Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_06-cv-01987/USCOURTS-azd-2_06-cv-01987-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Fraud

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Design Trend International Interiors, Ltd.,

an Arizona corporation, 

Plaintiff, 

vs.

S. W. Huang and Terry Chan Huang,

husband and wife, 

Defendants. 

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No. CV-06-1987-PHX-LOA

ORDER AND

ORDER TO SHOW CAUSE

This matter arises on Defendants’ Motion to Amend Answer, filed on March 29,

2007. (docket # 18) No response has been filed by Plaintiff to date.

I. MOTION TO AMEND ANSWER

The Rule 16 scheduling order required all amendments to pleadings be filed by

March 30, 2007. (docket # 15) Thus, Defendants’ Motion to Amend Answer was timely

filed and makes clear that Defendants intend “to amend their answer to include as an

affirmative defense the equitable defense of recoupment.” (docket # 18 at 1) Due to an

obvious clerical error, defense counsel underscored paragraph 31 of the lodged Amended

Answer, rather than the new paragraph alleging the defense of recoupment, in his attempt

Case 2:06-cv-01987-LOA Document 21 Filed 04/18/07 Page 1 of 5
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1

 Defense counsel’s reference to Rule 15(a), FED.R.CIV.P., is misplaced. Amendment

of pleadings is controlled by Rule 16(b), FED.R.CIV.P. Johnson v. Mammoth Recreations,

Inc., 975 F.2d 604, 607-08 (9th Cir.1992)

2

 The parties were reminded that (1) a corporation is a citizen of the state where it is

incorporated and the state of its principle place of business and (2) partnerships and limited

liability companies are citizens of every state in which one of their members or partners

resides. Title 28 U.S.C. §1332(c); Indus. Tectonics v. Aero Alloy, 912 F.2d 1090, 1092 (9th

Cir. 1990); Belleville Catering Co. v. Champaign Market Place, L.L.C., 350 F.3d 691, 692

(7th Cir. 2003).

Diversity jurisdiction is based on citizenship, not residency. To be a citizen of a

particular state, a natural person must both be a citizen of the United States and be domiciled

within that state. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218,

2221 (1989); Kalinowski v. Davol, Inc., 2006 WL 2615894 * 2 (D. Ariz. 2006). A person's

domicile is his or her permanent home, where he or she resides with the intention to remain

or to return. Lew v. Moss, 797 F.2d 747, 749 (9th Cir.1986). A person residing in a given

state is not necessarily domiciled there, and is also not necessarily a citizen of that state.

Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir.2001).

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to comply with LRCiv 15.1(a). (docket # 18 at 8) There being no objection and good cause

appearing, the subject motion will be granted.1

II. JURISDICTION

At the February 14, 2007 Rule 16 scheduling conference, Plaintiff's counsel

raised a concern he had about the possibility of the lack of complete diversity of citizenship

in that one or both Defendants may be residents of the State of Arizona.2

 Defendants

removed this lawsuit to the District Court on or about August 14, 2006 upon information and

belief that Plaintiff is an Arizona corporation doing business in Arizona and the

representation that Defendants “live in and are residents of the State of California.” (docket

# 1, ¶¶ 5 and 6) The Court thereafter directed that “Plaintiff shall either file a motion to

remand for lack of jurisdiction or the parties shall file a joint short statement (no more than

two pages) of the jurisdictional basis for the case, describing the basis for the jurisdiction and

citing specific jurisdictional statute(s) on or before March 23, 2007. If the parties file[d] a

joint statement of jurisdiction, the Court [would] do an independent inquiry into the issue of

subject matter jurisdiction. Feldman v. Allstate Ins. Co., 322 F.3d 660, 665 (9th Cir. 2003);

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3

 Notwithstanding the requirement of complete diversity, an otherwise non-diverse

party's citizenship may be disregarded if a party can demonstrate that the non-diverse party

was “fraudulently joined.” Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th

Cir.2001) (citing McCabe v. General Foods Corp., 811 F.2d 1336, 1339 (9th Cir.1987).

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Rule 12(h)(3), FED.R. CIV.P.” (docket # 15 at 5-6) To date, neither a motion to remand for

lack of jurisdiction nor a joint jurisdictional statement establishing jurisdiction of this federal

lawsuit has been filed.

It is undisputed that "a [district] court has an obligation to inquire sua sponte into

its subject matter jurisdiction, and to proceed no further if such jurisdiction is wanting.”

Feldman, 322 F.3d at 665; In re Recticel Foam Corp., 859 F.2d 1000, 1002 (1st Cir.1988);

Fed.R.Civ.P. 12(h)(3). “No matter how tantalizing a problem may be, a federal [] court

cannot scratch intellectual itches unless it has jurisdiction to reach them.” Director, OWCP

v. Bath Iron Works Corp., 853 F.2d 11, 13 (1st Cir.1988). Federal court is a court of limited

jurisdiction and may not grant relief absent a constitutional or valid statutory grant of

jurisdiction. A-Z International v. Phillips, 323 F.3d 1141, 1145 (9th Cir. 2003). "A federal

court is presumed to lack jurisdiction in a particular case unless the contrary affirmatively

appears." Id.; Stevedoring Servs. of Am., Inc. v. Eggert, 953 F.2d 552, 554 (9th Cir.1992)

(quoting Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir.1989)).

Federal subject-matter jurisdiction under Title 28 U.S.C. § 1332(a)(1) requires

complete diversity of citizenship3

 and an amount in controversy in excess of $75,000.

Generally, if a defendant has improperly removed a case to federal court over which the

federal court lacks complete diversity jurisdiction, the district court shall remand the case to

state court. Title 28 U.S.C. § 1447(c); Sanchez v. Monumental Life Ins. Co., 102 F.3d 398,

403-04 (9th Cir.1996) (strong presumption in favor of remand). “Once a defendant has filed

a notice of removal in the federal court, a plaintiff objecting to removal ‘on the basis of any

defect in removal procedure’ may, within 30 days, file a motion to remand the case to state

court. § 1447(c).” Caterpillar Inc. v. Lewis, 519 U.S. 61, 62 (1996). “This 30-day limit does

not apply, however, to jurisdictional defects: ‘If at any time before final judgment it appears

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4

 Section 1447(c) of Title 28 provides, in relevant part: “An order remanding the case

may require payment of just costs and any actual expenses, including attorney fees, incurred

as a result of the removal.” 28 U.S.C. § 1447(c). 

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that the district court lacks subject matter jurisdiction, the case shall be remanded.’” Id.

(citations omitted) With a few exceptions, subject-matter jurisdiction is, however, premised

upon diversity of citizenship at the time of filing the complaint. Grupo Dataflux v. Atlas

Global Group, L.P., 541 U.S. 567, 571 (2004); Newman-Green, Inc. v. Alfonzo-Larrain, 490

U.S. 826, 830 (1989). 

If a district court determines that removal was improper, it has discretion to award

to a plaintiff the reasonable attorney's fees and costs a plaintiff incurred in attacking removal.

Pressman v. Meridian Mortgage Co., 334 F.Supp.2d 1236, 1241 (D. Hawai'i 2004) (citing

Moore v. Permanente Medical Group, Inc., 981 F.2d 443, 446 (9th Cir.1992) (“By adding

attorney's fees to costs which may be awarded after remand, Congress provided the statutory

authorization necessary to award fees without a finding of bad faith. Congress has

unambiguously left the award of fees to the discretion of the district court.”)). Under Title

28 U.S.C. § 1447(c),4

 an award of attorney fees and costs is only authorized if removal was

improper. Baddie v. Berkeley Farms, Inc., 64 F.3d 487 (9th Cir.1995) “In an all-too-rare

effort to reduce the high cost of litigation, Congress provided that remand orders are

completely unreviewable ‘on appeal or otherwise.’” Osborn v. Haley, U.S. , 127 S.Ct.

881, 2007 WL 135830 (2007) (citing Title 28 U.S.C. § 1447(d)).

Accordingly,

IT IS ORDERED that Defendants’ Motion to Amend Answer, (docket # 18), is

GRANTED. Defendants’ Lodged Amended Answer (docket # 19) is deemed filed the date

this Order is entered by the Clerk. LRCiv. 15.1(c).

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IT IS FURTHER ORDERED that setting a Show Cause deadline on or before

5:00 p.m. on Monday, May 7, 2007 for Defendants to show cause in writing why this Court

has subject matter jurisdiction to exercise jurisdiction over this lawsuit and why this Court

should not remand this lawsuit back to state court. Absent good cause shown, the

Defendants’ failure to timely establish by affidavit or other admissible evidence complete

diversity of citizenship at the time of the filing of the Complaint shall result in the entry of

a remand order and possible imposition of an award of reasonable attorneys’ fees and costs

against Defendants.

DATED this 18th day of April, 2007.

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