Case 2:13-cv-05698-CCC-JBC Document 6 Filed 12/19/14 Page 1 of 7 PageID: 47
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`UNITED STATES DISTRICT COURT
`DISTRICT OF NEW JERSEY
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`MICHAEL OKECHUKU.
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`Civil Action No.: 13-5698
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`OPINION & ORDER
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`Plaintiff.
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`V.
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`SHARP MANAEGEMENT,
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`Defendant.
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`CECCHI, District Judge.
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`I.
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`1NTRODUCTION
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`This matter comes before the Court upon motion of Defendant Sharp Management
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`(“Defendant”) to dismiss Plaintiff Michael Okechuku’s (“Plaintiff’) complaint pursuant to Fed.
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`R. Civ. P. 12(b)(1). {ECF No. 3.] Plaintiff opposes the motion.
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`[ECF No. 4.] No oral argument
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`was heard. See Fed. R. Civ. P. 78. For the reasons set forth below, Defendant’s motion is
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`granted.
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`II.
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`BACKGROUND
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`Norman Sheet Metal & Mechanical Corp. (“NSM&M”) is a New Jersey corporation with
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`its principal place of business in New Jersey. On October 5. 2010. NSM&M filed a voluntary
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`petition under Chapter 7 of the Bankruptcy Code and, the next day, Plaintiff was appointed
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`Chapter 7 trustee for NSM&M. Plaintiff alleges that NSM&M provided goods and;or services
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`totaling $122,297.68 to Defendant without compensation and, accordingly, demanded this
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`amount from Defendant via letter dated September 12, 2012. On January 9,2013, Plaintiff filed
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`an adversary complaint in the U.S. Bankruptcy Court for the District of New Jersey seeking,
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`jilter a/ia, the turnover of accounts receivable by Defendant.
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`In June 2013. Defendant filed a
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`motion to dismiss Plaintiff’s adversary complaint
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`in the Bankruptcy Court on permissive
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`abstention and jurisdictional grounds. Plaintiff opposed that motion.
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`Defendant had also filed a motion to withdraw—which Plaintiff did not oppose—seeking
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`entry of an order by this Court withdrawing reference to the Bankruptcy Court of the adversary
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`proceeding. On March 25, 2014,
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`the Court granted Defendant’s motion to withdraw and
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`concomitantly transferred the case to this Court. Defendant then filed the instant motion to
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`dismiss, alleging that the Court does not have subject matter jurisdiction to hear this suit.
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`III.
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`LEGAL STANDARD
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`Federal courts have only limited jurisdiction to entertain certain lawsuits and therefore
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`the party seeking to invoke federal court jurisdiction bears the burden of proving subject matter
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`jurisdiction. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). Federal courts
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`may examine, sua sponte, whether subject matter jurisdiction exists in a particular suit, Hertz
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`Corp. v. Friend, 559 U.S. 77, 94 (2010), or a party may challenge subject matter jurisdiction
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`under Federal Rule of Civil Procedure 12(b)(1). Here, pursuant to 12(b)(1), Defendant moves to
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`dismiss Plaintiff’s complaint for lack of subject matter jurisdiction.
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`Under Rule 12(b)(1), “the [C]ourt’s jurisdiction may be challenged either facially (based
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`on the legal sufficiency of the claim) or factually (based on the sufficiency of a jurisdictional
`fact).” Ezeiruaku v. Bull. 2014 WL 5587404. at *3 (D.N.J. Nov. 3. 2014) (citing Gould
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`Electronics Inc. v, United States, 220 F.3d 169, 178 (3d Cir.2000)), “The substantive distinction
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`between a facial attack and a factual attack is that in a facial attack the defendant contests the
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`sufficiency of the complaint, while a factual attack challenges the existence in fact of federal
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`subject matter jurisdiction.” LaLoup v. United States. 2014 WL 3361804, at *3 (E.D. Pa. July
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`10, 2014).
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`In considering a facial challenge to subject matter jurisdiction under Rule 12(b)(1), as
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`here, the Court considers “the allegations of the complaint and documents referenced therein and
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`attached thereto, in the light most favorable to the plaintiff.” Gould, 220 F.3d at 176; Taliaferro
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`v. Darby Twp. Zoning Bd., 458 F.3d 181, 188 (3d Cir.2006). Accordingly, the complaint must
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`be dismissed if the allegations on the face of the complaint, accepted as true, fail to “allege facts
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`sufficient to invoke the jurisdiction of the district court.” Licata v. U,S.P.S., 33 F.3d 259, 206
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`(3dCir. 1994).
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`IV.
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`DISCUSSION
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`Defendant argues that the Court’s Order withdrawing reference to the Bankruptcy Court
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`and transferring the adversary proceeding to this Court concomitantly nullified the “related to”
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`jurisdiction conferred by 28 U.S.C. § 1334(b) and 28 U.S.C.
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`§ 157 for Bankruptcy Court
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`jurisdiction.
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`(Def.’s Mot. at 2.) Defendant further argues that neither federal question
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`jurisdiction under 28 U.S.C. § 1331, nor diversity jurisdiction under 28 U.S.C. § 1332 exist in
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`this case and therefore Plaintiff’s complaint should be dismissed.
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`(Id. at 2-3.) Plaintiff does not
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`seem to dispute that jurisdiction no longer exists under 28 U.S.C. § 1334(b), 157 and that
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`subject matter jurisdiction cannot be maintained under federal question jurisdiction.t (Pl.’s
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`Opp’n at 2-6.)
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`Instead, Plaintiff argues that there is diversity of citizenship2 and, even if there is
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`Under 28 U.S.C.
`1331. “[flederal question inrisdiction arises where federal law creates the cause of action, or
`where the complaint, on its face, poses a federal quesuon.” ghneiler cx rd. Schneiler v. Crozer Chester Med. Ctr.,
`387 F. App’x 289, 292 (3d Cir, 2010) (citing ç Comanch
`Inc. v.G’toi
`slads, 278 F.3d 250, 259 (3d
`Cir,2002));
`iso gpg,,yMCI Co
`,, 328 Fed.Appx. 768, 770 (3d Cir, 2008) (“For purposes of federal question
`jurisdiction, ‘[a]n action arises under the laws of the United States if and only if the complaint seeks a remedy
`expressly granted by a federal law or if it requires the construction of a federal statute or a distinctive policy of a
`federal statute requires the application of federal legal principles for its disposition.” (citation omitted)): j,iliv.
`AtI. Cdv Med. Ctr., 861 F. Supp. 2d 459. 466-67 (D.N.J. 2012). The Court agrees with the parties that Plaintiffs
`complaint, on its face, poses no federal question.
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`2 It is unclear whether Plaintiff actually contests Defendant’s contention that there is no diversity of citizenship here.
`(See P1’s Opp’n at 5 (“The Defendant attempted to assert that there was no diversity of citizenship between the
`parties in the Bankruptcy Motion to Dismiss,
`In response thereto, the Trustee asserted that Defendant had not met
`its burden of proving that there was not diversity jurisdiction. .
`. [Gjiven that the Defendant is a limited liability
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`.
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`Case 2:13-cv-05698-CCC-JBC Document 6 Filed 12/19/14 Page 4 of 7 PageID: 50
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`no diversity, “the equities weigh in favor of having this Court adjudicate the matter.” (Id. at 6.)
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`“To establish diversity jurisdiction under 28 U.S.C.
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`§ 1332(a).
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`the party asserting
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`jurisdiction must show that there is complete diversity of citizenship among the parties and an
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`amount in controversy exceeding $75,000.” Schneller cx rd. Schneller v. Crozer Chester Med.
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`Ctr.. 387 F. App’x 289, 292 (3d Cir. 2010). Since the enactment of 1332, complete diversity of
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`citizenship has been required—i.e., plaintiff and any defendant must be citizens of different
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`states. Carden v. Arkoma Associates, 494 U.S. 185, 187 (1990). Accordingly, a plaintiff
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`asserting federal jurisdiction via diversity of citizenship ‘“must specifically allege each party’s
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`citizenship, and these allegations must show that the plaintiff and defendant[sj are citizens of
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`different states.” Gay v. Unipack, Inc., 2011 WL 5025116, at *4 (D.N.J. Oct. 20, 2011)
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`(citation omitted); Phillip v. Ati. City Med. Ctr., 861 F. Supp. 2d 459, 467 (D.N.J. 2012). When
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`the defendant, as here,
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`is a Limited Liability Corporation (“LLC”), “the citizenship []
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`is
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`determined by the citizenship of [each of] its members.” Zambelli Fireworks Mfg. Co. v. Wood,
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`592 F.3d 412, 420 (3d Cir. 2010)).
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`Here, NSM&M, on whose behalf Plaintiff flied the complaint, is a citizen of New Jersey.
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`(Pl.’s Opp’n at 2.) Defendant—an LLC—is comprised of two members: Christopher Pompeo
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`(domiciled in New Jersey) and Barbara Marino (domiciled in New York).
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`(Def.’s Mot. at 5.)
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`Because Plaintiff and one member of Defendant share the same state of citizenship,3 complete
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`company, disclosure of the citizenship of its members was required. Citizenship of a limited liability company is
`determined by the citizenship of each of its members for purposes of diversity jurisdiction.”).) However, for the
`sake of completeness, the Court shall construe Plaintiff’s brief to challenge Defendant on this point.
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`“Citizenship is synonymous with an individual’s domicile,” Curlev v. Mosier, 2010 WL 2607264, at *2 (DN.J.
`June 17. 2010) (citing Krasnov v. Oman, 465 F.2d 1298. 1300 (3d Cir. 1972)): Woodson v. Runyon. 2013 WL
`3514421. at *2 (D.N.J. July 11. 2013) (“Forpurposes ofdetermining diversity, state citizenship is equated with
`domicile.”). affd. 537 F. App’x 28 (3d Cir. 2013).
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`4
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`diversity is lacking and therefore jurisdiction cannot lie under § 1332. See Zambelli, 592 F.3d
`at 420.
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`However, despite a lack of subject matter jurisdiction, Plaintiff argues that the Third
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`Circuit in Zambelli set forth certain ‘equities” that counsel in favor of retaining jurisdiction here.
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`(Pl.’s Opp’n at 6.) This argument is incongruous with both the age-old concept of subject matter
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`jurisdiction and a plain reading of Zambelli. With respect to the former, “[s]ubject-matter
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`limitations on federal jurisdiction serve institutional interests. They keep the federal courts
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`within the bounds the Constitution and Congress have prescribed.” Ruhrgas AG v. Marathon Oil
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`Co., 526 U.S. 574, 583 (1999). Thus, “[a] federal court’s entertaining a case that is not within its
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`subject matter jurisdiction is no mere technical violation;
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`it
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`is nothing less
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`than an
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`unconstitutional usurpation of state judicial power.” Courts of Limited Jurisdiction, 13 Fed.
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`Prac. & Proc. Juris. § 3522 (3d ed.). Allowing a suit to progress absent constitutional and
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`congressional authorization upends 225-year-old precepts of limited federal court jurisdiction.
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`Plaintiff also misinterprets Zambelli. The Zambelli case involved three parties: plaintiff
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`Zambelli Fireworks Manufacturing Co., defendant Pyrotecnico, and defendant Matthew Wood.
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`Zambelli, 592 F.3d at 415. The Zambelli district court had “premised jurisdiction on the
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`diversity of the parties, based on Zambelli’s pleading [J
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`that
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`it was a corporate citizen of
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`Pennsylvania. Wood was a citizen of Florida. and Pyrotecnico ‘is a Nevada limited liability
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`company with its principal place of business in Nevada,’”
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`at 4l8. Holding that the
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`At the district court level, the citizenship of the members of Pyrotecnico was not pled. However, in the course of
`the trial proceedings, the testimony of Stephen Vitale—a Pennsylvania resident employed in Pyrotecnico’s New
`Castle, Pennsylvania headquarters—•revea1ed that Pyrotecnico was a wholly-owned subsidiary of Pvrotecnico of
`Louisiana. LLC. of which he was the managing member. Based on this record, the Third Circuit sua sponre
`recognized the apparent absence of complete diversity and directed the parties to submit supplemental briefing on
`the issue. Ed. at 418-19.
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`citizenship of PyTotechnico. as an LLC, “is determined by the citizenship of its members”, the
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`Third Circuit explained that complete diversity was lacking because Zambelli and one of
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`Pyrotechnico’s members were both citizens of Pennsylvania.5 at 420. The issue then
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`became whether the suit should proceed without P rotechnico as a party or be dismissed in its
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`entirety.
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`Id. (“Having established that we lack subject matter jurisdiction, all parties agree that
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`the suit cannot proceed with Pyrotecnico as a party.”).
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`It was at this point, the Third Circuit
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`noted: “[C]onsiderations of efficiency, fairness, and judicial economy weigh against a wholesale
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`dismissal of the action at this stage.”
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`id. at 420-21. Alternatively, the court explained that
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`“Pyrotecnico is a dispensable party to this action and we will exercise our Rule 21 authority to
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`dismiss Pyrotecnico on appeal, thus restoring complete diversity in this case.” Id. at 422.
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`Plaintiff cites Zambelli for the proposition that a federal court may retain jurisdiction due
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`to “considerations of efficiency, fairness, and judicial economy”.
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`(P1.’s Opp’n at 6.) However, a
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`clear reading of Zambelli demonstrates that such considerations may only come into play when
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`one party to the action “spoils” the otherwise complete diversity of the parties, thus raising the
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`question of whether to dismiss the case wholesale or proceed without the spoiling party. Here, in
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`stark contrast, there is only one plaintiff and only one defendant, and they lack complete
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`diversity.
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`In such a case, a federal court’s only option is to dismiss the suit for want of subject
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`matter jurisdiction,
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`For these reasons, the Court lacks subject matter jurisdiction to hear this dispute.
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`More specifically: ‘Pvrotecnico, despite being a Nevada limited liability company. has a single member:
`Pvrotecnico of Louisiana, LLC, a Louisiana limited liability company. Tracing its citizenship through the layers,
`Pyrotecnico takes on the citizenship of the members of Pyrotecnico of Louisiana, including its managing member
`Stephen Vitale, Because Stephen Vitale is a resident of New Castle, Pennsylvania, Pyrotecnico is a citizen of
`Pennsylvania and is not diverse from Zambelli. another citizen of Pennsylvania.” Id. at 420.
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`V.
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`CONCLUSION
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`For the reasons set forth above. IT IS on this 19th day of December 2014.
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`ORDERED that Defendant’s motion to dismiss pursuant to Rule 12(b)(1) [ECF No. 3] is
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`GRANTED without prejudice; and it is further
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`ORDERED that the Clerk of the Court shall close this case; and it is further
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`ORDERED that Plaintiff is granted thirty days to file a complaint that cures the pleading
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`deficiencies as set forth by the Court.
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`CLAIRE C. CECCHI, U.S.D.J.