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Transamerican Equipment Company LLC v. Industrial Assets Corp

United States District Court, N.D. Alabama

February 12, 2018

TRANSAMERICAN EQUIPMENT COMPANY, LLC, Plaintiff,
v.
INDUSTRIAL ASSETS CORP., et al. Defendants.

          MEMORANDUM OF OPINION

          L. Scott Coogler United States District Judge

         Plaintiff, Transamerican Equipment Company, LLC (“Transamerican” or “Plaintiff”), originally filed this action in the Circuit Court of Tuscaloosa County, Alabama seeking compensatory and punitive damages resulting from an auction sale alleging fraudulent suppression, fraud and fraudulent inducement, conspiracy, breach of contract, and violation of two North Carolina statutes including Chapter 85B, Section 8 of the North Carolina General Statutes (the Auctioneer Statute), and North Carolina Generate Statute § 75-1.1 (the Deceptive Trade Practices Act). Defendants, Industrial Assets Corp. (“IAC”), Maynards Industries USA, LLC (“Maynards”), and Utica Leaseco, LLC (“Utica”) (collectively “Defendants”), then removed the action to this Court. (Doc. 1.) Before the Court is Utica's Motion to dismiss (doc. 2), IAC and Maynards' Motion to change venue (doc. 3), Transamerican's Motion to remand (doc. 11) and Transamerican's Motion for discovery (doc. 12).

         I. BACKGROUND [1]

         On December 1, 2016, Plaintiff participated in an auction (“the Auction”) held online to sell equipment located in Enka, North Carolina. Maynards was the auctioneer of the Auction, and Utica the seller and owner of the equipment. IAC is alleged to have been working in concert with Maynards and Utica in the sale of the goods and the collection of the purchase funds from Plaintiff. Maynards is a Delaware limited liability company with its principal place of business in Delaware. Utica is a Florida limited liability company with its principal place of business in Michigan. IAC is a California business corporation with its principal place of business in California. Transamerican is a limited liability company organized under Alabama law which has an Alabama citizen as its sole member.

         The Auction was accessible through multiple online platforms and was governed by the terms and conditions set forth on Bidspotter, an online auction platform. No other contract between Defendants and Plaintiff was formed. The Auction was advertised via the Biditup website and Transamerican accessed and bid in the Auction through the Bidspotter platform from its office in Tuscaloosa, Alabama. Defendants directed correspondence to Transamerican regarding the auction and the equipment sold. During the Auction, Transamerican noticed irregular bidding activity and became suspicious that the owner of the equipment may have been secretly placing shill[2] bids to increase the final bid price of the equipment.

         In the week following the Auction, Transamerican contacted Maynards in order to schedule payment and removal of the equipment. According to Plaintiff, Maynards, Utica, and IAC began sending fraudulent correspondence, claiming it had agreed to burdensome terms and conditions. Maynards, Utica, and IAC threatened litigation by consent judgment to be filed in Burbank, California if Transamerican did not immediately comply. After weeks of negotiation, Maynards and Utica agreed to a different removal schedule. Transamerican claims that during negotiations, Maynards admitted to having entered shill bids on behalf of Utica in order to drive up the price at auction.[3] Despite this admission, Plaintiff closed on the equipment sale by wiring funds to Maynards on February 10, 2017.

         II. Plaintiff's Motion to Remand (Doc. 11)

         A. Removal Standard of Review

         This Court, like all federal courts, is a court of “limited jurisdiction.” Jackson-Platts v. Gen. Elec. Capital Corp., 727 F.3d 1127, 1134 (11th Cir. 2013). It is authorized to hear only those cases falling within “one of three types of subject matter jurisdiction: (1) jurisdiction under a specific statutory grant; (2) federal question jurisdiction pursuant to 28 U.S.C. § 1331; or (3) diversity jurisdiction pursuant to 28 U.S.C. § 1332(a).” PTA-FLA, Inc. v. ZTE USA, Inc., 844 F.3d 1299, 1305 (11th Cir. 2016). A defendant may remove an action initially filed in state court to federal court if the action is one over which the federal court has original jurisdiction. 28 U.S.C. § 1441(a). “[A] defendant seeking to remove a case to a federal court must file in the federal forum a notice of removal ‘containing a short and plain statement of the grounds for removal.'” Dart Cherokee Basin Operating Co. v. Owens, 135 S.Ct. 547, 553 (2014) (quoting 28 U.S.C. § 1446(a)). For removal to be proper, the court must have subject-matter jurisdiction in the case. See Caterpillar Inc. v. Williams, 482 U.S. 386, 392 (1987). Because Defendants removed this action, Maynards, Utica, and IAC have the burden of establishing that the case was properly removed. See Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921). Any doubt about the existence of federal jurisdiction “should be resolved in favor of remand to state court.” City of Vestavia Hills v. Gen. Fid. Ins. Co., 676 F.3d 1310, 1313 (11th Cir. 2012) (internal citations omitted)).

         B. Discussion of Plaintiff's Motion to Remand

          Transamerican contends that the case must be remanded due to a facial defect in the notice of removal; contending that because the identity of all members of Maynards LLC and Utica LLC, and their respective citizenships, were not alleged in the Notice of Removal it was improper.[4]

         To establish diversity jurisdiction under 28 U.S.C. § 1332, each party must be completely diverse, with no plaintiff's citizenship overlapping any defendant's citizenship.[5] Triggs v. John Crump Toyota, Inc., 154 F.3d 1284, 1287 (11th Cir. 1998). Indeed, “diversity jurisdiction in a suit by or against the entity depends on the citizenship of ‘all the members . . . .'” Carden v. Arkoma, Assocs., 494 U.S. 185, 195 (1990) (internal citations omitted). For example, “[t]o sufficiently allege the citizenships of these unincorporated business entities, a party must list the citizenships of all the members of the limited liability company . . . .” Rolling Greens MHP, L.P. v. Comcast SCH Holdings, L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004) (“a limited liability company is a citizen of any state of which a member of the company is a citizen.”). An individual is a citizen of the state in which he is domiciled.[6] See Mas v. Perry, 489 F.2d 1396, 1399 (5th Cir. 1974).[7]

         Here, in the Notice of Removal, Defendants neither identified the individual members of the LLCs, Maynards and Utica, nor did they allege the citizenship of each member. (See Doc 1.) Defendants do, however, allege the identities and citizenships of each member in their Response to the Motion to Remand and Supplement to Notice of Removal. (See Doc 19.) Pursuant to 28 U.S.C. §1653, “[i]f a party fails to specifically allege citizenship in their notice of removal, the district court should allow that party ‘to cure the omission' as authorized by § 1653.” Corp. Mgmt. Advisors, Inc. v. Artjen Complexus, Inc., 561 F.3d 1294, 1297 (11th Cir. 2009) (citations omitted). When determining whether a party has met the burden of proving diversity, the Court considers all of the evidence, both presented with the notice of removal, as well as that evidence submitted in response to the Motion to Remand. See Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 753-55 (11th Cir. 2010).

         Here, Defendants alleged the citizenship of all the members, including the respective trustees and beneficiaries, of both LLCs-Maynards and Utica-in their Response, showing in detail that all entities and members comprising the LLCs were all either citizens of Michigan or are domiciled in Michigan. Thus, the Court finds that Defendants have alleged enough in the body of their Response and Supplement to Notice of Removal, in conjunction with the attached affidavits, to establish that no citizenship of any Defendant overlapped with that of Plaintiff. Because complete diversity existed and the jurisdictional amount was met when Defendants' removed this action, the motion to remand is due to be DENIED.

         III. Utica's Motion to Dismiss (doc. 2) [8]

A. Standard for 12(b)(2) Motion to Dismiss

In a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff generally “bears the burden of establishing a prima facie case of jurisdiction over the movant, non-resident defendant.” Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir. 1988) (citing Delong Equip. Co. v. Washington Mills Abrasive Co., 840 F.2d 843, 845 (11th Cir. 1988)). “A prima facie case is established if the plaintiff presents enough evidence to withstand a motion for directed verdict.” Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir. 1990). The Court must treat facts alleged in the complaint as true if they are not controverted by affidavits submitted from the defendant. Id. However, if the defendant submits affidavits, the plaintiff must produce additional evidence supporting jurisdiction unless the defendants' affidavits are only conclusory. Stubbs v. Wyndham Nassau Resort & Crystal ...


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