United States District Court, D. Arizona
ORDER
DAVID
C. BURY, UNITED STATES DISTRICT JUDGE
Plaintiff
filed a Complaint on December 8, 2016. He alleged that
Defendants solicited an investment loan from him in the sum
of $500, 000.00, pursuant to a Gurantee Agreement. He alleges
they fraudulently and negligently breached the Guarantee
Agreement. This action arises because the Plaintiff was
unable to recover from the borrower under the Promissory
Note, and now proceeds against the Gurantors. On February 25,
2017, the Defendant Stewarts filed a Motion to Dismiss for
lack of subject matter jurisdiction based upon a lack of
complete diversity between the parties. The Court grants the
motion, as explained below.
Plaintiff's
complaint alleges that this Court has subject jurisdiction
over this case pursuant to 28 U.S.C. § 1332(a)(2), which
vests the district courts with original jurisdiction over
civil actions where the matter exceeds the jurisdictional sum
of $75, 000 and is between “citizens of a State and
citizens or subjects of a foreign state.” Diversity is
destroyed if even just one of the defendants has the same
citizenship as the plaintiff. Here, the Stewarts argue that
diversity between the parties does not exist since they share
Arizona citizenship with the Plaintiff. The Plaintiff alleges
the Stewarts are citizens of Wyoming because in a prior
proceeding between these parties all agreed that diversity
existed based on the Stewarts being citizens of Wyoming
because they own a business there. The prior proceeding was
voluntarily dismissed so that the Plaintiff could attempt
recovery from the borrower under the Promissory Note, which
he did do without success. The Plaintiff argues,
alternatively, that if the Court is not inclined to find
jurisdiction based on this stipulation, the Court enter a
discovery order requiring the Stewarts to provide evidence to
enable the Court and the Plaintiff to better evaluate the
Defendant's claim of citizenship.
The
seminal case in the Ninth Circuit setting out the legal
standard and standard of review for determining whether
subject matter jurisdiction exists in a diversity case is
Lew v. Moss, 797 F.2d 747 (9th Cir.
1986). Plaintiff, as the party asserting diversity
jurisdiction, has the burden of proof concerning the
assertion. Id. at 748. Courts have created a
presumption in favor of a previously established domicile as
against a newly acquired one. Id. at 751. When a
prior presumption of domicile has been made, the burden of
production of evidence shifts to the party challenging
diversity, but the burden of proof remains with the
plaintiff. Id. Discovery should be allowed where
pertinent facts bearing on the question to jurisdiction or
venue are in dispute. America West Airlines, Inc. v. GPA
Group, Ltd., 877 F.2d 793, 801 (9th Cir.
1989).
Importantly,
domicile and residence are not the same thing; residence is
one of the Lew factors. A person is
“domiciled” in a location where he or she has
established a “fixed habitation or abode in a
particular place, and intends to remain there permanently or
indefinitely” and the existence of domicile is
determined as of the time the lawsuit is filed. Lew,
797 F.2d, at 748. The determination of domicile involves a
number of factors, with no single factor controlling,
including: current residence, voting registration and voting
practices, location of personal and real property, location
of brokerage and bank accounts, location of spouse and
family, membership in unions and other organizations, place
of employment or business, driver license and automobile
registration, and payment of taxes. Id. A person can
have multiple residences but only one domicile for
determining citizenship. Domicile is evaluated by objective
facts, and statements of intent are less important when they
conflict with facts. Id. at 750. Importantly, a
previous domicile is valid until there is confluence of
physical presence at the new location with an intention to
remain there indefinitely. Id.
Here,
the Plaintiff filed the first Complaint against Defendants on
November 22, 2013. The Complaint alleged diversity
jurisdiction existed in that case based on the Stewarts being
citizens of Wyoming. There was no objection, and in the Joint
Case Management Plan, the parties agreed to jurisdiction
existed based on diversity. The Plaintiff argues that the
Stewarts' admission during the first action that
diversity jurisdiction existed was necessarily an admission
to being citizens of Wyoming.
A party
cannot stipulate to jurisdiction. See e.g. Stock West,
Inc. v. Confederated Tribes of Colville Reservation, 873
F.2d 1221, 1228 (9th Cir. 1989) (a party cannot
waive lack of subject matter jurisdiction by consent or
contract). Therefore, the admission in the first action is
not binding to establish subject matter jurisdiction over
this case. The Plaintiff provides no evidence that the
Stewarts ever admitted the fact of being citizens of Wyoming.
Defendant
Stewarts' motion to dismiss tracks the Lew
factors. The Stewarts argue that Mr. Stewart has lived in
Arizona since 1968, except when he resided in Seattle from
1989-1993, has never resided in the State of Wyoming, and his
last time to visit Wyoming was 30 years ago. His wife has not
resided in Wyoming for at least 29 years. The Stewarts have
been married for over 29 years and have lived together in
their present house in Scottsdale, Arizona since 2013. The
Plaintiff mailed this Complaint to the Stewarts addressed to
an Arizona post box. With the motion, the Stewarts provide
their “current residence, ” “location of
spouse and family, ” “driver's license”
and Veteran's Administration (“VA”)
registration and receipt of benefits in Arizona
1) Redacted Addendums to a 6/13/13 Contract:
Objective factors in evaluating residence include whether a
person owns or rents in the state. The addendums extended a
prior contract for a rental in Scottsdale, Arizona, but the
Stewarts did not provide the rental contract and the
addendums redacted the physical address of the property.
2) 3/9/17 Southwest Gas Customer Service Letter:
Utility bills are typically not one of the objective factors
courts consider as evidence of citizenship. Here, the billing
address reflects Scottsdale, Arizona, and the Southwest Gas
Customer Service letter states that Mr. Stewart has active
gas service as of March 9, 2017.
3) Invalid Arizona Driver's License Issued on October
12, 2011: Proof of a valid driver's license in the
state is an objective factor for citizenship. However, Mr.
Stewart's driver's license is invalid because the
address provided on it is not a resident but a PostNet Store
rental mailbox, which is not permitted by Arizona Department
of Transportation. This is not a valid driver license for
this Court to consider in determining citizenship.
4) VA Health ID Card and 2009 Letter from VA to PostNet
Rental Mailbox: Like the 3/9/17 Southwest Gas Customer
Service Letter, Health ID Cards are not one of the objective
factors courts consider in connection with citizenship. Even
as a cumulative factor, a letter in 2009 from the VA to the
Defendant Stewarts' PostNet rental mailbox on an
unspecified date is weak evidence to establish Arizona
citizenship.
Until
seeing the Reply, this Court was prepared to allow the
Plaintiff to conduct discovery on the question of
citizenship. Until the Reply, the evidence tendered by the
Stewarts suggests a residence in Arizona, but does not prove
domicile. The utility bill and VA card are not Lew
factors; nevertheless, the Court considered the evidence as
similar to union or other organization membership. The Court
notes that the Stewarts tendered evidence of recent residency
and nothing to support the assertion that they have domiciled
in Arizona for over 20 years.
Finally,
in the Reply, the Stewarts provided clear evidence of
citizenship in Arizona. The Stewarts provided Mrs.
Stewart's Voter Identification Card, which was issued on
8/13/2016, and lists the Stewarts' residential street
address in Scottsdale, Arizona. Voting registration
unequivocally establishes the Mrs. Stewart's physical
presence in Arizona with an intention to remain here because
voting is restricted to a person's permanent residence,
i.e., domicile. With Mrs. Stewart's Voter Identification
Card, the Stewarts successfully rebut the presumption of a
prior domicile in Wyoming by establishing their domicile in
Arizona as of August 13, 2016, six months prior to the filing
date of this Complaint. The ...