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LYNCH FORD, INC. v. FORD MOTOR CO.

August 19, 1996

LYNCH FORD, INC., an Illinois corporation, Plaintiff,
v.
FORD MOTOR COMPANY, INC., et al., Defendants.



The opinion of the court was delivered by: ALESIA

 This matter is before the Court on Plaintiff Lynch Ford Inc.'s motion pursuant to 28 U.S.C. § 1447(c) to remand this matter to the Circuit Court of Cook County and for attorney's fees and costs. For the reasons set forth below, the motion is denied.

 I. BACKGROUND

 Plaintiff, Lynch Ford, Inc. (Lynch), is an Illinois corporation with its principal place of business in Illinois. Lynch is a franchise dealership of Defendant Ford Motor Company, Inc. (Ford). Lynch sells and services Ford vehicles.

 Defendant, Prestige Ford Sales and Services, Inc. (Prestige), is a Delaware corporation with its principal place of business in Illinois. Prestige is a subsidiary of Ford -- Ford owns 100% of Prestige's stock. Prestige operates a franchise dealership in direct competition with and just south of Lynch's dealership.

 Defendant, Landmark of Niles, Inc. (Landmark), is a Delaware corporation with its principal place of business in Illinois. Ford partially owns Landmark -- it is one of three shareholders in Landmark. Landmark operates a franchise dealership in direct competition with and just north of Lynch's dealership.

 Lynch initiated this action following Ford's decision to terminate Lynch's dealership. As a result of that decision, Lynch filed a six-count complaint premised entirely on Illinois law against Ford, Prestige, and Landmark, alleging: (1) a violation of the Illinois Motor Vehicle Franchise Act; (2) a conspiracy to violate the Illinois Motor Vehicle Franchise Act; (3) unfair competition; (4) deceptive trade practices; (5) a violation of the Illinois Anti-Trust Act; and (6) a violation of the Illinois Consumer Fraud Act.

 Lynch filed this action in the Circuit Court of Cook County. Ford removed the action pursuant to 28 U.S.C. § 1441(a) and § 1446 to this Court -- the United States District Court for the Northern District of Illinois. Although Lynch, Prestige, and Landmark all share the same state of citizenship, Ford claimed that Lynch fraudulently joined Prestige and Landmark as defendants to intentionally destroy complete diversity of citizenship and thus prevent this Court from exercising jurisdiction over this matter under 28 U.S.C. § 1332(a)(1) -- there is no dispute that the amount in controversy exceeds $ 50,000.

 II. DISCUSSION

 This matter is now before the Court on Lynch's motion pursuant to 28 U.S.C. § 1447(c) to remand the case to the Circuit Court of Cook County. Lynch also seeks attorney's fees and costs for Ford's alleged improper removal of the action to this Court. As discussed below, the Court agrees with Ford that Prestige and Landmark were fraudulently joined as defendants in an attempt by Lynch to destroy complete diversity of citizenship and thus deprive this court of subject matter jurisdiction.

 It is true that "for a case to be within the diversity jurisdiction of the federal courts, diversity of citizenship must be 'complete' meaning that no plaintiff may be a citizen of the same state as any defendant." Hoosier Energy Rural Elec. Coop., Inc. v. Amoco Tax Leasing IV Corp., 34 F.3d 1310, 1314-15 (7th Cir. 1994). As discussed, Plaintiff Lynch and Defendants Prestige and Landmark are all citizens of the state of Illinois. Thus, at first glance, it appears that this Court lacks diversity jurisdiction to hear this matter.

 It is well-established, however, that "diversity jurisdiction cannot be destroyed by joinder of nondiverse parties if such joinder is fraudulent." Id. at 1315. Fraudulent joinder occurs when, "after resolving all issues of fact and law in favor of the plaintiff, the plaintiff cannot establish a cause of action against the in-state defendant." *fn1" Poulos v. Naas Foods, Inc., 959 F.2d 69, 73 (7th ...


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