United States District Court, D. New Mexico
MEMORANDUM OPINION AND ORDER DENYING MOTION
PLAINTIFF'S MOTION TO REMAND
FASHING UNITED STATES MAGISTRATE JUDGE
MATTER comes before the Court on plaintiff John Elling's
Motion to Remand (Doc. 8), filed July 12, 2019. Defendants
Mesa Biotech, Inc., Hong Cai, and Robert Bruce Cary filed
their response opposing the motion on July 31, 2019, and Mr.
Elling filed his reply on August 14, 2019. See Docs.
15, 20. The parties consented to my conducting dispositive
proceedings in this matter. See Docs. 6, 7, 9. For
the following reasons, I DENY Mr. Elling's motion.
Statement of the Case and Procedural
case arises out of a dispute between plaintiff John Elling,
formerly Director, President, and Chief Executive Officer of
defendant Mesa Tech International, Inc. (MTI), and his former
colleagues, defendants Hong Cai and Robert Bruce Cary, who
now are employed at defendant Mesa Biotech, Inc. See
Doc. 1-1 ¶¶ 6-10, 20-34. According to the
complaint, Mr. Elling founded MTI with Ms. Cai and Mr. Cary,
and all three were initial shareholders. Id.
¶¶ 2-4. MTI was a New Mexico Corporation with its
principal place of business in Los Alamos County, New Mexico.
See Id. ¶ 5. In October 2010, Mr. Elling agreed
to resign from his positions at MTI, but he retained nearly
9% of MTI's stock pursuant to a written agreement.
Id. ¶¶ 20, 21; see also Doc. 1-1
at 10-12 (agreement between MTI and Mr. Elling).
Elling alleges that over the years, he received scant
information regarding MTI's operations. Id.
¶ 22. In August 2018, Mr. Elling learned that MTI had
merged with Mesa Biotech, Inc., a Delaware Corporation whose
principal place of business is in San Diego, California.
Id. ¶¶ 11, 23, 24. According to the
complaint, Mr. Elling received no notice of any proposed
merger or proposed amendment to MTI's articles of
incorporation, nor did he receive the opportunity to vote on
the proposed merger, nor was a merger plan submitted to
MTI's shareholders. Id. ¶¶ 25-27. Mr.
Elling also alleges that MTI/Mesa Biotech has refused to
allow him to inspect its books and records and has refused to
address his concerns regarding the merger, amendments to the
company's articles of incorporation and bylaws, the
company's relocation to California, and changes to its
stock plan. Id. ¶ 29-34. In count I of his
complaint, Mr. Elling claims that Ms. Cai and Mr. Cary
breached their fiduciary duties to him. Id.
¶¶ 35-38. Count II alleges that defendants
collectively engaged in “shareholder oppression.”
Id. ¶¶ 39-41. Count III alleges that MTI
breached its contract with Mr. Elling, including breaching
the covenant of good faith and fair dealing. Id.
¶¶ 42-46. Mr. Elling seeks compensatory, punitive,
and statutory damages, as well as his attorneys' fees and
costs. Id. at 8.
Elling filed his complaint in the First Judicial District
Court in Santa Fe, New Mexico, on May 7, 2019. Doc. 1-1 at 1
(file stamp showing location and date of filing). In his
complaint, Mr. Elling alleged “[o]n information and
belief, Cai and Cary are residents of Los Alamos County and
Santa Fe County, respectively.” Id. ¶ 12.
A process server served defendants Mesa Biotech, Hong Cai,
and Robert Bruce Cary in San Diego, California on May 14,
2019. Doc. 1-1 at 13-15. On June 13, 2019, these
three defendants filed a notice of removal, and removed the
case to this Court based on diversity jurisdiction.
See Doc. 1.
notice of removal, the defendants assert that MTI formerly
was a New Mexico Corporation but formally merged with Mesa
Biotech on July 14, 2015, and therefore ceased to exist on
that date. Id. ¶ 11; see also Doc.
1-2; Doc. 1-4 at 5. Because MTI no longer existed as a New
Mexico corporation when Mr. Elling's lawsuit was filed,
and because it had been subsumed by Mesa Biotech, the
remaining defendants assert that MTI is no more than a
“nominal party to the lawsuit, ” and that the
Court should disregard MTI's citizenship in determining
whether the Court has jurisdiction over this lawsuit based on
diversity. Doc. 1 ¶ 13. Thus, Mr. Elling, Ms. Cai, Mr.
Cary, and Mesa Biotech are the only real parties in interest
in this lawsuit. Id.
three remaining defendants further assert that there was
complete diversity between Mr. Elling and the three
“properly joined, real party in interest
Defendants” when Mr. Elling filed his complaint and at
the time is was removed. Doc. 1 ¶¶ 14, 15 (citing
28 U.S.C. § 1441(b)(2)). As alleged in Mr. Elling's
complaint, Mesa Biotech is a Delaware corporation with its
principal place of business in California. Doc. 1-1 ¶
11; see also Doc. 1-2; Doc. 1-4 at 4. Ms. Cai and
Mr. Cary assert that contrary to the allegations in Mr.
Elling's complaint, they both are domiciled in California
and therefore are citizens of California. Doc. 1 ¶¶
9, 10. They each attached affidavits to the notice of removal
in which they stated that they considered California to be
their domicile, and that they planned to remain there
indefinitely. Doc. 1-3 ¶ 4; Doc 1-4 ¶ 4. These
three defendants also assert that the amount in controversy
exceeds $75, 000. Doc. 1 at 5-7.
Mr. Ellington's Motion to Remand
Elling argues that this case should be remanded to the First
Judicial District Court in Santa Fe because there is not
complete diversity among the parties. Doc. 8 at 1. He argues that
neither Ms. Cai nor Mr. Cary can meet their burden of proving
that they are domiciled in California. See id.;
see also Docs. 8-1, 8-2, 8-3, 10, 10-1, 10-2, 10-3,
10-4, 10-5, 20. In response, Ms. Cai and Mr. Cary rely not
only on their original affidavits in which they each asserted
that they resided in and intended to remain in California,
but they also submit additional affidavits with additional
evidence relating to their residency and intent to remain in
California. See Docs. 15, 15-1, 15-2. Based on the
evidence presented, I find that Ms. Cai and Mr. Cary have
shown by a preponderance of the evidence that they are
domiciled in California.
Legal Standard for Diversity Jurisdiction
jurisdiction requires complete diversity: “the
citizenship of each plaintiff [must be] diverse from the
citizenship of each defendant.” Caterpillar Inc. v.
Lewis, 519 U.S. 61, 68 (1996). Jurisdictional facts such
as citizenship must be proven by a preponderance of the
evidence. McPhail v. Deere & Co., 529 F.3d 947,
953 (10th Cir. 2008). “[T]he party invoking federal
jurisdiction bears the burden of proof.” Penteco
Corp. Ltd. P'ship-1985A v. Union Gas Sys.,
Inc., 929 F.2d 1519, 1521 (10th Cir. 1991). “The
burden of showing something by a preponderance of the
evidence . . . simply requires the trier of fact to believe
that the existence of a fact is more probable than its
nonexistence . . . .” Concrete Pipe & Prods. of
Cal, Inc. v. Constr. Laborers Pension Trust for S. Cal,
508 U.S. 602, 622 (1993) (quoting In re Winship, 397
U.S. 358, 371-72 (1970) (Harlan, J., concurring) (quotations
defendants are the removing party, they must establish by a
preponderance of the evidence that defendants Hong Cai and
Robert Bruce Cary were citizens of California at the time
this case was filed and removed. “For diversity
purposes, citizenship is determined by a person's
domicile.” Macias v. N.M. Dep't of Labor,
300 F.R.D. 529, 548 (D.N.M. 2014). One's domicile, in
turn, is defined as the state where the individual physically
resides and intends to remain indefinitely. Middleton v.
Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014). When
ascertaining a person's domicile, a court “should
consider the totality of the circumstances.”
Id. at 1201. “[A]ny number of factors might
shed light on the subject in any given case.”
Id. Relevant evidence includes, inter alia,
“the party's current residence; voter registration
and voting practices; situs 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 automobile registration; payment of taxes . . .
.” 13E Charles Alan Wright & Arthur R. Miller,
Federal Practice and Procedure § 3612 (3d ed. 2014)
Defendants Hong Cai and Robert Bruce Cary Have Shown by a
Preponderance of the Evidence That They Were Domiciled in