Court Opinion

ID: 4177857
Source: CourtListenerOpinion
Date Created: 2017-06-15 17:05:05.877315+00
Date Added: 2024-06-11T14:54:56.227343
License: Public Domain

Case: 16-15457   Date Filed: 06/15/2017   Page: 1 of 7

                                                         [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 16-15457
                         Non-Argument Calendar
                       ________________________

                   D.C. Docket No. 1:16-cv-00035-LMM

PATRICK F. DYE, JR.,
SPORTSTRUST ADVISORS, LLC,

                                                           Plaintiffs-Appellees,

                                   versus

JIMMY SEXTON,

                                                          Defendant-Appellant.

                       ________________________

                Appeal from the United States District Court
                   for the Northern District of Georgia
                      ________________________

                              (June 15, 2017)

Before ED CARNES, Chief Judge, JULIE CARNES, and JILL PRYOR, Circuit
Judges.

PER CURIAM:
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       Pat Dye, Jr., is the chief executive officer and an equity member of the

sports agency SportsTrust Advisors, LLC. Dye and SportsTrust filed a complaint

in state court asserting several state law claims against Jimmy Sexton. Sexton was

Dye’s longtime rival in the sports agent business, then his partner at SportsTrust,

and is now once again his rival in the sports agent business.

       Sexton filed a timely notice of removal on the basis of diversity jurisdiction.

See 28 U.S.C. § 1446(b)(1) (“The notice of removal . . . shall be filed within 30

days after the receipt by the defendant . . . of a copy of the initial pleading . . . .”).

He alleged that he was a Tennessee citizen, that Dye was a Georgia citizen, and

that although SportsTrust was a “corporation originally organized under the laws

of the State of Tennessee with no principal place of business,” it was no longer in

operation and was named as a party only “to defeat diversity jurisdiction.” As a

result, he asserted, there was complete diversity between the actual parties: Dye

and Sexton. Even though Sexton’s notice of removal alleged that SportsTrust was

a corporation, he attached to that notice a document printed from the Tennessee

Secretary of State’s website which showed that SportsTrust was an LLC, not a

corporation, that its status was “Inactive – Revoked,” and that it had only one

member.

       Over four months later the plaintiffs, Dye and SportsTrust, moved to remand

the case for lack of subject matter jurisdiction, arguing that SportsTrust had the

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capacity to sue and had “actionable claims against Sexton.” They admitted that

SportsTrust was a limited liability company and that for purposes of diversity

jurisdiction, “a limited liability company is a citizen of any state of which a

member of the company is a citizen.” See Rolling Greens MHP, L.P. v. Comcast

SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004). They asserted,

however, that Sexton had not withdrawn as a member of SportsTrust, and as a

result, complete diversity did not exist because Sexton and SportsTrust were both

citizens of Tennessee. 1

       A week later Sexton filed an amended notice of removal, alleging that

SportsTrust was an LLC and that its only member was Dye, a Georgia citizen. He

attached the same document that he had attached to his original notice of removal,

along with a copy of a filing from the Tennessee Secretary of State’s Division of

Business Services confirming that SportsTrust was an inactive LLC with only one

member. As a result, Sexton asserted that diversity jurisdiction did exist because

Dye and SportsTrust were completely diverse from him.

       The district court granted the plaintiffs’ motion to remand. It stated that

Sexton’s notice of removal “[did] not properly establish SportsTrust’s citizenship”

because it alleged that SportsTrust was a corporation with no principal place of

       1
        That argument conflicts with the allegations in the plaintiffs’ complaint, which state,
among other things, that Dye “is a member” of SportsTrust and that Sexton “was a member” of
SportsTrust.

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business, instead of alleging that it was a limited liability company and providing

the “citizenship of [its] members.” It refused to consider Sexton’s amended notice

of removal, reasoning that it “add[ed] new allegations of a separate jurisdictional

basis” instead of “merely clarif[ying] a preexisting jurisdictional allegation.”

Because those “new allegations of citizenship . . . were untimely,” that is, they

were added after 28 U.S.C. § 1446’s thirty-day window to remove, the district

court concluded that it could not consider them in assessing SportsTrust’s

citizenship.

       Sexton appeals. He contends that, because the district court’s remand was

based on a procedural defect and its order was entered more than thirty days after

he filed his original notice of removal, the court lacked authority to remand the

case. He also contends that the district court erred by refusing to consider his

amended notice of removal in granting the plaintiffs’ motion to remand.

      We review de novo questions of subject matter jurisdiction and statutory

interpretation. Lindley v. FDIC, 773 F.3d 1043, 1050 (11th Cir. 2013). “A motion

to remand the case on the basis of any defect other than lack of subject matter

jurisdiction must be made within 30 days after the filing of the notice of removal

. . . .” 28 U.S.C. § 1447(c). District courts are also “bound by th[at] thirty-day

limit,” meaning that they can sua sponte remand a case based on a procedural

defect only if they do so within 30 days after the filing of the notice of removal. In

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re Bethesda Mem’l Hosp., Inc., 123 F.3d 1407, 1410–11 (11th Cir. 1997); see id. at

1411 (“The court acted outside of its statutory authority by remanding for a

procedural defect after thirty days of the notice of removal.”). We have

jurisdiction to review “an order remanding [a case] on procedural grounds either

upon an untimely motion or untimely sua sponte order,” but we do not have

jurisdiction to review an order remanding a case for lack of subject matter

jurisdiction. Id. at 1409–10.

      The district court stated that it was granting the plaintiffs’ motion to remand

for lack of subject matter jurisdiction because Sexton failed to allege that

SportsTrust was a limited liability company and to provide the citizenship of its

member or members. But as this Court has held, even where a district court

purportedly remands a case “on a perceived lack of subject matter jurisdiction,”

“the failure to establish a party’s citizenship at the time of filing the removal notice

is a procedural, rather than jurisdictional, defect.” Corp. Mgmt. Advisors, Inc. v.

Artjen Complexus, Inc., 561 F.3d 1294, 1296 (11th Cir. 2009) (quotation marks

omitted). Under that holding, Sexton’s failure to establish SportsTrust’s

citizenship is a procedural defect, not a jurisdictional one. See id. And because

the remand was on procedural grounds and the remand order was entered more

than 30 days after the notice of removal was filed, see 28 U.S.C. § 1447(c), we

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have subject matter jurisdiction to review that order. See Bethesda Mem’l Hosp.,

123 F.3d at 1410–11.

      “Defective allegations of jurisdiction may be amended, upon terms, in the

trial or appellate courts.” 28 U.S.C. § 1653. In our Artjen decision, this Court held

that “[i]f a party fails to specifically allege citizenship in [its] notice of removal,

the district court should allow that party ‘to cure the omission,’ as authorized by

§ 1653.” 561 F.3d at 1297 (quoting D.J. McDuffie, Inc. v. Old Reliable Fire Ins.

Co., 608 F.2d 145, 146–47 (5th Cir. 1979)). We explained that “where subject

matter jurisdiction exists and any procedural shortcomings may be cured by resort

to § 1653, we can surmise no valid reason for the court to decline the exercise of

jurisdiction.” Id. (quoting In re Allstate Ins. Co., 8 F.3d 219, 223 (5th Cir. 1993)).

Because “the district court erred by remanding th[e] case on jurisdictional grounds

when faced solely with a procedural defect in the removal process,” we directed

the district court to give the defendants leave to amend their notice of removal

under 28 U.S.C. § 1653. Id. at 1298; see also Toms v. Country Quality Meats,

Inc., 610 F.2d 313, 316 (5th Cir. 1980) (noting that 28 U.S.C. § 1653 “should be

construed liberally”).

      The same result is warranted here. The allegations in Sexton’s amended

notice of removal cure his defective allegation that SportsTrust was an inactive

corporation, and the record evidence demonstrates that diversity jurisdiction does

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exist. The parties agree that Sexton is a Tennessee citizen, that Dye is a Georgia

citizen, and that SportsTrust is a limited liability company. Sexton has alleged that

Dye is the only member of SportsTrust, and he has supported that allegation with a

document from the Tennessee Secretary of State’s office confirming that

SportsTrust has only one member. Despite the plaintiffs’ later argument that

Sexton has not actually withdrawn from SportsTrust, their complaint

acknowledges that Dye “is a member” (emphasis added) of SportsTrust and that

Sexton “was a member” (emphasis added) of SportsTrust, and the document

Sexton filed with his amended notice of removal shows that SportsTrust now has

only one member. As a result, the district court should have permitted Sexton to

amend his notice of removal to cure his defective allegation of citizenship, and it

should have considered his amended notice of removal in ruling on the plaintiffs’

motion to remand. See Artjen, 561 F.3d at 1298.

      We REVERSE the district court’s order and REMAND the case to the

district court with instructions to permit Sexton leave to amend his notice of

removal, pursuant to 28 U.S.C. § 1653.

      REVERSED AND REMANDED.

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