Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_04-cv-01178/USCOURTS-azd-2_04-cv-01178-0/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

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IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Pimal Property, Inc., a Delaware

corporation; Wilson Lam, individually, 

Plaintiffs, 

vs.

Fireman's Fund Insurance Company, a

foreign corporation; Gaintner Bandler

Reed, PLC, an Arizona corporation;

Michael J. Vander Maten; and Kevin

Reed, 

Defendants. 

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No. CIV 04-1178-PHX-JAT

ORDER

Pending before the Court are the Plaintiffs’ Motion to Remand (doc. 50); Defendant

Gaintner Bandler Reed's Motion to Dismiss (doc. 51), Defendant Fireman's Fund Insurance

Company's Motion to Stay (doc. 53); and Defendant Gaintner Bandler Reed's Motion for

Reconsideration (doc. 56). The Court now rules on the motions. 

I. BACKGROUND

On May 11, 2004, the Plaintiffs filed a Complaint against Defendant Fireman's Fund

Insurance Company in Maricopa County Superior Court. On June 7, 2004, the Defendant

removed this matter to the United States District Court for the District of Arizona, pursuant

to 28 U.S.C. § 1441(b), based on allegations of diversity jurisdiction. On November 5, 2004,

Case 2:04-cv-01178-JAT Document 126 Filed 12/02/05 Page 1 of 6
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the Plaintiffs filed a Motion for Leave to file a First Amended Complaint to add several new

defendants including Michael Vander Maten, Kevin Reed, and Gaintner Bandler Reed

("GBR"). After holding Oral Argument on the matter, on April 13, 2005, the Court granted

the Plaintiffs' Motion for Leave to Amend. 

On April 26, 2005, the Plaintiffs filed a Motion to Remand this action to Maricopa

County Superior Court for lack of subject matter jurisdiction. On May 4, 2005, Defendant

GBR filed a Motion to Dismiss. On May 13, 2005, Defendant Fireman's Fund filed a Motion

to Stay these proceeding pending resolution of Defendant GBR's Motion to Dismiss. After

the motions had been briefed, on September 30, 2005, the parties stipulated to the dismissal

of Defendants Kevin Reed and Michael Vander Maten. 

II. LEGAL STANDARD AND DISCUSSION

As an initial matter, the Court should note that whenever parties in a case do

something by stipulation that changes facts underlying the substantive arguments of motions

that are still pending before this Court, it is the responsibility of the parties to file a short

supplement to the pending motions calling this to the Court's attention. 

 Federal jurisdiction pursuant to 28 U.S.C. § 1332 exists only when there is complete

diversity between the plaintiffs and the defendants. Owen Equip. and Recreation Co. v.

Kroger, 437 U.S. 365, 373, 98 S.Ct. 2396, 2402 (1978); Inecon Agricorporation v. Tribal

Farms, 656 F.2d 498 (9th Cir. 1981). In order to achieve “complete diversity” no party

plaintiff may be a citizen of the same state as any of the defendants. Owen Equipment, 437

U.S. at 373, 98 S.Ct. at 2402; Inecon Agricorporation, 656 F.2d at 498. 

According to the Plaintiffs' Motion to Remand and First Amended Complaint: (1)

Plaintiff Pimal is a Delaware corporation with a principal place of business in Arizona; (2)

Defendant Michael Vander Maten is a citizen of the state of Arizona; (3) Defendant Kevin

Reed is a citizen of the state of Arizona; and (4) Defendant GBR is an Arizona corporation.

Plaintiffs argue that the addition of the three Defendants destroys subject matter jurisdiction

because the Defendants are citizens of the same state as Plaintiff Pimal. Because Defendants

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Vander Maten and Reed have recently been dismissed from this action, the Court need only

determine whether Defendant GBR destroys diversity of citizenship in this case.

The standard for determining citizenship for purposes of ascertaining diversity

jurisdiction is different depending upon whether an entity is a limited liability company or

a corporation. A corporation is deemed to be a citizen of both: (1) its state of incorporation;

and (2) the state where it has its principal place of business. 28 U.S.C. § 1332(c)(1);

Montrose Chemical Corp. of California v. Am. Motorists Ins. Co., 117 F.3d 1128, 1134 (9th

Cir. 1997). Unlike corporations, an unincorporated entity such as an L.L.C. is not, without

more, a citizen of the state that created the entity. Carden v. Arkoma Assocs., 494 U.S. 185,

187-88, 110 S.Ct. 1015, 1017 (1990). Rather, citizenship is determined by looking at the

citizenship of the individuals that comprise the legal entity. Carden, 494 U.S. at 196, 110

S.Ct. at 1021. In other words, such legal entities are citizens of every state in which each of

their members or partners are citizens. Id.; see also Mutuelles Unies v. Kroll & Linstrom,

957 F.2d 707, 711 (9th Cir. 1992) (where a partnership is a party, the citizenship of each

partner is considered for diversity purposes and none of the partners can be a citizen of the

same state as any opposing party). Failure to allege the citizenship of every member or

partner is inadequate to establish diversity jurisdiction. 

The parties in this case refer to Defendant GBR as an "Arizona corporation." The

mere statement that a corporate defendant is a citizen is inadequate to establish diversity

jurisdiction. Fifty Assocs. v. Prudential Ins. Co. of Am., 446 F.2d 1187, 1190 (9th Cir. 1970).

Moreover, through the course of these proceedings, it has never been in dispute that GBR is

an L.L.C. An L.L.C. is not a corporation, it is a professional limited liability company.

A.R.S. § 29-845(B). Therefore, GBR's citizenship is determined by looking at the citizenship

of all of its members or partners. 

On the face of the pleadings, there are insufficient allegations with respect to the

citizenship of each member or partner of GBR for this Court to exercise diversity jurisdiction.

Moreover, on November 21, 2005, counsel for GBR confirmed at Oral Argument of the

pending motions that GBR members Leroy Gaintner, Kevin Reed, Connie Peters, and Steve

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A natural person is a citizen of a particular state if they are a citizen of the United

States and domiciled within that state. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S.

826, 828, 109 S.Ct. 2218, 2221 (1989).

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Bandler are all citizens of the state of Arizona.1

 Thus, GBR is an Arizona citizen. 

In their moving papers, the Defendants concede that the addition of GBR destroys

diversity of citizenship. However, they argue that the Court should either: (1) reconsider its

prior ruling allowing the Plaintiffs to amend their Complaint and add the non-diverse

defendants; or (2) stay the Court's ruling on the Motion to Remand, rule on Defendant GBR's

Motion to Dismiss, dismiss the counts asserted against non-diverse defendants, and retain

jurisdiction over this case. 

A district court can, under appropriate circumstances, dismiss non-indispensable

parties in order to perfect subject matter jurisdiction. Inecon Agricorporation, 656 F.2d at

499; Desert Empire Bank v. Ins. Co. of N. Am., 623 F.2d 1371, 1376 (9th Cir. 1980).

However, such circumstances are not present in this case. 

This Court held Oral Argument on the Plaintiffs' Motion for Leave to file a First

Amended Complaint. Defendant Fireman's fund had ample opportunity to advance arguments

regarding the addition of new defendants in this case. The Defendants have not provided the

Court with any authority that suggests that GBR has standing to bring a motion to reconsider

an Order that was entered before GBR was a party to this action. Even assuming that GBR

does have standing to bring the Motion to Reconsider, it has not presented anything to suggest

that this Court's prior Order was in error. 

Motions to reconsider are disfavored, and are not the place to make arguments that

were not raised in the original briefing. Corp. v. Lynwood Equip., Inc., 841 F.2d 918, 925-26

(9th Cir. 1988). The Defendants suggest that in deciding whether to reconsider its prior

decision to allow the Plaintiffs to amend their Complaint, the Court should consider summary

judgment type evidence that speaks to the viability of the Plaintiffs' claims against GBR. That

is not a valid basis for reconsideration. 

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When the Plaintiffs moved to amend their Complaint, the Court not only examined the

pleadings, it held Oral Argument and found that the Plaintiffs had a legitimate basis for their

request to add additional defendants. Despite the fact that the new defendants are not diverse,

the relationship of the parties and the nature of the actions alleged in this case at the time the

Plaintiffs filed their Motion for Leave to file a First Amended Complaint supported the

addition of the new defendants. 

GBR has not presented any evidence of fraudulent joinder or improper motive on the

part of the Plaintiffs. Additionally, this case is still in the early stages of litigation. The

Defendants have not shown that this case is so far along that they would be prejudiced by

remand. Nor have they presented any argument to suggest that it would be more equitable to

dismiss GBR rather than remanding this action to superior court. 

Finally, this Court cannot, as the Defendants suggest, stay its ruling on the Motion to

Remand and instead rule on the other pending motions, including the Defendants' Motion to

Dismiss. This Court cannot make a determination as to the viability of the Plaintiffs' claims

without first determining whether the Court has subject matter jurisdiction over the case. A

challenge to federal subject matter jurisdiction may be raised at any time. Wisconsin Dep’t

of Corrections v. Schacht, 524 U.S. 381, 392, 118 S.Ct. 2047, 2054 (1998); Quarty v. United

States, 170 F.3d 961, 973 n.7 (9th Cir. 1999). 28 U.S.C. § 1447 controls the remand of

removed matters for lack of subject matter jurisdiction. Pursuant to the statute, if a district

court determines at any time before final judgment that it is without subject matter jurisdiction

it “shall” remand the action to the state court. 28 U.S.C. § 1447(c); Bruns v. Nat’l Credit

Union Admin., 122 F.3d 1251, 1257 (9th Cir. 1997). Having considered the Plaintiffs' Motion

to Remand, the Court concludes that it lacks jurisdiction to decide the remaining motions. 

Defendant GBR is a citizen of the state of Arizona. Because the newly added

defendant is a citizen of the same state as Plaintiff Pimal, the addition of GBR has destroyed

diversity of citizenship and this Court no longer has subject matter jurisdiction over the case.

Desert Empire Bank v. Ins. Co. of N. Am., 623 F.2d 1371, 1373 (9th Cir. 1980). Therefore,

remand of this action to state court is required. 

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Accordingly,

IT IS ORDERED GRANTING the Plaintiffs’ Motion to Remand to Superior Court

(doc. 50). 

IT IS FURTHER ORDERED REMANDING this case to the Maricopa County

Superior Court in the State of Arizona.

IT IS FURTHER ORDERED DENYING for lack of jurisdiction Defendant Gaintner

Bandler Reed's Motion to Dismiss (doc. 51).

IT IS FURTHER ORDERED DENYING for lack of jurisdiction Defendant Fireman's

Fund Insurance Company's Motion to Stay (doc. 56).

IT IS FURTHER ORDERED DENYING for lack of jurisdiction Defendant Gaintner

Bandler Reed's Motion for Reconsideration (doc. 56).

DATED this 29th day of November, 2005.

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