Opinion
CIVIL ACTION NO. 3:00-CV-1801-G
June 19, 2002
MEMORANDUM ORDER
Before the court is the motion of the plaintiffs, American Realty Trust, Inc. ("ART") and Basic Capital Management, Inc. ("BCM"), and the third party defendants, A. Cal Rossi ("Rossi") and Gene E. Phillips ("Phillips") (collectively, "the movants"), to remand this case to the state court from which it was previously removed. For the reasons stated below, the motion is denied.
I. BACKGROUND
ART commenced this action in state court on June 26, 2000. See Notice of Removal ("Notice") at 1. In its Original Petition ("Petition"), ART alleged that each of the defendants, including Jack Takacs ("Takacs"), was a citizen of Colorado and that ART was a Georgia corporation with its principal place of business in Texas. Petition at 1, 2. The defendants, Matisse Capital Partners, L.LC. ("Matisse"), Paul Bagley ("Bagley") and Takacs (collectively, "the defendants") filed their notice of removal on August 16, 2000, alleging that this court has diversity jurisdiction over this case. Notice ¶ 3. The movants maintain that this court lacks subject matter jurisdiction over this case because the requisite diversity of citizenship between the parties does not exist. Specifically, the movants challenge the assertion by Takacs that he was a citizen of Colorado for diversity purposes at the time this action was removed to federal court. The movants argue that Takacs was a citizen of Texas at the time of removal, a fact which would destroy diversity in light of the Texas citizenship of both the plaintiffs and the third-party defendants. See generally Plaintiffs and Third Party Defendants Motion to Remand and Supporting Brief ("Motion"). The defendants assert that Takacs was a citizen of Colorado at the time the petition was filed in state court and at the time the action was removed to federal court, thus establishing diversity jurisdiction at the time of removal. See generally Defendants' Opposition to Plaintiffs' Motion to Remand ("Response").
I. ANALYSIS
Title 28 U.S.C. § 1441 (a) permits removal of "any civil action brought in a State Court of which the district courts of the United States have original jurisdiction." Under this statute, "[a] defendant may remove a state court action to federal court only if the action could have originally been filed in the federal court." Aaron v. National Union Fire Insurance Company of Pittsburg, Pennsylvania, 876 F.2d 1157, 1160 (5th Cir. 1989), cert. denied, 493 U.S. 1074 (1990) (citations omitted). Removal jurisdiction must be strictly construed, however, because it "implicates important federalism concerns." Frank v. Bear Steams Co., 128 F.3d 919, 922 (5th Cir. 1997); see also Willy v. Coastal Corp., 855 F.2d 1160, 1164 (5th Cir. 1988). Furthermore, "any doubts concerning removal must be resolved against removal and in favor of remanding the case back to state court." Cross v. Bankers Multiple Line Insurance Company, 810 F. Supp. 748, 750 (N.D. Tex. 1992); see also Shamrock Oil Gas Corporation v. Sheets, 313 U.S. 100, 108-09 (1941); Healy v. Ratta, 292 U.S. 263, 270 (1934). The burden of establishing federal jurisdiction is on the party seeking removal. Frank, 128 F.3d at 92 1-22; Willy, 855 F.2d at 1164.
There are two principal bases upon which a district court may exercise removal jurisdiction: (1) the existence of a federal question and (2) complete diversity of citizenship among the parties. See 28 U.S.C. § 1331, 1332. Here, the court cannot exercise jurisdiction over this case on the basis of a federal question because the case does not present any issues "arising under the Constitution, laws, or treaties of the United States." See 28 U.S.C. § 1331. However, the court can properly exercise jurisdiction on the basis of diversity of citizenship if the parties are completely diverse and the case involves an amount in controversy of at least $75,000. See 28 U.S.C. § 1332 (a). It was on this basis that the defendants removed this action to the United States District Court for the Northern District of Texas. Notice ¶ 3.
Section 1332 states, "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between — (1) citizens of different States. . . ." 28 U.S.C. § 1332 (a)(1). Neither ART nor BCM disputes that the amount in controversy in this case exceeds $75,000. See generally Motion.
The movants contend that complete diversity of citizenship does not exist because Takacs shares Texas citizenship with the plaintiffs and third-party defendants, thus destroying diversity. See Motion at 7-9. In support of this contention, the movants direct the court's attention to the following facts. First, the negotiations and execution of the contract at the heart of this dispute, the Consulting Agreement, were directed to Takacs at his offices at the Pacific Group, located at 2740 North Dallas Parkway, Plano, TX. Motion at 5. Second, Takacs recently testified at his deposition that he now resides in Texas, having taken a position with the Pacific group in September of 2001. Id. Further, he owns a house that he lives in with his girlfriend, Veronique Mantel ("Mantel"). Id.; Deposition of Jack Takacs at 5, 56-58, 62-65, and 237, located in Appendix to Plaintiffs and Third Party Defendants Motion to Remand and Supporting Brief ("Plaintiffs' Appendix"), tab E-10 at 64-72. The movants claim that they have recently discovered that the house Takacs said he purchased within the last year was actually purchased on July 27, 2000, before the removal date, with his wife, Mantel. Motion at 5; Certified Copy of the Deed of Trust from Dallas County Records, Plaintiffs' Appendix, tab H at 87-114. The movants also assert that Mantel had a driver's license issued in November 1999 at an apartment in Dallas, Texas, and that one of the finance sources identified by Takacs and/ or Matisse pursuant to the Consulting Agreement, Craig Allen, faxed Takacs at "Jack's home fax" to (214) 526-3138. Motion at 6; Plaintiffs' Appendix, tab E-8 at 61-62. Further, the movants claim that Takacs frequently stayed with Mantel in an apartment in Dallas, funded Mantel's checking account, out of which she paid utility bills, and funded the down payment on the house they later moved into together. Motion at 5-6.
The district court has the power to dismiss for lack of subject-matter jurisdiction on any one of three bases: the complaint alone; the complaint supplemented by undisputed facts evidenced in the record; or the complaint supplemented by undisputed facts plus the court's resolution of disputed facts. Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir.), cert. denied, 454 U.S. 897 (1981). Because of the nature of this motion, the court must decide whether to dismiss this case relying on the third type of evidence.
The defendants respond, however, that (1) the plaintiffs' own pleadings have repeatedly acknowledged that complete diversity existed at all relevant times, and (2) Takacs was a citizen of Colorado, both at the time the petition was filed and at the time this case was removed to federal court. See generally Response. As for the defendants' first point, they fail to cite any legal authority to support their argument. Response at 2-4. Because diversity jurisdiction involves subject matter jurisdiction and is not procedural, it cannot be waived and may be considered at any time before judgment. See Williams v. AC Spark Plugs Division of General Motors Corporation, 985 F.2d 783, 787 (5th Cir. 1993). The court acknowledges that the general rule is that diversity of citizenship is determined at the commencement of a lawsuit. See, e.g., Zurn Industries, Inc. v. Acton Construction Company, Inc., 847 F.2d 234, 236 (5th Cir. 1988). It is important to note, however, that the facts as of the date of filing of the suit are determinative on the issue of domicile in a diversity action. Scoggins v. Pollock, M.D., 727 F.2d 1025, 1028 (5th Cir. 1984). If, as the movants assert, neither the plaintiffs nor the court was aware of certain facts surrounding the issue of Takacs domicile at the time this case was removed, then the court cannot be sure that subject matter jurisdiction existed at that time. Furthermore, no court may decide a case without subject matter jurisdiction, and neither the parties nor their lawyers may stipulate to jurisdiction or waive arguments that the court lacks jurisdiction. See Christianson v. Colt Industries Operating Corporation, 486 U.S. 800, 818 (1988); American Fire Casualty Co. v. Finn, 341 U.S. 6, 17-18 (1951). Accordingly, the fact that the plaintiffs previously acknowledged the existence of diversity jurisdiction is not relevant to this inquiry. Therefore, the court will focus on the second issue — whether Takacs was a citizen of Colorado at the time of removal.
Citizenship or domicile for diversity purposes is determined by two elements: (1) physical presence within a state and (2) intent to make a home there indefinitely. See Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989). Courts look to the actual facts and circumstances in existence at both the time the original petition was filed and at the time of removal to determine where an individual is domiciled. Corny v. Prot, 85 F.3d 244, 248-249 (5th Cir. 1996). The Fifth Circuit has identified the following factors as indicative of citizenship: current residence; place of employment; location of real and personal property; membership in clubs and religious organizations; location of bank accounts; driver's license and automobile registration; and payment of taxes. Cowy, 85 F.3d at 251. No single factor is conclusive. Id. Rather, a "totality of the evidence" approach is used. National Artists Management Company, Inc. v. Weaving, 769 F. Supp. 1224, 1228 (S.D.N.Y. 1991).
No one disputes that Takacs was a Colorado citizen before moving to Texas, and the law presumes that once established, a person's domicile continues until another one is acquired. See, e.g., Mitchell v. United States, 88 U.S. 350, 353 (1874). Further, "on the question of whether a party has changed his domicile the party seeking to prove the change has the burden." Willis v. Westin Hotel Company, 651 F. Supp. 598, 603 (S.D.N.Y. 1986) (citing Mitchell).
The defendants argue that examination of the Coury factors establishes that Takacs was a citizen of Colorado at the relevant times. Response at 4. The defendants contend that Takacs had not changed his domicile from Colorado to Texas, nor did he intend to do so, at the time this case was removed. Id. The defendants submit that Takacs maintained multiple residences, including residences in California and Texas, but that he was domiciled in Colorado at the relevant times. Id. at 4-5; see also Declaration of Jack Takacs ("Takacs Decl.") ¶¶ 3-4, located in Appendix in Support of Defendants' Opposition to Plaintiffs' Motion to Remand ("Defendants' Appendix"), tab A at 1-2. Takacs conducted his financial affairs in Colorado, maintaining both his personal and business bank accounts in Denver and receiving his credit card statements in Denver. Takacs Decl. ¶¶ 6-8, Defendants' Appendix at 1-2. Takacs was a partner in Stone Pine Partners, an investment banking firm in Denver, Colorado. Takacs Decl. ¶ 2, Defendants' Appendix at I. He also owned an interest in real property located in Denver. Takacs Decl. ¶ 7, Defendants' Appendix at 2. Takacs was registered to vote in Colorado. Takacs Decl. ¶ 11, Defendants' Appendix at 2. His cellular phone account had a Denver, Colorado area code. Takacs Decl. ¶ 12, Defendants' Appendix at 2. Takacs maintained a membership at the Denver Athletic Club. Takacs Decl. ¶ 13, Defendants' Appendix at 2. His doctors and dentist were in Colorado. Takacs Decl. ¶ 15, Defendants' Appendix at 2. Further, he paid Colorado state and Denver municipal income tax for the entire year of 2000, which was contrary to his direct financial interests had he actually been a Texas domiciliary for all or part of 2000. Response at 5; Takacs Decl. ¶ 5; Defendants' Appendix at 1.
As for the issue of Mantel, the defendants dispute that she is Takacs' wife, and argue that, even assuming that she is, there are a number of problems with concluding that this automatically conferred Texas citizenship on Takacs. Response at 6-9. First, the defendants assert that Mantel was not a United States citizen at the time of removal, id. at 8, but they offer no evidentiary or legal support for this assertion and do not indicate whether her immigration status was that of a permanent resident. Second, the defendants contend that marriage to a citizen of one state is but one factor to consider in deciding the issue of domicile. See, e.g., Wasson v. Northrup Worldwide Aircraft Services, Inc., 443 F. Supp. 400, 402-404 (W.D. Tex. 1978) (holding that although Wasson had married a woman and resided with her in Texas, he had failed to otherwise take any of the steps that are normally associated with a change in domicile). The court has considered the movants' arguments, and for the purposes of this motion only, will assume that Mantel and Takacs were indeed mated as of the date of removal, and that her living expenses were largely funded by Takacs. Additionally, the court acknowledges that Takacs provided the down payment on the home that Mantel purchased in July 2000. Motion at 5-6; Response at 8-9. These circumstances alone, however, are not enough to convince the court that Takacs had changed his domicile from Colorado to Texas at the time this case was removed. After reviewing the totality of the evidence presented, the court finds that Takacs was a citizen of Colorado at the time this action was removed.
For purposes of diversity jurisdiction, 28 U.S.C. § 1332 (a) provides that an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled.
III. CONCLUSION
For the reasons discussed above, the movants' motion to remand this case to the state court from which it was previously removed is DENIED.