McCann v. Newman Irrevocable Trust

• Decision Date: 16 August 2006
• Docket Number: No. 052312.,052312.
• Citation: 458 F.3d 281
• Parties: Virginia McCANN, on behalf of the Estate of William E. McCann, Appellant v. The George W. NEWMAN IRREVOCABLE TRUST; The Bank of New York, as Trustee of the Irrevocable Trust of George W. Newman; Marc Joseph, as Trustee of the Irrevocable Trust of George W. Newman; Patricia J. Theryoung, as Trustee of the Irrevocable Trust of George W. Newman.
• Court: U.S. Court of Appeals — Third Circuit

458 F.3d 281

Virginia McCANN, on behalf of the Estate of William E. McCann, Appellant v. The George W. NEWMAN IRREVOCABLE TRUST; The Bank of New York, as Trustee of the Irrevocable Trust of George W. Newman; Marc Joseph, as Trustee of the Irrevocable Trust of George W. Newman; Patricia J. Theryoung, as Trustee of the Irrevocable Trust of George W. Newman.

No. 052312.

United States Court of Appeals, Third Circuit.

Submitted Pursuant to Third Circuit LAR 34.1(a) April 27, 2006.

Filed August 16, 2006.

George H. Parsells, Esquire, John P. Leonard, Esquire, McElroy, Deutsch, Mulvaney & Carpenter, LLP, Morristown, NJ, Attorneys for Appellant.

Gary K. Wolinetz, Esquire, Jemi M. Goulian, Esquire, Greenbaum, Rowe, Smith & Davis LLP, Woodbridge, NJ, Attorneys for Appellees, The George W. Newman Irrevocable Trust and Marc Joseph, as Trustee of the Irrevocable Trust of George W. Newman.

Christopher J. Stracco, Esquire, Pitney Hardin LLP, Morristown, NJ, Attorney for Appellee, The Bank of New York, as Trustee of the Irrevocable Trust of George W. Newman.

Lori E. Grifa, Esquire, Joseph Tripodi, Esquire, Wolff & Samson PC, West Orange, NJ, Attorneys for Appellee, Patricia J. Theryoung, as Trustee of the Irrevocable Trust of George W. Newman.

Before SCIRICA, Chief Judge, NYGAARD and ALARCÓN^*, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Chief Judge.

In this appeal from the District Court's final order granting defendants' motion to dismiss for lack of subject matter jurisdiction, the issue is whether plaintiff established diversity of citizenship based on a change of domicile. We will vacate and remand.

I.

A.

On July 6, 1990, George W. Newman established and funded the George W. Newman Irrevocable Trust to acquire and hold property in Secaucus, New Jersey. Newman named as trustees Patricia Theryoung, Marc Joseph, and the National Community Bank, which was later acquired by the Bank of New York. Newman's development company, Allied Junction Corporation, was to develop the property acquired by the trust into a commercial and transportation center. Newman hired William E. McCann as President, Chief Executive Officer, and Director of Operations of Allied Junction Corporation, which later became Secaucus Connection, L.L.C.

A dispute arose between McCann and the Newman Trust over McCann's compensation. Theryoung and the Bank of New York, as trustees, agreed to settle the dispute by granting McCann an equity interest in the development project. Joseph, the third trustee, filed an action in state court to enjoin the other two trustees from entering the proposed agreement with McCann and from granting McCann any interest in trust property.

McCann died in February 2002 while this and related state court actions were pending. McCann's widow, Virginia, filed an action to intervene on behalf of McCann's estate, which the court denied. The court also dismissed all pending actions because Theryoung and the Bank of New York—the trustees who negotiated the agreement granting McCann an interest in the development project—had since resigned.

On December 23, 2004, McCann's estate filed an action in federal court in New Jersey against the Newman Trust and its trustees, seeking to enforce the proposed agreement. The estate asserted subject matter jurisdiction based on diversity, contending McCann had changed his domicile from New Jersey to New Hampshire prior to his death. Defendants filed a motion to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1), contending diversity of citizenship was lacking because all parties were domiciled in New Jersey.¹

B.

The material facts regarding McCann's domicile are undisputed. In 1969, he and his wife, Virginia, purchased a house in Short Hills, New Jersey, where they resided for over thirty years. In 1990, they purchased a second house in North Hampton, New Hampshire. In June 2000, they sold their New Jersey house and moved their furniture and personal belongings to New Hampshire. Virginia became a full-time resident of New Hampshire, but McCann rented an apartment in Springfield, New Jersey, and continued to live and work in New Jersey during the week. He spent weekends in New Hampshire.

McCann stopped commuting to New Jersey in November 2001, when he stopped receiving a salary from Secaucus Connection, L.L.C. During the three months between November 2001 and his death in February 2002, he traveled to New Jersey four times to attend meetings regarding the development project. He did not use his New Jersey apartment after January, but he did not cancel or break the lease or sublet the apartment.

McCann had ties to both states. He registered to vote in New Jersey in August 2001 and voted in the New Jersey general election on November 6, 2001. He registered to vote in New Hampshire at the end of November, but never actually voted there prior to his death. On July 30, 1999, he obtained a New Hampshire driver's license, but he maintained a New Jersey license, which he renewed after receiving the New Hampshire license. When Virginia became a full-time New Hampshire resident, the McCanns registered and insured all of their personal vehicles in New Hampshire. McCann had use of a company car in New Jersey.

McCann transferred his personal bank accounts to New Hampshire, but maintained a brokerage account in excess of $2.6 million in New Jersey. His federal income tax returns filed during his life represented he was a New Jersey resident. But his 2001 federal income tax return, prepared by Virginia and filed after his death, represented he was a New Hampshire resident. Virginia's application for continued health insurance coverage after McCann's death represented he was a New Jersey resident. McCann's funeral was held in New Jersey, but he was buried in New Hampshire.

C.

On August 8, 2005, the District Court heard oral argument on defendants' motion to dismiss. Neither party requested—and the court did not hold—an evidentiary hearing regarding McCann's domicile. Following oral argument, the District Court dismissed the estate's complaint for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1). In a letter opinion dated the same date, the court explained, "the burden here rests squarely on Plaintiff to demonstrate by clear and convincing evidence that McCann 1) took up residence in New Hampshire, and 2) intended to remain there." (App.8.) The court concluded the estate had not met this burden and accordingly, had not established McCann changed his domicile to New Hampshire prior to his death.

The estate contends on appeal that the District Court erred in applying a clear and convincing evidence standard of proof, in concluding McCann was not a domiciliary of New Hampshire, and in failing to hold an evidentiary hearing prior to dismissing the complaint.

II.

We have jurisdiction to review the District Court's final order granting defendants' motion to dismiss under 28 U.S.C. § 1291.

A district court's dismissal for lack of subject matter jurisdiction is a question of law, over which we exercise plenary review. See Golden ex rel. Golden v. Golden, 382 F.3d 348, 354 (3d Cir.2004); Grand Union Supermarkets of V.I., Inc. v. H.E. Lockhart Mgmt., Inc. 316 F.3d 408, 410 (3d Cir.2003). A district court's determination regarding the relevant burden of proof is also a question of law, over which we exercise plenary review. See United States v. Rodriguez, 342 F.3d 296, 298 (3d Cir.2003); Polselli v. Nationwide Mut. Fire Ins. Co., 23 F.3d 747, 750 (3d Cir. 1994).

A district court's determination regarding domicile or citizenship is a mixed question of fact and law, but primarily one of fact, which we review for clear error. See Krasnov v. Dinan, 465 F.2d 1298, 1299-1300 (3d Cir.1972). Under this standard of review, "our sole function is to review the record to determine whether the findings of the District Court were clearly erroneous, i.e., whether we are `left with a definite and firm conviction that a mistake has been committed.'" Id. at 1302 (quoting Speyer, Inc. v. Humble Oil and Ref. Co., 403 F.2d 766, 770 (3d Cir.1968)).

III.

A.

Federal district courts are vested with original jurisdiction over civil actions where the matter in controversy exceeds the sum or value of $75,000 and is between "citizens of different States." 28 U.S.C. § 1332(a)(1). If a party is deceased, "the legal representative of the estate of a decedent shall be deemed to be a citizen only of the same State as the decedent." § 1332(c)(2).

Several principles guide our analysis of a party's citizenship for purposes of subject matter jurisdiction. The party asserting diversity jurisdiction bears the burden of proof. McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Samuel-Bassett v. KIA Motors Am., Inc., 357 F.3d 392, 396 (3d Cir.2004). A party generally meets this burden by proving diversity of citizenship by a preponderance of the evidence. McNutt, 298 U.S. at 189, 56 S.Ct. 780.

Citizenship is synonymous with domicile, and "the domicile of an individual is his true, fixed and permanent home and place of habitation. It is the place to which, whenever he is absent, he has the intention of returning." Vlandis v. Kline, 412 U.S. 441, 454, 93 S.Ct. 2230, 37 L.Ed.2d 63 (1973). In determining an individual's domicile, a court considers several factors, including "declarations, exercise of political rights, payment of personal taxes, house of residence, and place of business." Krasnov, 465 F.2d at 1301 (quotation omitted). Other factors to be considered may include location of brokerage and bank accounts, location of spouse and family, membership in unions and other organizations, and driver's license and vehicle registration. 13B Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 3612 (3d ed.2005).

An individual can change domicile instantly. To do so, two things are required: "[h]e must take up residence at the new...