Court Opinion

ID: 9458984
Source: CourtListenerOpinion
Date Created: 2023-08-04 21:07:15.140879+00
Date Added: 2024-06-11T17:35:58.291440
License: Public Domain

THORNBERRY, Circuit Judge
(concurring specially):
I agree with Judge Phillips that jurisdiction based on diversity of citizenship does not exist in this case, but my reasons are somewhat different from his. In my opinion, the jurisdictional question can be answered without reference to the actual or supposed citizenship of Elizabeth Syms. I would hold simply that the “assignment” by Lynch to Syms, Jr., deprived the district court of diversity jurisdiction by reason of 28 U.S.C. § 1359.
In Caribbean Mills, Inc. v. Kramer, 5th Cir. 1968, 392 F.2d 387, aff’d, 394 U.S. 823, 89 S.Ct. 1487, 23 L.Ed.2d 9 (1969), we held that an assignment that did not divest the assignor of his interest in the recovery and that was made for the purpose of creating diversity of citizenship, was “improper or collusive” within the meaning of Section 1359. Both of these elements — lack of economic substance and improper motive — are present in the case at bar.
First, Syms, Jr., admittedly paid nothing for the assignment from Lynch; and he received nothing in return, for Lynch retained his full share of the 30% trustee’s interest after the assignment. Of course, Syms, Jr., unlike Kramer, had an interest in the recovery prior to the execution of the assignment. He was thus no mere stranger to the cause of action. But this fact does not lend economic substance to a transaction that left Lynch’s share of the possible recovery absolutely unchanged. Nor does it affect my conclusion that Syms, Jr. was “made” a party to the suit by means of the purported assignment, because the assignment was necessary to eliminate the interest of Lynch, whose presence would have destroyed “complete” diversity. Secondly, as Judge Phillip’s opinion convincingly demonstrates, Lynch’s purported assignment could have been motivated by nothing more than a desire to create diversity of citizenship.
In short, the assignment was a sham, and Syms, Jr. was a mere collection agent with respect to Lynch’s share of the claim. If litigants were permitted to manufacture diversity by such a hollow device as this, then the requirement of complete diversity would be meaningless.