United States Court of Appeals
For the First Circuit
No. 03-1670
CARLOS A. GARCÍA PÉREZ, ET AL.,
Plaintiffs, Appellants,
v.
ALVARO SANTAELLA, M.D., ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Jay A. Garcia-Gregory, U.S. District Judge]
Before
Torruella, Circuit Judge,
Coffin, Senior Circuit Judge,
and Selya, Circuit Judge.
Joan S. Peters with whom Andrés Guillemard-Noble and Nachman
& Guillemard were on brief for appellants.
José Héctor Vivas with whom Vivas & Vivas was on brief for
appellee Iván Terón Méndez.
Raphael Peña Rámon and De Corral & De Mier for appellee
Ashford Presbyterian Community Hospital.
April 13, 2004
COFFIN, Senior Circuit Judge. Appellants Carlos A. García
Pérez and Gisela M. Baerga Torres, together with their infant
daughter Carla Isabel (collectively, the Garcías), challenge the
district court's determination that they were domiciled in Puerto
Rico when they filed a medical malpractice claim against appellees
Dr. Iván Terón Méndez and Ashford Presbyterian Community Hospital.
The Garcías contend that they were domiciled in Florida at the time
of the filing, thus establishing complete diversity between the
plaintiffs and the defendants and conferring subject matter
jurisdiction on the district court under 28 U.S.C. § 1332(a)(1).
After deliberating upon this well briefed and argued case, we
conclude that errors of both law and fact require recognition of
Florida as the state of domicile. We therefore reverse.
I. Background
The underlying medical malpractice claim arose out of the May
6, 1996, birth of quadruplets to Carlos and Gisela. At the time,
the Garcías were living in Gurabo, Puerto Rico. The babies were
premature and only one child - Carla Isabel - survived. She
suffered from a variety of complications requiring ongoing and
intensive medical care. In June 1996, having already lost three of
the quadruplets while they were in the care of Ashford
Presbyterian, the Garcías decided to move Carla Isabel to Miami
Children's Hospital.
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On May 5, 1997, the medical malpractice claim was filed.
Discovery on the merits continued until March 23, 2001, when
appellee Terón Méndez filed a motion to dismiss under Fed. R. Civ.
P. 12(b)(1), alleging that the Garcías were domiciled in Puerto
Rico, and the court therefore lacked subject matter jurisdiction.
Ashford Presbyterian joined this motion.
A magistrate judge's report and recommendation, issued
February 20, 2002, concluded that the Garcías were domiciled in
Florida at the time the suit was filed and recommended that the
motion to dismiss be denied. Reviewing the contested portions of
the report and recommendation de novo, see 28 U.S.C. § 636(b)(1),
the district court reached a contrary determination. The court
noted a series of remaining contacts between the Garcías and Puerto
Rico, supporting each example with a citation to a particular page
and line number of Carlos's deposition, taken on August 8, 2000.
At that time, however, the deposition transcript had not been
submitted to the court. The only portions of the transcript before
the court were five pages submitted with appellants' opposition to
the motion to dismiss, but these did not include several portions
of the deposition cited by appellees. The district court relied on
the appellees' citations. In total, the district court listed
eleven factors favoring a Puerto Rico domicile, relying not only on
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the citations, but also on the phrasing of appellees' objections to
the magistrate judge's report.1
Following the court's order of dismissal, appellants moved for
reconsideration. They pointed out discrepancies between the facts
as described by the district court and the actual deposition
transcript. Appellants also argued that the court made a legal
error in giving significant weight to Carlos's statement that he
would like to return to Puerto Rico at some undetermined point in
the future.
Sensing the precarious nature of the court's reliance on their
paraphrasing, appellees submitted the entire deposition transcript
with their opposition to the motion for reconsideration. The court
accepted the invitation and "carefully read the deposition
testimony provided." It found nothing to change its conclusion and
denied the motion. This appeal ensued.
II. Standard of Review
The determination of domicile presents a mixed question of law
and fact. Bank One, Texas, N.A. v. Montle, 964 F.2d 48, 51 (1st
Cir. 1992). To the extent that the motion to dismiss called upon
the district court to resolve factual challenges, we will not set
aside those findings unless clearly erroneous. Valentín v.
Hospital Bella Vista, 254 F.3d 358, 365 (1st Cir. 2001). "'A
1
We note that seven of the factors rely on the deposition
testimony that the court did not have before it at the time of its
decision.
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finding is clearly erroneous when although there is evidence to
support it, the reviewing court on the entire evidence is left with
the definite and firm conviction that a mistake has been
committed.'" Lundquist v. Precision Valley Aviation, Inc., 946
F.2d 8, 11 (1st Cir. 1991)(quoting Anderson v. City of Bessemer
City, 470 U.S. 564, 573 (1985)(internal citations omitted)). We
review the court's legal conclusions de novo. Valentín, 254 F.3d
at 365.
III. Law of Domicile
The federal courts have jurisdiction over controversies
arising between "citizens of different states," provided that the
amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1).
Citizenship is determined by domicile, Lundquist, 946 F.2d at 10,
which can be established by demonstrating that the individual is
physically present in the state and has an intent to remain
indefinitely, Sun Printing & Publ'g Ass'n v. Edwards, 194 U.S. 377,
383 (1904); Hawes v. Club Ecuestre El Comandante, 598 F.2d 698, 701
(1st Cir. 1979). Once challenged, the party invoking diversity
jurisdiction must prove domicile by a preponderance of the
evidence. Bank One, 964 F.2d at 50. The key point of inquiry is
whether diversity of citizenship existed at the time the suit was
filed; subsequent events may bear on the sincerity of a professed
intention to remain but are not part of the primary calculus.
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Hawes, 598 F.2d at 700; Miranda v. Miranda, 686 F. Supp. 44, 47
(D.P.R. 1988).
Courts typically take into account a variety of factors
indicating the extent of a particular party's ties to the purported
domicile. These include:
current residence; voting registration and voting
practices; location of personal and real property;
location of brokerage and bank accounts; membership
in unions, fraternal organizations, churches, clubs
and other associations; place of employment or
business; driver's license and other automobile
registration; [and] payment of taxes...
13B Wright, Miller & Cooper, Federal Practice and Procedure § 3612
(2d ed. 1984). See also Bank One, 964 F.2d at 50; Hawes, 598 F.2d
at 700. No single factor is dispositive, and the analysis focuses
not simply on the number of contacts with the purported domicile,
but also on their substantive nature. Lundquist, 946 F.2d at 12
("[D]omicile need not be determined by mere numerical comparison of
the number of factors that may appear to favor each side of the
issue."); see also Leon v. Caribbean Hosp. Corp., 848 F. Supp. 317,
318 (D.P.R. 1994) (favoring ties that "could not be easily undone"
over more easily established ties).
IV. Analysis
We turn first to two errors of law affecting the baseline of
the district court's analysis.
First, the court erred when it gave considerable weight to
Carlos's testimony - taken more than three years after the case was
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filed - that he thought "just about every other day" of returning
to Puerto Rico. In Hawes, we determined that a "floating
intention" to return to a former domicile at some unspecified
future date does not prevent a party from acquiring a new domicile.
598 F.2d at 701. Carlos's vague and noncommittal language is
precisely within the contours of what we consider a floating
intention. See Valentín, 254 F.3d at 367 (characterizing a
floating intention as "[a]n amorphous desire to relocate from one
place to another at an indeterminate future date" and noting that
such an "'indefinite and ambulatory future intention. . . is of no
real significance'")(citing Hardin v. McAvoy, 216 F.2d 399, 403
(5th Cir. 1954)). As we said in Hawes, an individual is "entitled
to keep [his] options open," 598 F.2d at 704. Carlos's statement
should not have been a significant element of the court's analysis.
Second, the court erred in enunciating the burden of proving
domicile once challenged.2 The correct burden of proof is
preponderance of the evidence. Bank One, 964 F.2d at 50. The
district court's opinion is at best confusing on this issue. In
initially setting out the burden, the court correctly stated that
2
The initial error seems to have been made in appellees'
motion to dismiss, which cited Alicea-Rivera v. SIMED, 12 F. Supp.
2d 243, 245 (D.P.R. 1998), in support of the assertion that the
plaintiff must prove a change in domicile by clear and convincing
evidence. Alicea-Rivera incorrectly adopted the clear and
convincing burden of proof from a Second Circuit case analyzing the
law of domicile of New York State. Id. Alicea-Rivera is in
conflict with our earlier decision in Bank One, 964 F.2d at 50, and
therefore has no precedential value on the burden of proof issue.
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plaintiffs bore the burden of proving domicile by a preponderance
of the evidence, citing Bank One. Two paragraphs later, it stated
the burden as that of proving domicile by clear and convincing
evidence. It cited Valentín, which, however, says nothing about
the nature of the burden. Shortly thereafter, the court repeated
the clear and convincing evidence standard, erroneously citing Bank
One. Finally, the court concluded that plaintiffs "have failed to
rebut this evidence [of Puerto Rico domicile] with clear and
convincing proof," immediately following this language with an
invocation of "preponderance of evidence," citing Francis v.
Goodman, 81 F.3d 5, 6 (1st Cir. 1996). Appellants did not raise
the issue below,3 but it is settled in this circuit that an
appellate court has discretion, in exceptional cases, to relieve a
party of forfeiture. See United States v. La Guardia, 902 F.2d
1010, 1013 (1st Cir. 1990). This is such a case. Not only should
the proper burden govern our review, but both courts and lawyers
should be aware of the importance of clarity as to the applicable
burden of proof. To the extent that the court evaluated the
appellants' evidence under a clear and convincing standard, plain
error occurred.
3
Upon questioning at oral argument, both parties agreed that
the burden was preponderance of the evidence. This was a retreat
from appellees' earlier argument in their briefs before this court,
which, like the motion to dismiss, incorrectly stated the burden.
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We now move on to our factual analysis. The district court
marshaled a string of factors favoring domicile in Puerto Rico,
which we now review as context for our analysis of factual error.
In concluding that Carlos "lacked the intent to change his
domicile to Florida," the district court focused on the couple's
remaining contacts in Puerto Rico, which include the fact that at
the time the suit was filed, Carlos was employed by Goldman
Antonetti (a law firm based in Puerto Rico) and traveled to Puerto
Rico for business, that the Garcías rented (rather than sold) their
Gurabo house, and that the family left open two Puerto Rico bank
accounts and made regular use of an ATM card associated with one of
those accounts. The district court also made much of the family's
interest in a Taco Maker franchise, from which they derived about
16% of their annual reported income for 1997. Carlos was president
of the franchise corporation and Gisela held a contract that paid
her approximately fourteen hundred to fifteen hundred dollars a
month in exchange for services and advice regarding the operation
of the Taco Maker. The district court also pointed to the couple's
filing of income tax returns in Puerto Rico (reporting the
franchise income).
As we noted earlier, the district court adopted the appellees'
version of the facts, including citations to portions of Carlos's
deposition transcript that were not submitted to the court.
Appellants argue that the district court failed to conduct an
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independent review of the record, misconstrued Carlos's testimony
and relied on irrelevant factors, entirely disregarding their
contrary evidence. We now consider these contentions.
A review of the record, including the deposition transcript,
reveals that Carlos and Gisela created substantial personal,
professional and civic ties to Florida that significantly
outweighed their residual ties with Puerto Rico.
First, Carlos and Gisela established that Florida was their
personal and financial base. By the time the lawsuit was filed,
they had each registered to vote in Florida, acquired Florida
drivers' licenses, sold their car in Puerto Rico, and purchased two
cars in Florida. In addition, the Garcías rented out their Puerto
Rico house, unfurnished, on an annual basis.4 They opened a Miami
bank account, which became the primary account for the family's
expenses. The couple did retain a Puerto Rican bank account, but
the district court's reference to "regular" use of the Puerto Rican
ATM card is unsupported by the record. No plausible construction
of the cited testimony supports calling the use "regular,"5 and no
4
In the five years that they lived in Miami, Carlos and Gisela
purchased two homes in Florida and had two more children. In March
1999, Carlos resigned from Goldman Antonetti and joined the Miami
office of Rice Fowler, a law firm based in New Orleans. Although
these events, occurring subsequent to the filing of the lawsuit,
are not the primary focus of our analysis, we note them as
indicative of the sincerity of the family's intent to remain in
Florida, see supra at 5-6.
5
The full text of the exchange is as follows:
Q: Do you have any credit cards issued by banks in Puerto Rico?
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reasonable inference from that portion of the testimony supports a
Puerto Rico domicile. This was a clearly erroneous conclusion.
In evaluating the family's financial contacts, the district
court further erred in concluding that the Garcías' Puerto Rico tax
returns implied a Puerto Rico domicile. Gisela and Carlos used
their Miami address on their return. The act of filing the return
is not by itself evidence of domicile. As appellants note, any
individual deriving income from Puerto Rico is required to file a
tax return, regardless of citizenship. Furthermore, the tax return
provides no evidence that Puerto Rico was the appellants' financial
base; the reported income derived from Puerto Rico was
approximately 16% of the family's annual income.
Second, the court's conclusion that Carlos's residual
professional ties supported a Puerto Rico domicile is not
substantiated by the evidence. By May 1997, Carlos had built a
professional foundation for himself in Miami, including studying
for and passing the Florida bar exam, working out of an office in
his home, and spearheading the opening of a branch office for
Goldman Antonetti. He had, by February, not only explored job
A: Any what; I am sorry?
Q: Credit cards?
A: No. I still have the ATH.
Q: Okay, the ATM from Banco Popular?
A: Yes.
Q: Do you use it in Florida?
A: No.
Q: Okay.
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opportunities in Miami but had begun discussions with the head of
his firm's litigation department regarding the branch office.
Although formal approval was not given until shortly after the
complaint was filed, it is clear that Carlos had by that time the
settled intent to practice law in Florida, with reasonable
expectation of an association in Florida with his firm.6 Carlos
testified that he traveled to Puerto Rico for business, in service
to some Puerto Rico clients, on only an "on and off basis."
Third, the evidence demonstrates that the Garcías' role in the
Taco Maker corporation involved minimal contacts with Puerto Rico
that were more indicative of an investment interest than a
substantial tie. Carlos testified that Gisela never traveled to
Puerto Rico to render services to the Taco Maker. Neither Carlos
nor Gisela was involved in day-to-day operations; Carlos's related
travel was in his capacity as president of the corporation, an
office which neither requires nor suggests that he was domiciled in
Puerto Rico. The district court seemed to think it notable that
Carlos filed the corporation's Puerto Rico income tax returns, but
this simply demonstrates that he fulfilled what were reasonably his
duties as an officer of a closely-held corporation. There is
6
Neither party has provided us with the exact date that the
firm formally approved the opening of the Miami office, agreeing
only that it was about one month after Carlos passed the Florida
bar exam in mid-April.
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little support for a Puerto Rico domicile by virtue of these
corporate contacts.
Of course, not all factors weigh heavily in favor of a Florida
domicile. But our review indicates to us that, although on the
surface there are ties to Puerto Rico, in every area those ties
appear more tenuous as the evidence is more fully revealed.
Financial ties were sharply confined to a limited purpose.
Business relations were similarly restricted to infrequent
oversight. Meanwhile, the ordinary arrangements for settling into
a community were becoming stronger in Florida, by registering to
vote, purchasing cars, and contracting to rent an apartment. But
most important was the evidence of an intent to remain in Florida
and earn a livelihood there: studying for the bar, exploring job
opportunities, planning and receiving encouragement for opening a
branch office for his firm.
We see the scales in this case as weighted, on the Puerto Rico
side, by formal and attenuated connections, while, on the Florida
side, by deliberate investment of time and energy in preparing for
living and working indefinitely in Florida.
Appellees offer no arguments that undermine this conclusion.
Their attempt to characterize the relocation as "forced," and
therefore unable to effect a change in domicile, is contrary to
precedent. Although the Garcías moved because of a medical
emergency, motive does not defeat a bona fide change in domicile.
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See Hawes, 598 F.2d at 702 (plaintiffs were not prevented from
acquiring new domicile simply because relocation was motivated by
urgent need to seek medical care). Furthermore, rather than take
steps to move back to Puerto Rico following the baby's release from
the hospital in October 1996, the Garcías strengthened their ties
with Florida, including Carlos's commitment a month later to take
the Florida bar exam. See Hawes, 598 F.2d at 703-04 (noting that
if Hawes had intended to return to Puerto Rico, "the time to do so
was when her husband left for Mexico [after being discharged from
a rehabilitation center]").
As far as we can see, the cases relied on by appellees
actually support the Garcías' claim. Alicea-Rivera involved a
student who lived with relatives and did not pay for rent,
utilities or phone; he retained his Puerto Rico driver's license
and held only a part-time job that didn't indicate steps toward a
permanent residence. See Alicea-Rivera, 12 F. Supp. 2d at 246.
This case is quite inapposite, relating primarily to the
established principle that out-of-state college students are not
domiciliaries of the state in which they go to school. Id.
Likewise, we are somewhat perplexed by appellees' reliance on
Leon, in which the court found that "superficial" ties such as bank
accounts, voter registration and drivers' licenses did not - on
their own - indicate a change of domicile. Leon, 848 F. Supp. at
318. However, studying for and taking the Florida bar exam is just
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the sort of "complicated" and skilled undertaking that the Leon
court would have found more convincing evidence of a change of
domicile. Id. Furthermore, the Leon court observed that:
[It] is more significant to examine, however,
the bridges back to Puerto Rico that she
failed to burn. She resigned from her job,
but her employer expected her to return . . .
. It was her Puerto Rican checking account
that was routinely as reflected by the
activity in the check register used. Although
she rented out a small apartment . . . , she
left her home, with all of the furniture,
unoccupied. She did not even discontinue her
utility services . . . [H]er late model car
was left in Puerto Rico, where it was ready
and waiting for her upon her return . . . .
Her main source of income, social security
payments, continued to be sent to her Puerto
Rico address. Likewise, she did not file
federal, state or city tax return[s] using her
Illinois address, in addition to the filing of
her Puerto Rico income return.
Id. In the instant case, not one of these "bridges" remained.
And finally, Valentín, 254 F.3d at 361, which at least
presents comparable facts in that the plaintiff relocated in order
to seek medical treatment, nevertheless involved a situation in
which the plaintiff maintained much stronger connections with
Puerto Rico and failed to establish any of comparable significance
in Florida. Valentín lived with her sister during her stay in
Florida, and kept the bulk of her personal belongings (including a
car) in Puerto Rico. Id. at 361-62, 366. Significantly, Valentín
did not resign from her position as a nurse in Puerto Rico and she
never worked in Florida. She relied on a combination of sick days
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and unpaid leave to cover her stay. Carlos, on the other hand,
actually worked in Miami - either from home or at a branch office.
Correcting for the factual and legal errors, the remaining
evidence predominantly establishes that Florida was the Garcías'
"true, fixed home and principal establishment," to which, whenever
they were absent, they had the intention of returning. 13B Wright,
Miller & Cooper, Federal Practice and Procedure, at § 3612.
See also Valentín, 254 F.3d at 366. The ties remaining with Puerto
Rico - ongoing investments and the retention of property in order
to benefit from supplemental rental income - are simply the
vestiges of longtime prior residence on the island . . . and a
nostalgic hope for a far off future.
In sum, an evaluation of the relevant factors under the proper
burden of proof leads us to the conclusion that the appellants were
domiciled in Florida.
Reversed.
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