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Sage Financial Properties LLC v. Fireman's Fund Insurance Co.

United States District Court, D. Montana, Billings Division

May 21, 2019

SAGE FINANCIAL PROPERTIES, LLC, HORIZON PROPERTIES, INC., Plaintiffs,
v.
FIREMAN'S FUND INSURANCE COMPANY, Defendant.

          ORDER AND FINDINGS AND RECOMMENDATION OF U.S. MAGISTRATE JUDGE

          TIMOTHY J. CAVAN UNITED STATES MAGISTRATE JUDGE.

         This action was originally brought in the Seventh Judicial District Court, Richland County, in the State of Montana. On April 4, 2019, Defendant Fireman's Fund Insurance Company, timely removed, invoking the Court's diversity jurisdiction under 28 U.S.C. § 1332(a) and 1441. (Doc. 1.)

         Presently before the Court are Plaintiffs' Motion to Remand (Doc. 11) and Defendant's Unopposed Motion for Leave to File Sur-Reply Brief (Doc. 17), which have been referred to the undersigned under 28 U.S.C. § 636(b)(1)(B). These motions are fully briefed and ripe for the Court's review. (Docs. 12, 15, 16, 18.)

         Having considered the parties' submissions, the Court finds diversity jurisdiction is lacking, and therefore, RECOMMENDS Plaintiffs' motion to remand be GRANTED.

         I. DISCUSSION

         “Federal courts are courts of limited jurisdiction, ” and “possess only that power authorized by Constitution and statute.” Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Federal district courts have original jurisdiction over actions “arising under the Constitution, laws, or treaties of the United States, ” 28 U.S.C. § 1331, and in actions where there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000.00. 28 U.S.C. § 1332. Complete diversity of citizenship requires each of the plaintiffs to be a citizen of a different state than each of the defendants. Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir. 2001). For purposes of diversity jurisdiction, the citizenship of a limited liability company is determined by the citizenship of its members. Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006).

         When Defendant removed this matter from state court, Defendant alleged that it is a California corporation with its principle place of business in Illinois. Defendant further alleged Plaintiff Horizon Properties, Inc. is a Montana corporation with its principle place of business in Montana, and Plaintiff Sage Financial Properties, LLC is a Montana limited liability company with its principle place of business in Montana. Defendant, however, failed to allege any facts regarding the citizenship of the members of Sage Financial.

         Plaintiffs moved to remand on grounds that complete diversity does not exist because one of Sage Financial's members, Mark Brodka, is a citizen of California. In response, Defendant agrees that complete diversity does not exist, and that remand is appropriate. Accordingly, in light of the parties' agreement that diversity jurisdiction is lacking, the Court recommends that this action be remanded to state court. Plaintiffs have also requested attorney's fees pursuant to 28 U.S.C. § 1447(c). The award of attorney's fees on remand is discretionary. Section 1447(c) provides in relevant part: “An order remanding the case may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). “Absent unusual circumstances, a court may award costs and attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal.” Grancare, LLC v. Thrower by & through Mills, 889 F.3d 543, 552 (9th Cir. 2018).

         Here, Defendant incorrectly treated Sage Financial as a corporation, and arguably should have been more diligent in inquiring into the citizenship of Sage Financial's members before removing this action. Despite Defendant's mistake, however, the Court cannot conclude Defendant's conduct was objectively unreasonable on this record. Plaintiffs' Complaint did not include information regarding the members and citizenship of Sage Financial. Further, once Defendant was provided with the affidavit of Mark Brodka, Defendant conceded the basis for removal was lacking, and did not oppose remand. “[R]emoval is not objectively unreasonable solely because the removing party's arguments lack merit, or else attorney's fees would always be awarded whenever remand is granted.” Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). See also Berkeley Research Grp., LLC v. United Potato Growers of Am., Inc., 2017 WL 1650582, *4 (N.D. Cal. May 2, 2017) (finding it was not objectively unreasonable for defendants to remove based on the information in the complaint given the 30-day time limit for removal). Accordingly, the Court recommends that Plaintiffs' request for attorney's fees be denied.[1]

         III. CONCLUSION

         Based on the foregoing, IT IS HEREBY ORDERED that:

         1. Defendant's Unopposed Motion for Leave to File Sur-Reply (Doc. 17) is DENIED.

         2. The Preliminary Pretrial Conference presently scheduled for May 30, 2019 at 11:00 a.m. is VACATED.

         IT IS RECOMMENDED that Plaintiffs' Motion for Remand (Doc. 11) be GRANTED, and that Plaintiffs' ...


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