Walsh Construction Company v. Chicago Explosive Services, LLC et al

Filing 92

OPINION AND ORDER: The 66 Motion to Dismiss Plaintiff's Complaint for Lack of Subject Matter Jurisdiction is GRANTED. This case is DISMISSED WITHOUT PREJUDICE for lack of subject matter jurisdiction. Signed by Judge Rudy Lozano on 9/25/2017. (jss)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
WALSH CONSTRUCTION CO.,

)
)
)
)
)
)
)
)
)
)
)

Plaintiff,
vs.
CHICAGO EXPLOSIVE
SERVICES, LLC, and
PMG INDUSTRIAL, LLC,
Defendants.

No. 2:14-CV-084

OPINION AND ORDER
This matter is before the Court on Defendant Chicago Explosive
Services, LLC’s Motion to Dismiss Plaintiff’s Complaint for Lack
of

Subject

Matter

Jurisdiction,

filed

by

Defendant,

Explosive Services, LLC, on May 27, 2016 (DE #66).
set forth below, the motion is GRANTED.

Chicago

For the reasons

This case is DISMISSED

WITHOUT PREJUDICE for lack of subject matter jurisdiction.

BACKGROUND
Plaintiff, Walsh Construction Company (“Walsh”), filed its
Complaint on March 17, 2014.

(DE #1.)

The Complaint lists the

following claims: Count I, Breach of Contract against Chicago
Explosive Services, LLC (“CES”); Count II, Breach of Contract for
Failure to Indemnify against CES; Count III, Breach of Contract
for Failure to Properly Procure Insurance against CES; Count IV,
Negligence

against

CES;

Count

V,

Negligence

against

PMG

Industrial, LLC (“PMG”); Count VI, Strict Liability against CES;
and Count VII, Strict Liability against PMG.

(DE #1.)

CES filed

a Motion for Enlargement of Time in which to Answer or Otherwise
Respond to Complaint on May 30, 2014.

(DE #11.)

CES then filed

its Answer to Complaint along with a Motion to Dismiss Count II
and III of Plaintiff’s Complaint on June 11, 2014.
#15.)

(DE’s #13 &

The Court denied the Motion to Dismiss Count II and III of
(DE #27.)1

Plaintiff=s Complaint on October 20, 2014.

A protracted discovery period ensued during which several
requests for extensions of time related to discovery matters were
granted.
(DE

#66.)

On May 27, 2016, the instant motion to dismiss was filed.
In

response

to

the

motion,

Walsh

requested

an

enlargement of time to respond so that it could conduct discovery
on the issue raised in the motion to dismiss -- lack of subject
matter jurisdiction.

(DE #69.)

On June 28, 2016, Magistrate

Judge Paul R. Cherry ordered all discovery not related to subject
matter jurisdiction stayed, and he vacated the discovery schedule
providing

new

deadlines

discovery matters.

for

(DE #73.)

specific,

jurisdictionally

based

On November 7, 2016, Walsh filed

its response to the instant motion to dismiss.

(DE #83.)

1 The initial Motion to Dismiss Count II and III of Plaintiff’s Complaint
was premised upon Federal Rule of Civil Procedure 12(b)(6) for failure to
state a claim, and the Court decided it on those grounds.

2

CES

filed its reply on November 18, 2016.

(DE #86.)

The motion is

ripe for adjudication.

DISCUSSION
Facts
Walsh, an Illinois corporation with its principal place of
business in the state of Illinois, was hired by the Indiana
Department of Transportation (“INDOT”) pursuant to INDOT Contract
IB-30997-A to demolish the Cline Avenue Bridge (“Bridge”) in East
Chicago, Indiana.

(DE #1, pp. 1-2.)

Walsh retained CES, a

limited liability company with its principal place of business in
Indiana, pursuant to a subcontract agreement (“Subcontract”) to
perform

certain

demolition.

“blasting”

tasks

associated

with

the

(Id.; see also Subcontract, DE #1-1.)

assisted by PMG in completing the blasting work.

Bridge
CES was

(DE #1, p. 3.)

Walsh alleges that some of the blasting work was performed in an
improper and negligent manner, which ultimately led to Walsh
incurring significant monetary damages.

(Id. at 3-11.)

Walsh

filed the instant Complaint bringing claims of breach of contract,
negligence, and strict liability.

(Id.)

The Complaint alleges

that jurisdiction is proper under 28 U.S.C. § 1332 because the
amount in controversy exceeds $75,000 and because diversity exists
between the parties.

Id. at 1-2.
3

Specifically, Walsh alleges

that it is a citizen of Illinois while, “[u]pon information and
belief,” CES and PMG are citizens of Indiana for purposes of
diversity jurisdiction.2

Id. at 1.

CES’s Limited Liability Company Operating Agreement defines
its initial members as Richard N. Flores, Patrick L. Carney, and
Brant Flores.

(DE #66-2.)

It is not disputed that both Richard

N. Flores and Brant Flores are citizens of Indiana as is alleged
in the Complaint.

However, during the course of discovery, it was

discovered that Carney has never been a citizen of Indiana.3
#66-3, p. 2.)
citizen

of

(DE

While the parties agree that Carney was never a

Indiana,

they

dispute

the

actual

state

of

his

citizenship as of March 17, 2014, the date of the filing of the
Complaint.

The following is a summary of the evidence as provided

by both parties.
In the “Declaration of Patrick L. Carney in Support of
Defendant Chicago Explosive Services, LLC’s Motion to Dismiss”
(the “Declaration” or “Carney’s Declaration”), Carney states that:
(1) he maintained citizenship in Illinois at all relevant times;
(2) he currently (as well as during previous relevant time periods)

2 It is undisputed that PMG is considered a citizen of the state of Indiana
and that Walsh is considered a citizen of Illinois.
3 Carney initially advised counsel that he was not a member of CES during
the relevant time period, but this was later determined to be false. (DE
#66-3, p. 1; see also DE #66, p. 5, n. 1.)

4

maintains

residency

at

10343

South

Oakley

Street,

Chicago,

Illinois 60643 (“10343 Oakley Street”); (3) he maintains a Driver’s
License issued by the State of Illinois with an expiration date of
August 12, 2016; (4) his Illinois and Federal tax returns identify
his address as 10343 Oakley Street; (5) he maintains a vacation
home at 1209 Varela Street, Key West, Florida 33040 (“1209 Varela
Street”); and (6) he is not a citizen of Florida or Indiana.
#66-3.)

(DE

CES has provided copies of Carney’s 2013 and 2014 Illinois

and Federal tax returns, which identify his address as 10343 Oakley
Street (DE ##86-4 through 86-7), an Illinois Driver’s License
issued on August 18, 2012, that has an expiration date of August
12, 2016, and lists Carney’s address as 10343 Oakley Street (DE
#86-8), a certificate of an Illinois vehicle title dated June 9,
2008 (DE #86-9), and a money market account statement dated
February 28, 2014, with an address of 10343 Oakley Street (DE #8610).

Carney also testified that he was a registered voter in the

State of Illinois as of March 17, 2014, and that he voted in the
Illinois primary as late as 2016.

(DE #86-11, pp. 2-3.)

In 2010, Carney purchased the properties located at 1209
Varela Street and 1207 Varela Street in Key West, Florida.
#83-5, pp. 4-5.)

(DE

When asked about the purpose of the property at

his deposition on October 4, 2016 (the “Deposition”), Carney
initially testified as follows:
5

Q:
And I understand these properties were initially
purchased as a vacation home, correct?
A: Correct. One of the -- yeah, correct.
Q: I mean, it it’s not correct, then please feel free
to correct me, because I don’t want to put words in your
mouth.
A:
It wasn’t purchased for a vacation home.
I knew
eventually I would move down here full time. That’s why
I bought the house. I didn’t figure I’d come down two
weeks out of the year, or anything like that. I bought
the house because of the change in business, obviously,
getting out of the blasting business, the pits at the
Board of Trade that you are familiar with -- well,
probably, you know what I’m talking about. Those are
all going -- I was in the pit back in the day. They are
all pretty much – for 2007 you could see the handwriting
on the walls, all going computerized; hence, there was
really no reason for me to remain in Chicago. So, it
wasn’t purchased just as an occasional – it was purchased
as a final destination.
. . .
Q: When you purchased it in 2010, approximately what
percentage of the year did you spend in Key West?
. . .
A:

2010?

All total, probably maybe three months.4

4 In its response brief, Walsh states that Carney’s “percentage of time
spent living in the Florida home increased following completion of the
project at issue in the Complaint, which concluded in 2013.” (DE #83, p. 5.)
However, several of the pages of the Deposition that Walsh cites to in
support of that assertion have not been included in the record. (See Id.
citing to pages 54, 55, 73, and 74 of the Deposition). Of those pages, only
page 54 of the Deposition was submitted to the Court with Exhibit 5. (See DE
#83-5, p. 6.) The Court “need not credit [a party’s] version of the facts
when the materials supporting those asserted facts are not part of the
record.” Stevens v. Hous. Auth. of S. Bend, Ind., 663 F.3d 300, 311 (7th
Cir. 2011). Nor is the Court required to hunt through the record to make a
party’s case for him. See Gross v. Town of Cicero, Ill., 619 F.3d 697, 70203 (7th Cir. 2010) (collecting cases). Thus, any factual assertions that
lack direct citation to easily identifiable support in the record will not be
considered by the Court.

6

(Id. at 5-6.)

Later in that same Deposition, Carney expanded upon

his position when asked again about the property:
Q: Looking back at Exhibit 17, No. 7 states that, ‘I
maintain a vacation home at 1209 Varela Street, Key West,
Florida, 33040’; that’s what it states, right?
A: Yes.
Q: But we have already talked about today, and it is
your position that that property is not -- was never a
vacation home?
A:
I didn’t say that at all.
I said that it was a
destination home eventually. I mean, obviously when I
first bought it it was for a vacation home. And there
is probably an overriding reason I bought it to begin
with. Has nothing to do with what we are talking about
here at all.
So it is just a whole different reason
that I purchased it as opposed to a vacation home.
Q: So, just so that I’m clear, the home at 1207 to 1209
Varela Street as of May 19th 2016, was maintained as a
vacation home, or it was not maintained as a vacation
home?
A: There is two addresses there.
MR. ANDERSON:
I’m going to object to relevance. The
question is where he was a citizen at the time this
complaint was filed. So any questions about anything
after that are totally irrelevant. I have a standing
objection to that. You can answer.
MR. CARNEY:5 And I think, you know, we haven’t even
defined what a vacation home is versus what he thinks
vacation home means versus -THE WITNESS: My idea of a vacation home may be totally
different than yours.
BY MS. GILBERT:
Q: Well, it’s your affidavit. So why don’t you tell
me in No. 7 the statement that, ‘I maintain a vacation
home at 1209 Varela Street, Key West, Florida, 33040,’
what did you mean by that when you signed the affidavit?
MR. CARNEY: You can answer that.
THE WITNESS: (inaudible)
THE COURT REPORTER: I’m sorry?
5 The Court has some question as to who is speaking in this section of the
transcript, but for purposes of accuracy, the transcript has been quoted
verbatim.

7

THE WITNESS:

We will call it a vacation home then.

(DE #86-1, pp. 2-3.)
When asked at the Deposition whether he earned any income
from work performed in Florida between 2013 and 2014, Carney
testified as follows:
THE WITNESS: It’s a tough question to answer, because
it’s -- it’s -- it’s -- it’s -- if I’m trading, where
does that money -- you know, if you are trading
commodities, for example, you know, that all goes
through Chicago, no matter where you are at. So I don’t
know that you can call -- so I’m confused . . . .6
(DE #83-5, p. 11.)

Carney testified that he did have a personal

bank account with the First State Bank of the Florida Keys for the
period of February through June of 2014 but that he did not have
any business accounts at that bank in the beginning of 2014.
at 3.)

(Id.

Carney was also asked about additional business dealings

in Florida:
Q: What about in 2014? As you sit here today, do you
recall whether you were involved in any Florida business
enterprises as a sole proprietorship, partnership,
corporation, or LLC?

6 The rest of Carney’s answer is not included in the record. Walsh states
in its response brief that “[b]y the time of the filing of the Complaint,
[Carney] was engaging in business in Florida, including engaging in futures
trading from Florida through Skype, which is a combination of video and
telephone transmissions.” (DE #83, p. 5.) Again, several of the pages of
the Deposition that Walsh cites to in support of that assertion have not been
included in the record. (See Id. citing to pages 70 through 72 of the
Deposition.) Of those pages, only page 70 was submitted to the Court with
Exhibit 5. (See DE #83-5, p. 11.) For the reasons set forth in footnote 4,
supra, the factual assertions lacking support will not be considered.

8

. . .
THE WITNESS: There was a company, White Street Capital,
that never got going.
It was intended to be a
partnership with me and another broker, and then he died.
It was a partnership between they and another.
THE COURT REPORTER: Did you say, ‘Wash U’?
MS. GILBERT: White Street Capital.
THE WITNESS:
I formed that as it was going to be a
partnership, and then the thing blew up immediately, you
know. And so it never was actually -- I don’t think it
actually was ever registered with the State of Florida.
And you will see -- there is someplace around here you
will see that White Street Capital.
It’s on the NFA
form, I think, actually. You can take a look at that.
(DE #86-3, p. 2-3.)

A document entitled Electronic Articles of

Organization for a Florida Limited Liability Company (“Articles of
Organization”) was filed with the State of Florida on May 7, 2013,
for White Street Capital, LLC (“White Street Capital”).
6.)

(DE #83-

White Street Capital’s street address and mailing address was

listed as 1207 Varela Street, Key West, Florida 33040 (“1207 Varela
Street”).

(Id.)

The Articles of Organization describe Carney as

a managing member and also as the registered agent of White Street
Capital, both with an address of 1207 Varela Street.

(Id.)

As

the registered agent, Carney agreed to “accept service of process”
for White Street Capital at 1207 Varela Street, and he also agreed
to “comply with the provisions of all statutes relating to the
proper and complete performance of [his] duties.”

(Id.)

The

electronic signature of John Kiely, Carney’s “old tax attorney,”
appears on that document.

(Id.; see also DE #86-2, p. 2.)
9

On

June 2, 2014, a Florida Limited Liability Company Annual Report
(“Annual Report”) was filed with the state listing Carney as the
managing member and registered agent for White Street Capital with
an address of 1207 Varela Street.

(DE #83-6, p. 4.)

Finally, on

January 30, 2015, a separate Articles of Organization was filed
for 923-931 Toppino Drive Associates, LLC (“TDA”).

(DE #83-7.)

The street address of TDA’s principal office was listed as 1209
Varela Street, the mailing address was listed as 377 14th Street
Ste. 2F, Brooklyn, New York 11215, and the registered agent was
listed as White Street Capital at 1207 Varela Street with Carney’s
name at the registered agent signature line.

(Id.)

The document

was electronically signed by TDA’s managing member, Michael Robert
Carney.

(Id.)

At the Deposition, Carney testified that, with the

exception of White Street Capital, he was not a registered agent
for any other Florida LLC between 2013 and 2014.
9.)

(DE #83-5, p.

He further testified that he did not recall White Street

Capital acting as the registered agent for TDA in 2015 and 2016.
(Id. at 9-11.)

Standard
Federal Rule of Civil Procedure 12(b)(1) governs dismissal
for lack of subject matter jurisdiction.

Jurisdiction is the

“power to decide” and must be conferred upon a federal court.
10

In

re Chicago, Rock Island & Pacific R.R. Co., 794 F.2d 1182, 1188
(7th Cir. 1986).
court

must

Normally, at the motion to dismiss stage, a

accept

all

of

the

plaintiff’s

well-pled

factual

allegations as true and draw all reasonable inferences derived
from those allegations in the plaintiff’s favor.

United Transp.

Union v. Gateway Western R.R. Co., 78 F.3d 1208, 1210 (7th Cir.
1996).

The court may look beyond the complaint and review any

extraneous evidence submitted by the parties to determine whether
subject matter jurisdiction exists.
evidence

calling

“presumption

of

the

court’s

correctness

Id.

If a defendant proffers

jurisdiction
that

we

into

accord

to

question,

the

a

complaint’s

allegations falls away on the jurisdictional issue.”

Sapperstein

v. Hager, 188 F.3d 852, 855–56 (7th Cir. 1999).
the

plaintiff

must

establish

the

facts

At that point,

supporting

jurisdiction by a preponderance of the evidence.

federal

Muscarello v.

Ogle County Bd. of Comm’rs, 610 F.3d 416, 424 (7th Cir. 2010); see
also Hart v. FedEx Ground Package System Inc., 457 F.3d 675, 679
(7th Cir. 2006) (the party asserting that jurisdiction exists has
the burden of establishing that the cause lies within the federal
court’s limited jurisdiction).

Furthermore, the Seventh Circuit

has noted that “a defect in subject-matter jurisdiction requires
a suit’s dismissal, no matter how much the parties have spent and
no matter how late in the proceedings the defect comes to light.”
11

RTP LLC v. ORIX Real Est. Capital, Inc., 827 F.3d 689, 693 (7th
Cir. 2016).
Under 28 U.S.C. § 1332(a)(1), a federal district court has
“original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of
interest and costs, and is between citizens of different States.”
(emphasis added).

When a district court’s jurisdiction is based

on 28 U.S.C. § 1332, there must be complete diversity between the
opposing parties.

Schur v. L.A. Weight Loss Centers, Inc., 577

F.3d 752, 758 (7th Cir. 2009).

In other words, the citizenship

of each plaintiff must be diverse from the citizenship of each
defendant.

Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996).

When the suit involves a limited liability company as a party, the
court must look to the citizenship of each of its members to
determine whether diversity exists.

Muscarello, 610 F.3d at 424

(citing Wise v. Wachovia Sec., LLC, 450 F.3d 265, 267 (7th Cir.
2006)).

Citizenship is contingent upon a party’s domicile; an

allegation

of

residence

is

not

sufficient

establishing diversity jurisdiction.

for

purposes

of

Heinen v. Northrop Grumman

Corp., 671 F.3d 669, 670 (7th Cir. 2012).

Domicile consists of

two elements – (1) a physical presence in a state, and (2) an
intent to remain there.

Denlinger v. Brennan, 87 F.3d 214, 216

(7th Cir. 1996); see also Sadat v. Mertes, 615 F.2d 1176, 1181
12

(7th Cir. 1980) (citing Restatement (Second) of Conflict of Laws
§§ 15, 16, 18 (1971)) (“To establish a domicile of choice a person
generally must be physically present at the location and intend to
make that place his home for the time at least.”).

Because intent

is a state of mind, the court must evaluate it “through the
circumstantial evidence of a person’s manifested conduct,” and
declarations of intent are given little weight when they conflict
with the facts.

Sadat, 615 F.2d at 1181 (citations omitted).

The

Seventh Circuit Court of Appeals has recognized that picking one
state to be a person’s domicile can be difficult and even arbitrary
in light of the fact that transportation is now so efficient and
many individuals have second homes in different states.
Foundry, Co. v. Heiden, 924 F.2d 729, 730 (1991).
the

court

must

evaluate

the

totality

of

the

Galva

In such cases,
circumstances

surrounding the jurisdictional issue, and no single factor decides
citizenship.

Id.; see also Ner Tamid Congregation of N. Town v.

Krivoruchko, 620 F. Supp. 2d 924, 931–32 (N.D. Ill. 2009).

Factors

to be considered include:
the party’s current residence; voter registration and
voting practices; situs of personal and real property;
location of brokerage and bank accounts; membership in
unions, fraternal organizations, churches, clubs, and
other associations; place of employment or business;
driver’s license and automobile registration; payment of
taxes; as well as several other aspects of human life
and activity.
13

13E Charles Alan Wright, Arthur R. Miller & Edward H. Cooper,
Federal Practice and Procedure § 3612 (3d ed. 2017).

Once a

domicile is established, it continues until it is superseded by a
new domicile.

Sadat, 615 F.2d at 1181; Wright, Miller, & Cooper

at § 3612 (“a domicile once established continues unless and until
a new one is shown by clear and convincing evidence to have been
acquired”).

There is a presumption that an individual’s old,

established domicile is favored over a new one when there is a
question between the two.

See 24 Hour Fitness USA, Inc. v. Bally

Total Fitness Holding Corp., 08 CV 3853, 2008 WL 4671748, at *4
(N.D. Ill. Oct. 21, 2008) (collecting cases); see also Wright,
Miller, & Cooper at § 3612 (“Another important and widely accepted
presumption is that of favoring the continuation of an established
domicile against an allegedly newly acquired one.”).
As a rule, when the court’s jurisdiction is premised on 28
U.S.C. § 1332, complete diversity must be established at the
beginning of the action and subsequent events do not affect the
court’s diversity jurisdiction.

Johnson v. Wattenbarger, 361 F.3d

991, 993 (7th Cir. 2004); see also Thomas v. Guardsmark, LLC, 487
F.3d 531, 534 (7th Cir. 2007) (“[A]n LLC’s jurisdictional statement
must identify the citizenship of each of its members as of the
date the complaint or notice of removal was filed.”)

14

Analysis
Here,

a

consideration

of

all

of

the

relevant

factors

establishes that Carney was a citizen of Illinois at the time the
complaint was filed.

The following facts are undisputed and

supported by competent evidence as described above: (1) Carney
maintained a residence in Illinois at 10343 Oakley Street on March
17, 2014, and that, as of the date of his Declaration in May of
2016, he still maintained a residence at that address; (2) Carney
filed his 2013 and 2014 individual income tax returns with the
State of Illinois and identified his address as 10343 Oakley
Street; (3) Carney filed his 2013 and 2014 Federal individual
income tax returns and identified his address as 10343 Oakley
Street; (4) Carney maintained a valid Illinois Driver’s License on
March 17, 2014, that listed his address as 10343 Oakley Street and
remained valid as of the date of his Declaration in May of 2016;
(5) Carney’s vehicle was titled with the State of Illinois; (6)
Carney’s money market account lists an address of 10343 Oakley
Street as of February 28, 2014; and (6) Carney was a registered
voter with the State of Illinois from at least 2013 through
September of 2016, and he voted in the Illinois primary in 2016.
These significant contacts with Illinois show that Carney was
domiciled there because he maintained a physical presence in the
state and intended to make that place his home, for the relevant
15

time at least.

See Sadat, 615 F.2d at 1181.

It is true that Carney also purchased property in Florida in
2010 and retained that property throughout the period in question;
however, the Court finds that Walsh’s characterization of Carney’s
Deposition testimony places more weight on that factor than is
due.

A careful reading of the testimony as a whole shows that he

purchased 1207 and 1209 Vaerla Street in 2010 as a vacation
property to which he “eventually” intended to relocate to.

When

asked whether it was his position that the property was never a
vacation home, he emphatically denied that and clarified, “[I]t
was a destination home eventually.

I mean, obviously when I first

bought it it was for a vacation home.

And there is probably an

overriding reason that I bought it to begin with.

Has nothing to

do with what we are talking about here at all.”

The fact that

Carney owned a second home in Florida that he eventually intended
to make his “final destination” does not replace his established
domicile in Illinois with one in Florida unless Walsh can point to
additional clear and convincing evidence that Carney had intended
it to as of the date the complaint was filed.

Sadat, 615 F.2d at

1181; Wright, Miller, & Cooper at § 3612; see also Galva, 924 F.2d
at 730 (desire to retire to his Florida vacation home eventually
did not supersede the fact that the defendant intended to remain
in Illinois for the foreseeable future).
16

Walsh argues that such evidence exists.

First, Walsh asserts

that the percentage of time Carney spent living in the Florida
home increased following completion of the project at issue in the
Complaint, which concluded in 2013.

However, as noted above in

footnote four, several of the pages that Walsh cites in support of
that assertion have not been included in the record.

The testimony

that is included in the record establishes only that Carney spent
a total of approximately three months at the Florida residence in
2010; this does little to weigh in favor of a change in domicile.
Next, Walsh argues that Carney was “engaging in business” in
Florida through futures trading via Skype at the time the Complaint
was filed.

However, as described in footnote six, several pages

cited by Walsh are again missing from the record.

The Deposition

testimony that is provided shows that, when asked whether he earned
any income from work performed in Florida between 2013 and 2014,
Carney responded that it was a “tough question to answer” because
all commodities trading eventually goes through Chicago.

Carney

also testified that he had no business banking accounts in Florida
at the beginning of 2014.7

The argument that Carney was domiciled

7 Carney did testify that he had a personal bank account with the First
State Bank of the Florida Keys for the period in question. However, CES
produced Carney’s money market account statement dated February 28, 2014,
that lists 10343 Oakley Street as Carney’s address. Because these pieces of
evidence are of a similar vein, they tend to not shift the balance in either
direction.

17

in Florida because he engaged in some kind of electronic trading
there is not especially persuasive, and it becomes even less so
when viewed in light of the undisputed fact that Carney actually
filed his 2013 and 2014 individual income tax returns with the
State of Illinois.
Finally, Walsh argues that Carney’s ties to White Street
Capital provide definitive proof of his domicile.

Walsh points

out that Carney’s address on the Articles of Organization for White
Street Capital is listed as 1207 Varela Street and that he affirmed
through his electronic signature that he would comply with the
provisions of all statutes relating to the proper performance of
his duties as a registered agent.

Walsh cites to the Florida

Revised Limited Liability Company Act in which a registered agent
is defined as “[a]n individual who resides in this state and whose
business address is identical to the address of the registered
office.”

§ 605.0113(1)(b)(1) Fla. Stat. (2014).

According to

Walsh, because Carney affirmed via the Articles of Organization
that he resided in the state, his status as the registered agent
for White Street Capital is prima facie evidence that he was
domiciled in Florida.

As an initial matter, the Court notes that

the case cited by Walsh for the proposition that a person’s
residence is prima facie evidence of his or her domicile is not

18

binding on this Court.

State Farm Mut. Auto. Ins. Co. v. Dyer,

19 F.3d 514, 520 (10th Cir. 1994).8

In the Seventh Circuit, while

residence is certainly important to a determination of domicile
that has been challenged, no single factor decides citizenship;
rather, all relevant circumstances must be evaluated.
924 F.2d at 730.

See Galva,

In Galva, the defendant, who was sixty-eight

years old at the time the suit was filed in 1989, had lived in
Illinois his whole life.

Id.

In 1966, he purchased a second home

in Florida that was continually used as a vacation home by him and
his wife.

Id.

In 1988, the defendant registered to vote in

Florida, took out a Florida Driver’s license, declared permanent
residency in Florida, and listed Florida as his permanent address
on his State of Illinois and Federal tax returns.

Id.

In 1989,

the defendant spent several months in Florida; however, he retained
his home in Illinois and spent the balance of the year between
there and Europe.

Id.

The court found that, despite the numerous

affirmative steps that were taken with regard to establishing
residency in Florida for tax purposes in 1988, his domicile was

8 Walsh also cites to Lundquist v. Precision Valley Aviation, Inc., 946 F.2d
8, 12 (1st Cir. 1991) for the proposition that representations on corporate
reports are “weighty” in the domicile analysis; however, the Court notes that
that opinion places equal weight on voting registration and voting behavior.
Lundquist, 946 F.2d at 12. As noted above, Carney was registered to vote in
Illinois as of the date the Complaint was filed and actually did vote in
Illinois as recently as the 2016 primary. As such, this case does not help
Walsh.

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not converted.

Id. at 730-31.

The court recognized that a desire

to retire to Florida eventually did not supersede the fact that he
intended to remain in Illinois most of the year for the foreseeable
future.

Id. at 730.

The court also acknowledged that even the

defendant’s (seemingly fraudulent) representations on official
government

documents

were

not

dispositive

in

relation

to

determining his true domicile for diversity jurisdiction purposes.
Id. at 730-31.9
Thus, although Walsh states that Carney “certified under
oath”10 via the Articles of Organization that he resided at 1207
Varela Street in 2013 and 2014, this affirmation is not prima facie
evidence that he was domiciled in Florida.

Rather, the Court must

look to the multitude of other factors surrounding the domicile
issue to correctly determine Carney’s citizenship.

Here, Carney

testified that White Street Capital “never got going” and “blew
up” quickly after the death of his other business partner.

While

Walsh argues that the Annual Report filed on June 2, 2014, cuts

9 Said another way by the Seventh Circuit Court of Appeals in an unpublished
opinion, “[t]his is true even when it is criminal to misrepresent one’s
residency . . . because residency is determined differently in regard to
voting or paying taxes or registering automobiles than is citizenship for the
purposes of federal diversity jurisdiction.” Mader v. Motorola, Inc., No.
98-3040, 175 F.3d 1020 (7th Cir. April 9, 1999).
10 The Court notes that the Articles of Organization are actually signed by
John Kiely, Carney’s old tax attorney, and that John Kiely was the individual
to affirm that the “facts stated herein are true” and that false information
submitted constituted a felony. (See DE #83-6, p. 3.)

20

against Carney’s assertion that White Street Capital was not really
operating at the time the Complaint was filed on March 17, 2014,
the most that can be gleaned from that document standing alone is
that White Street Capital remained in existence as a limited
liability company as of June 2, 2014, and that a certificate of
continuing status was desired.

The same is true of the fact that

TDA listed White Street Capital as its registered agent in the
Articles of Organization filed on January 30, 2015, and later in
its Annual Report filed on March 3, 2016.
little

to

establish

that

White

Street

These documents do

Capital

conducted

any

corporate/business activity or that Carney actually performed any
actions as the registered agent for the company in Florida.

Had

Walsh provided additional evidence that White Street Capital was
transacting business during 2013 and 2014 (i.e. financial reports,
tax statements, etc.) or that Carney had performed duties as its
registered agent (i.e. copies of certified letters, service of
process notices, correspondence from state governmental entities,
notice of lawsuits, etc.), the Court might be inclined to give
more weight to White Street Capital as a factor pointing towards
Carney’s domicile being Florida.

As it stands, the bulk of the

evidence described above weighs in favor of Illinois citizenship.
Walsh

has

failed

to

meet

its

burden

of

establishing,

by

a

preponderance, that Carney had acquired a new domicile in Florida
21

as of the date the Complaint was filed.

See Muscarello, 610 F.3d

at 424; see also Sadat, 615 F.2d at 1181.

Because Walsh is an

Illinois corporation with its principal place of business in
Illinois and Carney, a member of CES, is also a citizen of
Illinois, the Court lacks jurisdiction over this diversity action,
and the case must be dismissed without prejudice.

See e.g. Murray

v. Conseco, Inc., 467 F.3d 602, 605 (7th Cir. 2006) (A dismissal
based on a lack of subject matter jurisdiction is not a decision
on the merits, so the case must be dismissed without prejudice.).

CONCLUSION
For

the

aforementioned

reasons,

the

Motion

to

Dismiss

Plaintiff’s Complaint for Lack of Subject Matter Jurisdiction (DE
#66) is GRANTED.

This case is DISMISSED WITHOUT PREJUDICE for

lack of subject matter jurisdiction.

DATED: September 25, 2017

/s/ RUDY LOZANO, Judge
United States District Court

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