Liu v. 88 Harborview Realty, LLC

• Decision Date: 12 March 2014
• Docket Number: No. 11 Civ. 1033(AT).,11 Civ. 1033(AT).
• Citation: 5 F.Supp.3d 443
• Parties: HAI YANG LIU, Plaintiff, v. 88 HARBORVIEW REALTY, LLC, Cheung Yeung, Yan Zhuang, Jia Xi Qui a/k/a Qui Jai Xi, Qian He, individually and as the Administratrix of the estate of You Laing Chen, and John Doe 1–X and Jane Doe 1–X, Defendants. Qian He, individually and as the Administratrix of the estate of You Laing Chen, Counter Claimant, v. Hai Yang Liu, Counter Defendant.
• Court: U.S. District Court — Southern District of New York

5 F.Supp.3d 443

HAI YANG LIU, Plaintiff,

v.88 HARBORVIEW REALTY, LLC, Cheung Yeung, Yan Zhuang, Jia Xi Qui a/k/a Qui Jai Xi, Qian He, individually and as the Administratrix of the estate of You Laing Chen, and John Doe 1–X and Jane Doe 1–X, Defendants.

Qian He, individually and as the Administratrix of the estate of You Laing Chen, Counter Claimant,

v.Hai Yang Liu, Counter Defendant.

No. 11 Civ. 1033(AT).

United States District Court,

S.D. New York.

Signed March 12, 2014.

Scott Glen Goldfinger, O'Rourke & Degen, PLLC, Vlad Anatole Kuzmin, Kuzmin & Associates, PLLC, New York, NY, for Plaintiff/Counter Defendant.

Kenneth Kangmin Ho, Attorney at Law, Flushing, NY, for Defendants.

Joseph Sferrazza, Sferrazza & Keenan, Melville, NY, Edward Elkin, Law Offices of Edward Elkin, New York, NY, for Defendants/Counter Claimant.

MEMORANDUM AND ORDER

ANALISA TORRES, District Judge:

Plaintiff, Hai Yang Liu, brings this action against Defendants 88 Harborview Realty, LLC (“Harborview”), Cheung Teung, Yan Zhuang, Jia Xi Qui, Qian He, John Doe 1–X, and Jane Doe 1–X, asserting eleven claims under New York law. Defendant Qian He counterclaims that Plaintiff is not a member of Harborview. Plaintiff moves for partial summary judgment seeking a declaratory judgment that he is a member. Because of unresolved jurisdictional issues, the motion is DENIED without prejudice and the parties are directed to submit supplemental papers.

BACKGROUND

This lawsuit involves a series of disputed real estate transactions and investments in New York City. Plaintiff brings this lawsuit against four individual defendants, up to twenty fictitious “Doe” defendants, and Harborview, a limited liability company (“LLC”), invoking subject matter jurisdiction by reason of diversity of citizenship pursuant to 28 U.S.C. § 1332. Plaintiff asserts that he immigrated to the United States from China, and resided in the New York City area during the years leading up to this lawsuit, including at a property he claims to have purchased in Brooklyn, at 2977 Fulton Street. Pl. Mot. at 1–3, ECF No. 62. Plaintiff alleges that all defendants, including the Doe defendants, “reside in the City, County and State of New York.” Compl. ¶¶ 4–19.

Despite these New York connections, Plaintiff contends that on February 8, 2011, the date he filed the complaint, he was “a resident of the State of South Carolina.” Id. ¶ 2. Annexed to Plaintiff's moving papers are documents indicating that he resided in Brooklyn or the Bronx when he commenced the action. First, an undated document—which purports to be a roster of Harborview members—lists Plaintiff's address as “2977 Fulton St., # 2/F, Brooklyn, N.Y. 11208.” Pl. 56.1 Statement Appx., Ex. 4 (the “Membership List”). The Membership List names twenty-five other members of Harborview, some of whom reside in states other than New York—contrary to what Plaintiff alleges in his complaint. Second, Plaintiff submits seven Internal Revenue Service 1065 forms given to him by Harborview, listing partnership income he received for years 2006 through 2012, each of which state that Plaintiff resides at a redacted street address in “Bronx, N.Y. 10451.” Id., Ex. 8.

These documents and the issues raised in Plaintiff's motion for partial summary judgment compel the Court to address whether it has subject matter jurisdiction over this lawsuit; there are open questions as to Plaintiff's citizenship, Defendants' citizenship, and the Court's jurisdiction to adjudicate state law claims between potentially non-diverse parties.

STANDARD OF REVIEW

“The district courts of the United States ... are courts of limited jurisdiction.” Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) (quotation and citation omitted). They only possess jurisdiction over a matter if they have both constitutional authorization under Article III and federal statutory authorization. Id. Article III, § 2 of the United States Constitution provides federal courts with original jurisdiction over suits, inter alia, “between Citizens of different States.” Pursuant to 28 U.S.C. § 1332(a), “[a] case falls within the federal district court's original diversity jurisdiction only if diversity of citizenship among the parties is complete, i.e., only if there is no plaintiff and no defendant who are citizens of the same State.” Wisconsin Dept. of Corr. v. Schacht, 524 U.S. 381, 388, 118 S.Ct. 2047, 141 L.Ed.2d 364 (1998) (internal quotation marks and citation omitted).

“Subject-matter jurisdiction can never be waived or forfeited. The objections may be resurrected at any point in the litigation, and a valid objection may lead a court midway through briefing to dismiss a complaint in its entirety.” Gonzalez v. Thaler, ––– U.S. ––––, ––––, 132 S.Ct. 641, 648, 181 L.Ed.2d 619 (2012). Moreover, if a court becomes concerned about its jurisdiction, it has “an independent obligation to ensure that [it] do[es] not exceed the scope of [its] jurisdiction, and therefore [it] must raise and decide jurisdictional questions that the parties either overlook or elect not to press.” Henderson ex rel. Henderson v. Shinseki, –––U.S. ––––, ––––, 131 S.Ct. 1197, 1202, 179 L.Ed.2d 159 (2011); see also Alliance of Am. Insurers v. Cuomo, 854 F.2d 591, 605 (2d Cir.1988) (stating that “a challenge to subject matter jurisdiction cannot be waived and may be raised sua sponte by the district court.”) (citation omitted).

DISCUSSION

At face value, Plaintiff's allegations that he is a citizen of South Carolina and Defendants are citizens of New York are sufficient to establish complete diversity. However, not only are Plaintiff's jurisdictional allegations contradicted by his own documentary evidence, they are insufficient as a matter of law. Although there has been no challenge to the Court's subject matter jurisdiction in the three years since this lawsuit was filed, the Court cannot overlook these defects, even where “many months of work on the part of the attorneys and the court may be wasted.” Henderson, 131 S.Ct. at 1202.

I. Plaintiff's Domicile

“Plaintiffs bear the burden of showing by a preponderance of the evidence that subject matter jurisdiction exists. [J]urisdiction must be shown affirmatively, and that showing is not made by drawing from the pleadings inferences favorable to the party asserting it.” APWU v. Potter, 343 F.3d 619, 623 (2d Cir.2003) (quotation marks and citations omitted; alteration in original). Whether diversity jurisdiction exists is determined by examining the citizenship of the parties at the time the action is commenced; diversity jurisdiction is not defeated if one party subsequently relocates. Freeport–McMoRan, Inc. v. K N Energy, Inc., 498 U.S. 426, 428, 111 S.Ct. 858, 112 L.Ed.2d 951 (1991).

The determination of a party's citizenship for purposes of 28 U.S.C. § 1332 is a mixed question of fact and law. Palazzo ex rel. Delmage v. Corio, 232 F.3d 38, 42 (2d Cir.2000). An individual's citizenship is determined by his or her domicile. Linardos v. Fortuna, 157 F.3d 945, 948 (2d Cir.1998). A person's “domicile” is “the place where a person has his true fixed home and principal establishment, and to which, whenever he is absent, he has the intention of returning.” Id. (quotation marks and citation omitted). At any given time, a person can only have one domicile. Palazzo, 232 F.3d at 42. Residence, alone, is not the equivalent of domicile, although it is prima facie evidence of domicile. Broadstone Realty Corp. v. Evans, 213 F.Supp. 261, 265 (S.D.N.Y.1962).

Here, Plaintiff's domicile is uncertain. His allegation that he is a resident of South Carolina is contradicted by the Membership List and the IRS 1065 forms. Drawing inferences against the party asserting jurisdiction, as the Court must, these documents imply that Plaintiff maintained a residence in New York, in at least 2011 and 2012. Accordingly, given these inconsistencies, Plaintiff is directed to submit proof that he was a South Carolina domiciliary at the time this lawsuit was commenced.

II. Defendants' Domicile

For purposes of diversity jurisdiction, a limited liability company has the citizenship of each of its members. See Handelsman v. Bedford Village Associates Ltd. Partnership, 213 F.3d 48, 51–52 (2d Cir.2000), citing Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir.1998); Strother v. Harte, 171 F.Supp.2d 203, 205 (S.D.N.Y.2001). Thus, to invoke this Court's diversity jurisdiction, plaintiff's complaint must allege the citizenship of each member of the limited liability company defendant. Krause v. Forex Exch. Mkt., Inc., 356 F.Supp.2d 332, 336 (S.D.N.Y.2005). Failure to do so may result in the dismissal of the complaint. Id.

Plaintiff has named as defendants an LLC, four individuals, and up to twenty Doe defendants, all of whom allegedly were “Members” or “Managing Members” of the LLC and who reside in New York. Compl. ¶¶ 4–19. These allegations, however, are belied by the Membership List. Pl. 56.1 Statement Appx., Ex. 4. Rather than unknown Doe defendants who all reside in New York, the Membership List shows 26 members, some of whom reside in Connecticut, Kentucky, and Minnesota. Id. Thus, not only are the allegations in the complaint inaccurate, they are also insufficient as a matter of law. For the reasons discussed below, Plaintiff cannot invoke the Court's diversity jurisdiction where the domicile of an LLC defendant's members is unknown or uncertain. Instead, Plaintiff must provide an accurate and complete list of Harborview's members and their respective domiciles so that the Court can establish whether diversity jurisdiction exists.

Because, by definition, their identity is anonymous, the presence of Doe defendants in federal diversity-based lawsuits is problematic, particularly where the citizenship of an LLC defendant depends upon the citizenship of Doe defendants. See Rich & Rich P'ship v. Poetman Records USA, Civ. A. No. 08–42–ART, 2008 WL 1868028, at *2 (E.D.K...