Algiers Development District v. Vista Louisiana, LLC et al

Filing 20

ORDER AND REASONS denying 6 Motion to Remand to State Court. Signed by Judge Mary Ann Vial Lemmon. (cbn)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
ALGIERS DEVELOPMENT DISTRICT

CIVIL ACTION

VERSUS

NO. 16-16402

VISTA LOUISIANA, LLC, ET AL.

SECTION "S"

ORDER AND REASONS
IT IS HEREBY ORDERED that Algiers Development District’s Motion to Remand
(Doc. #6) is DENIED.
BACKGROUND
This matter is before the court on a motion to remand filed by plaintiff, Algiers
Development District (“ADD”). ADD argues that this matter must be remanded to the Civil
District Court, Parish of Orleans, State of Louisiana because this court lacks subject matter
jurisdiction.
ADD, an economic development district and political subdivision of the State of Louisiana,
acquired ownership of the former United States Navy barracks and associated property in Orleans
Parish, Louisiana for the purpose of enhancing the economic development of the property and
surrounding areas through the creation of a mixed use commercial and residential development.
To accomplish this mission, ADD entered into contracts with defendants, Vista Louisiana, LLC,
Vista Trust and DeVere Construction Company, Inc.

The contracts included a Master

Development Agreement dated March 2, 2015, a First Supplemental Development Agreement
dated January 1, 2016, and a Purchase and Sale Agreement dated January 7, 2016. Under the
contracts ADD agreed to sell all or part of the property to defendants for development after
defendants fulfilled certain contractual obligations including: (1) providing timely and satisfactory

evidence of financial commitments; (2) submitting completed project business plans; and, (3)
obtaining approval from the City of New Orleans to subdivide the property.
On October 14, 2016, ADD filed this declaratory judgment action against defendants in
the Civil District Court, Parish of Orleans, State of Louisiana alleging that defendants failed to
fulfill their contractual obligations to provide timely and adequate evidence of financial
commitments, obtain rezoning, and provide adequate project business plans. ADD alleges that it
terminated the contracts as a result of these failures. ADD seeks declarations that defendants
breached the contracts by failing to perform their contractual obligations, and that as a result of
the breaches, the contracts are terminated.
On November 16, 2016, defendants removed this action to the United States District Court
for the Eastern District of Louisiana alleging both federal question and diversity subject matter
jurisdiction under 28 U.S.C. §§ 1331 and 1332, respectively. ADD moved to remand the matter
to the Civil District Court, Parish of Orleans, State of Louisiana, arguing that neither asserted type
of subject matter jurisdiction is present.
ANALYSIS
A.

Remand Standard
Motions to remand to state court are governed by 28 U.S.C. § 1447(c), which provides that

“[i]f at any time before the final judgment it appears that the district court lacks subject-matter
jurisdiction, the case shall be remanded.” The removing defendant bears the burden of
demonstrating that federal jurisdiction exists and therefore that removal was proper. Jernigan v.
Ashland Oil, Inc., 989 F.2d 812, 815 (5th Cir. 1993). In assessing whether removal is appropriate,
the court is guided by the principle, grounded in notions of comity and the recognition that federal
courts are courts of limited jurisdiction, that removal statutes should be strictly construed. See

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Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002). Doubts regarding
whether federal jurisdiction is proper should be resolved against federal jurisdiction. Acuna v.
Brown & Root, 200 F.3d 335, 339 (5th Cir. 2000).
B.

Diversity Subject Matter Jurisdiction under § 1332(a)
Defendants allege that this court has diversity subject matter jurisdiction under 28 U.S.C.

§ 1332(a)(1), which provides that district courts have original jurisdiction over civil actions where
the amount in controversy exceeds $75,000, exclusive of interest and costs, and are between
citizens of different States.
1.

Citizenship of the Parties

Defendants claim that the parties are completely diverse. ADD is a political subdivision
of the State of Louisiana, and thus is a citizen of Louisiana. In the Notice of Removal, defendants
allege that DeVere is a citizen of Michigan because it is a corporation organized under the laws
of, and that maintains its principal place of business in, Michigan. See 28 U.S.C. § 1332(c)(1) (a
corporation is a citizen of every state by which it has been incorporated and where it has its
principal place of business). ADD does not dispute these jurisdictional facts.
Defendants allege that Vista Louisiana and Vista Trust have the same citizenship, which is
ultimately determined by the citizenship of Vista Trust. As a limited liability company, Vista
Louisiana’s citizenship is determined by the citizenship of its members. Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008). Defendants allege that Vista Navy, LLC is the
sole member of Vista Louisiana, and Vista Trust is the sole member of Vista Navy. As to Vista
Trust’s citizenship, defendants allege the following pertinent facts: (1) Vista Trust was formed in
Illinois; (2) Vista Trust was established by Lawrence and Nancy Starkman, who both reside in
Illinois; (3) the beneficiaries of Vista Trust are Amanda Zick, who resides in Illinois, and Abagail

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Van Earwage, who resides in California; and, (4) Jeffery Van Erwage, a resident of California, is
the trustee of Vista Trust.
ADD argues that defendants’ allegations regarding the citizenship of Vista Trust are
insufficient to establish diversity jurisdiction because the defendants alleged that the beneficiaries
and trustee “reside” in California and Illinois, not that they are citizens of those states. ADD
contends that an allegation of “residence” is not equivalent to one of “citizenship.” ADD also
argues that the defendants failed to demonstrate that there are no other members or beneficiaries
of Vista Trust, and that it is possible that Andrew Kramer, a citizen of Louisiana, who is the
registered agent and manager of Vista Louisiana, could be a member of Vista Louisiana, Vista
Navy or Vista Trust, which would destroy diversity jurisdiction.
a.

Citizenship Allegations

The domicile of the parties, not their residence, is the key for the purposes of diversity
jurisdiction. Combee v. Shell Oil Co., 615 F.2d 698, 700 (5th Cir. 1980). “A party’s residence in
a state alone does not establish domicile.” Preston v. Tenet Healthsystem Mem’l Med. Ctr., 485
F.3d 793, 798 (5th Cir. 2007). Rather, domicile requires residence in the state and an intent to
remain there. Id. “An allegation of residence is not sufficient for diversity jurisdiction purposes;
instead, a plaintiff must allege citizenship to satisfy the requirements of § 1332(a).” Monardes v.
Ayub, 339 Fed. Appx. 369 (5th Cir. 2009). However, the court can determine jurisdictional
matters by examining the pleadings and evidence in the record, such as affidavits. Coury v. Prot,
85 F.3d 244, 249 (5th Cir. 1996).
After ADD questioned defendants’ jurisdictional allegations regarding the “residences” of
various individuals involved in Vista Trust, defendants filed the affidavit of Lawrence J. Starkman,
one of Vista Trust’s settlers, to establish the individuals’ citizenships. Starkman declares that

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Jeffry Van Earwage, the sole trustee of Vista Trust is a citizen of California; and the sole
beneficiaries of the trust Amanda Zick and Abigail Van Earwage are citizens of Illinois and
California, respectively. ADD has not produced any evidence to challenge these citizenship
assertions. Thus, Starkman’s affidavit sufficiently determines the citizenships of the relevant
individuals.
b.

Citizenship of a Trust

In Americold Realty Trust v. Conagra Foods, Inc., 136 S.Ct. 1012 (2016), the Supreme
Court of the United States established that, if a trust itself is suing or being sued, its citizenship for
diversity jurisdiction purposes depends on the type of trust. If it is a traditional trust, its citizenship
is determined by the trustee’s citizenship. Id. at 1016. However, if it is a business entity, the
trust’s citizenship is determined by the citizenship of all of its members. Id.
Defendants do not state in the Notice of Removal whether Vista Trust is a traditional trust
or business entity. However, in his affidavit, Starkman explains that Vista Trust is a traditional
trust that is an inter vivos gift for his children. He also declares that Jeffry Van Earwage, a citizen
of California, is the sole trustee of Vista Trust. Starkman further states that Vista Trust is the sole
member of Vista Navy, which is the sole member of Vista Louisiana. Thus, Starkman’s affidavit
establishes that Vista Trust and Vista Louisiana are a citizens of California, and the parties are
completely diverse.
2.

Amount in Controversy

With respect to the amount in controversy, in the Notice of Removal, defendants allege
that:
Diversity jurisdiction requires that the amount in controversy exceed
$75,000 and that complete diversity exists, mandating that all
persons on one side of the controversy be citizens of different states

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than all persons on the other side. 28 U.S.C. § 1332. Diversity
jurisdiction exists over this matter pursuant to 28 U.S.C. § 1332.
There is no other mention of the amount in controversy nor are any facts alleged with respect to
the amount in controversy to support defendants’ assertion that “diversity jurisdiction exists.”
ADD argues that this is insufficient to establish that the minimum jurisdictional amount is satisfied.
Pursuant to 28 U.S.C. § 1446(a), “[t]o remove a case from a state to a federal court, a
defendant must file in the federal forum a notice of removal ‘containing a short and plain statement
of the grounds for removal.’” Dart Cherokee Basin Operating Co., LLC v. Owens, 135 S.Ct. 547,
551 (2014) (quoting 28 U.S.C. § 1446(a)). If removal is based on diversity subject matter
jurisdiction, the amount in controversy requirement must be met. Id. When the plaintiff’s state
court complaint demands a stated sum of monetary relief that is asserted in good faith, that amount
is “deemed to be the amount in controversy.” Id. (quoting 28 U.S.C. § 1446(c)(2)). However, if
the plaintiff’s complaint seeks nonmonetary relief or does not state the amount in controversy, the
defendant may state the amount in controversy in the notice of removal. Id. (citing 28 U.S.C. §
1446(c)(2)(A)).
In Dart, the Supreme Court of the United States held that, to satisfy § 1446(a)’s requirement
of a “short and plain” statement of the grounds for removal, “a defendants’ notice of removal need
include only a plausible allegation that the amount in controversy exceeds the jurisdictional
threshold[,]” and does not require evidentiary support. Id. at 554. However, if the plaintiff or the
court questions the defendant’s allegation as to the amount in controversy, “both sides submit
proof and the court decides, by a preponderance of the evidence, whether the amount-incontroversy requirement has been satisfied.” Id. at 554 (citing 28 U.S.C. § 1446(c)(2)(B)).
ADD’s state court petition seeks nonmonetary relief in the form of a declaration that the
defendants breached the contracts by failing to perform their contractual obligations, and as a result

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of the breaches, the contracts are terminated. In actions seeking declaratory or injunctive relief,
the amount in controversy is measured by the value of the object of the litigation. Hunt v. Wash.
State Apple Advert. Comm’n, 97 S.Ct. 2434, 2443 (1977). The United States Court of Appeals
for the Fifth Circuit has held that the object of the litigation is the value to the plaintiff of the right
to be protected or the extent of the injury to be prevented. Alfonso v. Hillsborough Cty. Aviation
Auth., 308 F.2d 724, 727 (5th Cir. 1962). “[W]hen the validity of a contract or a right to property
is called into question in its entirety, the value of the property controls the amount in controversy.”
Waller v. Prof’l Ins. Corp., 296 F.2d 545, 547 (5th Cir. 1961).
Defendants assert that the jurisdictional amount is satisfied because the January 7, 2016,
Purchase and Sale Agreement is for an amount greater than $75,000.1 The proposed amount that
defendants would pay ADD for the property is a sufficient approximation of its value. Therefore,
defendants have demonstrated by a preponderance of the evidence that the jurisdictional minimum
is met, and this court has diversity subject matter jurisdiction. ADD’s motion to remand is
DENIED.2
CONCLUSION
IT IS HEREBY ORDERED that Algiers Development District’s Motion to Remand
(Doc. #6) is DENIED.

12th
New Orleans, Louisiana, this _____ day of January, 2017.

____________________________________
MARY ANN VIAL LEMMON
UNITED STATES DISTRICT JUDGE
1
As specific amount is not stated because the January 7, 2016, Purchase and Sale Agreement is confidential and was
filed under seal.
2

Because this court has found that it has diversity subject matter jurisdiction, it is unnecessary to discuss whether
there is also federal question subject matter jurisdiction under 28 U.S.C. § 1331.

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