Nationstar Mortgage LLC v. Paulsen, Karen et al

Filing 23

ORDER Regarding Jurisdiction. Proof of Diversity Citizenship due 3/14/2014. Signed by District Judge William M. Conley on 2/27/2014. (jef),(ps)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
NATIONSTAR MORTGAGE LLC,
Plaintiff,

OPINION & ORDER

v.
13-cv-857-wmc
MICHAEL J. TATE,
Defendant.
Plaintiff Nationstar Mortgage LLC (“Nationstar”) originally filed this foreclosure
action in Polk County Circuit Court against Michael J. Tate and Karen Paulsen, alleging
that they had defaulted on the mortgage of a property located at 1796 West White Ash
Drive, Balsam Lake, Wisconsin. Tate, who considers himself a “Sovereign Citizen of the
republic,” removed the case to this court on December 11, 2013, alleging diversity
jurisdiction pursuant to 28 U.S.C. § 1332(a) and federal question jurisdiction under 15
U.S.C. § 1692(g) and (k). Within a week of removal, Paulsen was dropped as a party.
As an initial matter, the court concludes first that none of the claims in the
complaint arise under federal law, and any such invocation of federal law by defendant in an
affirmative defense or counterclaim is insufficient to create federal jurisdiction. As a result,
diversity jurisdiction is Tate’s only basis for this removal. Because Tate’s notice of removal
contains insufficient evidence to determine whether this court may exercise diversity
jurisdiction over this case, Tate will be given an opportunity to file an amended notice of
removal containing the necessary factual allegations to determine diversity jurisdiction.
Failure to do so will result in a remand of this dispute back to state court.

OPINION
“Federal courts are courts of limited jurisdiction.” Int’l Union of Operating Eng’r, Local
150, AFL-CIO v. Ward, 563 F.3d 276, 280 (7th Cir. 2009) (citation omitted).

Because

jurisdiction is limited, federal courts “have an independent obligation to determine whether
subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v. Friend, 559
U.S. 77, 94 (2010). Further, the party seeking to invoke federal jurisdiction bears the burden of
establishing that jurisdiction is present. Smart v. Local 702 Int’l Bhd. of Elec. Workers, 562 F.3d
798, 802-03 (7th Cir. 2009).

Tate’s notice of removal invokes both federal question

jurisdiction, pursuant to 28 U.S.C. § 1331, and diversity jurisdiction. The court considers each
in turn to determine if Tate has met his burden to demonstrate that subject-matter jurisdiction
exists here.

I. Federal Question Jurisdiction
The district courts have original jurisdiction over all civil actions “arising under the
Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. Here, Tate appears
to be alleging that this court has federal question jurisdiction over the current action
because of the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq.
Presumably, Tate intends to bring some sort of counterclaim under that statute, or to use it
as a defense, but federal question jurisdiction can rest neither upon an actual or anticipated
counterclaim, nor upon an actual or anticipated defense. Vaden v. Discover Bank, 556 U.S.
49, 61 (2009 (citing Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826
(2002)). Rather, the court must determine whether “the plaintiff’s statement of his own
cause of action shows that it is based upon [federal law].” Id. (quoting Louisville & Nashville
R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908)). Here, the plaintiff’s cause of action is
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foreclosure, which is based on the state law of Wisconsin alone.

See Wis. Stat. § 846.

Accordingly, this court does not have jurisdiction under § 1331.
II. Diversity Jurisdiction
Unless a complaint alleges complete diversity of citizenship among the parties and an
amount in controversy exceeding $75,000, or raises a federal question, the case must be
dismissed for want of jurisdiction.

Smart, 562 F.3d at 802.

Here, Tate contends that

diversity jurisdiction exists because (1) the amount in controversy exceeds $75,000 and (2)
the parties are diverse. (Notice of Removal (dkt. #1) ¶¶ 1, 11-14.) For the latter to be true,
however, there must be complete diversity, meaning plaintiff cannot be a citizen of the same
state as any defendant. Smart, 562 F.3d at 803. Unfortunately, Tate’s allegations prevent
this court from determining the citizenship of the parties here.
First, Nationstar is an LLC, not a corporation. “The citizenship of an LLC is the
citizenship of each of its members,” yet plaintiff has not alleged the citizenship of
defendant’s members, making it impossible to determine whether complete diversity exists
here. Camico Mut. Ins. Co. v. Citizens Bank, 474 F.3d 989, 992 (7th Cir. 2007). Instead,
plaintiffs allege defendant Nationstar is “a foreign corporation based in Texas.” (Notice of
Removal (dkt. #1) ¶ 12.) As the Seventh Circuit has repeatedly instructed, this information
is irrelevant in deciding the citizenship of a limited liability company. Hukic v. Aurora Loan
Serv., 588 F.3d 420, 429 (7th Cir. 2009).
Second, Tate alleges that he “does not claim citizenship whatsoever” and that he is
“[a]n American National or a Non-Citizen national.” (Notice of Removal (dkt. #1) ¶ 14.)
“Citizenship,” for purposes of diversity jurisdiction, means the place where Tate is

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domiciled -- that is, “the state in which a person intends to live over the long run.” Heinen v.
Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012).
From Tate’s notice of removal, the court cannot tell where he is domiciled, and the
court therefore cannot make a determination as to diversity jurisdiction. To establish Tate’s
citizenship for diversity jurisdiction purposes, Tate must allege facts indicating in which
state he is domiciled.1
Before remanding this action for lack of subject matter jurisdiction, Tate will be given
leave to file within 14 days an amended notice of removal that establishes subject matter
jurisdiction by: (1) alleging the names and citizenship of each member of the plaintiff LLC;
and (2) indicating where he is domiciled for diversity purposes.

In alleging the LLC’s

citizenship, plaintiff should be aware that if the member or members of the LLCs are
themselves a limited liability company, partnership, or other similar entity, then he must
allege the citizenship of those members and partners as well. See Meryerson v. Harrah’s E.
Chi. Casino, 299 F.3d 616, 617 (7th Cir. 2002) (noting that “the citizenship of
unincorporated associations must be traced through however many layers of partners or
members there may be”). Tate should also be aware that if a member or members of the
LLCs are corporations, he must allege both the state of incorporation and the state in which
the corporation has its principal place of business. See 28 U.S.C. § 1332(c).
1

Technically, the notice of removal is also defective as to defendant Karen Paulsen in two
respects: (1) Paulsen did not join in the notice, see MB Fin., N.A. v. Stevens, 678 F.3d 497,
499 (7th Cir. 2012) (“Removal requires the consent of all defendants.”) (emphasis in
original) (citations omitted); and (2) Tate alleges that Paulsen “resides in Minnesota,”
(Notice of Removal (dkt. #1) ¶ 13), (“[b]ut residence may or may not demonstrate
citizenship, which depends on domicile,”) Heinen, 671 F.3d at 670. Since any defect in the
notice other than one involving subject matter jurisdiction must be made within 30 days
after the filing of the notice of removal, 28 U.S.C. § 1447(c); and Paulsen is no longer a
party, neither defect is a bar to Tate’s removal.
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ORDER
IT IS ORDERED that:
1) defendant Michael J. Tate shall have until March 14, 2014, to file and serve an
amended notice of removal containing good faith allegations sufficient to
establish complete diversity of citizenship for purposes of determining subject
matter jurisdiction under 28 U.S.C. § 1332; and
2) failure to amend timely shall result in prompt dismissal of this matter for lack of
subject matter jurisdiction.
Entered this 27th day of February, 2014.
BY THE COURT:
/s/
________________________________________
WILLIAM M. CONLEY
District Judge

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