Isaacs et al v. Royal Bank of Canada et al

Filing 13

ORDER entered by Judge Sara Darrow on June 16, 2014. The Court ADOPTS U.S. Magistrate Judge Jonathan E. Hawley's 7 Report and Recommendations. This case is DISMISSED without prejudice due to lack of subject matter jurisdiction. The Clerk is directed to enter judgment and close the case. (JD, ilcd)

E-FILED

Monday, 16 June, 2014 02:24:43 PM
Clerk, U.S. District Court, ILCD
IN THE UNITED STATES DISTRICT COURT
FOR THE CENTRAL DISTRICT OF ILLINOIS
ROCK ISLAND DIVISION
ANNA F. ISAACS and
JODY D. KIMBRELL,
Plaintiffs,
v.
ROYAL BANK OF CANADA,
a Canadian Chartered Bank, and
RBC CAPITAL MARKETS,
Defendants.

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No. 1:14-cv-01138-SLD-JEH

ORDER
Plaintiffs Anna F. Isaacs and Jody D. Kimbrell object to U.S. Magistrate Judge Jonathan E.
Hawley’s recommendation that this case be dismissed due to lack of subject matter jurisdiction. For
the following reasons, the Court ADOPTS Magistrate Judge Hawley’s Report and
Recommendations, ECF No. 7. This case is DISMISSED without prejudice.
BACKGROUND
Plaintiffs, proceeding pro se, filed a five-count Complaint on April 11, 2014, alleging that
Defendants are liable for fraudulent conveyance of property, mortgage fraud, deceptive business
practices, breach of fiduciary duty, and negligence. Compl., ECF No. 1. Plaintiffs plead the
existence of federal jurisdiction on the basis of diversity of citizenship. Specifically, they allege that
Plaintiffs are both citizens of Illinois; Defendant Royal Bank of Canada is a Canadian-chartered bank
with principal places of business in Toronto, Canada, and New York, New York; and Defendant
RBC Capital Markets (“RBCCM”) is headquartered in Chicago, Illinois. Id. at 2. On April 23,
2014, Magistrate Judge Hawley entered a Report and Recommendations (“Report”) finding that
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Plaintiffs failed to establish diversity jurisdiction because: (1) both Plaintiffs and RBCCM are
alleged to be citizens of Illinois for purposes of 28 U.S.C. § 1332; and (2) Royal Bank of Canada
cannot have two principal places of business. Report & Rec. 2, ECF No. 7.
The Report noted that Plaintiffs had asserted the same claims against these and additional
Defendants in an earlier case filed in this District. Id. (citing Isaacs v. Royal Bank of Can., No. 14cv-1036, 2014 WL 1379345 (C.D. Ill. April 8, 2014)). The court dismissed that case for lack of
jurisdiction, explaining that diversity was incomplete because Plaintiffs had alleged that they and one
of the Defendants were citizens of Illinois. Isaacs, 2014 WL 1379345 at *2. Therefore, “[a]t the
time the Plaintiffs filed the instant case,” the Report states, “they were on notice that complete
diversity was necessary in order to invoke the Court’s subject matter jurisdiction and that opposing
parties from Illinois defeated complete diversity.” Report & Rec. 3. The Report therefore
recommended that the Court (1) dismiss this case for lack of subject matter jurisdiction, and (2)
admonish Plaintiffs that vexatious and repeated filings against the same Defendants may result in
the imposition of sanctions.1 Id. at 3–4.
Plaintiffs filed an objection to the Report on April 24, 2014, and moved for reconsideration
of the Report’s proposed findings on April 29, 2014. Both motions stated that RBCCM is a wholly
owned subsidiary of Royal Bank of Canada, itself a Canadian company, and recited the same general
legal principles to the effect that a corporation’s principal place of business for purposes of 28 U.S.C.
§ 1332 is its headquarters or nerve center, and that courts should take extra care when adjudicating
the rights of pro se litigants. Objection, ECF No. 8; Mot. Recons., ECF No. 10.

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The Report noted that the instant case is Plaintiff Isaacs’ third suit against Royal Bank of Canada and RBCCM.
Report & Rec. 3. The first, Isaacs v. Royal Bank of Can., No. 13-1565 (C.D. Ill. Jan. 28, 2014), was dismissed for
lack of standing. Report & Rec. 3.

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DISCUSSION
I. Legal Standard
When reviewing a magistrate judge’s recommendation on a dispositive issue, a court
considers de novo those portions of the report to which a party timely objects. See 28 U.S.C. §
636(b)(1); Fed. R. Civ. P. 72(b); Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 760 (7th Cir.
2009).

The court “may accept, reject, or modify, in whole or in part, the findings or

recommendations made by the magistrate judge.” 28 U.S.C. § 636(b)(1).
Federal diversity jurisdiction is defeated if any plaintiff is a citizen of the same state as any
defendant. See 28 U.S.C. § 1332(a)(1); Wis. Dep’t of Corr. v. Schacht, 524 U.S. 381, 388 (1998).
A corporation is a citizen of both the state where it is incorporated and the state containing its
principal place of business. 28 U.S.C. § 1332(c)(1). A corporation’s principal place of business is
its “nerve center,” or, “more concretely, where its executive headquarters are located.” Ill. Bell Tel.
Co., Inc. v. Global NAPs Ill., Inc., 551 F.3d 587, 590 (7th Cir. 2008). A corporation has only one
principal place of business. Metro. Life Ins. Co. v. Estate of Cammon, 929 F.2d 1220, 1223 (7th Cir.
1991). The party claiming federal jurisdiction must establish the facts supporting that jurisdiction,
when contested, by a preponderance of the evidence. Id.
District courts must construe pro se pleadings liberally and allow “ample opportunity” to
amend a complaint where the plaintiff could state a meritorious claim by doing so. Donald v. Cook
Cnty. Sheriff’s Dep’t, 95 F.3d 548, 555 (7th Cir. 1996). “The essence of liberal construction is to
give a pro se plaintiff a break when, although he stumbles on a technicality, his pleading is otherwise
understandable.” Hudson v. McHugh, 148 F.3d 859, 864 (7th Cir. 1998). A plaintiff’s pro se status
will not save her complaint, however, where its factual basis fails to support subject matter

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jurisdiction. See, e.g., Wolf v. Fliss, No. 96-2158, 1997 WL 14158, at *2 (7th Cir. Jan. 9, 1997)
(upholding dismissal of pro se complaint for lack of diversity jurisdiction where it was undisputed
that plaintiff and defendants resided in the same state); Eyiowuawi v. Chi. Medicar Co., No. 05 C
5210, 2007 WL 723393, at *2 (N.D. Ill. Mar. 5, 2007) (dismissing pro se complaint where facts
undermined claim to federal subject matter jurisdiction); DeLagrange v. Matthews, No. 1:04-CV454, 2006 WL 2623266, at *4 (N.D. Ind. Sept. 12, 2006) (dismissing pro se complaint when plaintiff
failed to provide evidentiary support to counter challenge to diversity of citizenship).
A federal court has no authority to consider the merits when it determines subject matter
jurisdiction is lacking, and must immediately dismiss the case. See Fed. R. Civ. P. 12(h); State of
Ill. v. City of Chicago, 137 F.3d 474, 478 (7th Cir. 1998). Dismissal for lack of subject matter
jurisdiction is without prejudice. Murray v. Conseco, Inc., 467 F.3d 602, 605 (7th Cir. 2006).
II. Analysis
Because the Court must dismiss this case if it lacks subject matter jurisdiction, the Court
reviews Magistrate Judge Hawley’s recommendation de novo. See 28 U.S.C. § 636(b)(1). Because
Plaintiffs are proceeding pro se, the Court must read their pleadings more generously than it would
for represented parties. See Donald, 95 F.3d at 555. The Complaint specifically invokes diversity
jurisdiction; additionally, since all of Plaintiffs’ claims are based in state law, federal question
jurisdiction is not an option. Compl. ¶ 1; see 28 U.S.C. § 1331. Therefore, Plaintiffs must establish
jurisdiction based on complete diversity of parties. See Schacht, 524 U.S. at 388.
Construing the Complaint liberally, the Court could perhaps countenance Plaintiffs’
allegation of two principal places of business for Royal Bank of Canada so long as Defendant’s
citizenship in either state did not defeat complete diversity. Plaintiffs’ jurisdictional pleading
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regarding RBCCM, however, is fatal. The Complaint does not state expressly what type of entity
RBCCM is for jurisdictional purposes, see Compl. 2, but—after the Report concluded that Plaintiffs
alleged RBCCM to be a subsidiary corporation of Royal Bank of Canada—Plaintiffs failed to claim
a different status, if applicable, and provide relevant factual allegations regarding RBCCM’s
citizenship under that theory. Indeed, in both their objection to the Report and request for
reconsideration, Plaintiffs acknowledge that a corporation’s principal place of business is its “nerve
center”or headquarters, implicitly affirming the Report’s conclusion that they are claiming corporate
status for RBCCM.
The Complaint alleges that RBCCM is headquartered in Chicago, Illinois. Even after
Magistrate Judge Hawley specifically explained why this allegation was problematic for jurisdiction,
however, Plaintiffs have made no effort in their subsequent responsive filings to amend their
allegations or produce evidence to establish that RBCCM’s nerve center or headquarters is in a
different state. This factual allegation defeats diversity jurisdiction no matter how artfully pled;
Plaintiffs’ repeated failure2 to allege diverse citizenship for RBCCM implies that they cannot.
Granting Plaintiffs further opportunity to amend their claims is therefore unlikely to produce a
justiciable case. See Donald, 95 F.3d at 555.
Alleging shared citizenship by Plaintiffs and RBCCM is no mere technicality that can be
overlooked on the basis of pro se status, but a fundamental flaw that requires the Court to dismiss
the case for lack of subject matter jurisdiction. See State of Ill., 137 F.3d at 478. As this dismissal
is necessarily without prejudice, see Murray, 467 F.3d at 605, Plaintiffs are free to bring their suit

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Plaintiffs have known that pleading the same state of citizenship for themselves and any Defendant will lead to
dismissal at least since April 8, 2014, when another Central District of Illinois court dismissed Plaintiffs’ claims
against Royal Bank of Canada and RBCCM due to lack of complete diversity. See Isaacs, 2014 W L 1379345 at *2.

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again if they name properly diverse defendants or establish a different jurisdictional basis for their
claims. However, Plaintiffs should be aware that “frivolous, vexatious, and repeated filings by pro
se litigants interfere with the orderly administration of justice by diverting scarce judicial resources
from cases having merit” and are grounds for imposing sanctions such as fines and/or restrictions
on the litigant’s ability to proceed in federal court. See United States ex rel. Verdone v. Circuit Ct.
for Taylor Cnty., 73 F.3d 669, 671, 674–75 (7th Cir. 1995).
CONCLUSION
The Court ADOPTS Magistrate Judge Hawley’s Report and Recommendations, ECF No.
7. This case is DISMISSED without prejudice due to lack of subject matter jurisdiction. The
Clerk is directed to enter judgment and close the case.
Entered this 16th day of June, 2014.
s/ Sara Darrow
SARA DARROW
UNITED STATES DISTRICT JUDGE

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