Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_05-cv-03476/USCOURTS-azd-2_05-cv-03476-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Contract Dispute

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

TEAM TRANSPORTATION SERVICES,

INC., 

Plaintiff, 

vs.

THE ELDER-BEERMAN STORES

CORP., an Ohio corporation, and THE

BON-TON STORES, INC., a

Pennsylvania corporation, 

Defendant. 

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No. CV-05-03476-PHX-JAT

ORDER

Pending before this Court is Defendants’ Supplemental Pleading (Doc. # 15). For the

reasons given hereafter, the Court finds that this case was improperly removed to the federal

court on the basis of diversity of citizenship under 28 U.S.C. § 1332. Accordingly, this case

is remanded to the state court for further proceedings.

I. FACTUAL AND PROCEDURAL BACKGROUND

On September 19, 2005, Plaintiff filed a complaint with the Maricopa County

Superior Court alleging that Defendants breached a contract entered into with Plaintiff on

January 1, 2003. Defendants promptly thereafter removed the case to this Court pursuant to

28 U.S.C. §§ 1332, 1441, and 1446. It was the belief of Defendants at the time that the

parties were of diverse citizenship. Defendant The Elder-Beerman Stores Corporation, is an

Case 2:05-cv-03476-JAT Document 20 Filed 03/23/06 Page 1 of 4
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Ohio corporation. Defendant The Bon-Ton Stores, Incorporated is a Pennsylvania

corporation. At the time, Plaintiff represented itself as an Arizona corporation. On February

24, 2006, Defendants filed Defendants’ Supplemental Pleading (Doc. #15) alleging they had

just discovered facts material to Plaintiff’s standing and to jurisdictional issues. Defendants

attached to their pleadings evidence establishing that Plaintiff corporation is incorporated in

the State of Ohio, including: 1) Plaintiff’s certificate of incorporation, 2) Plaintiff’s articles

of incorporation, and 3) a statement from the Executive Director of the Arizona Corporation

Commission denying any record that Plaintiff is an authorized corporation in Arizona. 

II. DISCUSSION

A district court has original jurisdiction over all civil matters if the matter in

controversy exceeds the amount of $75,000 and if the parties are citizens of different states.

28 U.S.C. § 1332(a). The citizenship of a corporation includes “any State by which it has

been incorporated and . . . the State where it has its principal place of business.” Id. §

1332(c). For Defendants to have properly removed this case on the basis of diversity of

citizenship, there must have been “complete diversity between all named plaintiffs and all

named defendants.” Lincoln Property Co. v. Roche, 126 S.Ct 606, 610 (2005); Caterpillar

Inc. v. Lewis, 519 U.S. 61, 68 (1996) (finding 28 U.S.C. § 1332(a) applicable “only to cases

in which the citizenship of each plaintiff is diverse from the citizenship of each defendant”).

In Plaintiff’s Response to Defendant’s Supplemental Pleading (Doc. #17), Plaintiff

discusses at length its authority to transact business in Arizona, the fact that its principal

place of business is Arizona, and that it is an Arizona corporation. None of these arguments

is able to remedy the lack of diversity in this suit resulting from the fact that Plaintiff was

incorporated in the State of Ohio at the time of execution, is still incorporated in the State of

Ohio, and was thus presumably incorporated in the State of Ohio at the time of removal.

Plaintiff’s certificate of incorporation, as provided by Defendants, clearly establishes the

citizenship of Plaintiff corporation as that of Ohio citizenship. Plaintiff does not dispute the

fact that it is still incorporated in Ohio. Both Defendant The Elder-Beerman Stores

Corporation and Plaintiff Team Transportation Services, Incorporated are citizens of Ohio.

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The District Court cannot base its jurisdiction on diversity of citizenship if any plaintiff and

any defendant are citizens of the same state. Caterpillar, 519 U.S. at 68. Thus this case was

improperly removed to federal court.

Any other issues raised by Defendants’ Supplemental Pleading (Doc. #15) cannot be

considered by this Court without proper jurisdiction to do so.

III. ATTORNEY’S FEES

As noted by the Court at the time set for oral argument, subject matter jurisdiction is

mandatory and, as such, should be given appropriate attention and scrutiny by all parties to

the litigation before removal. The Court poignantly illustrated the potential harm that may

arise if subject matter jurisdiction is addressed in haste when it related the facts of Belleville

Catering Co. v. Champaign Market Place, L.L.C., 350 F.3d 691 (7th Cir. 2003) (ordering

counsel to perform all further services necessary to bring the suit to a conclusion without

charging additional fees to clients). It should be noted by all parties that subject matter

jurisdiction is not achieved through the best efforts of litigants but through satisfaction of

statutory requirements.

Here, Defendants were content in making their request for removal to accede to

Plaintiff’s allegations as to its citizenship . Defendants’ good faith reliance was erroneous.

To their credit, however, Defendants completed further research before oral argument and

ascertained proof of Plaintiff’s incorporation in Ohio, which thus eviscerated diversity of

citizenship. When Plaintiff brought this suit in state court, it likewise found the issue of its

citizenship not sufficiently important to positively ascertain all of the facts relevant thereto.

Unfortunately, Plaintiff also misunderstood 42 U.S.C. § 1332(c) to give rise to jurisdiction,

until that understanding was confronted by the Court at oral argument, when in fact that

provision, when applied here, defeats diversity.

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Because this new information regarding lack of diversity came to the Court’s attention

early in the proceedings and because both parties were partially at fault for not recognizing

the problem sooner, the Court will not award attorney’s fees to either party.

Accordingly,

IT IS SO ORDERED that the Clerk of the Court shall remand this case to the

Maricopa County Superior Court.

IT IS FURTHER ORDERED that neither party shall be awarded attorney’s fees.

DATED this 22nd day of March, 2006.

Case 2:05-cv-03476-JAT Document 20 Filed 03/23/06 Page 4 of 4