Ankura Consulting Group, LLC v. Mortazavi

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ---------------------------------------------------------X : ANKURA CONSULTING GROUP, LLC, : : Plaintiff, : : 22-CV-2385(VSB) - against - : : OPINION& ORDER : MOHAMMAD MORTAZAVI, : : Defendant. : : ---------------------------------------------------------X Appearances: Steven Yudin Yudin & Yudin PLLC New York, New York Counsel for Plaintiff Marisella Prada Prada & Associates San Jose, California Counsel for Defendant VERNON S. BRODERICK, United States District Judge: Defendant Mohammad Mortazavi (“Defendant”) removed this breach of contract case from the Supreme Court of the State of New York, Countyof New York on the basis of diversity citizenship. Before me are Plaintiff Ankura Consulting Group, LLC’s (“Plaintiff” or “Ankura”) motion to remand this case to the Supreme Court of New York and Defendant’s motion to dismiss or, in the alternative, to transfer thecase to the United States District Court for the Northern District of California. Because I find that I do not have subject matter jurisdictionover this action, Plaintiff’s motion to remand is GRANTED. Since this Court cannot exercise subject matterjurisdiction over this case, I do not consider or resolve Defendant’s motion to dismiss or to transfer the case. Factual and Procedural History On June 15, 2021, Plaintiff, asserting diversity jurisdiction under 28 U.S.C. § 1332 ,filed a complaint allegingbreach of contract claims against Defendant in this Court. (Doc. 1 Ex. A.) On July 1, 2021, Plaintiff filed a complaint in an unrelated actionagainst a different defendant in this Court, alsoinvoking diversity jurisdiction. Ankura v. Bernsten et al.,No. 21 CIV. 5303 (LLS) (“Bernsten”), at Doc. 1. On October 25, 2021, Judge Louis L. Stanton sua sponteordered Plaintiff to show that the Court had subject matter jurisdiction in Bernsten, noting that a limited liability company(“LLC”) takes the citizenship of each of its members. Ankura Consulting Group, LLC v. Bernsten, No. 21 CIV. 5303 (LLS), 2021 WL 4950583 , at *1 (S.D.N.Y. Oct. 25, 2021). Following Judge Stanton’s order, on November 12, 2021, Plaintiff and the defendant in that action stipulated to a voluntary dismissal pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(ii). Ankura v. Bernsten et al.,No. 21 Civ. 5303 (LLS), at Doc. 19. According to Plaintiff, because of its experience in Bernsten, including Judge Stanton’s order, Plaintiff realized that,since members of the LLC are citizens of California and Defendant in this action is also a resident, subject matter jurisdiction does not exist in the instantcase. (Doc. 14, at 5–6.) On October 28, 2021, Plaintiff filed a notice of voluntary dismissal of this action pursuant to Rule 41(a)(1)(A)(ii). (Doc. 1 Ex. B.) On December 6, 2021, Plaintiff filed a complaint against Defendant in the Supreme Court of the State of New York, County of New York, asserting the same claims for breach of contract. (Doc. 1 Ex. C.) OnMarch 23, 2022, Defendant filed a notice of removal, citing diversity jurisdiction as its basis for removal. (Doc. 1.) On March 31, 2022, Defendant filed itsmotion to dismiss pursuant to 28U.S.C.§ 1406(a) or, in the alternative, transfer the action to the Northern District of California pursuant to 28 U.S.C.§1404(a). (Docs. 8–9.) On April 22, 2022, Plaintiff filed a cross-motion to remand the action to state court and an opposition to Defendant’s motion to dismiss or transfer the case. (Docs. 12, 14–16.) On May 9, 2022, Defendant filed a response to Plaintiff’s cross-motion to remand. (Docs. 19–21.) Legal Standards “[A]nycivil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant orthe defendants, to the district court of the United States for the district and division embracing the place where such action is pending.” 28 U.S.C. § 1441 (a). District courts have original jurisdiction where the parties are “citizens of different States” and the amount in controversy exceeds $75,000. 28 U.S.C. § 1332 (a)(1). “Aplaintiffasserting subject matterjurisdictionhas the burdenof proving bya preponderance of the evidencethatit exists.” Makarovav.UnitedStates,201F.3d110,113 (2dCir.2000). Therefore, “the party seeking to invoke jurisdiction under 28 U.S.C. § 1332 bears the burdenof demonstrating that the grounds for diversity exist and that diversity is complete.” Herrick Co.v.SCSCommc’ns,Inc., 251 F.3d 315 , 322–23 (2d Cir. 2001) (internal quotation marks omitted). Consequently, on a motion to remand, the burden of showing complete diversity falls on “the party seeking to sustain the removal, not the party seeking remand.” Wilds v. United Parcel Serv. Inc., 262 F. Supp. 2d 163, 171 (S.D.N.Y. 2003) (citation omitted); see also United Food & Com.Workers Union, Local 919v. CenterMark Props Meriden Square, Inc., 30 F.3d 298 , 301 (2d Cir. 1994). Determination of diversity jurisdiction is based on “the state of facts that existed at the time of filing.” Grupo Dataflux v. Atlas Glob. Grp., L.P., 541 U.S. 567, 571 (2004). “Alimitedliabilitycompanytakesthe citizenshipof itsmembers.” AvantCap.Partners, LLCv.W108Dev.LLC, 387 F.Supp.3d320,322(S.D.N.Y. 2016) (citing Bayerische Landesbank,NewYork Branchv.AladdinCapitalMgmt.LLC,692F.3d42,49(2dCir.2012)). “Acomplaint premisedupondiversityof citizenshipmust allege the citizenshipof natural persons whoare members of a limitedliabilitycompanyandthe place of incorporationand principal place of business of anycorporateentities whoaremembers ofthe limitedliability company.” NewMillenniumCapital Partners,III,LLCv.Juniper Grp.Inc.,No.10Civ.46 (PKC),2010WL1257325,at *1(S.D.N.Y.Mar.26,2010) (citingHandelsmanv.BedfordVill. Assocs.Ltd.P’ship,213F.3d48,51–52(2dCir.2000)). Anactionmust be dismissedifsubject matter jurisdictionis lacking. Fed.R.Civ.P. 12(h)(3); seealsoLyndonville Sav.Bank & Tr.Co.v.Lussier,211F.3d 697,700(2dCir.2000) (“Itis axiomaticthatfederalcourts are courts oflimitedjurisdictionandmaynot decide cases over whichtheylacksubjectmatter jurisdiction.”). “Inthe context of removal,if at anytime beforefinaljudgment itappearsthatthe district court lacks subjectmatterjurisdiction,the case shall be remanded.” U.S.Bank,Nat’lAss’nas Tr.for Bear Sterns Asset BackedSec.I Tr.2006AC1, Asset-Backed Certificates, Series 2006-AC1 v. Profeta,No.3:18-CV-1710(CSH),2019 WL2185725,at *4(D.Conn.Mar.26,2019) (internal quotationmarksomitted);see also Vasurav.Acands,84F.Supp.2d531,540(S.D.N.Y.2000) (remandingcase tostate court, concluding“because diversityjurisdictionwas lackingat thetime of removal...thiscasewas improvidentlyremoved”). Discussion Defendant seeks to invoke diversity jurisdiction as its basis for removing this action to this Court. Therefore, “Defendant[], as the removing part[y], bear[s] the burden of demonstrating the propriety of removal.” Fouad v. Milton Hershey Sch. & Sch. Tr., No. 20 CIV. 10042 (PAC), 2021 WL 839453 (S.D.N.Y. Mar. 5, 2021) (internal quotation marks omitted). Defendant must show that complete diversity exists. Herrick Co., 251 F.3d at 322–23. Defendant acknowledges that Ankura is wholly owned by Ankura Intermediate Holdings, LP, which has eight limited partners who are all residents of California. (Doc. 19, at 2.) Defendant’s only attempt at showing complete diversity isits argument that “[t]his link to California seems rather attenuated and is an insufficient basis to defeat diversity jurisdiction.” (Id.) Defendant does not cite any case law to support this assertion. In any event, the statement does not satisfy Defendant’s burden of “demonstrating that the grounds for diversity exist and that diversity is complete.” Herrick Co.,251 F.3d at 322–23. Instead, Defendant improperlyshifts the burden to Plaintiff to show that diversity does not exist. Defendant argues that Plaintiff does not state who each member of Ankura was at the time of filing the complaint in December 2021 to show that members of the LLC included residents of California. (Doc. 19, at 4–5.) The law makes clear that the burden is not on Plaintiff. Defendant—as the party seeking to sustain removal—bears the burden to show that complete diversity exists. See Herrick Co.,251 F.3d at 322–23; see alsoWilds, 262 F. Supp. 2d at 171 (holding that the burden of showing complete diversity falls on “the party seeking to sustain the removal, not the party seeking remand”). Defendant’s argument that “Ankura should be required to identify each of its members, andthe citizenship of each” in order to “establish lack of diversity” simply is not the law and must be rejected. (Doc. 19, at 6.) Based on these facts, and because Defendant failed to show that complete diversity exists for removal, I find that I do not have subject matter jurisdiction over this case. Therefore, I cannot resolve Defendant’s motion to dismiss or, in the alternative, to transfer the action, and this case must instead be remanded to state court. IV. Conclusion Because this Court does not have subject matter jurisdiction to hear this case, the case is hereby REMANDED to the Supreme Court of the State of New York, County of New York. Upon remand of this case, the Clerk of Court is respectfully directed to close this case. SO ORDERED. Dated: August 17, 2022 New York, New York / / Vernon S. Broderick United States District Judge