Thomas et al v. Chesapeake Energy Corporation et al

Filing 51

ORDER ADOPTING MAGISTRATE JUDGE'S REPORT AND RECOMMENDATION, DENYING ALL OTHER MOTIONS AS MOOT, AND DISMISSING CASE. Plaintiffs Vivian Moreland Thomas et al's claims against Chesapeake Energy Corporation et al are DISMISSED. All other pending motions are DENIED AS MOOT. Signed by Judge Ron Clark on 9/17/13. (ljw, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
LUFKIN DIVISION
§
VIVIAN MORELAND THOMAS; TODD
MORELAND; ANDREW J. MORELAND, §
JR.; ANTHONY MORELAND; LaSHONDA §
§
MORELAND; MONICA MORELAND
DODSON; CARLA D. MORELAND JONES; §
PAULETTE MORELAND REED; RONNA §
§
MORELAND; ALISHA HILL; LOUISE
§
MORELAND; and TERENCE NOWLIN
§
MORELAND,
§
§
Plaintiffs,
§
§
v.
§
CHESAPEAKE ENERGY CORP; ERNEST §
COULTER; GLORIA COULTER; DAVID D. §
ADAMS; ELOISE C. ADAMS; and DAVID §
§
ADAMS, LTD.,
§
§
Defendants.

Civil Action No. 9:13-CV-201

ORDER ADOPTING MAGISTRATE JUDGE’S REPORT AND RECOMMENDATION,
DENYING ALL OTHER MOTIONS AS MOOT, AND DISMISSING CASE
Plaintiffs filed suit pro se seeking royalties from oil, gas, and mineral leases connected to a
parcel of real property located in Nacogdoches County, Texas, because they are all allegedly
descendants of prior owners of this parcel. Plaintiffs allege that Defendants have procured these lease
rights through a series of fraudulent land transactions intended to circumvent Plaintiffs’ alleged
ownership rights of the real property and/or the royalties associated with the gas, oil, and mineral
leases.
The case was originally referred to United States Magistrate Judge Judith K. Guthrie for
determination of non-dispositive pretrial matters pursuant to 28 U.S.C. § 636. Upon Judge Guthrie’s
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retirement in August 2013, the case was reassigned to United States Magistrate Judge Keith. F.
Giblin.
Judge Guthrie entered a Report and Recommendation on July 30, 2013, recommending that
the case be dismissed for lack of subject matter jurisdiction. Doc. # 15. Specifically, Judge Guthrie
found that Plaintiffs’ pleadings, which asserted only diversity as a basis for jurisdiction, did not
allege complete diversity among the parties because at least one Plaintiff—Carla Moreland Jones—
and several Defendants were citizens of Texas. Because complete diversity did not exist, she
recommended that the case be dismissed. Judge Guthrie also noted that Plaintiffs had filed two prior
federal lawsuits—including one in the undersigned court in 2008—that had been dismissed for
precisely the same reasons. See Thomas v. Chesapeake Energy Corp, 2007 WL 1656268 at *2 (E.D.
Mo. Jun. 6, 2007); Moreland v. Chesapeake Energy Corp., 9:08-cv-9, Doc. # 27 (E.D. Tex. 2008).
Following Judge Guthrie’s Report and Recommendation, the Plaintiff cited as non-diverse,
Carla Moreland Jones, filed a motion to withdraw as Plaintiff. Doc. # 18. Plaintiffs then filed
objections to the Report and Recommendation, Docs. # 23, 24; a motion to file an amended
complaint to reflect Ms. Moreland Jones’s departure, Doc. # 29; and an motion to reissue summons
due to improper service, Doc. # 30. Defendants then filed two motions to dismiss for lack of subject
matter jurisdiction or, in the alternative, for failure to state a claim. Docs. # 34, 27. Plaintiffs then
filed six new motions, five of which, although confusing, seem to request that the court dismiss all
Defendants that have appeared other than Chesapeake (i.e., David Adams, Eloise Adams, and David
Adams, Ltd.), Docs. # 42-45, 47. The sixth motion requests a default judgment against two
Defendants that have not appeared, Ernest and Gloria Coulter. Doc. # 46. No entry of default has

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been requested as to these Defendants, and none of the proper documentation that accompany a
motion for default judgment was filed with the motion.1
Pursuant to Federal Rule of Civil Procedure 72 and 28 U.S.C. § 636(b), the court has
conducted a de novo review of the magistrate judge’s Report and Recommendation, Plaintiffs’
objections, and the record as a whole, and concludes that the objections are without merit. Because
of their limited jurisdiction, federal courts have a continuing obligation to examine their basis for
jurisdiction. MCG, Inc. v. Western Energy Corp., 896 F.2d 170, 173 (5th Cir.1990). Jurisdiction may
be raised by the court, sua sponte, at any time, id., and a court must dismiss the action if it is
determined that subject matter jurisdiction is lacking. Fed. R. Civ. P. 12(h)(3).
Even assuming the court were to permit Ms. Moreland Jones to withdraw as a party in this
case and the dismissal of David Adams, Eloise Adams, and David Adams, Ltd., Plaintiffs still have
a jurisdictional problem. As previously discussed in the Moreland case, Plaintiffs have failed once
again to properly plead the citizenship of Chesapeake.
Even looking at the proposed amended complaint, Plaintiffs fail to establish the principal
place of business of Chesapeake. Plaintiffs’ proposed amended complaint states only that
Chesapeake is a corporation organized under the laws of Oklahoma “doing business” in Texas. Doc.

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Securing a default judgment is a three-step procedure involving the defendant’s default, entry of default,
and a default judgment. New York Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). A “default” occurs
when the Defendant does not plead or otherwise respond to the complaint, and an entry of default is the notation the
Clerk makes after the default is established by affidavit. Id. The entry of default cuts off the Defendant’s right to
appear in the case with respect to liability issues. See Greyhound Exhibit group, Inc. V. E.L.U.L. Rlty. Corp., 973
F.2d 155, 160 (2nd Cir. 1992). After the entry of default by the Clerk, a party may seek a default judgment from the
court. Fed. R. Civ. P. 55(b)(2). Prior to the entry of any default judgment, the Plaintiff must include a sworn
statement detailing whether the defendant currently serves in the military. See 50 U.S.C. app. § 521(b)(1).
Moreover, a default judgment should not be entered against an infant or incompetent person who is not represented
in the action by a guardian, or other representative. Fed. R. Civ. P. 55(b)(2). Plaintiffs have performed none of the
required steps to secure a default judgment.

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# 29-1. Plaintiffs’ subsequent motions all state the same thing: that Chesapeake does business in
Texas, not that Chesapeake’s principal place of business is located in Texas. The court has no idea,
based on Plaintiffs’ pleadings, where Chesapeake’s principal place of business is, meaning that
Plaintiffs’ pleadings are insufficient to establish diversity. See Joiner v. Diamond M Drilling Co.,
677 F.2d 1035, 1039 (5th Cir. 1982) (“to adequately extablish diversity jurisdiction, a complaint
must set forth with specificity a corporate party's state of incorporation and its principal place of
business.”); see also 28 U.S.C. § 1332(c)(1) (“[A]corporation shall be deemed to be a citizen of
every State and foreign state by which it has been incorporated and of the State or foreign state where
it has its principal place of business . . . .”).
The failure to properly plead citizenship is particularly glaring where, as here, Plaintiffs’
Complaint was previously dismissed twice for failure to correctly allege diversity jurisdiction. See
Thomas v. Chesapeake Energy Corp, 2007 WL 1656268 at *2 (E.D. Mo. Jun. 6, 2007); Moreland
v. Chesapeake Energy Corp., 9:08-cv-9, Doc. # 27 (E.D. Tex. 2008). Rather than learn from past
mistakes, Plaintiffs again fail to conform their pleadings to the express requirements of 28 U.S.C.
§ 1332(a).
While the court should consider the facts in the light most favorable to Plaintiffs, and takes
into account that Plaintiffs are acting pro se in this case, Plaintiffs failed to allege Chesapeake’s
principal place of business despite having been explicitly instructed on proper pleading for corporate
defendants by the Missouri district court and this court. The Fifth Circuit requires “strict adherence”
to the rule that citizenship be “distinctly and affirmatively alleged,” Howery v. Allstate Ins. Co., 243
F.3d 912, 919 n.34 (5th Cir. 2001), and Plaintiffs’ failure to do so means that their Complaint does
not even make a prima facie showing of diversity jurisdiction. Given this, the court will overrule
Plaintiffs’ objections to the Report and Recommendation and dismiss the case.
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IT IS THEREFORE ORDERED that Plaintiffs Vivian Moreland Thomas et al’s claims
against Chesapeake Energy Corporation et al are DISMISSED. All other pending motions are
DENIED AS MOOT.
So ORDERED and SIGNED this 17 day of September, 2013.

___________________________________
Ron Clark, United States District Judge

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