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Robert A. Lincoln, and Mary O. Lincoln, His Wife v. Magnum Land Services

April 4, 2012

ROBERT A. LINCOLN, AND MARY O. LINCOLN, HIS WIFE, PLAINTIFFS,
v.
MAGNUM LAND SERVICES, LLC, ET AL., DEFENDANTS.



The opinion of the court was delivered by: (judge Caputo)

MEMORANDUM

Presently before the Court is the Notice of Removal by Defendants Chesapeake Appalachia, LLC, Chesapeake Energy Corporation, and Statoil USA Onshore Properties, Inc. (Doc. 1), as well as their Amended/Supplemental Notice of Removal (Doc. 5). Because these Notices of Removal fail to establish that the Court has subject matter jurisdiction over this action, it will be remanded to state court unless the Defendants can show that diversity jurisdiction is proper.

I. Background

Plaintiffs, residents of Virginia Beach, Virginia, originally filed this action in the Court of Common Pleas of Wyoming County, Pennsylvania on December 30, 2011. In their Complaint, Plaintiffs bring a state-law action to quiet title to 191 acres of land in Wyoming County, Pennsylvania. Specifically, they request a decree that a purported lease on the land and its subsequent assignment was invalid, and that the Plaintiffs are the owners in fee simple absolute. On March 29, 2012, the same day the Plaintiffs filed their Amended Complaint in the Common Pleas Court, Defendants Chesapeake Appalachia, LLC, Chesapeake Energy Corporation, and Statoil USA Onshore Properties, Inc. removed the action to the Middle District of Pennsylvania.*fn1 (Doc. 1.)

In their original notice of removal,*fn2 the Defendants aver that complete diversity exists in this action as: (1) "[t]he Plaintiffs are residents of Virginia Beach, Virginia; (2) "Magnum is a Michigan limited liability company"; (3) "Sinclair is a Utah company"; (4) "Belmont is a Michigan limited liability company"; (5) "Chesapeake Appalachia, L.L.C. is an Oklahoma limited liability company, and whose residence is determined by the residence of its sole member, Chesapeake Energy Corporation which is an Oklahoma corporation with a principal place of business in Oklahoma"; and (6) "Statoil is a Delaware corporation with a business address of 2103 CityWest Boulevard, Suite 800, Houston TX 77042." (Notice of Removal at ¶¶ 12-17.)

II. Analysis

Federal courts have an obligation to address issues of subject matter jurisdiction sua sponte. Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999). The removing Defendants allege that the Court's basis for jurisdiction is diversity of citizenship pursuant to 28 U.S.C. § 1332. Section 1332(a)(1) gives district courts original jurisdiction to hear cases where the matter in controversy exceeds the value of seventy-five thousand dollars ($75,000) and is between citizens of different states. In order for jurisdiction to exist, there must be complete diversity, meaning that each defendant must be a citizen of a different state from each plaintiff. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). Of course, "[t]he person asserting jurisdiction bears the burden of showing that the case is properly before the court at all stages of the litigation." Packard v. Provident Nat'l Bank, 994 F.2d 1039, 1045 (3d Cir. 1993).

"It is . . . well established that when jurisdiction depends upon diverse citizenship the absence of sufficient averments or of facts in the record showing such required diversity of citizenship is fatal and cannot be overlooked by the court, even if the parties fail to call attention to the defect, or consent that it may be waived." Thomas v. Bd. of Trs., 195 U.S. 207, 211 (1904). Moreover, "[w]hen the foundation of federal authority is, in a particular instance, open to question, it is incumbent upon the courts to resolve such doubts, one way or the other, before proceeding to a disposition of the merits." Carlsberg Res. Corp. v. Cambria Sav. & Loan Ass'n, 554 F.2d 1254, 1256 (3d Cir. 1977); see also Fed R. Civ. P. 12(h)(3).

A. The Plaintiffs' Citizenship

For purposes of diversity jurisdiction, a natural person is deemed to be a citizen of the state where they are domiciled. Swiger v. Allegheny Energy, Inc., 540 F.3d 179, 182 (3d Cir. 2008) (citing Gilbert v. David, 235 U.S. 561, 569 (1915)). To be domiciled in a state, a person must reside there and intend to remain indefinitely. Krasnov v. Dinan, 465 F.2d 1298, 1300--01 (3d Cir. 1972). A person may have only one domicile, and thus may be a citizen of only one state for diversity jurisdiction purposes. See Williamson v. Osenton, 232 U.S. 619 (1914).

To the extent the Notice of Removal alleges that the Plaintiffs "are residents" of Virginia Beach, Virginia, this is not sufficient. Residence is not the same as domicile and does not establish citizenship for diversity purposes. See Krasnov, 465 F.2d at 1300 (3d Cir. 1972) ("Where one lives is prima facie evidence of domicile, but mere residency in a state is insufficient for purposes of diversity.") (internal citations omitted). The Court therefore finds that Notice of Removal has not properly demonstrated Plaintiffs' citizenship for the purposes of diversity jurisdiction.

B. Limited Liability Company Citizenship

In this case, the Plaintiff's Complaint fails to demonstrate the requirements of federal subject matter jurisdiction because it insufficiently alleges the citizenship of two of the three Limited Liability Companies--Magnum Land Services, LLC and Belmont Resources, LLC. The Notice of Removal specifically states that Defendant Magnum Land Services, LLC "is a Michigan limited liability company" and that Belmont Resources, LLC is also a "Michigan limited liability company." (Notice of Removal at ¶¶ 13, 15, Doc. 1.) However, as to Chesapeake Appalacia, LLC, the Defendants elaborate more fully, describing it as "an Oklahoma limited liability company, and whose residence is determined by the residence of its sole member, Chesapeake Energy Corporation which is an Oklahoma corporation with a principal place of business in Oklahoma" (Id. at ¶ 16.)

As the moving Defendants explicitly acknowledge in their averment as to Chesapeake Appalachia, LLC, "the citizenship of an LLC is determined by the citizenship of its members." Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010); Carden v. Arkoma Assocs., 494 U.S. 185, 195 (1990) (quoting Chapman v. Barney, 129 U.S. 677, 682 (1889)) (affirming the "oft-repeated rule that diversity jurisdiction in a suit by or against [an artificial] entity depends on the citizenship of 'all the members'"); see also 1 Fed. Proc., L. Ed. ยง 1:176 (2011) (explaining that a "limited liability company is a citizen, for purposes of diversity jurisdiction, of each state where its members are citizens."). Therefore, as the Notice of Removal fails to ...


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