Eagle TX I Spe LLC v. Sharif & Munir Enters., Inc.
| Decision Date | 24 February 2014 |
| Docket Number | Civil Action No. 3:13-cv-2565-O |
| Court | U.S. District Court — Northern District of Texas |
| Parties | EAGLE TX I SPE LLC, Plaintiff, v. SHARIF & MUNIR ENTERPRISES, INC. and RAMSEY M. MUNIR, Defendants. |
Before the Court are Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction and Brief in Support (ECF No. 10), filed September 3, 2013; Plaintiff's Response (ECF No. 14), filed October 15, 2013; and Defendants' Amended Reply (ECF No. 19), filed November 17, 2013.1 Having reviewed the motion, the pleadings, and the applicable law, the Court finds that Defendants' Motion to Dismiss (ECF No. 10) should be and is hereby GRANTED.
This diversity action arise outs of four promissory notes (the "Notes") executed and delivered to Colonial Bank by Defendant Sharif & Munir Enterprises, Inc. ("S&M Enterprises") between February 2005 and August 2008. Pursuant to the Notes, Colonial Bank extended four loans to S&M Enterprises and each Note was secured by a deed of trust, security agreement, and assignment of rents for one property located in Frisco, Texas, and three properties located in Dallas, Texas. Defendant Ramsey M. Munir ("Munir") guaranteed all four Notes. Plaintiff Eagle TX I SPE, LLC d/b/a Eagle Lone Star I SPE, LLC ("Plaintiff") alleges it is a North Carolina limited liability company ("LLC") with its principal place of business in Winston-Salem, North Carolina. Compl. ¶ 1, ECF No. 1. Plaintiff alleges that S&M Enterprises is a Texas corporation with its principal place of business in Dallas, Texas, and Munir is a resident of Texas. Id. ¶¶ 2-3.
Around 2009, Colonial Bank failed and Branch Banking & Trust Company ("BB&T") acquired certain assets and liabilities of Colonial Bank from the Federal Deposit Insurance Corporation ("FDIC"), which was appointed as Colonial Bank's receiver. See Defs.' Mot. 7, ECF No. 10. To effectuate the asset acquisition, BB&T and the FDIC entered into a purchase and assumption agreement ("PAA") and loss-sharing agreements ("LSA"). On June 29, 2011, BB&T assigned all its right, title, and interest in the Notes and other loan documents to Plaintiff. Compl. Ex. 6 (Assignment), App. 59-61, ECF No. 1-1. The sole member of Plaintiff is Eagle SPE, LLC, and the sole member of Eagle SPE, LLC is BB&T. Compl. ¶ 5, ECF No. 1.
Plaintiff alleges that S&M Enterprises became delinquent in the payment of the Notes. Compl. ¶ 25, ECF No. 1. Plaintiff made demand on S&M Enterprises for payment of the overdue indebtedness on the Notes and notified S&M Enterprises of its intent to exercise its legal remedies.Id. ¶ 25. Plaintiff provided S&M Enterprises with notice of a substitute trustee's sale for the Frisco and Dallas properties, and on July 5, 2011, Plaintiff purchased the Frisco and Dallas properties at foreclosure sales. Id. ¶¶ 28-47. Plaintiff filed suit against Defendants S&M Enterprises and Munir (collectively "Defendants") seeking to recover deficiency amounts from the sales. Id. ¶¶ 48-49.
On September 3, 2013, Defendants filed their Motion to Dismiss (ECF No. 10). Defendants assert that complete diversity does not exist because Plaintiff and/or BB&T and the FDIC, which is considered a "stateless" entity for purposes of diversity jurisdiction, were partners under the PAA and LSA. The motion has been fully briefed and is ripe for determination.
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges a court's subject matter jurisdiction. Fed. R. Civ. P. 12(b)(1). Federal courts are courts of limited jurisdiction and possess "only that power authorized by Constitution and statute, . . . which is not to be expanded by judicial decree." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994) (citations omitted). Federal courts presume that a cause lies outside their limited jurisdiction, and the party asserting jurisdiction bears the burden of establishing that subject matter jurisdiction exists. Id. (citations omitted); see also Coury v. Prot, 85 F.3d 244, 248 (5th Cir. 1996) (citations omitted); Sierra Club v. Energy Future Holdings Corp., 921 F. Supp. 2d 674, 678 (W.D. Tex. 2013) (citing Paterson v. Weinberger, 644 F.2d 521, 523 (5th Cir. 1981)). Accordingly, a case will be dismissed under Rule 12(b)(1) if a court "'lacks the statutory or constitutional power to adjudicate the case.'" McKinney v. United States, 950 F. Supp. 2d 923, 925-26 (N.D. Tex. 2013) (McBryde, J.) (quoting Home Builders Ass'n ofMiss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir. 1998)).
Where subject matter jurisdiction is challenged, a court is "free to weigh the evidence and resolve factual disputes in order to satisfy itself that it has the power to hear the case." Montez v. Dep't of Navy, 392 F.3d 147, 149 (5th Cir. 2004) (citing Land v. Dollar, 330 U.S. 731, 735 n.4 (1947)). Rule 12(b)(1) permits a court to consider a "broader range" of materials than the Rule 12(b)(6) standard, Williams v. Wynne, 533 F.3d 360, 365 n.2 (5th Cir. 2008), and a defendant may make a "facial attack" or a "factual attack" upon a complaint under Rule 12(b)(1). Paterson, 644 F.2d at 523. A facial attack requires a court to determine whether the complaint sufficiently alleges a basis for subject matter jurisdiction while presuming the allegations in the complaint are true. Id.; Rodriguez v. Tex. Comm'n on the Arts, 992 F. Supp. 876, 878 (N.D. Tex. 1998) (Cummings, J.). A factual attack, however, challenges the facts on which jurisdiction depends and allows a court to consider matters outside of the pleadings, such as affidavits, testimony, or other evidentiary materials. Paterson, 644 F.2d at 523; Sierra Club, 921 F. Supp. 2d at 678. When a defendant makes a factual attack "no presumptive truthfulness attaches to plaintiff's allegations." Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981) (citation omitted). Under Rule 12(b)(1), a court may consider "(1) the complaint alone, (2) the complaint supplemented by undisputed facts evidenced in the record, or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Sierra Club, 921 F. Supp. 2d at 679 (citing Garcia v. Copenhaver, Bell & Assocs., M.D.'s, P.A., 104 F.3d 1256, 1261 (11th Cir. 1997)). If the defendant makes a factual attack on a court's jurisdiction the plaintiff has the burden of proving by a preponderance of the evidence that the court has subject matter jurisdiction. Paterson, 644 F.2d at 523; Jones v. SuperMedia Inc., 281 F.R.D. 282, 286 (N.D. Tex. 2012) (Boyle, J.).
Here, Defendants argue that the PAA and LSA created a partnership between Plaintiff and/or BB&T and the FDIC, and that the presence of the FDIC in the partnership destroys complete diversity.2 Defendants offer evidentiary materials outside of the pleadings, including BB&T's Form 8-K, the PAA and LSA, and documents from the FDIC's website, to support their motion.3 See Defs.' App. Supp. Mot., ECF No. 11. Accordingly, the Court construes Defendants' motion as a factual attack on the Court's jurisdiction. See Paterson v. Weinberger, 644 F.2d at 523.
Plaintiff asserts that the Court has jurisdiction of this case because there is complete diversity of citizenship between the parties. Compl. ¶ 4, ECF No. 1. Under 28 U.S.C. § 1332, district courts have original jurisdiction of all civil actions where the matter in controversy exceeds $75,000 andis between citizens of different States.4 28 U.S.C. § 1332(a)(1). The Supreme Court has interpreted this statute to require "complete diversity" of citizenship. Carden v. Arkoma Assocs., 494 U.S. 185, 187 (1990) (citing Strawbridge v. Curtiss, 3 Cranch 267, 2 L.Ed. 435 (1806)); see also Caterpillar Inc. v. Lewis, 519 U.S. 61, 68 (1996); Vantage Drilling Co. v. Hsin-Chi Su, ___ F.3d ___, 2014 WL 53691, at *2 (5th Cir. 2014). "Complete diversity requires that all persons on one side of the controversy be citizens of different states than all persons on the other side." Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008) (citations omitted) (internal quotation marks omitted). The citizenship of unincorporated entities, such as partnerships and LLCs, is determined by the citizenship of each member of the entity. Id. at 1079-80 (citing Carden, 494 U.S. at 195-96); see also Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 569 (2004). Accordingly, for a court to have subject matter jurisdiction over a dispute involving a partnership, each partner must meet the requirements of the diversity statute. See Lincoln Prop. Co. v. Roche, 546 U.S. 81, 84 n.1 (2005) (citing Carden, 494 U.S. at 192-97); Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 829 (1989) (citation omitted); Harvey, 542 F.3d at 1079.
The FDIC is a federally-chartered corporation. See 12 U.S.C. § 1811(a); Fed. Deposit Ins. Corp. v. Nat'l Sur. Corp., 345 F. Supp. 885, 887 (S.D. Iowa 1972). The citizenship of federally-chartered corporations has "a long and checkered legal history," but courts have generally found that federally-chartered corporations "are national citizens ineligible to invoke federal diversity jurisdiction." Lehman Bros. Bank, FSB v. Frank T. Yoder Mortg., 415 F. Supp. 2d 636, 639-41 (E.D. Va. 2006); see also Iceland Seafood Corp. v. Nat'l Consumer Co-op. Bank, 285 F.Supp. 2d 719, 26 (E.D. Va. 2003) (); Little League Baseball, Inc. v. Welsh Pub. Grp., Inc., 874 F. Supp. 648, 651 (M.D. Pa. 1995) (same); Nat'l Sur. Corp., 345 F. Supp. at 887 (). Accordingly, the presence of a federally-chartered corporation in a suit destroys complete diversity. Banks of the Ozarks v. IS Motel Corp., No. 4:12-cv-0024-HLM, 2012 WL 1134733, at *2 (N.D. Ga. Apr. 2, 2012) (citation omitted); see also Newman-Green, 490 U.S. at 829 ...
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