Ross v. Toon et al, No. 2:2008cv00701 - Document 43 (D. Ariz. 2009)
Court Description: ORDER granting Plaintiff's 30 Motion to Remand to State Court; denying as moot Plaintiff's 42 Motion for Ruling, or in the alternative, Notice of Readiness for Pretrial Conference; granting, to the extent that it is consistent with this Court, Defendants' 41 Motion for an Automatic Stay; directing the Clerk to remand this case back to Maricopa County Superior Court. Signed by Judge Mary H Murguia on 9/10/09.(REW, )
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Ross v. Toon et al 1 Doc. 43 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Ruth Ross, Plaintiff, 10 11 vs. 12 Lory Toon, et al., 13 Defendant. 14 ) ) ) ) ) ) ) ) ) ) ) ) No. CV-08-701-PHX-MHM ORDER 15 16 17 Currently pending before the Court is Plaintiff/Counter-Defendant Ruth Ross’ Motion 18 to Remand (Dkt.#30.), and Motion for Ruling Request (Dkt.#42.), as well as 19 Defendant/Counter-Claimant Lory Toon’s Motion for an Automatic Stay and Notice of 20 Filing Bankruptcy. (Dkt.#41.) After reviewing the pleadings and determining oral argument 21 unnecessary, the Court issues the following Order. 22 I. BACKGROUND 23 On April 10, 2008 Defendants Lory and David Toon removed Plaintiff Ruth Ross' 24 Complaint to federal court. (Dkt.#1.) Ross asserts claims against David and Lory Toon, who 25 are husband and wife, for fraud, breach of contract, conversion, identity theft, breach of the 26 covenant of good faith and fair dealing, breach of fiduciary duty, and unjust enrichment. On 27 April 24, 2008, David and Lory Toon answered Ross’ Complaint, and at the same time Lory 28 Toon asserted various counter-claims against Ross for defamation, intentional infliction of Dockets.Justia.com 1 emotional distress, negligent infliction of emotional distress, malice, harassment, and breach 2 of contract. On January 5, 2009, Ross filed a motion to remand the case back to Arizona 3 state court. On April 8, 2009, Lory Toon filed a notice with the Court that she had filed for 4 bankruptcy in the Middle District of Florida. Ms. Toon has also made filings requesting the 5 Court impose an automatic stay on the instant proceedings. 6 II. THE EFFECT OF LORY TOON’S BANKRUPTCY FILING 7 11 U.S.C. § 362(a) automatically stays a wide array of collection and enforcement 8 proceedings against the debtor and his or her property. The stay is self-executing and is 9 effective upon the filing of the bankruptcy petition. See 11 U.S.C. § 362(a); In re The 10 Minoco Group of Co., 799 F.2d 517, 520 (9th Cir. 1986). The scope of the automatic stay 11 is set forth in a series of overlapping provisions in § 362(a). 12 commencement or continuation of any judicial, administrative or other action against the 13 debtor that was or could have been commenced before the commencement of the bankruptcy 14 case or to recover a claim against the debtor that arose before the bankruptcy case. 11 U.S.C. 15 362(a). The stay bars the 16 In the instant case, Lory Toon has filed for bankruptcy, but her husband David Toon 17 has not. Therefore, as a matter of course, Plaintiff Ross’ claims against Lory Toon are 18 subject to the automatic stay provision of 11 U.S.C. § 362(a), while Ross’ claims against 19 David Toon are not. With respect to the Counter-Complaint that has been filed against Ross, 20 the Court notes that the claims contained in the Counter-Complaint have only been asserted 21 by Lory Toon; David Toon does not appear to be a party to the Counter-Complaint. This is 22 because the only parties that are named in the Counter-Complaint are Ruth Ross as 23 Defendant and Lory Toon as Plaintiff. In fact, the document specifically states that “[f]or 24 her counter complaint Toon alleges as follows;” in addition, the only Parties that are 25 mentioned at all are Ruth Ross and Lory Toon. (See Dkt.#5, p. 6.) (emphasis added). 26 Accordingly, since David Toon is not a counter-claimant, the Counter-Complaint in its 27 entirety is also subject to the automatic stay provision of 11 U.S.C. § 362(a). 28 -2- 1 In light of Lory Toon’s Florida bankruptcy filing, the only claims that may proceed 2 forward in this case are Ruth Ross’ claims against David Toon. 3 III. RUTH ROSS’ MOTION TO REMAND 4 The removal statute authorizes the defendant to remove to federal court “any civil 5 action brought in a State court of which the district courts of the United States have original 6 jurisdiction.” 28 U.S.C. § 1441(a). In other words, “[o]nly state court actions that originally 7 could have been filed in federal court may be removed to federal court by the defendant.” 8 Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). The party invoking the removal 9 statute—generally the defendant— bears the burden of establishing federal jurisdiction. See 10 Ethridge v. Harbor House Restaurant, 861 F.2d 1389, 1393 (9th Cir. 1988). Courts strictly 11 construe the removal statute against removal. Id. Remand to state court is controlled by § 12 1447, which reads “[i]f at any time before final judgment it appears that the district court 13 lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C. § 1447(c). 14 Section 1332(a) vests the district courts with “original jurisdiction of all civil actions 15 where the matter in controversy exceeds the sum or value of $ 75,000, exclusive of interest 16 and costs, and is between” diverse parties. See 28 U.S.C. § 1332(a). Despite the statute's 17 silence, the Supreme Court has held that § 1332 requires complete diversity of citizenship. 18 Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 553 (2005) ("In a case with 19 multiple plaintiffs and multiple defendants, the presence in the action of a single plaintiff 20 from the same State as a single defendant deprives the district court of original diversity 21 jurisdiction over the entire action.") (internal citations omitted). In order to establish 22 citizenship in a state for the purpose of diversity jurisdiction, a person must (1) be a United 23 States citizen, and (2) be domiciled in a State. Lew v. Moss, 797 F.2d 747, 749 (9th Cir. 24 1986). 25 A person's domicile is determined by that person's “permanent home, where she 26 resides with intention to remain or to which she intends to return.” Kanter v. Warner-Lambert 27 Co., 265 F.3d 853, 857 (9th Cir. 2001). A person's domicile is distinct from residency. See 28 Weible v. United States, 244 F.2d 158, 163 (9th Cir. 1957) (“Residence is physical, whereas -3- 1 domicile is generally a compound of physical presence plus an intention to make a certain 2 definite place one's permanent abode.”). The Ninth Circuit has stated that the factors used 3 to determine domicile are “current residence, voting registration and voting practices, 4 location of personal and real property, location of brokerage and bank accounts, location of 5 spouse and family, membership in unions and other organizations, place of employment or 6 business, driver’s license and automobile registration, and payment of taxes.” Lew, 797 F.2d 7 at 750. The Ninth Circuit has also recognized that there is a “presumption in favor of an 8 established domicile as against a newly acquired one.” Id. at 751. 9 There is no dispute that the amount in controversy is over $75,000. The only issue 10 before the Court with respect to the remand motion is whether there is a complete diversity 11 of citizenship between Ross and David Toon: it is undisputed that the named Toon is a 12 citizen of the State of Arizona. The more problematic inquiry relates to the citizenship of 13 Ruth Ross. 14 Ross argues that remand is appropriate here because she is “stateless” for purposes 15 of § 1332. Having moved to Iraq in 2004 as part of her employment as a civilian contractor 16 with Kellogg Brown & Root, Inc. (“KBR”), Ross claims that she is not domiciled in any 17 state. Ross argues that to the extent that she has a discernable domicile, it is in the country 18 of Iraq. 19 In support of this contention, Ross cites to the U.S. Supreme Court case of Newman- 20 Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826 (1989). In Newman-Green, the Supreme Court 21 determined “an American citizen who lived overseas, fell within none of the statutory 22 categories of parties over whom the federal courts may exercise diversity jurisdiction. 23 Because he was not domiciled in any state, this defendant was ‘stateless’ for purposes of the 24 diversity statute, and, under the strictures of § 1332, the plaintiff could not pursue an action 25 in federal court against him.” Lee v. Am. Nat'l Ins. Co., 260 F.3d 997, 1005 (9th Cir. 2001). 26 Like the “stateless” actor in Newman-Green, Ross contends that complete diversity 27 of citizenship for purposes of § 1332 cannot be maintained on the facts here, because Ross 28 has no discernable domicile in any specific state. See id. (“In order to be a citizen of a State -4- 1 within the meaning of the diversity statute, a natural person must both be a citizen of the 2 United States and be domiciled within the State.”).1 In her remand motion, Ross claims that 3 since 2004 she has been almost continuously stationed in Iraq and has returned to the United 4 States for only transient interruptions in her work schedule. Ross further claims that she owns 5 property in Maricopa County, Arizona, which she has yet to live in, but that she intends to 6 reside in her Arizona home once her work for KBR concludes. Ross also notes that while she 7 has previously lived in California she has not registered to vote there; though Ross 8 acknowledges that she maintains a bank account in California, but generally accesses it 9 through the internet. Lastly, Ross alleges that upon her most recent return to the United States 10 from Iraq in July 2008, she has been living with an acquaintance in Texas and that she will 11 remain at this address until she returns to Iraq after receiving a new work assignment from 12 her employer. 13 As a preliminary matter, because David Toon is a resident of the State of Arizona, in 14 order to maintain diversity jurisdiction, it must be proven that Ross is domiciled in some 15 specific state other than Arizona. Furthermore, as the Party invoking the Court’s jurisdiction, 16 David Toon bears the burden of demonstrating the existence of subject matter jurisdiction, 17 by proving Ross’ specific domicile. 18 Toon claims that the evidence presented supports an inference that Ross is domiciled 19 in California, thereby meeting the requirement of complete diversity of citizenship between 20 the Parties for purposes of diversity jurisdiction under § 1332. To support this contention, 21 Toon points to the fact that Ross has a valid California drivers license which does not expire 22 until 2010, and that she has registered two automobiles (a truck and a motorcycle) in 23 California. Toon further maintains that Ross has an active bank account in California and 24 25 26 27 28 1 Furthermore, although under § 1332 diversity jurisdiction also exists between citizens of a State and citizens or subjects of a foreign state, a United States citizen domiciled abroad is not an alien or foreign subject for purposes of diversity jurisdiction. Newman-Green, 490 U.S. at 828 (“Subsection 1332(a)(2), which confers jurisdiction in the District Court when a citizen of a State sues aliens only, also could not be satisfied because [defendant] is a United States citizen [living abroad].”). -5- 1 that she has used a California address on various KBR employment forms. Toon also alleges 2 that Ross has filed at least one federal income tax document listing a California location as 3 her home address, and that she has multiple children and grandchildren already living in 4 California. 5 Ross has responded to Toon’s allegation of a California domicile by claiming that the 6 two vehicles in question actually belong to her friend, Bill Herron. According to Ross, the 7 vehicles were registered in her name only because Herron was unemployed at the time of 8 registration and was not creditworthy, and that by registering the vehicles in her name Ross 9 was doing Herron a favor.2 Ross also notes that one of the two vehicles is a motorcycle, and 10 she has never held a drivers licence that would authorize her to operate a motorcycle. Ross 11 also claims that Herron has been making payments on the vehicles. With respect to the 12 California address, Ross contends that she was required to list an actual physical address on 13 her KBR employment form and the address listed belongs to Herron, and Ross does not live 14 on the premises. With respect to the fact that her children live in California, Ross contends 15 that her children are all adults and do not require her supervision. 16 It is worth first noting that Ross’ contention of being domiciled in Iraq is without 17 merit. As previously stated, domicile means physical residency plus a showing of intent to 18 reside at that location permanently. See Kanter, 265 F.3d at 857. Although Ross has worked 19 as a civilian contractor in Iraq since 2004, she is not a citizen of Iraq and Ross has not 20 expressed an intent to make that country her permanent home. Furthermore, it is not 21 altogether clear that Ross would be legally permitted under the laws of either the United 22 States or Iraq to make that country her permanent home, even if she so desired. 23 The question of where Ross is domiciled within the United States is a much more 24 difficult issue. Certainly, Ross has ample connections to the State of California: her adult 25 children live there, she has held a California issued drivers licence, a bank account, has 26 2 27 28 Ross further contests the accuracy of the Toon’s representations regarding the truck, which she claims has always been registered in the State of Texas and carries Texas license plates. -6- 1 registered two vehicles in that state, has filed a federal tax return from there, and has even 2 rented California property. At the same time, Ross has purchased a house in Arizona and has 3 demonstrated a desire to permanently reside at this property upon the completion of her work 4 obligations for KBR in Iraq. Also, Ross presently lives in Texas while awaiting a new 5 assignment in Iraq. Because of the conflicting factual submissions that have been made to 6 the Court, there is enough evidence for the Court to conclude that Ross is indeed “stateless,” 7 such that she lacks a discernable state in which she is domiciled for purposes of § 1332. In 8 any event, it is not Ross’ burden to prove a domicile. That task falls to the party who is 9 invoking the Court’s jurisdiction, David Toon. See Kokkonen v. Guardian Life Ins. Co. of 10 Am., 511 U.S. 375, 377 (1994) (the removing party bears the burden of establishing subject 11 matter jurisdiction, and a court must presume lack of jurisdiction until that party establishes 12 otherwise). 13 As such, Toon has not presented sufficient evidence for the Court to conclude that 14 Ross either currently resides in California or that she intends to make California her 15 permanent home. For that reason, the Court cannot conclude that its subject matter 16 jurisdiction has been properly invoked in this matter. Therefore, the instant lawsuit shall be 17 remanded back to the court of competent jurisdiction, which is Maricopa County Superior 18 Court in the State of Arizona. 19 Accordingly, 20 IT IS HEREBY ORDERED granting Plaintiff’s Motion to Remand. (Dkt.#30.) 21 IT IS FURTHER ORDERED denying as moot Plaintiff’s Request for Ruling, or in 22 the alternative, notice of readiness for Pretrial Conference. (Dkt.#42.) IT IS FURTHER ORDERED, to the extent that it is consistent with this Order, 23 24 granting Defendants’ Motion for an Automatic Stay. (Dkt.#41.) 25 /// 26 27 28 -7- 1 2 3 IT IS FURTHER ORDERED directing the Clerk to remand the instant case back to Maricopa County Superior Court. DATED this 10th day of September, 2009. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -8-
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