Ryan Enterprises LLC v. Independence Professional Hockey LLC et al

Filing 30

MEMORANDUM OPINION AND ORDER denying 14 Motion to Remand or Transfer filed by Ryan Enterprises LLC, and granting 22 Motion for Leave to Amend filed by Steven Brothers Sports Management of Allen LLC, Central Partners LLC, Independence Professional Hockey LLC, Northlight USA Inc, Matt Adams, Rapid City Professional Hockey LLC, Steven Brothers Sports Management LLC, Steven Brothers Sports Management of Tulsa LLC. (Ordered by Judge Sidney A Fitzwater on 7/31/2017) (Judge Sidney A Fitzwater)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
RYAN ENTERPRISES LLC,
Plaintiff,
VS.
INDEPENDENCE PROFESSIONAL
HOCKEY, LLC, et al.,
Defendants.

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Civil Action No. 3:17-CV-1219-D

MEMORANDUM OPINION
AND ORDER
Plaintiff Ryan Enterprises, LLC’s (“Ryan’s”) May 31, 2017 motion to remand or transfer is
denied, and defendants’ July 12, 2017 motion for leave to amend is granted.1
I
At the outset, it should be noted that this case was not removable in the first place due to the
presence of several Texas-citizen defendants, but Ryan waived this procedural defect by failing to
file a timely motion to remand.
According to defendants’ amended notice of removal—which they filed at the court’s
direction—defendant Independence Professional Hockey, LLC (“Independence”) is a Texas citizen
because three of its four members are Texas citizens.2 Defendant Central Partners, LLC (“Central”)

1

Under § 205(a)(5) of the E-Government Act of 2002 and the definition of “written opinion”
adopted by the Judicial Conference of the United States, this is a “written opinion[] issued by the
court” because it “sets forth a reasoned explanation for [the] court’s decision.” It has been written,
however, primarily for the parties, to decide issues presented in this case, and not for publication in
an official reporter, and should be understood accordingly.
2

“All federal appellate courts that have addressed the issue have reached the same
conclusion: like limited partnerships and other unincorporated associations or entities, the
citizenship of a LLC is determined by the citizenship of all of its members.” Harvey v. Grey Wolf

is a Texas citizen at least because Independence is one of its members, and three of Independence’s
members are Texas citizens, and another of Central’s members is QCM Holdings, Inc., which is also
alleged to be a Texas citizen. And defendant Matt Adams is also alleged to be a Texas citizen. A
case cannot be removed to federal court on the basis of diversity of citizenship when a properly
joined and served in-state citizen is a defendant. See 28 U.S.C. § 1441(b). In other words, even
when, as here, there is complete diversity of citizenship,3 the removal statute does not permit
removal to a federal district court in Texas when there is a properly joined and served Texas citizen
defendant.
Nevertheless, this type of defect is procedural. See, e.g., Halmekangas v. State Farm Fire
& Cas. Co., 603 F.3d 290, 295 n.18 (5th Cir. 2010) (“[A] procedural defect is any defect that does
not go to the question of whether the case originally could have been brought in federal district
court.” (citing Williams v. AC Spark Plugs Div. of Gen’l Motors Corp., 985 F.2d 783, 787 (5th
Cir.1993))).
If a plaintiff initially could have filed his action in federal court, yet
chose to file in state court, even if a statutory provision prohibits the
defendant from removing the action and the defendant removes
despite a statutory proscription against such removal, the plaintiff
must object to the improper removal within thirty days after the
removal, or he waives his objection.
Williams, 985 F.2d at 787.
Ryan was therefore required to raise this procedural defect within 30 days of the date the
case was removed, or it waived its objection. See id. Defendants removed this case (albeit to the

Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (collecting cases).
3

In this case, there is alleged to be complete diversity because Ryan’s sole member is alleged
to be a Connecticut citizen, and no defendant is alleged to be a Connecticut citizen.
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wrong division of this court)4 on April 27, 2017. Ryan did not file its motion to remand until May
31, 2017 (and even then it did not raise this ground as a basis for its remand motion). Because more
than 30 days elapsed, Ryan waived this procedural defect.
II
A
Ryan moves to remand on the ground that defendants have neither asserted nor established
that the amount in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.
If the plaintiff’s state court petition demands monetary relief of a stated sum, that sum, if asserted
in good faith, is deemed to be the amount in controversy. Dart Cherokee Basin Operating Co. v.
Owens, ___ U.S. ___, 135 S.Ct. 547, 551 (2014). But when, as here, the plaintiff’s state court
petition does not state the amount in controversy, the defendants’ notice of removal must make “a
plausible allegation that the amount in controversy exceeds the jurisdictional threshold.” Id. at 55354. No evidence is required unless and until the plaintiff contests, or the court questions, the
allegation. See id. at 551, 554.
If the plaintiff contests the allegation, then the defendant must prove, by a preponderance of
the evidence, that the amount in controversy requirement has been satisfied. Id. at 554 (explaining
that, if plaintiff contests defendant’s allegation, then “both sides submit proof and the court decides,
by a preponderance of the evidence, whether the amount-in-controversy requirement has been
satisfied”); see also Allee Corp. v. Reynolds & Reynolds Co., 2015 WL 1914663, at *3 (N.D. Tex.
Apr. 28, 2015) (Fitzwater, J.). The defendant’s burden “is met if (1) it is apparent from the face of

4

Defendants removed the case to the Lubbock Division rather than to the Dallas Division.
Judge Cummings later transferred the case to the Dallas Division due to the removal to the wrong
division.
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the petition that the claims are likely to exceed $75,000, or, alternatively, (2) the defendant sets forth
summary judgment type evidence of facts in controversy that support a finding of the requisite
amount.” Manguno v. Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th Cir. 2002) (internal
quotation marks omitted).

If the defendant can produce evidence sufficient to show by a

preponderance of the evidence that the amount in controversy exceeds the jurisdictional threshold,
the plaintiff can defeat diversity jurisdiction only by showing to a legal certainty that the amount in
controversy does not exceed the sum or value of $75,000, exclusive of interest and costs. See De
Aguilar v. Boeing Co., 47 F.3d 1404, 1411 (5th Cir. 1995).
In the present case, even if the court assumes that it is not apparent from the face of Ryan’s
state court petition that the amount in controversy exceeds the sum or value of $75,000, exclusive
of interest and costs—because the petition does not actually make that claim—it concludes that
defendants by their analysis of the petition have proved by a preponderance of the evidence that the
amount in controversy requirement is met. See Ds. Resp. 3, ¶ 8 (explaining that Ryan alleges that
Stephen M. Ryan, Jr. worked for nearly one year as Commissioner and Chief Executive Officer of
the Central Hockey League without being paid his base monthly salary of $15,400 or $15,900,
severance pay, or reimbursement for reasonable business expenses, which totals approximately
$169,400, from October 2013 to September 2014).
The court therefore denies the motion to remand.
B
Ryan’s alternative motion to transfer this case to the Dallas Division is denied as moot
because Judge Cummings transferred the case to this division on May 8, 2017.

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III
Defendants’ July 12, 2017 motion for leave to amend is granted, and defendants are granted
leave to file their first amended original answer. Ryan maintains that defendants’ motion should be
denied because they should not be permitted to amend to assert futile or frivolous defenses. But the
court declines to deny a motion to amend that is presumed to be timely because it was filed before
the August 15, 2017 deadline that Judge Cummings imposed for filing motions for leave to amend,
see, e.g., Pyramid Transportation, Inc. v. Greatwide Dallas Mavis, LLC, 2012 WL 5875603, at *2
(N.D. Tex. Nov. 21, 2012) (Fitzwater, C.J.), and about 2½ months after the case was removed to this
court. And this court almost invariably declines to consider futility of amendment in the context of
a motion for leave to amend. As this court has frequently noted, its almost unvarying practice when
futility is raised is to address the merits of the claim or defense in the context of a Rule 12(b)(6) or
Rule 56 motion, where the procedural safeguards are surer. See, e.g., Klein v. Fed. Ins. Co., 2014
WL 239652, at *6 (N.D. Tex. Jan. 22, 2014) (Fitzwater, C.J.).
The court therefore grants defendants’ motion for leave to amend.

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Accordingly, Ryan’s motion to remand or transfer is denied, and defendants’ motion for
leave to amend is granted.5
SO ORDERED.
July 31, 2017.

_________________________________
SIDNEY A. FITZWATER
UNITED STATES DISTRICT JUDGE

5

The court will decide in due course defendants’ June 26, 2017 motion to transfer venue and,
if necessary, Ryan’s July 17, 2017 motion for partial summary judgment on breach of contract
claims against certain defendants.
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