Ferrara v. Ryen Munro & Tripping Gnome Farm, LLC

• Decision Date: 22 November 2016
• Docket Number: Civil Action No. 3: 16 - CV - 950 (CSH)
• Court: U.S. District Court — District of Connecticut
• Parties: LOUIS FERRARA, MELISSA FERRARA, and NEW ENGLAND ALPACAS, Plaintiffs, v. RYEN MUNRO and TRIPPING GNOME FARM, LLC, Defendants.

LOUIS FERRARA, MELISSA FERRARA,and NEW ENGLAND ALPACAS, Plaintiffs, v. RYEN MUNRO and TRIPPING GNOME FARM, LLC, Defendants.

Civil Action No. 3: 16 - CV - 950 (CSH)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF CONNECTICUT

NOVEMBER 22, 2016

ORDER RE: SUBJECT MATTER JURISDICTION

HAIGHT, Senior District Judge:

I. BACKGROUND

Plaintiffs Louis Ferrara, Melissa Ferrara, and New England Alpacas (collectively, "Plaintiffs") bring this action against Defendants Ryen Munro and Tripping Gnome Farm, LLC ("Defendants") for damages "arising from the Defendants' refusal to pay the Plaintiffs commission on the Defendants' sale of certain alpaca[s] to non-party Pamela Brewster and her company Stillmeadow Farm, LLC."¹ Doc. 1, at 1 (¶ 1). The Plaintiffs allege that they had a contract with Defendants "under which the Defendants were obligated to pay the Plaintiffs a commission on the sale of alpacas by Defendants to Ms. Brewster and her company during a two-year period ending June 19, 2013." Id., at 1-2 (¶ 1). With respect to these alpaca sales, however, Defendants have allegedly "repeatedly refused to pay [Plaintiffs] the commission owed." Id., at 2 (¶ 1). In theirComplaint, Plaintiffs have included the following state law claims against all Defendants: breach of contract, unjust enrichment, breach of the implied covenant of good faith and fair dealing, and violation of Connecticut's Unfair Trade Practices, Conn. Gen. Stat. § 42-110a, et seq. In addition, Plaintiffs have asserted a claim for tortious interference with contractual relations against individual defendant Munro.

Due to the fact that Plaintiffs bring solely state law claims, they base the Court's subject matter jurisdiction over this action on diversity of citizenship under 28 U.S.C. § 1332(a)(1). Doc. 1, at 2 (¶ 2). Specifically, they allege that "none of the Plaintiffs are citizens of the same state as any of the Defendants" and the amount in controversy "exceeds the sum or value of seventy-five thousand dollars ($75,000), exclusive of interest and costs." Id. However, as set forth below, Plaintiffs' allegations are insufficient to establish diversity jurisdiction.

II. DISCUSSION

A. Subject Matter Jurisdiction

Pursuant to Article III of the Constitution, a federal court has limited jurisdiction. Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541(1986) (citing Marbury v. Madison, 1 Cranch (5 U.S.) 137, 173-80 (1803)). In general, it may only exercise subject matter jurisdiction if either: (1) the plaintiff sets forth a colorable claim arising under the Constitution or federal statute, creating "federal question" jurisdiction, 28 U.S.C. § 1331; or (2) there is complete diversity of citizenship between plaintiff and all defendants and the amount in controversy exceeds $75,000, exclusive of interest and costs, 28 U.S.C. § 1332(a)(1). Strawbridge v. Curtiss, 3 Cranch 267, 1806 WL 1213, at *1 (February Term 1806). See also Da Silva v. Kinsho Int'l Corp., 229 F.3d 358, 363 (2d Cir. 2000) (delineating two categories of subject matter jurisdiction).

It is incumbent on a federal court to determine with certainty whether it has subject matter jurisdiction over a case pending before it. If necessary, the court must consider its subject matter jurisdiction sua sponte. Joseph v. Leavitt, 465 F.3d 87, 89 (2d Cir. 2006) ("Although neither party has suggested that we lack appellate jurisdiction, we have an independent obligation to consider the presence or absence of subject matter jurisdiction sua sponte."), cert. denied, 549 U.S. 1282 (2007); Promisel v. First Am. Artificial Flowers, Inc., 943 F.2d 251, 254 (2d Cir. 1991) ("Although we would not normally consider an issue not raised below, the lack of subject matter jurisdiction may be raised at any time, by the parties, or by the court sua sponte."), cert. denied, 502 U.S. 1060 (1992).²

Unlike personal jurisdiction, "subject matter jurisdiction is not waivable." Lyndonville Sav. Bank & Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000). If subject matter jurisdiction is lacking, the action must be dismissed. See Fed. R. Civ. P. 12(h)(3); Lyndonville, 211 F.3d at 700-01. See also, e.g., Cortlandt St. Recovery Corp. v. Hellas Telecomms., S.A.R.L., 790 F.3d 411, 416-17 (2d Cir. 2015) (district court properly dismisses an action for lack of subject matter jurisdiction if it "lacks the statutory or constitutional power to adjudicate it") (citing Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)); Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., Div. of Ace Young Inc., 109 F.3d 105, 108 (2d Cir. 1997) ("Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction of the subject matter, the court shalldismiss the action.") (citing Fed. R. Civ. P. 12(h)(3)); Lovejoy v. Watson, 475 F. App'x 792, 792 (2d Cir. 2012) ("Where jurisdiction is lacking . . . dismissal is mandatory.") (quoting United Food & Commercial Workers Union, Local 919, AFL-CIO v. CenterMark Props. Meriden Square, Inc., 30 F.3d 298, 301 (2d Cir.1994)); Manway Constr. Co. v. Housing Auth. of Hartford, 711 F.2d 501, 503 (2d Cir. 1983) ("It is common ground that in our federal system of limited jurisdiction any party or the court sua sponte, at any stage of the proceedings, may raise the question of whether the court has subject matter jurisdiction; and, if it does not, dismissal is mandatory.").

In the case at bar, Plaintiffs have included solely state law claims in their Complaint. Therefore, there is no arguable basis upon which the Court may assert "federal question" subject matter jurisdiction over this action, 28 U.S.C. § 1331.³ Plaintiffs allege that the alternate jurisdictional basis of "diversity of citizenship" exists under 28 U.S.C. § 1332(a).⁴

In order for diversity of citizenship to exist, each plaintiff's citizenship must be diverse from that of all defendants. See, e.g., St. Paul Fire and Marine Ins. Co. v. Universal Builders Supply, 409 F.3d 73, 80 (2d Cir. 2005) ("Diversity is not complete if any plaintiff is a citizen of the same state as any defendant.") (citing Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)). Moreover, "diversity must exist at the time the action is commenced." Universal Licensing Corp.v. Lungo, 293 F.3d 579, 581 (2d Cir. 2002). See also Wolde-Meskel v. Vocational Instruction Project Cmty. Servs., Inc., 166 F.3d 59, 62 (2d Cir.1999) ("Satisfaction of the § 1332(a) diversity requirements (amount in controversy and citizenship) is determined as of the date that suit is filed - the 'time-of-filing' rule.").

Furthermore, there must be a minimum amount in controversy exceeding "$75,000, exclusive of interest and costs," 28 U.S.C. § 1332(a). Plaintiffs must allege in good faith that they sustained sufficient damages to invoke the Court's subject matter jurisdiction based on diversity of citizenship. Congress included this jurisdictional amount with the intention of "remov[ing] from the federal courts claims insubstantial in character, which contributed to the mounting backlogs of these courts." Brown v. Bodak, 188 F. Supp. 532, 533-34 (S.D.N.Y. 1960) (citing 1958 U.S. Code Congressional and Administrative News, pp. 2594-95). In cases where there is evidence that a plaintiff has inflated damages "solely to exceed the jurisdictional threshold," dismissal by the district court is proper. Deutsch v. Hewes St. Realty Corp., 359 F.2d 96, 100 (2d Cir. 1966) (citing Brown, 188 F. Supp. 532).

B. Diversity of Citizenship

1. Citizenship of the Parties

Plaintiffs Louis Ferrara and Melissa Ferrara allege that they are citizens and residents of the state of Connecticut. Doc. 1, at 2 (¶ 4). An individual's citizenship for diversity purposes is determined by his or her domicile, as opposed to residence. See Palazzo v. Corio, 232 F.3d 38, 42 (2d Cir. 2000). See also John Birch Soc. v. Nat'l Broad. Co., 377 F.2d 194, 199 (2d Cir.1967) ("it has long been held that a statement of residence, unlike domicile, tells the court only where the parties are living and not of which state they are citizens"). "In general, the domicile of an individualis his true, fixed and permanent home and place of habitation"—i.e, "the place to which, whenever he is absent, he has the intention of returning." Martinez v. Bynum, 461 U.S. 321, 331 (1983). Accepting that both Ferraras are domiciled in Connecticut, that state is their state of citizenship.

With respect to "New England Alpacas," however, Plaintiffs have failed to indicate what type of entity it is - e.g., corporation, limited liability company, etc. Rather, Plaintiffs simply allege that the "Ferraras do business under the trade name 'New England Alpacas' and have a principal place of business located in Killingworth, Connecticut."⁵ Doc. 1, at 2 (¶ 4). If New England Alpacas is actually a corporation, pursuant to 28 U.S.C.§ 1332(c)(1), it "shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business." However, if New England Alpacas is a limited liability company, "a limited liability company takes the citizenship of each of its members." Bayerische Landesbank, New York Branch v. Aladdin Capital Mgmt., 692 F.3d 42, 49 (2d Cir. 2012) (emphasis added). See also Wise v. Wachovia Secs, LLC, 450 F.3d 265, 267 (7^th Cir. 2006) ("[t]he citizenship for diversity purposes of a limited liability company . . . is the citizenship of each of its members") (emphasis added), cert. denied, 549 U.S. 1047 (2006). Put simply, the "citizenship of a limited liability company is not the state in which it is organized or has its principal place of business, but rather, each of the states in which it has members." Lewis v. Allied Bronze LLC, No. 07 Civ. 1621(BMC), 2007 WL 1299251, at *1-2 (E.D.N.Y. May 2, 2007) (citing Handelsman v. Bedford Vill. Assocs. Ltd. P'ship, 213 F.3d 48, [51-52] (2d Cir. 2000) and remanding removed action for lack of diversity jurisdiction). If New England...