United States District Court, D. New Mexico
ACC HEALTH, LLC, DENTRUST NEW MEXICO, P.C., and DOCS MSO, LLC, Plaintiffs,
LOST CREEK HOLDINGS, LLC, ALL-STAR HEALTH SOLUTIONS, DIANE TOMLINSON, ABBEY TOMLINSON, LAUREN TOMLINSON, NATALI LUDI, ERIN MARTIN, and MEGAN FREELS, Defendants.
MEMORANDUM OPINION AND ORDER
matter is before the Court on Plaintiff's Motion for
Order of Remand and Award of Attorney Fees [Doc. 23]. As
the case has already been remanded, the sole issue before the
Court is whether to award Plaintiffs attorney's fees
based on Defendants' improper removal of the case to this
Court. Because the Court concludes that Defendants lacked an
objectively reasonable basis to remove the case, the motion
will be granted and Plaintiffs may file their detailed motion
for attorney's fees.
AND PROCEDURAL BACKGROUND
April 15, 2016, Plaintiffs filed their Complaint [Doc. 1-1]
in the Second Judicial District Court, County of Bernalillo,
New Mexico. On May 10, 2016, the Defendants received service,
and on June 9, 2016, the Defendants removed the case to this
federal district court. [Doc. 1]. In their Notice of Removal,
Defendants averred in conclusory fashion that this Court had
jurisdiction over the case under 28 U.S.C. § 1332
“because there is complete diversity between the
Plaintiffs and Defendants” and because the
jurisdictional amount was satisfied. Doc. 1 at ¶ 5. The
Defendants' Notice of Removal contained no allegations of
the citizenship of any of the Plaintiffs or Defendants.
Similarly, the Plaintiffs' complaint contained no
allegations regarding the citizenship of any party.
10, 2016-one day after removal-the then presiding judge
entered an Order to Amend Notice of Removal [Doc. 5]. The
order stated that Defendants' notice “fail[ed] to
allege the facts of citizenship necessary to sustain
diversity jurisdiction. Specifically, the Notice fails to
allege the citizenship of each and every member of Plaintiff
ACC Health, LLC, Plaintiff DOCS MSO, LLC, and Defendant Lost
Creek Holdings, LLC.” Doc. 5 at 1. The presiding judge
explained that limited liability companies, such as
Plaintiffs, are considered citizens of every state of which
any of its members is a citizen, and cited authority in
support of that principle. Id. at 2. The order
directed the Defendants to file an amended notice of removal
containing the necessary jurisdictional allegations, if such
allegations could be made in compliance with Rule 11, no
later than July 1, 2016.
14, 2016, Defendants filed their Amended Notice of Removal
[Doc. 7]. However, this document failed to comply with the
Court's order. Specifically, Defendants appear to have
ignored the Court's directive that they identify the
state of citizenship of every member of each LLC that is a
party in the case. Instead, Defendants merely listed the
states in which each LLC had been organized or is registered
to do business. Doc. 7 at ¶ 5. At this point, the
presiding judge would have been justified in remanding the
case to state district court for lack of subject matter
jurisdiction. Instead, the court generously offered
Defendants a second opportunity to properly plead diversity.
On June 15, the presiding judge entered a Second Order to
Amend Notice of Removal [Doc. 8]. Once again, the court
spelled out for Defendants the law regarding citizenship of
limited liability companies and directed them to file a
Second Amended Notice of Removal, if they were able to do so
under Rule 11, no later than July 1, 2016. Doc. 8 at 2-3.
Defendants still did not amend their Notice of Removal to
contain the necessary jurisdictional facts as required by the
court. Instead, on June 15, 2016, their counsel wrote to
Plaintiffs' counsel stating that information regarding
the citizenship of the individual members of LLCs was not
publicly available and asking Plaintiffs to provide not only
that information, but also “the ownership structure of
all Plaintiffs and  their relationship to one
another.” Doc 27-3. In addition, Defendants served the
Plaintiffs with interrogatories and requests for production
aimed at discovering jurisdictional facts to support the
Notice of Removal-the identities of the members of the
Plaintiff LLCs and their respective states of citizenship.
See Doc. 10 and Doc. 27-4. Because the parties had
not yet conducted a Rule 26(f) “meet and confer,
” in accordance with the Local Rules Plaintiffs refused
to engage in discovery. Doc. 27-5. However, on June 30, 2016,
Plaintiffs' counsel informed Defendants' counsel by
telephone and email that a member of ACC Health, LLC-Matt
Walter-was a citizen of Ohio. Doc. 27-2. As some of the
Defendants were citizens of Ohio as well, complete diversity
of citizenship was lacking.
1, 2016, Defendants filed their Notice of Withdrawal of
Notice of Removal [Doc. 15], which they said was “based
solely on representations by Plaintiffs that Matt Walter is a
present member of Plaintiff ACC Health LLC and is a resident
of and domiciled in Ohio, thereby destroying complete
diversity between the parties . . .” Doc. 15. On July
6, 2016, the case was transferred to the undersigned United
States District Judge. Doc. 17. On July 7, 2016, based on the
Notice of Withdrawal of Notice of Removal, the Court's
chambers sent an email to all counsel asked the parties to
file a stipulated motion and order of remand. The
correspondence between the parties thereafter demonstrates
their inability to agree on a form of motion and order. Doc.
31-1. Accordingly, on July 21, Plaintiffs filed their own
Motion for Order of Remand and Award of Attorney Fees [Doc.
23], a portion of which is currently before the Court. On
August 2, 2016, the Court remanded the case to state district
court via a form of order to which the parties stipulated.
Doc. 25. Thereafter, the parties continued briefing the issue
of attorney's fees for improper removal. See
Docs. 27-29, 31.
civil action filed in state court satisfies the requirements
for original federal jurisdiction, the defendant may invoke
28 U.S.C. § 1441(a) to remove the action to the federal
district court “embracing the place where such action
is pending.” 28 U.S.C. § 1441(a). See Huffman
v. Saul Holdings Ltd. P'ship, 194 F.3d 1072, 1076
(10th Cir. 1999). Under 28 U.S.C. § 1332(a), a federal
district court possesses original subject-matter jurisdiction
over a case when the parties are diverse in citizenship and
the amount in controversy exceeds $75, 000.00. See
28 U.S.C. § 1332(a); Johnson v. Rodrigues, 226
F.3d 1103, 1107 (10th Cir. 2000). Diversity between the
parties must be complete. See Caterpillar Inc. v.
Lewis, 519 U.S. at 68, 117 S.Ct. 467; Radil v.
Sanborn W. Camps, Inc., 384 F.3d 1220, 1225 (10th Cir.
Tenth Circuit has held that “in determining the
citizenship of an unincorporated association for purposes of
diversity, federal courts must include all the entities'
members.” Siloam Springs Hotel, L.L.C. v. Century
Surety Co., 781 F.3d 1233, 1237-38 (10th Cir. 2015)
(citing Carden v. Arkoma Assocs., 494 U.S. 185,
195-96 (1990) (holding that the citizenship of a limited
partnership is determined by the citizenship of each of its
partners, both general and limited). See also Conagra
Foods, Inc. v. Americold Logistics, LLC, 776 F.3d 1175,
1181 (10th Cir. 2015) (holding that when a trust is party to
litigation, the citizenship of the trust is derived from all
the trust's “members.”).
remove a case based on diversity, the diverse defendant must
demonstrate that all of the prerequisites of diversity
jurisdiction contained in 28 U.S.C. § 1332 are
satisfied. “It is well-established that statutes
conferring jurisdiction upon the federal courts, and
particularly removal statutes, are to be narrowly construed
in light of our constitutional role as limited
tribunals.” Pritchett v. Office Depot, Inc.,
404 F.3d 1232, 1235 (10th Cir. 2005) (citing Shamrock Oil
& Gas Corp. v. Sheets, 313 U.S. 100, 108-09 (1941)).
“All doubts are to be resolved against removal.”
Fajen v. Found. Reserve Ins. Co., 683 F.2d 331, 333
(10th Cir. 1982). “The burden of establishing
subject-matter jurisdiction is on the party asserting
jurisdiction.” Montoya v. Chao, 296 F.3d 952,
955 (10th Cir. 2002).
28 U.S.C. § 1447(c), “[a]n order remanding may
require payment of costs and any actual expenses, including
attorney fees, incurred as a result of the removal.” In
deciding whether to award costs, “the key factor is the
propriety of defendant's removal.” Excell, Inc.
v. Sterling Boiler & Mech., Inc., 106 F.3d 318, 322
(10th Cir. 1997). The court need not find that the defendant
removed the state court action in bad faith; the court may
award attorneys' fees if it finds that the defendant
lacked “objectively reasonable grounds to believe
removal was proper.” Martin v. Franklin Capital
Corp., 393 F.3d 1143, 1145 (10th Cir. 2004). The court
has wide discretion in this matter. Id.
Court concludes that there is no evidence in the record to
show that Defendants possessed objectively reasonable grounds
to believe that at the time of removal there was complete
diversity among the parties such that removal was proper.
Defendants have provided the Court with no evidence to show
that prior to removal, they identified the members of every
LLC and made an effort to determine the citizenship of each
such, as is required when determining whether LLCs are
diverse. That Defendants lacked objectively
reasonable grounds to remove is confirmed by their actions
after removal. Their original Notice of Removal contained no
allegations regarding the citizenship of the members of the
LLC parties, and when the Court directed Defendants to amend
their notice to add that information (to the extent they were
able within the bounds of Rule 11), they did not do so.
Instead, they made further conclusory allegations that did
not meet the requirements of the Court's order. Only
after the Court ordered Defendants to amend their notice of
removal a second time did Defendants seem to notice that
citizenship of the individual members of the LLC was
relevant. At that time, Defendants could have acknowledged
that they lacked any reasonable basis to assert the complete
diversity of the parties, and they could have moved to
remand. Instead, Defendants demanded information regarding
LLC membership ...