United States District Court, N.D. Illinois
April 29, 2004.
GTC INTERNATIONAL HOLDINGS, INC., Plaintiff,
JOHN BURNS, Defendant
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, GTC International Holdings, Inc., filed suit against
Defendant, John Burns, seeking damages for breach of his fiduciary duty
of loyalty to GTC and its shareholders, as well as a declaratory judgment
affirming that the Defendant breached his fiduciary duty of care to GTC
and its shareholders, breached his September employment contract, that he
is not owed accelerated final payment of all outstanding principal and
interest under a Secured Promissory Note in consequence of the
termination of his employment, and that he continues to have
non-competition and confidentiality obligations to GTC.
Presently before the Court is Defendant's Motion to Dismiss Plaintiff's
Complaint or, in the Alternative, to Transfer.
A reading of the Complaint supports the following summary of the
alleged operative conduct of the parties.
Art Wholesalers, Inc. ("AWI ") and Silver Capital Corporation ("SCC")
are wholly owned by GTC. SCC wholly owns Stratton Picture Company
("Stratton"). Defendant, John Burns, was, at various relevant times,
simultaneously the President and Chief Operating Officer of GTC, AWI, SCC
and Stratton; a member of the Boards of Directors of GTC, AWI, SCC and
Stratton; and a member of the Executive Committee of GTC. On or about September 15,
2003, OTC, AWI, SCC, Stratton and Defendant executed an Employment
Agreement providing for Defendant to be employed as President and Chief
Operating Officer of Plaintiff GTC, AWI, SCC and Stratton; to serve as a
member of the Board of Directors and Executive Committee of GTC; and to
report to the Chairman of GTC. On or about December l, 2003, Defendant
resigned his positions as President and Chief Operating Officer of GTC,
SCC and Stratton. Defendant remained President and Chief Operating
Officer of AWI; a member of the Board of Directors and Executive
Committee of GTC; and a member of the Boards of Directors of AWI, SCC and
GTC and AWI are members of a single enterprise engaged in a common
business venture. The corporations are closely held, and their general
business interests are aligned. In 2003, GTC and AWI filed a combined tax
Plaintiff, GTC is a corporation organized under the laws of the state
of Delaware with its principal place of business in Bedford Park,
Illinois. Defendant Burns resides in the state of Arizona.
Defendant contends Plaintiff's Complaint should be dismissed or, in the
alternative, transferred because: (1) this Court lacks subject matter
jurisdiction because GTC has not established diversity between the
parties, GTC is not the real party in interest, and GTC has failed to
join an indispensable party; and (2) venue in this district is improper.
To complete diversity jurisdiction, two basic requirements must be
satisfied: (1) complete diversity of citizenship between the plainliffs
and the defendants and (2) the proper amount in controversy. Neuma, Inc.
v. AMP, Inc., 259 F.3d 864, 881 (7th Cir. 2001). There is no dispute that
the second prong is satisfied. As to diversity of citizenship, residence
and citizenship are not synonyms it is the latter that matters for purposes of diversity
jurisdiction. Meyerson v. Harrah's East Chicago Casino, 299 F.3d 616, 617
(7th Cir. 2002).
Generally, an individual's state of citizenship, for diversity
purposes, is the state of his domicile, the state he considers his
permanent home. Galva Foundry Co. v. Heiden, 924 F.2d 729, 730 (7th Cir.
1991). Physical presence in a state with intent to remain there is
necessary to establish domicile for purposes of diversity jurisdiction.
Denlinger v. Brennan, 87 F.3d 214, 216 (7th Cir. 1996). An allegation of
residency without citizenship is insufficient to establish diversity
jurisdiction. Simon v. Allstate Employee Group Med. Plan, 263 F.3d 656,
658 (7th Cir. 2001). Generally, when a party bringing an action under the
court's diversity jurisdiction alleges residency but not citizenship, the
court must dismiss the suit. However, a plaintiff may be granted leave to
amend his complaint pursuant to 28 U.S.C. § 1653. Held v. Held,
137 F.3d 998, 1000 (7th Cir. 1998).
In this case, the Plaintiff has alleged that the Defendant resides in
Arizona. While it is true that the Defendant has not denied Arizona
citizenship, he also has not confirmed it. In order for diversity
jurisdiction to exist, the Plaintiff must allege diverse citizenship of
the parties in its Complaint. Accordingly, Plaintiff has failed to
properly plead diversity.
For the foregoing reason, Defendant's Motion to Dismiss is granted.
Plaintiff's Complaint is dismissed without prejudice to refile within
fourteen days of this order. Defendant's Motion to Transfer is denied as
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