Gunderson v. Gunderson et al
Filing
13
MEMORANDUM OPINION AND ORDER denying as moot 7 Motion to Dismiss. See text of Order for details. Signed by Judge Mark W Bennett on 1/7/14. (djs)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF IOWA
WESTERN DIVISION
BLAINE D. GUNDERSON,
No. C 13-4086-MWB
Plaintiff,
vs.
MEMORANDUM OPINION AND
BRIAN K. GUNDERSON, Individually, ORDER REGARDING DEFENDANTS’
and GUNDERSON’S COMPANIES,
MOTION TO DISMISS FOR LACK
INC., an Iowa Corporation,
OF SUBJECT MATTER
JURISDICTION
Defendants.
___________________________
In this case, involving claims between brothers arising from a business
relationship gone sour, plaintiff Blaine D. Gunderson filed his original Complaint
(docket no. 1) on September 5, 2013, naming as defendants his brother, Brian K.
Gunderson, and two companies in which the brothers are allegedly shareholders:
Gunderson’s Companies, Inc., and Nordic Properties, L.L.C.
In his original
Complaint, Blaine alleged that he is a “citizen” of the United States and a “resident” of
South Sioux City, Nebraska; that Brian is a “citizen” of the United States and a
“resident” of South Dakota; that Gunderson’s Companies, Inc., is an Iowa corporation
doing business primarily in Woodbury County, Iowa; and that Nordic Properties,
L.L.C., is a “limited liability company incorporated in the State of South Dakota” and
“doing business” in Iowa and South Dakota. In his original Complaint, Blaine invoked
diversity jurisdiction pursuant to 28 U.S.C. § 1332(a)(1), and asserted claims of
“minority
shareholder
oppression,”
“conversion,”
and
“breach
of
fiduciary
responsibility,” asserted liability of the defendant companies for Brian’s acts, and
sought an accounting and other relief, including dissolution of the defendant companies
or their assets, and compensatory and punitive damages.
This case is now before me on the original defendants’ October 31, 2013,
Motion To Dismiss For Lack Of Subject Matter Jurisdiction (docket no. 7) challenging
diversity of citizenship subject matter jurisdiction over Blaine’s original Complaint
(docket no. 1). Somewhat more specifically, the defendants assert, first, that Nordic
Properties’ citizenship is not “diverse” from Blaine’s, because a limited liability
company is a “citizen” of every state where its members—including Blaine—are
citizens. The defendants also assert that Blaine has not adequately alleged either the
“domicile” or “citizenship” of Brian and Blaine for purposes of diversity jurisdiction,
but only that they are “residents” of different states. Although the defendants concede
that Brian is “domiciled” in South Dakota and a “citizen” of that state, they dispute
whether Blaine is actually “domiciled” in Nebraska—that is, that he has the intent to
remain there—rather than simply having moved there temporarily to attempt to
manufacture diversity of citizenship, because he had previously been a lifelong citizen
of South Dakota.
On November 18, 2013, Blaine filed both an Amended Complaint (docket no. 9)
and a Resistance To Defendants’ Motion To Dismiss For Lack Of Subject Matter
Jurisdiction (docket no. 10). In his Amended Complaint, Blaine expressly alleges that
he is a “citizen” of Nebraska and that his “domicile” is there; expressly alleges that
Brian is a “citizen” of South Dakota and that his “domicile” is there; reiterates that
Gunderson’s Companies, Inc., is an Iowa corporation doing business in Iowa; and
drops Nordic Properties as a defendant. He then asserts the same claims and seeks the
same relief against these defendants as he did in his original Complaint.
In his
Resistance, Blaine argues that he is allowed to amend his Complaint as of right,
because a Rule 12(b) motion to dismiss is not a “responsive pleading” that cuts off a
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plaintiff’s right to amend his complaint as of right under Rule 15(a) of the Federal
Rules of Civil Procedure. He also argues that his Amended Complaint “moots” the
defendants’ Motion To Dismiss by correcting any deficiencies in the allegations
supporting diversity of citizenship of the individual parties and by deleting the
purportedly “non-diverse” defendant, Nordic Properties.
The defendants filed no Reply in further support of their Motion To Dismiss.
Instead, they filed an Answer To Plaintiff’s Amended Complaint And Counterclaim
(docket no. 11) on December 9, 2013.
Blaine then filed an Answer To The
Defendants’ Counterclaim (docket no. 12) on December 13, 2013.
Although Blaine was at pains to argue in his Resistance that a Rule 12(b) motion
to dismiss is not a “responsive pleading” that cuts off a plaintiff’s right to amend a
complaint as of right under Rule 15(a), Rule 15(a) was amended in 2009 to resolve any
question on this point. Rule 15(a) now provides as follows:
(a) Amendments Before Trial.
(1) Amending as a Matter of Course. A party may
amend its pleading once as a matter of course within:
(A) 21 days after serving it, or
(B) if the pleading is one to which a responsive
pleading is required, 21 days after service of a
responsive pleading or 21 days after service of
a motion under Rule 12(b), (e), or (f),
whichever is earlier.
(2) Other Amendments. In all other cases, a party
may amend its pleading only with the opposing
party’s written consent or the court’s leave. The court
should freely give leave when justice so requires.
(3) Time to Respond. Unless the court orders
otherwise, any required response to an amended
pleading must be made within the time remaining to
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respond to the original pleading or within 14 days
after service of the amended pleading, whichever is
later.
FED. R. CIV. P. 15(a) (emphasis added).1
Under the amended version of Rule 15(a),
which was effective well before Blaine filed his original Complaint, his Amended
1
As the Advisory Committee Notes to the 2009 amendments explain,
Rule 15(a)(1) is amended to make three changes in
the time allowed to make one amendment as a matter of
course.
Former Rule 15(a) addressed amendment of a
pleading to which a responsive pleading is required by
distinguishing between the means used to challenge the
pleading. Serving a responsive pleading terminated the right
to amend. Serving a motion attacking the pleading did not
terminate the right to amend, because a motion is not a
“pleading” as defined in Rule 7. The right to amend
survived beyond decision of the motion unless the decision
expressly cut off the right to amend.
The distinction drawn in former Rule 15(a) is
changed in two ways. First, the right to amend once as a
matter of course terminates 21 days after service of a motion
under Rule 12(b), (e), or (f). This provision will force the
pleader to consider carefully and promptly the wisdom of
amending to meet the arguments in the motion. A responsive
amendment may avoid the need to decide the motion or
reduce the number of issues to be decided, and will expedite
determination of issues that otherwise might be raised
seriatim. It also should advance other pretrial proceedings.
Second, the right to amend once as a matter of course
is no longer terminated by service of a responsive pleading.
The responsive pleading may point out issues that the
original pleader had not considered and persuade the pleader
(Footnote continued . . .
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Complaint, filed eighteen days after service of the defendants’ Rule 12(b)(1) motion to
dismiss, was a timely amendment “as a matter of course” that required no leave of
court. FED. R. CIV. P. 15(a)(1)(B).
The next question is whether Blaine’s amended allegations are sufficient to allege
diversity of citizenship under 28 U.S.C. § 1332(a), where I “‘must accept all factual
that amendment is wise. Just as amendment was permitted
by former Rule 15(a) in response to a motion, so the
amended rule permits one amendment as a matter of course
in response to a responsive pleading. The right is subject to
the same 21-day limit as the right to amend in response to a
motion.
The 21-day periods to amend once as a matter of
course after service of a responsive pleading or after service
of a designated motion are not cumulative. If a responsive
pleading is served after one of the designated motions is
served, for example, there is no new 21-day period.
Finally, amended Rule 15(a)(1) extends from 20 to 21
days the period to amend a pleading to which no responsive
pleading is allowed and omits the provision that cuts off the
right if the action is on the trial calendar. Rule 40 no longer
refers to a trial calendar, and many courts have abandoned
formal trial calendars. It is more effective to rely on
scheduling orders or other pretrial directions to establish
time limits for amendment in the few situations that
otherwise might allow one amendment as a matter of course
at a time that would disrupt trial preparations. Leave to
amend still can be sought under Rule 15(a)(2), or at and
after trial under Rule 15(b).
FED. R. CIV. P. 15, Advisory Committee Comments, 2009 Amendments (footnote
omitted).
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allegations in the pleadings as true and view them in the light most favorable to the
nonmoving party’” on a Rule 12(b)(1) motion to dismiss for lack of subject matter
jurisdiction. A.J. ex rel. Dixon v. UNUM, 696 N.W.2d 788, 789 (8th Cir. 2012)
(quoting Great Rivers Habitat Alliance v. Fed. Emergency Mgmt. Agency, 615 F.3d
985, 988 (8th Cir. 2010)).
As to the nature of the “diversity” requirement, the
Supreme Court has “consistently interpreted § 1332 as requiring complete diversity: 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.” Exxon Mobil Corp. v. Allapattah
Servs., Inc., 545 U.S. 546, 553 (2005) (citations omitted). “Complete diversity” did
not exist in the case of Blaine’s original Complaint, because, assuming that he
adequately alleged that he was a “citizen” of Nebraska, Nordic Properties, a limited
liability company of which Blaine was a member, was also a “citizen” of Nebraska,
because “[a]n L.L.C.’s citizenship, for purposes of diversity jurisdiction, is the
citizenship of each of its members.” OnePoint Solutions, LLC v. Borchert, 486 F.3d
342, 346 (8th Cir. 2007). Blaine’s allegations in his original Complaint of “diversity”
of citizenship between himself and Brian were also inadequate. To allege “citizenship”
of an individual, a plaintiff must allege each individual’s “domicile,” which requires
the intent to stay in the state; merely alleging where the individual parties “reside” is
insufficient, because it does not indicate intent to remain. See Walker by Walker v.
Norwest Corp., 108 F.3d 158, 161 (8th Cir. 1997).
I agree with Blaine, however, that he has now remedied these deficiencies in his
Amended Complaint, mooting the defendants’ Motion To Dismiss. Blaine has dropped
Nordic Properties, the non-diverse limited liability company, as a defendant—and
argues in his Resistance that Nordic Properties is not a necessary party to this action.
He has also alleged the “domicile” of each of the individual parties, Brian’s in South
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Dakota and his in Nebraska, including an express allegation that he “intends to remain”
in Nebraska “indefinitely.”
See Amended Complaint, ¶ 3.
I must take these
allegations as true for purposes of a Rule 12(b)(1) motion. A.J. ex rel. Dixon, 696
N.W.2d at 789. I believe that I may also construe the defendants’ filing of an Answer
and Counterclaim to Blaine’s Amended Complaint as conceding the adequacy of
Blaine’s allegations of diversity of citizenship in his Amended Complaint. This is so,
notwithstanding their denial in their Answer of the paragraphs of Blaine’s Amended
Complaint alleging that diversity jurisdiction is proper based on diversity of citizenship
and amount in controversy and Blaine’s allegations of his “domicile” and “citizenship”
in Nebraska. The defendants have filed their Answer, without waiting for a ruling on
their Motion To Dismiss and without reiterating their Motion To Dismiss as to the
Amended Complaint, and they have asserted a state-law counterclaim of “conversion,”
without alleging any separate basis for subject matter jurisdiction.
THEREFORE, the defendants’ October 31, 2013, Motion To Dismiss For Lack
Of Subject Matter Jurisdiction (docket no. 7) is denied as moot.
IT IS SO ORDERED.
DATED this 7th day of January, 2014.
______________________________________
MARK W. BENNETT
U.S. DISTRICT COURT JUDGE
NORTHERN DISTRICT OF IOWA
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