United States District Court, M.D. Alabama, Eastern Division
NATIONSTAR MORTGAGE LLC, d/b/a MR. COOPER, Plaintiff,
GASTON DILLON and LESIA H. DILLON, Defendants.
REPORT AND RECOMMENDATION OF THE MAGISTRATE
M. BORDEN UNITED STATES MAGISTRATE JUDGE.
3, 2018, Defendants Gaston Dillon and Lesia Dillon removed
this action from the Circuit Court of Russell County,
Alabama. Doc. 1. Pursuant to 28 U.S.C. § 636(b)(1) this
case was referred to the undersigned United States Magistrate
Judge for review and submission of a report with recommended
findings of fact and conclusions of law. Doc. 7. For the
reasons stated herein, the Magistrate Judge VACATES its
previous Report and Recommendation (Doc. 22) and RECOMMENDS
that the action be REMANDED to the Circuit Court of Russell
state-court complaint, Plaintiff Nationstar Mortgage LLC,
doing business as Mr. Cooper, claimed to be a corporation.
Doc. 1-1 at 1. Defendants removed this action, alleging that
jurisdiction is predicated on diversity because Defendants
are citizens of Alabama and Plaintiff is a corporation
registered in Texas. Doc. 1 at 1. But Plaintiff's name
suggests that it is an “LCC, ” the common
abbreviation for a limited liability company. Consequently,
the court ordered Defendants to identify the name and
citizenship of each of Plaintiff's members. Doc. 7.
Defendants' response, which proposed that Plaintiff was a
Delaware corporation, failed to shed any light on the basis
for federal jurisdiction. Doc. 10. Accordingly, the court
again ordered Defendants to identify the name and citizenship
of each of Plaintiff's members. Doc. 11.
did not file a response. The court directed Defendants to
respond to its previous order (Doc. 11), and cautioned them
that a failure to comply might result in recommendation of
remand. Doc. 12. Although Defendants timely responded, their
response did not establish federal jurisdiction as they again
alleged that Plaintiff is a corporation. Doc. 13. Defendants
also identified the residences of some Plaintiff's
employees. Doc. 13. Rather than recommending a remand at this
time, the court allowed the parties to conduct jurisdictional
discovery and instructed Defendants to identify
Plaintiff's corporate form and to allege the
prerequisites for diversity jurisdiction no later than
October 15, 2018. Doc. 14.
did not respond by October 15, so the court ordered
Defendants to show cause as to why this matter should not be
remanded to the state courts. Doc. 19. Due to a clerical
error, the court did not receive Defendants' show cause
response, and recommended that the case be remanded. Doc. 22.
Defendants then filed an objection to the recommendation,
explaining that they had timely filed their response to the
show cause order. Doc. 24. Because it was predicated on
Defendants' failure to respond to the show cause order
and the court is satisfied that Defendants made a good faith
attempt to respond, the court's previous report and
recommendation (Doc. 22) is hereby VACATED.
Defendants' objection fails to identify Plaintiff's
corporate form or to establish diversity jurisdiction even
though it provides new information about Plaintiff. Doc. 24.
Because Defendants still have not established diversity of
citizenship, the court RECOMMENDS that this matter be
courts are courts of limited jurisdiction. Kokkonen v.
Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994).
Thus, the courts “have an independent obligation to
determine whether subject-matter jurisdiction exists, even in
the absence of a challenge from any party.” Arbaugh
v. Y & H Corp., 126 S.Ct. 1235, 1244 (2006). And
because removal implicates federalism concerns, the court
must construe the removal statutes narrowly and resolve all
doubts in favor of remand. See, e.g., Scimone v.
Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013).
“It is in everyone's best interest, both the
litigants' and the courts,' to verify that diversity
jurisdiction exists before proceeding with the case.”
Purchasing Power, LLC v. Bluestem Brands, Inc., 851
F.3d 1218, 1220 (11th Cir. 2017).
party removing a case to federal court based on diversity of
citizenship bears the burden of establishing the citizenship
of the parties.” Rolling Greens MHP, L.P. v.
Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th
Cir. 2004). Diversity jurisdiction exists where the amount in
controversy exceeds $75, 000 and the action is between
citizens of different states. 28 U.S.C. § 1332. A
corporation is a citizen of the state in which it is
incorporated and in which it maintains its principal place of
business. Id. But a “limited liability company
is a citizen of any state of which a member of the company is
a citizen.” Rolling Greens MHP, 374 F.3d at
1022. “[W]hen a limited liability company consists of
multiple tiers of ownership and control, the entire structure
must be considered for diversity purposes. In other words,
when an entity is composed of multiple layers of constituent
entities, the citizenship determination requires an
exploration of the citizenship of the entity before the
court.” RES-GA Creekside Manor, LLC v. Start Home
Builders, Inc., 2011 WL 6019904, at *3 (S.D. Ga. 2011)
(quoting Multibank 2009-1 RES-ADC Venture, LLC v. CRM
Ventures, LLC, 2010 WL 3632359 (S.D. Colo. 2010)). While
the Supreme Court has not expressly defined the term
“member” it has “equated an
association's members with its owners or the several
persons composing such association.” Americold
Realty Trust v. Conagra Foods, Inc., 136 S.Ct. 1012,
2018, Defendants submitted Plaintiff's Assumed Name
Certificate (Doc. 10-1), and alleged that the Certificate
implied that Plaintiff is a Delaware corporation with its
principal place of business in Texas. Doc. 10 at 1. If
Plaintiff is indeed a Delaware corporation with its principal
place of business in Texas, then diversity of citizenship
exists because Defendants are citizens of Alabama. But the
Assumed Name Certificate does not support Defendants'
allegations. The certificate demonstrates instead that
Plaintiff is an LLC formed in Delaware that has its principal
office in Texas. Doc. 10-1 at 2.
Defendants have yet to establish the citizenship of
Plaintiff's members, the court cannot determine whether
federal diversity jurisdiction exists. In their objection,
Defendants allege that Plaintiff is owned by two subsidiary
companies-Nationstar Sub1 LLC (“Sub1”) and
Nationstar Sub2 LLC (“Sub2”). Doc. 24 at 1.
Defendants also provided Plaintiff's 2017 tax information
report, listing Karrie Cooper, Mary Spradlin, and Richard
Spradlin as members of Mr. Cooper. Doc. 23-1. Assuming
Plaintiff's members are Sub1, Sub2, Karrie Cooper, Mary
Spradlin, and Richard Spradlin, Defendants must allege the
citizenship of each of these entities or individuals. To
determine the citizenship of members Sub1 and Sub2,
Defendants must establish the citizenship of the members of
each subsidiary LLC. Defendants contend that Sub1 and Sub1
are both owned by Nationstar Mortgage Holdings Inc. Doc. 24
at 1. But, as discussed above, a corporation is a citizen in
its state of incorporation and its principal place of
business. See Rolling Greens MHP, 374 F.3d at 1021
n.1 (“Rather than taking the citizenship of their
members, corporations are citizens in the states of their
incorporation and their principal place of business.”).
Defendants have alleged that Nationstar Mortgage Holdings is
a Delaware corporation (Doc. 24 at 1), but they have not
alleged the corporation's principal place of business.
Accordingly, the court is unable to determine the citizenship
of Sub1 and Sub2, and thus unable to determine the
citizenship of Plaintiff's members.
numerous opportunities for Defendants to establish diversity
jurisdiction, the record before the court does not reflect
that the prerequisites for federal jurisdiction are met.
Defendants removed this case almost seven months ago, were
given the chance to conduct jurisdictional discovery, and
have attempted to allege jurisdiction four separate times.
They still have not satisfied their burden of establishing
this court's jurisdiction. Accordingly, the only
appropriate course of action to remand this case to a court
of competent jurisdiction.