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Paddison v. Paddison

United States District Court, E.D. Louisiana

April 16, 2019

DAVID R. PADDISON, Plaintiff
v.
RICHARD M. PADDISON, JR., ET AL. Defendants

         SECTION: “E” (5)

          ORDER AND REASONS

          SUSIE MORGAN UNITED STATES DISTRICT JUDGE

         Before the Court is a motion to remand this case to the 22nd Judicial Court for the Parish of St. Tammany, filed by Plaintiff David R. Paddison.[1] The motion is opposed.[2] For the reasons that follow, the Court GRANTS Plaintiff's motion.

         BACKGROUND

         According to the state court petition, Plaintiff David R. Paddison and Defendant Richard M. Paddison, Jr., are siblings and the sole members of Defendant Paddison Scenic Properties, LC (“PSP”).[3] PSP is an Idaho limited liability company with its principal place of business in Louisiana.[4] PSP owns real property in Idaho, and its only business is to own and administer that property.[5]

         On October 3, 2018, Richard M. Paddison, Jr. filed a complaint against David R. Paddison and PSP in the District Court of the Second Judicial District for the State of Idaho, seeking dissolution of PSP.[6] In his complaint in the Idaho litigation, Richard M. Paddison, Jr., represented he is a Louisiana resident, [7] and he attached a sworn affidavit, signed on October 1, 2018, stating the contents of the Complaint were true.[8]

         On November 20, 2018, David R. Paddison filed the instant suit in the 22nd Judicial Court for the Parish of St. Tammany.[9] He named as Defendants Richard M. Paddison, Jr. and PSP and seeks injunctive relief against Richard M. Paddison, Jr.[10] On March 6, 2019, Richard M. Paddison, Jr., removed this matter to this Court.[11] He represents he is a citizen of Idaho and invokes the Court's diversity jurisdiction.[12] He also represents PSP was dissolved on December 31, 2018, pursuant to its Operating Agreement.[13]

         On March 12, 2019, David R. Paddison filed the instant motion to remand this case to state court.[14] On March 13, 2019, this Court ordered that, in his opposition to the motion, Richard M. Paddison, Jr., address whether PSP is an existing LLC and whether PSP is a real party in interest or merely a nominal party, the citizenship of which need not be considered.[15] On March 26, 2019, Richard M. Paddison, Jr., filed his opposition.[16] He attaches an affidavit labeled “unsworn declaration” and dated March 26, 2019, in which he asserts he is a citizen of Idaho who moved from Louisiana to Idaho in 2018.[17]

         LEGAL STANDARD

         Federal courts are courts of limited jurisdiction and possess only the authority conferred upon them by the United States Constitution or by Congress.[18] Federal law allows for state civil suits to be removed to federal courts in certain instances. Generally, removal jurisdiction is governed by 28 U.S.C. § 1441(a), which provides:

Except as otherwise expressly provided by [an] Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.[19]

         “The removing party bears the burden of showing that federal jurisdiction exists and that removal was proper.”[20] “In determining diversity jurisdiction, the citizenship of the real parties in interest is determinative, and the citizenship of nominal or formal parties who have no real interest in the dispute before the court may be disregarded, even though they may be required by law or court order to join in the lawsuit.”[21] “The jurisdictional facts supporting removal are examined as of the time of removal.”[22]

         ANALYSIS

         I. Citizenship of Richard M. Paddison, Jr.

         The Fifth Circuit has explained the citizenship requirement of § 1332 as follows:

To be a citizen of a State within the meaning of section 1332, a natural person must be both a citizen of the United States, and a domiciliary of that State. For diversity purposes, citizenship means domicile; mere residence in the State is not sufficient. A person's domicile is the place of his true, fixed, and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom. A change of domicile may be effected only by a combination of two elements: (a) taking up residence in a different domicile with (b) the intention to remain there.[23]

         When determining domicile, the Court may take into account “current residence; voting registration and voting practices; location of personal and real property; location of brokerage and bank accounts; membership in unions, fraternal organizations and other associations; place of employment or business; driver's license and automobile registration; [and] payment of taxes.”[24]

         “When jurisdiction has been challenged, a mere allegation of citizenship is insufficient to prove jurisdiction.”[25] “In making a jurisdictional assessment, a federal court is not limited to the pleadings; it may look to any record evidence, and may receive affidavits, deposition testimony or live testimony concerning the facts underlying the citizenship of the parties. The court has wide, but not unfettered, discretion to determine what evidence to use in making its determination of jurisdiction.”[26]

         Richard M. Paddison, Jr.'s affidavit of October 1, 2018 attests he is a Louisiana resident.[27] In the Notice of Removal, filed on March 6, 2019, he alleges he is a citizen of Idaho and states the address of his Idaho residence.[28] His declaration of March 26, 2019 attests that (1) he is an Idaho citizen; (2) he resides in Idaho; (3) although he still owns his prior residence in Louisiana, he has given up his homestead exemption and is renting the property to third parties; (4) he moved his household belongings to Idaho in 2018; (5) he is registered to vote in Idaho; and (6) he has an Idaho driver's license.[29] David R.

         Paddison has not submitted affidavits or testimony showing Richard M. Paddison, Jr., did not move to Idaho in 2018 or that he was still a Louisiana citizen on March 6, 2019. The Court finds Richard M. Paddison, Jr., has met his burden of showing that he is an Idaho citizen.

         II. Citizenship of PSP

         Citizenship of a limited liability company is determined not by the company's state of incorporation or its principal place of business, but rather the citizenship of all of the limited liability company's members.[30] The sole members of PSP are David R. Paddison and Richard M. Paddison, Jr.[31] For purposes of diversity jurisdiction, PSP is a citizen of Louisiana and Idaho. As a result, if Defendant PSP's citizenship is considered for purposes of diversity jurisdiction, the parties are not completely diverse because Plaintiff David R. Paddison is a Louisiana citizen and PSP is a citizen of Louisiana and Idaho.

         Richard M. Paddison, Jr., argues this Court should disregard PSP's citizenship because (1) he intends to file a motion to dismiss PSP, (2) PSP has been dissolved, and (3) PSP is a nominal party.[32] Whether Richard M. Paddison, Jr. intends to file a motion to dismiss PSP is irrelevant, as the jurisdictional facts must be determined at the time of removal.[33]

         With respect to whether PSP is an existing entity, Richard M. Paddison, Jr., attaches to his Notice of Removal PSP's Operating Agreement, under which PSP was established for a term to expire on December 31, 2018, on which date it was to be dissolved.[34] He also alleges that the ongoing litigation in Idaho state court “seeks dissolution and winding up” of PSP.[35] However, the website of the Idaho Secretary of State's Office states, as of April 5, 2019, that PSP is an active, existing limited liability company.[36] In its Order of March 13, 2019, the Court took judicial notice of the website of the Idaho Secretary of State's Office and ordered Richard M. Paddison, Jr., to address whether PSP was an existing entity at the time of removal.[37] In his opposition to the instant motion, Richard M. Paddison, Jr., merely restates that PSP has been dissolved.[38]To the extent he argues that the Court should disregard PSP's citizenship because PSP has been dissolved, Richard M. Paddison, Jr., has failed to meet his burden of proof.

         The Court turns to whether PSP is a nominal party. “[A] federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.”[39] In Wolff v. Wolff, a partner in a partnership filed an action against the other partner and against the partnership, “reciting that the partnership had been dissolved on his earlier demand and seeking an accounting and a declaration that, as a partner, [the plaintiff] own[ed] a half interest in certain real estate.”[40] The Fifth Circuit held the partnership was not a real party in interest in the case because the “complaint did not seek to have title to the property conveyed” to it.[41] Rather, the partnership was “joined solely for the purpose of performing any ministerial acts required for the final dissolution and winding up of the partnership.”

         In this case, the state court petition states PSP is a party needed for just adjudication of his claim and alleges Richard M. Paddison, Jr., breached his fiduciary duty to PSP.[42] However, the petition does not seek relief from PSP.[43] The Court finds PSP, like the partnership in Wolff, was joined solely for the purpose of performing ministerial duties and that it is not a real party in interest to the controversy. As a result, the Court does not consider PSP's citizenship.

         The Court has found Removing Defendant Richard M. Paddison, Jr., has established he is a citizen of Idaho. Because the Court ignores PSP's citizenship, the requirement of complete diversity of citizenship is satisfied.

         III. Amount-in-Controversy Requirement

         “[T]he removing defendant must prove by a preponderance of the evidence that the amount in controversy exceeds $75, 000.”[44] “The defendant may make this showing in either of two ways: (1) by demonstrating that it is ‘facially apparent' that the claims are likely above $75, 000, or (2) ‘by setting forth facts in controversy-preferably in the removal petition, but sometimes by affidavit-that support a finding of the requisite amount.'”[45]

         In this case, Plaintiff David R. Paddison seeks only injunctive relief, not damages.[46]As part of the injunctive relief sought in this case, David R. Paddison seeks to enjoin Richard M. Paddison, Jr., from “[s]elling, conveying, mortgaging, pledging, leasing, exchanging and otherwise disposing of the property, ”[47] which refers to “certain immovable property located in Lowell, Idaho” owned by PSP.[48] “In actions seeking declaratory or injunctive relief the amount in controversy is measured by the value of the object of the litigation, ” which is “the value of the right to be protected or the extent of the injury to be ...


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