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U.S. Foodservice, Inc. v. Long Island Restaurant

January 11, 2008

U.S. FOODSERVICE, INC., PLAINTIFF
v.
LONG ISLAND RESTAURANT, LLC, AND NILESH PATEL, DEFENDANTS



The opinion of the court was delivered by: Judge James M. Munley United States District Court

MEMORANDUM

(Judge Munley)

Before the court for disposition is defendants' Motion to Dismiss for lack of diversity of citizenship and subject matter jurisdiction under 28 U.S.C. § 1332, lack of subject matter jurisdiction under 28 U.S.C. § 2201, improper venue, and lack of jurisdiction over Defendant Patel. (Doc. 20). The matter has been fully briefed and is ripe for disposition. For the following reasons, the motion will be denied.

Background

According to the complaint, on May 26, 2004, Defendants Long Island Restaurant, LLC and Nilesh Patel entered into a Credit Application Agreement with Plaintiff U.S. Foodservice, Inc. to purchase goods and services on credit. (Complaint, Doc. 1 (Hereinafter "Compl."), ¶ 8).*fn1

Defendants subsequently ordered, received, and accepted delivery of goods and services from plaintiff. (Id. ¶ 10). Plaintiff supplied defendants with invoices. (Id. ¶ 12). Pursuant to the terms of the invoices, defendants were obligated within twenty-one days from the invoice date to make payment to plaintiff in full for goods and services periodically received. (Id. ¶ 11). Plaintiff claims that defendants failed to pay the full purchase price of the goods and services provided as required by the agreement and invoices, and developed an unpaid account receivable balance. (Id. ¶ 13). On June 7, 2006, counsel for plaintiff demanded payment under the invoices for the goods sold and delivered to defendants and for additional charges related to defendants' alleged non-payment. (Id. ¶ 14). Plaintiff asserts that at the time the complaint was filed the defendants had failed to pay the amount owed pursuant to the agreement and invoices. (Id. ¶ 15).

On June 29, 2006, plaintiff filed suit against defendants for I) breach of contract; II) unjust enrichment; III) recovery of price under the Pennsylvania Commercial Code; and IV) breach of personal guaranty. (Id. ¶ 1).*fn2 On June 13, 2007, defendants filed a motion to dismiss due to lack of diversity of citizenship and subject matter jurisdiction under 28 U.S.C. § 1332, lack of subject matter jurisdiction under 28 U.S.C. § 2201, improper venue, and lack of jurisdiction over Defendant Patel. (Doc. 20). Defendants also argue that complaint was not properly served. We shall address these issues in seriatim.

I. Lack of Diversity of Citizenship

Federal courts, being courts of limited jurisdiction, have a continuing duty to satisfy themselves of jurisdiction before addressing the merits of a case. Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1049 (3d Cir. 1993) cert. denied sub nom Upp v. Mellon Bank, N.A., 510 U.S. 964 (1993). In the instant case, plaintiff premises jurisdiction on diversity of citizenship. The diversity jurisdiction statute provides: "The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between citizens of different states."*fn3 28 U.S.C. § 1332(a)(1). 28 U.S.C. § 1332 and "its predecessors have consistently been held to require complete diversity of citizenship. That is, diversity jurisdiction does not exist unless each defendant is a citizen of a different State from each plaintiff." Owen Equipment & Erection Co. v. Kroger, 437, U.S. 365, 373 (1978)(citing Snyder v. Harris, 394 U.S. 332, 338-339 (1969)). The burden is on plaintiff to establish that diversity of citizenship exists. Petruska v. Gannon University, 462 F.3d 294, 301 n.3 (3d Cir. 2006) ("No presumptive truthfulness attaches to plaintiff's allegations ... the plaintiff will have the burden of proof that jurisdiction does in fact exist.") (citing Petruska v. Gannon University, 350 F.Supp.2d 666 (W.D.Pa. Dec 27, 2004)).

The complaint asserts that plaintiff is a citizen of Delaware and Maryland, and the defendants are citizens of New York. (Doc. 1, Complaint ¶ ¶ 1 - 5). Defendants concede that they are citizens of New York and do not challenge that the amount in controversy exceeds $75,000. Defendants, however, challenge the plaintiff's citizenship and argue that complete diversity of citizenship is not present in the instant action. They, therefore, deny that this court has subject matter jurisdiction.

Plaintiff is a corporation. For diversity of citizenship purposes, a corporation is a citizen (i) of any State by which it has been incorporated; and (ii) of the State where it has its principal place of business. 28 U.S.C. § 1332(c)(1). We will address these two issues separately to determine plaintiff's citizenship.

A. State of Plaintiff's Incorporation

The complaint states plaintiff is a Delaware corporation that purchases, warehouses, sells and distributes food and food related products. (Compl. ¶ 1). Defendants, however, assert that plaintiff is a corporation of Delaware (where plaintiff alleges that it is incorporated), New York, and every other state where it is incorporated. Defendants present Exhibit B, a NYS Department of State Division of Corporations's Entity Form for U.S. Foodservice, Inc., to support its assertion. Defendants claim that the form establishes that plaintiff has been incorporated in New York since May 18, 1989. Consequentially, defendants argue that all parties are citizens of New York and diversity of citizenship does not exist, therefore, denying this court subject matter jurisdiction over this matter.

Plaintiff argues that Exhibit B merely indicates that it is registered to do business in New York and points to the fact that its entity type is classified as "Foreign Business Corporation" with jurisdiction in Delaware. (Id., Doc. 21-3). Plaintiff presents other evidence to support its incorporation in Delaware: 1) Exhibit A (Doc. 21-2, pp. 2-4), a deposition by Donna Bishop, a Regional Credit Manager of Northstar Foodservice, a division of U.S. Foodservice, Inc.; and 2) Exhibit 1 (Doc. 21-2, pp. 6-13), a Delaware Restated Certificates of Incorporation for plaintiff and a Delaware Certificate of Amendment. Ms. Bishop stated that plaintiff is "incorporated in the state of Delaware." (Exhibit A, Doc. 21-2, p.3 ). The Certificate of Amendment states clearly that "J.P. ...


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