Rowell v. Franconia Minerals Corp.
| Decision Date | 16 April 2010 |
| Docket Number | Case No. 08 C 2517. |
| Citation | 706 F.Supp.2d 891 |
| Parties | William ROWELL, Plaintiff,v.FRANCONIA MINERALS CORP., Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Keith L. Davidson, Law Offices of Keith L. Davidson, Chicago, IL, for Plaintiff.
David J. Fish, The Fish Law Firm, P.C., Naperville, IL, for Defendant.
Plaintiff William Rowell brought this action against defendant Franconia Minerals Corporation (“Franconia”) alleging breach of contract. (2nd Am. Compl. ¶¶ 5-38.) [Dkt 35.] The case originated in the Circuit Court of Cook County, Illinois, but was removed to federal court by Franconia on the basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. (Notice of Removal.) [Dkt 1.] The parties consented to the exercise of jurisdiction by a magistrate judge pursuant to 28 U.S.C. § 636(c). [Dkt 54.]
Franconia has moved for summary judgment. [Dkt 100.] Upon reviewing the motion, the court detected a potential flaw in subject matter jurisdiction: Rowell, a Canadian citizen, is an alien admitted to the United States for permanent residence. (Pl.'s LR Resp. ¶¶ 1, 2.) [Dkt 120.] He has lived in Illinois for 10 years. ( Id.) Franconia is incorporated in Alberta, Canada and has its principal place of business in the state of Washington. ( Id.) The court requested supplemental briefing from the parties about whether there is federal jurisdiction in the case. (Order, Dec. 23, 2009.) [Dkt 137.] Proceedings on Franconia's motion were stayed until a determination was reached regarding subject matter jurisdiction. ( Id.)
For the reasons set out below, the case is remanded to the Circuit Court of Cook County, Illinois for lack of subject matter jurisdiction. Franconia's motion for summary judgment is stricken as moot without prejudice.
Federal courts are courts of limited jurisdiction. Turner/Ozanne v. Hyman/Power, 111 F.3d 1312, 1316 (7th Cir.1997). In the absence of jurisdiction, a court is powerless to act. Lewis v. Local Union No. 100 of the Laborers' Intl. Union of N.A., AFL-CIO, 750 F.2d 1368, 1377 n. 11 (7th Cir.1984). Federal courts are expected to monitor their jurisdictional boundaries vigilantly and to guard carefully against expansion by judicial interpretation. American Fire & Cas. Co. v. Finn, 341 U.S. 6, 17-18, 71 S.Ct. 534, 95 L.Ed. 702 (1951); see also FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 230-31, 110 S.Ct. 596, 107 L.Ed.2d 603 (1990) (); Long v. Shorebank Dev. Corp., 182 F.3d 548, 554 (7th Cir.1999) (); In re Shell Oil Co., 966 F.2d 1130, 1133 (7th Cir.1992). Just as a federal court cannot expand its jurisdiction, parties may not confer subject matter jurisdiction on a federal court by oversight or consent. Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, 589 F.3d 881, 886 (7th Cir.2009).
Article III, Section 2 of the Constitution provides in part that the judicial power of the United States shall extend to controversies “between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.” 28 U.S.C. § 1332(a), which governs federal jurisdiction in diversity cases, requires complete diversity among the parties. Lincoln Prop. Co. v. Roche, 546 U.S. 81, 89, 126 S.Ct. 606, 163 L.Ed.2d 415 (2005). That statute states, in relevant part:
28 U.S.C. § 1332(a).
Franconia's Notice of Removal asserted that either subsection (1) or subsection (2) of § 1332(a) provides jurisdiction here, on the ground that Rowell is a citizen of Illinois and Franconia is a citizen of both Canada and the state of Washington. (Notice of Removal at 1-2.) The question here is whether that characterization is correct, because if Rowell is also a citizen of Canada, complete diversity is lacking.
Pursuant to 28 U.S.C. § 1332(a), “an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled.” Thus, Rowell is considered a citizen of Illinois for purposes of diversity jurisdiction. Whether Rowell is also deemed a citizen of Canada is at issue.
In Intec USA, LLC v. Engle, 467 F.3d 1038, 1042-43 (7th Cir.2006), the Seventh Circuit addressed the question, holding that “the best reading” of § 1332(a)'s permanent resident alien provision is that “permanent-resident aliens have both state and foreign citizenship.” See also See Karazanos v. Madison Two Assoc., 147 F.3d 624, 628 (7th Cir.1998) (). Thus, Rowell is a citizen of both Canada and Washington, and complete diversity is lacking.
To defend diversity jurisdiction here, Franconia argues that Intec was “implicitly overruled” by the Seventh Circuit two years later in MAS Capital, Inc. v. Biodelivery Sciences Intl., Inc., 524 F.3d 831 (7th Cir.2008). (Def.'s Mem. at 5-6.) [Dkt 142.] In MAS Capital, the court addressed a different question: the citizenship of a domestic corporation with a foreign principal place of business. 524 F.3d at 832-33. In doing so, the court looked to subsection (c)(1) of 28 U.S.C. § 1332, which states, in relevant part that “a corporation 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....” Because the word “State” is capitalized in that provision, the court interpreted it to mean “state of the United States,” and concluded that the corporation's foreign principal place of business should be disregarded. Id.1 Franconia argues that because the word “State” in the permanent resident alien provision of § 1332(a) is also capitalized, a permanent resident alien's foreign citizenship should likewise be disregarded. (Def.'s Mem. at 6.)
The problem with Franconia's argument is that the Seventh Circuit expressly considered that option in Intec and rejected it. Analyzing the permanent resident alien provision, which was added to the statute in 1988, the court stated:
But what does it mean? It could mean that a permanent-resident alien “shall be deemed a citizen [exclusively] of the State in which such alien is domiciled.” Or it could mean that the alien “shall be deemed a citizen of the State in which such alien is domiciled [in addition to his foreign citizenship].”
Intec, 467 F.3d at 1042 (brackets in original). The history of the provision, the court concluded, “unambiguously shows that the text's function is to add a (deemed) domestic citizenship to an alien who otherwise would come within the jurisdiction under § 1332(a)(2) or § 1332(a)(3)....” Id. at 1043. Thus, the Seventh Circuit concluded, an alien's foreign citizenship cannot be disregarded. Id. The court acknowledged that its view differs from that of the Third Circuit as expressed in Singh v. A.G. Daimler-Benz, 9 F.3d 303 (3d Cir.1993), but concluded that “ Singh is wrong and Karazanos right.” 467 F.3d at 1043.
There is nothing in the MAS Capital opinion to suggest that the court believed it was overruling its express holding in Intec, or that Intec even needed to be distinguished. MAS Capital did not involve or even discuss the permanent resident alien provision.2 Rowell, as a permanent resident alien, is a citizen of both Illinois and Canada.3
Perhaps concerned that Intec dooms its argument about Rowell's citizenship, Franconia backtracks from its Notice of Removal and argues that it is a citizen only of the state of Washington, not of Canada. (Def.'s Mem. at 1.) Pursuant to 28 U.S.C. § 1332(c)(1), “a corporation 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....” Based on that language, it appears that Franconia must be a citizen of both Canada (where it is incorporated) and the state of Washington (where it has its principal place of business).
However, Franconia contends that its Canadian citizenship should be disregarded based, again, on the Seventh Circuit's decision in MAS Capital. (Def.'s Mem. at 2-5.) To recap, in MAS Capital, the court held that a corporation with a domestic state of incorporation (Nevada) and a foreign principal place of business (Taiwan) was a citizen only of Nevada for diversity of citizenship purposes. 524 F.3d at 833. The court rejected the argument that under § 1332(c)(1) a domestic corporation having its principal place of business in a foreign state has two citizenships. Rather, the court found that, because the word “State” in subsection (c)(1) is capitalized, it refers to one of the 50 domestic states and not a foreign state, and the corporation's foreign citizenship should be disregarded. Id. at 832. Franconia argues that although its situation is the reverse-Franconia has a foreign incorporation and a domestic principal place of business-the same result should apply here, namely, that Franconia's foreign citizenship should be disregarded because subsection (c)(1) refers only to a corporation's “State,” which means a...
To continue reading
Request your trial