, while by now familiar, is nonetheless often disregarded by
counsel, as did counsel for Plaintiff in the case at bar.
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II.

SUBJECT MATTER JURISDICTION
In general, if subject matter jurisdiction is lacking in an action before a court, the action must

be dismissed. Fed. R. Civ. P. 12(h)(3) ("If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the action."). As the Second Circuit recently
noted, "[w]here jurisdiction is lacking, ... dismissal is mandatory." Lovejoy v. Watson, 475 F. App'x
792, 792 (2d Cir. 2012) (internal quotations and citation omitted).
Consequently a federal court must determine with certainty whether it has subject matter
jurisdiction over a case pending before it. If necessary, the court has an obligation to consider its
subject matter jurisdiction sua sponte. Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir.2006) (“Although
neither party has suggested that we lack appellate jurisdiction, we have an independent obligation
to consider the presence or absence of subject matter jurisdiction sua sponte.”), cert. denied, 549
U.S. 1282 (2007); see also, e.g., Univ. of South Alabama v. American Tobacco Co., 168 F.3d 405,
410 (11th Cir. 1999) (“a federal court is obligated to inquire into subject matter jurisdiction sua
sponte whenever it may be lacking”); Transatlantic Marine Claims Agency, Inc. v. Ace Shipping
Corp., 109 F.3d 105, 107-08 (2d Cir. 1997) (holding that district court may raise issue of subject
matter jurisdiction sua sponte at any time)). It is, in fact, "common ground that in our federal system
of limited jurisdiction any party or the court sua sponte, at any stage of the proceedings, may raise
the question of whether the court has subject matter jurisdiction; and, if it does not, dismissal is
mandatory." Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501, 503 (2d Cir. 1983).
In order for requisite diversity of citizenship to exist under 28 U.S.C. § 1332(a)(1), a
plaintiff's citizenship must be diverse from the citizenship of all defendants to an action. See, e.g.,
St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80 (2d Cir. 2005)
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("Diversity is not complete if any plaintiff is a citizen of the same state as any defendant.") (citing
Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)). Such complete diversity
"must exist at the time the action is commenced," Universal Licensing Corp. v. Lungo, 293 F.3d
579, 581 (2d Cir. 2002) (emphasis added), which in the case at bar is June 24, 2010, the date on
which Plaintiff's initial Complaint, [Doc. 1], was filed.
Assuming that while the Amended Complaint states that Defendant Silver and Associates,
LLC is a limited liability corporation, [Doc. 18] at ¶ 3, Plaintiff had intended to state that this
Defendant is in fact a limited liability company, as the inclusion of "LLC" in its name would suggest,
Plaintiff's statement that Defendant Silver and Associates, LLC has only one member, Defendant
Scott Silver, would be sufficient to establish that for purposes of diversity this Defendant has the
same citizenship as that of Defendant Scott Silver so long as Defendant Scott Silver was Defendant
Silver and Associate LLC's sole member on June 24, 2010. A limited liability company's
"citizenship for diversity purposes ... [is] the citizenship of each of its members." Wise v. Wachovia
Securities, LLC, 450 F.3d 265, 267 (7th Cir. 2006)(emphasis added), cert. denied, 549 U.S. 1047
(2006). Therefore assuming that Defendant Silver and Associates is a limited liability company, the
Court need not look to "the state in which [this Defendant] is organized or has its principal place of
business, but rather, each of the states in which it has members." Lewis v. Allied Bronze LLC, No.
07 Civ. 1621(BMC), 2007 WL 1299251, at *1-2 (E.D.N.Y. May 2, 2007) (citation omitted); see
also, e.g., Handelsman v. Bedford Village Associates Ltd. Partnership, 213 F.3d 48, 51-52 (2d Cir.
2000); City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 127 n. 13 (2d Cir. 2011);
Marks Group, LLC v. Schiciano, No. 3:10-CV-01898, 2011 WL 6816552 at *2 (D. Conn. 2011).
If it is indeed the case that on June 24, 2010 Defendant Scott Silver was the sole member of
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Defendant Silver and Associates, LLC, then Defendant Silver and Associates, LLC's citizenship for
diversity purposes is determined by the citizenship of Defendant Scott Silver on that date.
Plaintiff's statements concerning both his own citizenship and Defendant Scott Silver's
citizenship, however, fall short of demonstrating the Court's subject matter jurisdiction for the
following reasons.
Plaintiff alleges in his Amended Complaint that he "resides at 1411 N Harper Avenue #5,
West Hollywood, California 90046" and states in a conclusory fashion that he "is a citizen of the
State of California." [Doc. 18] at ¶ 1 (emphasis added). Plaintiff's Amended Complaint also alleges
that "Defendant Scott Silver resides at 12 Baldwin Farms South, Greenwich, Connecticut 06831"
and states in a conclusory fashion that he is therefore "a citizen of the State of Connecticut." Id. at
¶ 2 (emphasis added). However, an individual's citizenship for diversity purposes is determined by
his or her domicile, not his or her residence. See, e.g., Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir.
2000). Courts have "long ... held that a statement of residence, unlike domicile, tells the court only
where the parties are living and not of which state they are citizens." John Birch Soc. v. Nat'l
Broadcasting Co., 377 F.2d 194, 199 (2d Cir. 1967) (emphasis added). Thus it is "well-established
that allegations of residency alone cannot establish citizenship." Canedy v. Liberty Mut. Ins. Co.,
126 F.3d 100, 102-03 (2d Cir. 1997) (citing Leveraged Leasing Admin. Corp. v. PacifiCorp Capital,
Inc., 87 F.3d 44, 47 (2d Cir. 1996)).
The differences between a domicile and a residence are straightforward. "In general, the
domicile of an individual is his true, fixed and permanent home and place of habitation," which is
to say, "the place to which, whenever he is absent, he has the intention of returning." Martinez v.
Bynum, 461 U.S. 321, 331 (1983); see also, e.g., Palazzo v. Corio, 232 F.3d at 42. In contrast, the
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United States Supreme Court has described "residency" as occurring "when a person takes up his
abode in a given place, without any present intention to remove therefrom." Martinez v. Bynum, 461
U.S. at 331. A "residency," therefore, may be taken up for personal or business reasons and may be
either permanent or solely for a period of time. Id. The test for an individual's residency is thus
significantly less stringent than the "more rigorous domicile test." Id.
Given that "one can reside in one place but be domiciled in another," for jurisdictional
purposes, the term "'[d]omicile' is not necessarily synonymous with [the term] 'residence.'"
Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989) (citations omitted). While
Plaintiff has in his Complaint alleged residency of himself and Defendant Scott Silver, he has not
established either party's citizenship. For the reasons explicated supra, a court may not and cannot
simply infer the latter from the former. See, e.g., Realty Holding Co. v. Donaldson, 268 U.S. 398,
399 (1925). Accordingly, the citizenship of all parties to this action must be confirmed.
III.

CONCLUSION
In order to determine whether it has subject matter jurisdiction in this action, the Court

hereby ORDERS Plaintiff to establish, by affidavit, both his own citizenship and the citizenship of
Defendant Scott Silver for diversity purposes as of the date this action was commenced by the filing
of Plaintiff's initial Complaint, [Doc. 1], i.e., June 24, 2010. If counsel for Plaintiff require discovery
from Defendants on this jurisdictional question, the Court will on motion make an appropriate Order.
The Court also ORDERS Plaintiff to establish, by affidavit, that Silver and Associates, LLC is
indeed a limited liability company, and that its sole member on June 24, 2010 was Defendant Scott
Silver.
Plaintiff shall file and serve such affidavit regarding citizenship on or before Tuesday,
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October 15, 2013. All case deadlines shall be stayed pending the Court’s review of this affidavit.
If, upon review, the Court determines that it possesses subject matter jurisdiction, the action may
proceed. Otherwise, in the absence of such jurisdiction, the Court shall dismiss the action without
prejudice.
It is SO ORDERED.

Dated: New Haven, Connecticut
September 23, 2013
/s/ Charles S. Haight, Jr.
_
Charles S. Haight, Jr.
Senior United States District Judge

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