Halfwassen ILPK LLC v. Inland Logistics Port-Kingsbury LLC et al

Filing 13

OPINION AND ORDER: GRANTING 5 Motion to Remand. This case is REMANDED back to the LaPorte Circuit Court, Indiana on the basis that this Court lacks subject matter jurisdiction over this controversy. Additionally, Halfwassen is AWARDED its just c osts and actual expenses, including attorneys' fees, as a result of the removal. ***Civil Case Terminated. Signed by Judge Rudy Lozano on 2/18/15. (cert copy of Opinion and Order and cert copy of docket sheet sent to Clerk, LaPorte Circuit Court)(jld)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
Halfwassen ILPK, LLC,
Plaintiff,
v.
INLAND LOGISTICS PORT-KINGSBURY,
LLC AND GREEN EXPRESS COMPANY,
Defendants.

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No. 3:14-CV-1852

OPINION AND ORDER
This matter is before the Court on the Motion to Remand, filed
by Plaintiff, Halfwassen ILPK, LLC, on October 2, 2014 (DE #5).
For the reasons set forth below, the motion (DE #5) is GRANTED.
The case is REMANDED back to the LaPorte Circuit Court, Indiana, on
the basis that this Court lacks subject matter jurisdiction over
this controversy. Additionally,

Halfwassen is AWARDED its just

costs and actual expenses, including attorneys’ fees, as a result
of the removal.

BACKGROUND
Halfwassen ILPK filed its amended complaint in the LaPorte
Circuit Court on July 15, 2014, seeking a declaratory judgment over
the construction and validity of the Operating Agreement of ILPK,
LLC

and

seeking

damages

from

breaches

alleged

against

the

Defendants.

(DE #2.)

Defendants filed a notice of removal with

this Court on September 2, 2014.

(DE #1.)

The parties do not dispute that Defendant Green Express
Company (“Green Express”) is a Florida corporation and thus a
citizen of Florida.

(DE #1, ¶ 3.)

The only dispute is the

citizenship of Plaintiff, Halfwassen ILPK, which is a limited
liability company.

Plaintiff has provided sworn declarations

establishing that Halfwassen has four members, all trusts.

The

member-trusts are: the Caryl Anne Halfwassen Revocable Trust dated
October 28, 1997, as amended and restated; the Colin H. Halfwassen
Revocable Trust dated October 28, 1997, as amended and restated;
the

Colin

Brent

Halfwassen

and

Kathleen

Elizabeth

Halfwassen

Revocable Trust dated January 11, 2007, as amended and restated;
and the Joel E. Halfwassen Irrevocable Trust dated June 3, 2011.
(Pl.’s Ex. 1, Decl. of Colin J. Halfwassen; Pl.’s Ex. 2, Decl. of
Caryl Anne Halfwassen.)
Anne

Halfwassen,

the

Trustees Colin H. Halfwassen and Caryl
respective

trustees

of

the

Caryl

Anne

Halfwassen Revocable Trust dated October 28, 1997, as amended and
restated, and the Colin H. Halfwassen Revocable Trust dated October
28, 1997, as amended and restated, are both citizens of the state
of Florida.

Id.

DISCUSSION
Defendants have the burden of showing that this case was

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removable.

Wellness Cmty-Nat’l v. Wellness House, 70 F.3d 46, 49

(7th Cir. 1995); Fate v. Buckeye State Mut. Ins. Co., 174 F.Supp.2d
876, 878 (N.D. Ind. 2001) (“when a federal court’s exercise of
jurisdiction

is

challenged

following

removal,

the

burden

of

establishing federal jurisdiction rests on the party seeking to
preserve removal.”); Roberson v. Orkin Exterminating Co., Inc., 770
F. Supp. 1324, 1328 (N.D. Ind. 1991).

A defect in the removal

procedure results in a case being remanded back to the state court.
Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993).
The federal courts have limited jurisdiction.
F.3d at 50.

Wellness, 70

A federal court has diversity jurisdiction where the

amount in controversy exceeds $75,000 and the parties to the suit
are citizens of different states.

28 U.S.C. § 1332(a).

A

defendant may remove a case that is properly filed in state court
if that case could have originally been brought in federal court.
28 U.S.C. § 1441(a); Shaw, 994 F.2d at 366.

Importantly, section

1332 requires complete diversity of citizenship. Exxon Mobil Corp.
v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) (citations
omitted)

(“In

a

case

with

multiple

plaintiffs

and

multiple

defendants, the presence in the action of a single plaintiff from
the same State as a single defendant deprives the district court of
original diversity jurisdiction over the entire action.”).
As noted above, the dispute in this case is whether the
parties are diverse.

Plaintiff argues that the notice of removal

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baldly asserts that Halfwassen ILPK is “a citizen of the State of
Wisconsin,” because it wrongly concludes “Halfwassen is a Wisconsin
limited liability company with its principal place of business in
Milwaukee, Wisconsin.”

(DE #1, ¶ 3.)

This is not the proper

analysis for a limited liability corporation (LLC).
Plaintiff sets forth the law of determining the citizenship of
an LLC properly, and indeed, Defendants concede as much.
p. 1.)

(DE #8,

The citizenship of an LLC is determined by examining the

citizenship of each of its members - not the location of the LLC’s
principal place of business or its state of organization.

See,

e.g., Fellowes, Inc. v. Changzhou Xinrui Fellowes Office Equip. Co.
Ltd., 759 F.3d 787, 787-88 (7th Cir. 2014) (“[i]f it is a limited
liability company . . . then it has the citizenship of each
member”); Copeland v. Penske Logistics LLC, 675 F.3d 1040, 1043
(7th

Cir.

2012)

(“a

limited

liability

company’s

citizenship

includes every state of which any unit holder is a citizen”);
Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998) (“we
conclude that the citizenship of an LLC for purposes of the
diversity jurisdiction is the citizenship of its members.”). Thus,
“even if one of the members is a citizen of the same state as one
of the [Defendants], the suit cannot be maintained as a diversity
action.” Boyd Mach. & Repair Co. v. Freedman, No. 1:03-CV-57, 2003
WL 21919214, at *1 (N.D. Ind. Mar. 7, 2003) (citing Cosgrove, 150
F.3d at 731).

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There is no dispute that Defendant, Green Express, is a
Florida citizen.

Plaintiff has set forth that two members of

Halfwassen ILPK, LLC (Colin J. Halfwassen, as Trustree of the Colin
J. Halfwassen Revocable Trust dated October 28, 1997, as amended
and restated, and Caryl Anne Halfwassen, as Trustee of the Caryl
Anne Halfwassen Revocable Trust dated October 28, 1997, as amended
and restated), are Florida citizens.

(Pl.’s Exs. 1, 2.)

For the

purpose of diversity analysis, this means that Halfwassen ILPK is
a Florida citizen, because “the citizenship of a trust is the
citizenship of the trustee.”

Hemenway v. Peabody Coal Co., 159

F.3d 255, 257 (7th Cir. 1998); see also Navarro Sav. Ass’n v. Lee,
446 U.S. 458, 464 (1980) (a trust’s trustees are the “real parties
to the controversy” for jurisdictional analysis).
In response, Defendants merely state that in its amended
complaint, Plaintiff provided that it was “a limited liability
company organized and existing under the laws of the state of
Wisconsin.”

(DE #2 ¶ 1.)

This was a state court complaint,

though, and it is not surprising that Plaintiff did not allege
federal jurisdictional facts in it.

The defendant seeking removal

bears the burden of demonstrating federal jurisdiction.
70 F.3d at 49.

Wellness,

To jump from the allegation in the complaint to the

conclusion in the notice of removal that Halfwassen ILPK LLC “is a
citizen of Wisconsin” and that “diversity of citizenship . . .
exists under 28 U.S.C. ¶ 1332(A)(1)” (DE #1, ¶¶ 3,7) was simply

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incorrect on the part of Defendants.

Indeed, the Seventh Circuit

has condemned this type of assumption. See Belleville Catering Co.
v. Champaign Market Place, LLC, 350 F.3d 691, 693 (7th Cir. 2003)
(“Both sides also must share the blame for assuming that a limited
liability company is treated like a corporation.”).
The only other argument Defendants pose is that “the only
proof of the members of the plaintiff entity is the declarations
attached to the Memorandum in Support.”
they

complain

that

they

requested

(DE #8, p. 1.)
copies

of

the

Moreover,
operating

agreements and trust documents, but they have not been provided.
Plaintiff’s declarations were made under the penalties of perjury
allowed by 28 U.S.C. § 1746, and Defendants have put forth no
argument

showing

how

the

confidential

trust

agreements

and

operating agreements might verify the citizenship of the membertrustees.

The Court believes the declarations are entitled to the

assumption of truth - and anyway, it is not the Plaintiff’s burden
to prove non-diversity, it is the Defendants’ burden to establish
diversity of citizenship.
The only other issue is whether Halfwassen ILPK should be
awarded its attorneys’ fees.

As the Supreme Court has stated,

“[t]he process of removing a case to federal court and then having
it remanded back to state court delays resolution of the case,
imposes additional costs on both parties, and wastes judicial
resources.”

Martin v. Franklin Capital Corp., 546 U.S. 132, 140

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(2005).
filed

Under Seventh Circuit law, “if, at the time the defendant

his

notice

in

federal

court,

clearly

established

law

demonstrated that he had no basis for removal, then a district
court should award a plaintiff his attorneys’ fees.”

Lott v.

Pfizer, Inc., 492 F.3d 789, 793 (7th Cir. 2007).
In this case, Defendants failed to follow the law in analyzing
federal jurisdiction.

It is well settled that a limited liability

company has the citizenship of each of its members.
Cosgrove,

150

F.3d

at

731

(citizenship

of

See, e.g.,

Wisconsin

limited

liability company for purposes of diversity jurisdiction is the
citizenship of its members).

Moreover, as the court in Parks v.

Guidant Corp., 402 F.Supp.2d 964, 971 (N.D. Ind. 2005), stated:
The district court has a broad discretion in
deciding whether to award fees under § 1447(c). In
this circuit, plaintiffs who prevail on a remand
motion are presumptively entitled to attorneys’
fees. The presumption, of course, is rebuttable.
Defendants

argue

it

was

reasonable

to

rely

on

Plaintiff’s

statements in its amended complaint that Halfwassen is a limited
liability

company

Wisconsin.

As

organized

already

and

existing

established,

that

under

the

statement

laws
does

of
not

establish citizenship of an LLC, and Defendants were objectively
unreasonable for relying upon it in a bubble for the purpose of
removing this case.

As such, Halfwassen is awarded its just costs

and actual expenses, including attorneys’ fees, as a result of the
removal.
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CONCLUSION
For the reasons set forth above, the motion to remand (DE #5)
is GRANTED.

The case is REMANDED back to the LaPorte Circuit

Court, Indiana, on the basis that this Court lacks subject matter
jurisdiction over this controversy. Additionally,

Halfwassen is

AWARDED its just costs and actual expenses, including attorneys’
fees, as a result of the removal.

DATED: February 18, 2015

/s/ RUDY LOZANO, Judge
United States District Court

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