National City Bank v. Aronson

474 F. Supp. 2d 925 (2007)

NATIONAL CITY BANK, Plaintiff,
v.
Andrew D. ARONSON, et al., Defendants.

Civil Action No. 2:06-CV-189.

United States District Court, S.D. Ohio, Eastern Division.

February 21, 2007.

David Stewart Cupps, Vorys Sater Seymour & Pease, Columbus, OH, for Plaintiff.

Scott Ian Unger, Stark & Stark PC, Lawrenceville, NJ, for Defendants.

OPINION AND ORDER

MARBLEY, District Judge.

This matter is before the Court on Defendants' Objection to the Report and Recommendation Issued by the Honorable Magistrate Judge Granting the Plaintiff's Motion to Remand and Awarding the Plaintiff Costs and Fees Incurred in Connection with the Removal of this Action ("Defendants' Objection"). (Doc. # 26). In the Report and Recommendation, (Doc. # 25), the Magistrate Judge recommended that this action be remanded and that plaintiff be granted its costs and fees associated with the improper removal of this action. Pursuant to 28 U.S.C. 636(b)(1), this Court has conducted a de novo review of the Report and Recommendation. See also Vogel v. United States Office Prods. Co., 258 F.3d 509, 517 (6th Cir.2001) ("remand motions are dispositive," thus, the district court "shall make a de novo determination of those portions" of the opinion to which defendants objected. 28 U.S.C. § 636(b)(1)(C)). For the reasons discussed in the Report and Recommendation, and those that follow, Defendants' Objection is OVERRULED and the Report and Recommendation is hereby ADOPTED and AFFIRMED.

Magistrate Judge King determined that diversity jurisdiction was lacking in this case so that removal was improper under 28 U.S.C. § 1441 and, further, that plaintiff was entitled to its fees and costs incurred in connection with the improper removal under 28 U.S.C. § 1447. Plaintiff argued that the presence of defendant Christine Aronson-Ewbanks in the litigation, as a domiciliary of New Zealand, destroys complete diversity. Magistrate Judge King agreed, relying upon the "stateless person" doctrine articulated in Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989) (a United States citizen who has no domicile in any state is a "stateless" person whose presence in the litigation destroyed diversity jurisdiction). See also 28 U.S.C. § 1332 (district courts are vested with jurisdiction over cases between "citizens of different States"). Accordingly, the Magistrate Judge concluded that Plaintiff National City Bank's Motion to Remand, (Doc.# 8), was meritorious and recommended remand of this action. See also Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989) (removal petitions are to be strictly construed, with all doubts resolved in favor of remand).

Magistrate Judge King also concluded that plaintiff was entitled to an award of its costs and fees associated with the improper removal:

In the case sub judice, the Court concludes that the arguments presented by defendants in support of the removal of this action were "devoid of even fair support." See, e.g., Taylor-Sammons, supra, ("defendant should have been aware that plaintiff's complaint did not present a reasonable argument for removal based upon complete . . . preemption."). Defendants should have been aware that the presence in the litigation of a United States citizen who is not domiciled in any state will destroy diversity jurisdiction.

Report and Recommendation, at 8.

Defendants "do not object to the recommendation that this case be remanded" but object only to the "portion of the Magistrate's Report and Recommendation awarding Plaintiff fees and costs it incurred in opposing Defendants' removal of this action." Defendants' Objection at 4. Specifically, defendants argue:

Fair support exists in the fact that, after removing the action in good faith based on the understanding that there existed complete diversity of the parties, the Defendants presented an objectively reasonable argument that this Court should not adhere to the "stateless person" doctrine, a doctrine which apparently has not been addressed by the Sixth Circuit and has been recognized by other Courts as being "inherently not founded in reason." Wasson v. Northrup Worldwide Aircraft Serv., Inc., 443 F. Supp. 400, 402-03 (W.D.Tex.1978) (quoting 13 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice and Procedure: Jurisdiction, § 3612 at 722). There is no evidence of "fault" with the Defendants' decision to remove this action. Based on the pleadings and the information available to the Defendants at the time of removal, the Defendants' decision to remove was "fairly supportable." Therefore, it would be inequitable to award costs and fees to the Plaintiff in this action.

Id. at 7. This Court is not persuaded by defendants' argument.

The "stateless person" doctrine is found in a decision of the United States Supreme Court. Newman-Green, supra. Although defendants characterize the adoption of the doctrine in that case as dictum and therefore not binding, it is notable that the Supreme Court has itself cited Newman-Green for the proposition that the "stateless person" doctrine is federal law:

A United States citizen with no domicile in any State ranks as a stateless person for purposes of 28 U.S.C. § 1332(a)(3), providing for suits between "citizens of different States and in which citizens or subjects of a foreign state are additional parties," and § 1332(a)(2), authorizing federal suit when "citizens of a State" sue "citizens or subjects of a foreign state." See Newman-Green, 490 U.S. at 828, 109 S. Ct. 2218.

Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 588 n. 3, 124 S. Ct. 1920, 158 L. Ed. 2d 866 (2004). Moreover, contrary to defendants' assertion, the United States Court of Appeals for the Sixth Circuit has also recognized the "stateless person" doctrine. Curry v. United States Bulk Transp., Inc., 462 F.3d 536, 542 (6th Cir.2006); National Enters. v. Smith, 114 F.3d 561, 565 (6th Cir.Mich.1997). This Court does not regard itself as free to ignore this authority.

Rather than concede the issue of remand, defendants persisted in their futile efforts to establish diversity jurisdiction under circumstances that gave no reason to believe that jurisdiction existed. Defendants even suggested that Ms. Aronson-Ewbank is possessed of dual domiciles, a position that is entirely without legal support. See Martinez v. Bynum, 461 U.S. 321, 340, 103 S. Ct. 1838, 75 L. Ed. 2d 879 (1983) ("an individual has only one domicile"); Williams v. North Carolina, 325 U.S. 226, 229, 65 S. Ct. 1092, 89 L. Ed. 1577 (1945) (same); District of Columbia v. Murphy, 314 U.S. 441, 62 S. Ct. 303, 86 L. Ed. 329 (1941) (same); Williamson v. Osenton, 232 U.S. 619, 34 S. Ct. 442, 58 L. Ed. 758 (1914) (same). See also United States v. Namey, 364 F.3d 843, 845 (6th Cir.2004) ("An individual consequently may have several residences, but only one domicile.") (citing Eastman v. Univ. of Michigan, 30 F.3d 670, 672-73 (6th Cir. 1994)).

Finally, defendants argue that an award of fees is unwarranted because they did not act in bad faith in removing the action. However, as the Report and Recommendation correctly reasoned, an award of attorney's fees under 28 U.S.C. § 1447 falls within the sound discretion of the trial court and a "determination of bad faith, improper purpose, or vexatious or wanton conduct [is] not necessary" under 28 U.S.C. § 1447(c). Morris v. Bridgestone/Firestone, Inc., 985 F.2d 238, 240 (6th Cir.1993) (these factors were not required under the pre-1988 statute and the amended statute significantly expands the district court's discretion). See also Taylor-Sammons v. Bath, 398 F. Supp. 2d 868, 877-78 (S.D.Ohio 2005) (J. Graham) ("finding of an improper purpose is not required to support an award of fees" under Section 1447). This Court agrees that its discretion is appropriately exercised in favor of the award of fees and costs to plaintiff.

Accordingly, Defendants' Objection, (Doc. # 26), is OVERRULED, and the Report and Recommendation, (Doc. # 25), is hereby ADOPTED and AFFIRMED. Plaintiff National City Bank's Motion to Remand, (Doc.# 8), is GRANTED. This action is hereby ORDERED REMANDED to the Court of Common Pleas for Franklin County. Moreover, plaintiff is AWARDED its fees and costs incurred in connection with the improper removal of this action.

OPINION AND ORDER AND REPORT AND RECOMMENDATION

KING, United States Magistrate Judge.

This matter is before the Court on Plaintiff National City Banks's Motion to Remand ("Plaintiffs Motion to Remand"), Doc. No. 8, and Defendants' Motion to File a Sur-Reply, Doc. No. 17. For the reasons set forth below, defendants' motion is GRANTED and it is RECOMMENDED that plaintiffs motion be GRANTED.

I. BACKGROUND

The Complaint alleges that Eleanor S. Resler, as Grantor, entered into a trust agreement with BancOhio National Bank, as Trustee. Doc. No. 3, Complaint ¶ 1. Plaintiff became the successor to BancOhio National Bank. Id. ¶ 2. The Eleanor S. Resler Trust created six inter vivos trusts; each of the three defendants was named the beneficiary of two trusts. See id. ¶¶ 4-5. In January 2004, plaintiff was removed as Trustee. Id. ¶ 8. On February 16, 2006, National City Bank ("plaintiff') filed a complaint in the Probate Court of Franklin County, Ohio, seeking a declaration that any claims defendants could otherwise have brought against it for investment losses that occurred in any of the six Resler trusts is now barred by O.R.C. § 1339.69(©). See id. ¶¶ 23, 30, 37.

On March 13, 2006, defendants filed a Notice of Removal, invoking the diversity jurisdiction of this Court, 28 U.S.C. § 1332. Doc. No. 2, Notice of Removal ¶ 8. The Notice of Removal alleged the following:

Defendant, Andrew D. Aronson, is an individual with a principal residence at 1207C Lakewood Drive, Greensboro, North Carolina XXXXX-XXXX. Defendant Janie Baskin is an individual with a principal place of residence located at 1949 Clover Road, Northbrook, Illinois 60062. Defendant, Cristine Aronson-Ewbank is a United States citizen with a principal place of residence located in the foreign nation of New Zealand. Defendant, Cristine Aronson-Ewbank also has a residence located at 271 Cedar Grove, Glenwood Springs, Colorado.

Notice of Removal ¶ 1.

On March 30, 2006, plaintiff filed Plaintiffs Motion to Remand. Doc. No. 8. On April 19, 2006 defendants filed both a First Amended Petition for Removal, Doc., No. 14 ("Amended Notice of Removal"), and a memorandum contra plaintiff's motion ("Defendants' Memorandum in Opposition"), Doc. No. 15. On April 24, 2006, plaintiff filed its reply brief in support of its motion to remand ("Plaintiffs Reply"), Doc. No. 16.

On May 5, 2006, defendants filed a motion for leave to file a sur-reply in opposition to plaintiff's motion to remand ("Defendants' Motion to File Sur-Reply"), Doc. No. 17, and on that same day filed the actual sur-reply ("Defendants' Sur-reply"), Doc. No. 18. On May 25, 2006, plaintiff filed a memorandum contra Defendants' Motion to File Defendants' Sur-reply. Doc. No. 21.

II. DISCUSSION

A. Defendants' Motion to File Sur-Reply

The rules of this Court contemplate the filing of motions, memoranda in opposition, and replies and provide that "no additional memoranda beyond-those enumerated will be permitted except upon leave of court for good cause shown." S.D. Ohio Civ. R. 7.2(a)(2). Defendants seek leave to file a sur-reply but offer no good reason for their failure to present all their arguments in support of jurisdiction in Defendants' Memorandum in Opposition. That being said, however, plaintiff will suffer no prejudice by the filing of the sur-reply. See Burt v. Life Ins. Co. of N. Am., Case No. C-1-05-673, 2006 U.S. Dist. LEXIS 54630, *9 (S.D.Ohio, August 7, 2006) (M.J.Hogan) (granting motion to file sur-reply when good cause not shown because, "allowing Defendant to file its Sur-Reply results in no prejudice toward Plaintiff'). Moreover, in this circuit, there is a "strong preference that claims be adjudicated on their merits." Coleman v. Shoney's, Inc., 79 Fed.Appx. 155, 157 (6th Cir.2003) (citing Jourdan v. Jabe, 951 F.2d 108, 110 (6th Cir.1991)). Because the tendered sur-reply and the declaration attached to that filing address the merits of the issue of this Court's jurisdiction, this Court will consider the sur-reply. Defendants' Motion to File a Sur-Reply, Doc. No. 17, is therefore GRANTED.

B. Plaintiff's Motion to Remand

Under 28 U.S.C. § 1441, a defendant may remove an action brought in state court over which the federal district court would have original jurisdiction. 28 U.S.C. ¶ 1441(a). The defendant seeking to invoke federal jurisdiction has the burden of establishing that jurisdiction is properly invoked. Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir.1994). In this regard, the removal petition is to be strictly construed, with all doubts resolved in favor of remand. Her Majesty the Queen in Right of the Province of Ontario v. City of Detroit, 874 F.2d 332, 339 (6th Cir.1989).

Defendants removed the instant action on the basis of diversity jurisdiction. Plaintiff moves for remand, arguing that defendant Christine Aronson-Ewbank ("Ms.Aronson-Ewbank") destroys complete diversity because, although she is a United States citizen, she is not a citizen of any state. Plaintiff also seeks an award of costs, expenses and attorney fees

1. Subject matter jurisdiction

Section 1332 confers upon district courts jurisdiction over cases between "citizens of different States" where the amount in controversy exceeds $75,000. 28 U.S.C. § 1332(a)(1). State citizenship, for purposes of diversity jurisdiction, is not a matter of residency but of domicile. See Gilbert v. David, 235 U.S. 561, 35 S. Ct. 164, 59 L. Ed. 360 (1915); Certain Interested Underwriters at Lloyd's v. Layne, 26 F.3d 39, 41 (6th Cir.1994) (for diversity jurisdiction, "[w]e equate the citizenship of a natural person with his domicile"). Domicile is established by an intent to remain at a location permanently, or at least indefinitely. Stifel v. Hopkins, 477 F.2d 1116, 1120 (6th Cir.1973). A natural person can have only one domicile for purposes of diversity jurisdiction. Eastman v. Univ. of Michigan, 30 F.3d 670, 672-73 (6th Cir.1994); Williamson v. Osenton, 232 U.S. 619, 625, 34 S. Ct. 442, 58 L. Ed. 758 (1914).

In order to be a citizen of a State within the meaning of the diversity statute, a natural person must both be a citizen of the United States and be domiciled within the State. See Robertson v. Cease, 97 U.S. 646, 648-649, 7 U.S. 646, 24 L. Ed. 1057 (1878); Brown v. Keene, 33 U.S. 112, 8 Pet. 112, 115, 8 L. Ed. 885 (1834). The problem in this case is that Bettison, although a United States citizen, has no domicile in any State. He is therefore "stateless". . . .

Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S. Ct. 2218, 104 L. Ed. 2d 893 (1989). See also Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 588 n. 3, 124 S. Ct. 1920, 158 L. Ed. 2d 866 (2004) (same). A stateless United States citizen destroys complete diversity under 28 U.S.C. § 1332(a). See Newman — Green, 490 U.S. at 828, 109 S. Ct. 2218 ("Bettison's `stateless' status destroyed complete diversity").

Defendants initially alleged that Ms. Aronson — Ewbank is a United States citizen "with a principal place of residence in the foreign nation of New Zealand," who "also has a residence" in Colorado. Notice of Removal ¶ 1. Defendants' Amended Notice of Removal alleges that Ms. Aronson-Ewbank is a United States citizen "domiciled and residing in the foreign nation of New Zealand." Id., at ¶ 3. Ms. Aronson-Ewbank expressly avers that, although she owns property in Colorado, she resides in New Zealand, was "granted permanent residency in New Zealand in or around 2003[,]" and intends to "remain a resident of New Zealand and" to "become a citizen of New Zealand." Certification of Ms. Aronson — Ewbank ¶¶ 2, 4, 5, attached to Amended Notice of Removal. Significantly, Ms. Aronson — Ewbanks states:

Based on my understanding of the term "domicile" as a place of residency with the intent to remain, I consider myself domiciled in New Zealand.

Id. ¶ 7.

Plaintiff takes the position Ms. Aronson-Ewbanks has herself established that diversity jurisdiction is lacking because, although a citizen of the United States, she is not a citizen of any state. Plaintiffs Reply at 1-2. The Declaration of Ms. Aronson-Ewbank, attached to Defendants' Sur-Reply, attempts to avoid remand by recounting her continuing ties to Colorado: e.g., she receives bills and pays most of them from her Colorado bank account, owns two vehicles registered in Colorado, possesses a valid Colorado driver's license, pays United States and Colorado State income taxes, retains her academic certifications for Colorado, actively serves on the Board of Directors for the Aspen Jewish Congregation in Colorado; she also asserts that she resided in Colorado for nearly six months in 2005. Id. ¶¶ 3-7. Based on this declaration, defendants argue:

Although [Ms. Aronson-] Ewbank believes herself to be domiciled in New Zealand, and although [Ms. Aronson-] Ewbank has been granted permanent resident status in New Zealand, the record demonstrate that she is domiciled in the State of Colorado for purposes of this Court's jurisdiction.

Id. at 3.

This argument is unpersuasive. Ms. Aronson-Ewbank's two sworn statements unequivocally establish that this defendant resides in New Zealand and intends to remain there permanently. She is, therefore, domiciled in New Zealand. See Stifel, 477 F.2d at 1120 (domicile is established by an intent to remain permanently, or at least indefinitely). The Declaration of Ms. Aronson-Ewbank does not call this conclusion into question, but instead merely notes that Ms. Aronson-Ewbank was absent from her domicile in New Zealand for nearly six months in 2005. See id. (domicile is not lost by protracted absence from home, where the intention to return remains). Even construing her declaration to indicate that Ms. Aronson-Ewbanks has two residences is unavailing, for "`[c]itizenship' for purposes of the diversity statute is synonymous not with `residence' but with `domicile.'" Kaiser v. Loomis, 391 F.2d 1007, 1009 (6th Cir.1968) (citing to Napletana v. Hillsdale Coll., 385 F.2d 871 (6th Cir.1967) and Williamson v. Osenton, 232 U.S. at 625, 34 S. Ct. 442). "Diversity of citizenship, rather than diversity of residence, is necessary to confer jurisdiction upon the District Court." Id. See also Moore's Federal Practice § 102.35[1] (3 ed.) citing Von Dunser v. Aronoff, 915 F.2d 1071, 1072 (6th Cir.1990) ("A person may change domiciles only by taking up residence in a different state either with the intention to remain there, or at least without any specific intention to live anywhere else."). Simply because Ms. Aronson-Ewbanks resides part-time in Colorado and maintains certain ties to that state as a result of her part-time residence there does nothing to change her domicile in New Zealand.

Defendants also argue that, even if this Court concludes that Ms. Aronson-Ewbanks is domiciled in New Zealand, the Court need not remand this case or "adhere" to the "stateless person" doctrine. Defendants' Sur-Reply at 4.

The Plaintiff argues that "[u]nder long-settled law, if an individual is a United States citizen, but not a citizen of any State, he or she cannot be a party to a federal suit based on diversity jurisdiction." Ironically, the Plaintiff fails to cite to a single Sixth Circuit authority to support this assertion. Here, the facts unequivocally demonstrate that none of the Defendants is a citizen of the State of Ohio. Thus, complete diversity exists. The analysis should end there.

Defendants' Sur-Reply at 1. Defendants are again mistaken. It appears that diversity jurisdiction, as defined by the United States Supreme Court in Newman-Green, Inc., supra, 490 U.S. at 828, 109 S. Ct. 2218, does not exist in this case. This Court is bound by that conclusion, whether or not plaintiff cited to the appropriate authority.

Third, defendants argue that this Court need not remand this case if it recognizes that Ms. Aronson-Ewbanks has two domiciles. Defendants' Sur-Reply at 4. Once again, however, defendants are incorrect. A natural person may possess only a single domicile. See Martinez v. Bynum, 461 U.S. 321, 340, 103 S. Ct. 1838, 75 L. Ed. 2d 879 (1983) ("an individual has only one domicile"); Williams v. North Carolina, 325 U.S. 226, 229, 65 S. Ct. 1092, 89 L. Ed. 1577 (1945) (same); District of Columbia v. Murphy, 314 U.S. 441, 62 S. Ct. 303, 86 L. Ed. 329 (1941) (same); Williamson v. Osenton; 232 U.S. 619, 34 S. Ct. 442, 58 L. Ed. 758 (1914) (same). See also United States v. Namey, 364 F.3d 843, 845 (6th Cir.2004) ("An individual "consequently may have several residences, but only one domicile."), (citing Eastman v. Univ. of Michigan, 30 F.3d 670, 672-73 (6th Cir. 1994)).

Because it is clear that Ms. Aronson-Ewbanks is a United States citizen who is domiciled in New Zealand, she is a stateless person whose presence in the litigation destroys complete diversity. Because this Court lacks subject matter jurisdiction in this action, removal was therefore improper. Plaintiff's motion to remand is meritorious.

2. Costs, actual expenses and attorney fees

Plaintiff has requested an award of costs, actual expenses and attorney's fees pursuant to 28 U.S.C. § 1447(c), which provides in relevant part:

If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.

Id.

An award of attorney's fees under § 1447 falls within the sound discretion of the court. Morris v. Bridgestone/Firestone, Inc., 985 F.2d 238, 240 (6th Cir.1993); Taylor-Sammons v. Bath, 398 F. Supp. 2d 868, 877-78 (S.D.Ohio 2005) (J. Graham). A finding of an improper purpose in the removal is not required to support an award of fees. Id. However, a "district court abuses its discretion by refusing to award fees where the defendant's argument for removal was `devoid of even fair support.'" Taylor-Sammons v. Bath, supra (citing Bartholomew v. Town of Collierville, Tenn., 409 F.3d 684, 687 (6th Cir.2005)).

In the case sub judice, the Court concludes that the arguments presented by defendants in support of the removal of this action were "devoid of even fair support." See, e.g., Taylor-Sammons, supra, ("defendant should have been aware that plaintiff's complaint did not present a reasonable argument for removal based upon complete . . . preemption."). Defendants should have been aware that the presence in the litigation of a United States citizen who is not domiciled in any state will destroy diversity jurisdiction.

WHEREUPON the Court GRANTS Defendants' Motion to File a Sur-Reply, Doc. No. 17, but RECOMMENDS that Plaintiff's Motion to Remand, Doc. No. 8, be GRANTED and that plaintiff be AWARDED its costs and fees incurred in connection with the improper removal of this action.

If any party seeks review by the District Judge of this Report and Recommendation, that party may, within ten (10) days, file and serve on all parties objections to the Report and Recommendation, and the part thereof in question, as well as the basis for the objection thereto. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b). Responses to objections must be filed within ten (10) days after being served with a copy thereof. Fed.R.Civ.P. 72(b).

The parties are specifically advised that failure to object to the Report and Recommendation will result in a waiver of the right to de novo review by the District Judge and of the right to appeal the decision of the District Court adopting the Report and Recommendation. See Thomas v. Arn, 474 U.S. 140, 106 S. Ct. 466, 88 L. Ed. 2d 435 (1985); Harris v. City of Akron, 20 F.3d 1396 (6th Cir.1994); Smith v. Detroit Fed'n of Teachers, Local 231, Am. Fed'n of Teachers, AFL-CIO, 829 F.2d 1370 (6th Cir.1987).