Opinion
Civil No. CCB-04-1746.
October 12, 2004
MEMORANDUM
Defendant U.S. Inspect, LLC ("U.S. Inspect") has filed a motion to dismiss, or, in the alternative for summary judgment, challenging this court's subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). On August 13, 2004, this court issued a memorandum and order holding the motion under advisement until September 23, 2004 to permit the plaintiffs to obtain information in order to make specific allegations supporting the exercise of this court's diversity jurisdiction. On August 20, 2004, the plaintiffs filed a motion to amend their previous complaint and an amended complaint with supporting exhibits that purported to demonstrate this court's subject matter jurisdiction. On September 10, 2004, defendant Coldwell Banker Corporation filed a response to that motion asserting that the facts underlying plaintiffs' amended complaint remain insufficient for this court to exercise jurisdiction. This issue has now been fully briefed to the court. For the reasons stated below, this court lacks subject matter jurisdiction. Therefore, defendant U.S. Inspect's motion to dismiss will be granted and the plaintiffs' motion to amend will be denied.
BACKGROUND
The claims in this case arise out of plaintiffs' purchase of a residence at 10 Stewarton Court, Baltimore, Maryland in June 2003. Defendant Coldwell Banker Residential Brokerage served as buyer's agent in the transaction. Defendant Long Foster Real Estate, Inc. ("Long Foster") served as the seller's agent. Defendant U.S. Inspect conducted an inspection of the property prior to the purchase. The plaintiffs allege that the property has preexisting water damage and toxic mold infestation, rendering certain areas of the property unfit for habitation. (Am. Compl. at ¶ 3-9) Neither realtor nor U.S. Inspect informed plaintiffs of the presence of mold or water damage on the property. ( Id. at ¶ 4-5) Invoking the diversity jurisdiction of the federal district courts, the plaintiffs brought this suit seeking to recover damages for personal injuries, loss of use of the property, loss of income, and property damage, under theories of negligence, failure to warn, and breach of warranty. ( Id. at ¶ 10-21)
ANALYSIS
The federal district courts are courts of limited jurisdiction. The party asserting the court's jurisdiction must allege and prove such jurisdiction. Crosten v. Kamauf, 932 F. Supp. 676, 679 (D. Md. 1996) (citing Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). Here, the plaintiffs invoke diversity jurisdiction under 28 U.S.C. § 1332(a)(1), which grants the district courts original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different States." The statute has been interpreted to require complete diversity of the parties, meaning that each plaintiff must be a citizen of a different state than each defendant. See Dewhurst v. Telenor Invest AS, 83 F. Supp. 2d 577, 595 (D. Md. 2000) (citing Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)). A corporation is deemed to be a citizen of any state in which it is incorporated and the state in which it has its "principal place of business." 28 U.S.C. § 1332(c)(1).
U.S. Inspect seeks to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) for lack of subject matter jurisdiction based on diversity. This kind of motion may allege that a complaint does not allege facts upon which subject matter jurisdiction can be based or that the facts alleged in support of jurisdiction, although sufficient, are untrue. See Adams, 697 F.2d at 1219. In the latter situation, the court may go beyond the allegations of the complaint and consider evidence by affidavit, depositions, or live testimony, and then weigh the evidence to determine if there is jurisdiction. Id.
Evaluation of the exhibits accompanying the plaintiffs' amended complaint and the defendants' response to plaintiffs' motion to file an amended complaint demonstrates that the plaintiffs have failed to meet their burden to show complete diversity. All of the plaintiffs are alleged to be residents, (Am. Compl. at p. 3), and thus citizens, of Maryland. See, e.g., Sligh v. Doe, 596 F.2d 1169, 1171 n. 5 (4th Cir. 1979) (generally individuals are citizens of the state where they reside). Defendant Long Foster is incorporated in Virginia and maintains its principal place of business there. (Pls.' Ex. A.) Defendant U.S. Inspect is incorporated in Delaware and maintains its principal place of business there. (Pls.' Ex. B.) As to these parties, the plaintiffs and defendants are in complete diversity.
The third defendant named in this action is "Coldwell Banker Corporation d/b/a Coldwell Banker Residential Brokerage." (Am. Compl. at p. 1) Defendant Coldwell Banker Corporation asserts that it does not do business as Coldwell Banker Residential Brokerage and that NRT Mid-Atlantic, Inc. ("NRT") is the entity doing business as Coldwell Banker Residential Brokerage. (Def.'s Resp. to Pls.' Mot. for Leave to File an Am. Compl. at p. 1.) The plaintiffs agree that NRT is the owner of the entity doing business as Coldwell Banker Residential Brokerage. (Am. Compl. at p. 3; Pls.' Ex. D.) Plaintiffs' Exhibit D is a Maryland State Department of Assessment and Taxation form showing that NRT is the owner of the business using the trade name Coldwell Banker Residential Brokerage. Use of a trade name is merely descriptive of the business corporation using that name; without more it does not create a separate legal entity. See, e.g., Snowden v. Checkpoint Check Cashing, 290 F.3d 631, 635 n. 2 (4th Cir. 2002). The plaintiffs have made no allegation that Coldwell Banker Residential Brokerage represents a legal entity separate from NRT. Thus, the plaintiffs' claims against Coldwell Banker Residential Brokerage are properly characterized as claims against NRT.
The plaintiffs and Coldwell Banker Corporation, a Delaware Corporation, (Defs.' Ex. A at p. 4), with its principal place of business in New Jersey are diverse, but the plaintiffs' complaint alleges injury by the entity doing business as Coldwell Banker Residential Brokerage. As noted above, NRT, not Coldwell Banker Corporation, is this entity.
The plaintiffs allege that all defendants are incorporated outside of Maryland (Am. Compl. at p. 4), but have not made a specific allegation or offered any evidence of the state where NRT is incorporated. In contrast, the defendants have offered NRT's certificate of status from the Maryland State Department of Assessment and Taxation as evidence that NRT is incorporated in Maryland. (Def.'s Ex. A at p. 3) The court is satisfied that the defendants' evidence establishes that NRT is incorporated in Maryland. Because NRT is incorporated in Maryland, it is a citizen of Maryland for diversity purposes. The lack of complete diversity between the plaintiffs and the defendants deprives this court of subject matter jurisdiction over this case. Therefore, the defendants' motion to dismiss for lack of subject matter jurisdiction will be granted.
A separate Order follows.
ORDER
For the reasons stated in the accompanying Memorandum, it is hereby Ordered that:1. the plaintiffs' motion to amend (no. 22) is Denied;
2. the motion to dismiss filed by U.S. Inspect, LLC (no. 7) is Granted; and
3. the complaint is Dismissed pursuant to Fed.R.Civ.P. 12(b)(1).