Opinion ID: 779064
Heading Depth: 2
Heading Rank: 2

Heading: Exercise of Diversity Jurisdiction

Text: 31 Defendants argue that although FSN Top Secret was a California corporation, its principal place of business was New Mexico, thus it is a citizen of New Mexico. See 28 U.S.C. § 1332(c)(1), Bank of Cal. Nat'l Ass'n v. Twin Harbors Lumber Co., 465 F.2d 489, 491-92 (9th Cir.1972). Plaintiffs Marble and Catalyst were citizens of New Mexico. Therefore, Defendants argue that diversity jurisdiction did not exist over their suit against Marble and Catalyst on removal, and that the district court erred in exercising jurisdiction. 32 Although subject matter jurisdiction is reviewed de novo and may be raised at any point in the proceedings, the standard shifts when the argument raises new factual bases for the lack of jurisdiction which were not developed in the trial court record. Under Albrecht v. Lund, the failure to contest facts alleged on removal constitutes an admission of those facts. Albrecht v. Lund, 845 F.2d 193, 194 (9th Cir.1988) (citing O'Campo v. Hardisty, 262 F.2d 621, 624 (9th Cir.1958)). In this context, we will remand to the district court for a determination of diversity only if, on the face of the pleadings at the time of removal there exists a `substantial question concerning the plaintiff's citizenship.' Albrecht, 845 F.2d at 194 (citing Miller v. Grgurich, 763 F.2d 372, 373 (9th Cir.1985)). 33 In this case, Defendants filed their complaint in state court identifying Lui as a resident of Australia, and Froyer USA and FSN Top Secret as California corporations. Defendants identified the defending Plaintiffs Marble as a resident of California, and Catalyst as an entity doing business in the state of California. Plaintiffs filed their Notice of Removal under 28 U.S.C. § 1441(b) [Diversity] on August 6, 1998. In doing so, Plaintiffs alleged in the Notice that Marble was a citizen and resident of New Mexico, and that Catalyst was a New Mexico corporation, with its principal place of business in New Mexico. Plaintiffs also asserted that Froyer USA and FSN Top Secret were California corporations, both having their principal place of business in California. Defendants filed a jury demand, and never brought a motion to remand or to otherwise contest this factual allegation in the notice of removal. 34 Information regarding the principal place of business of the corporate Defendants was uniquely within Defendants' capacity to ascertain. Having failed to raise a factual contention in the district court, which if proved would deprive the court of subject matter jurisdiction, Defendants now attack the judgment entered against them. 35 Applying the standard of Albrecht v. Lund, nothing on the face of the pleadings at time of removal indicated that FSN Top Secret had a principal place of business in New Mexico. See Albrecht, 845 F.2d at 195. These Defendants subsequently failed to contest the allegations of citizenship, and did not move for remand. See id. Because Defendants failed to raise a substantial question of diversity of citizenship at the time of removal, and failed to submit evidence of lack of diversity to the district court at any time thereafter, we refuse to remand the matter, and affirm the district court on this issue. Id. 36
37 Defendants also challenge the district court's exercise of diversity jurisdiction in the original action, alleging that FSN Top Secret's purported nerve center was in New Mexico. In support of this argument, Defendants cite the deposition testimony of Steven Marble. Nothing in this deposition supports its position. Defendants' argument is based on an attenuated theory: that the deposition shows that the principal place of business for Plaintiff Catalyst was New Mexico; that we should infer that FSN Top Secret conducted its business only through Catalyst; and thus attribute Catalyst's New Mexico nerve center to FSN Top Secret. Even if Defendants could show some deposition testimony clearly supporting their argument, there is no indication in the record that evidence of a New Mexico nerve center was filed or otherwise raised in the district court. As noted by the district court, FSN Top Secret simply described itself as a corporation incorporated in the State of California in the complaint filed in the removed action. 38 After the Third Amended Complaint was filed in the district court, Defendants Lui and Froyer USA did file a motion to dismiss with their Rule 19 motion. The motion to dismiss the Third Amended Complaint alleged that FSN Top Secret was a joint venture, the joinder of which destroyed diversity. In support of this motion, Defendants also cited Marble's deposition testimony, that [FSN Top Secret]'s a corporation owned by Kevin Lui and it's a partnership that includes Froyer, Suzhou Amusement Land, and this entity New Wave Entertainment that Kevin Lui created and Catalyst International. As noted above, this argument was rejected by the district court. However, the citation to Marble's deposition belies the argument that FSN Top Secret's purported New Mexico nerve center is newly discovered. Marble's deposition was available and cited by Defendants in support of their Motion to Dismiss for lack of subject matter jurisdiction on the theory that FSN Top Secret was a joint venture. 39 Although Albrecht v. Lund specifically deals with jurisdictional facts in the context of removal, we see no principled distinction between that case and a case originally filed in the district court for purposes of diversity jurisdiction. See Albrecht, 845 F.2d at 195. Once a diversity case has been tried in federal court ... considerations of finality, efficiency, and economy become overwhelming. Caterpillar Inc. v. Lewis, 519 U.S. 61, 75, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). Consequently, we hold that the rule of Albrecht v. Lund applies equally to actions originally filed in the district court. Absent any allegation in the record that FSN Top secret was a citizen of New Mexico, we will only remand for a determination of diversity jurisdiction if, on the face of the pleadings, there exists a substantial question concerning the citizenship of the party alleged to be nondiverse on appeal. 40 The procedural history of this case demonstrates that Defendants, without factual support, have repeatedly asserted new theories to defeat diversity jurisdiction. In its complaint filed in the removed action, FSN Top Secret identified itself as a California corporation. Later, on motion to dismiss for lack of subject matter jurisdiction, the district court entered factual findings that FSN Top Secret was a California corporation, at a time when Marble's deposition was available and cited by Defendants. Because there was no allegation in the trial court that FSN Top Secret was a citizen of New Mexico, we decline to reopen the matter on appeal. On the record of factual issues raised before it, the district court's factual finding that FSN Top Secret was a California corporation for diversity purposes was not clear error. 41