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HELLER FINANCIAL LEASING, INC. v. GORDON

December 2, 2004.

HELLER FINANCIAL LEASING, INC., a Delaware corporation, Plaintiff,
v.
ARTHUR E. GORDON, et al., Defendants.



The opinion of the court was delivered by: SAMUEL DER-YEGHIAYAN, District Judge

MEMORANDUM OPINION

This matter is before the court on Defendant Arthur E. Gordon's and Rose A. Gordon's (collectively referred to as "the Gordons") motion to dismiss for lack of subject matter jurisdiction and motion to dismiss in favor of a parallel action. This matter is also before the court on Plaintiff Heller Financial Leasing, Inc.'s ("Heller") motion to dismiss the Defendants' counterclaims. This matter is also before the court on Heller's motion to strike Defendants' jury demand and on third party Pace LLC's (Pace") motion to intervene in the present action. For reasons stated below, we deny the Gordons' motions to dismiss. We also grant Heller's motion to dismiss the Defendants' counterclaims, we grant Heller's motion to strike the Defendants' jury demand, and we grant Pace's motion to intervene.

BACKGROUND

  In August of 2000, Pace entered into an $18,000,000 promissory note ("Promissory Note") and Aircraft Chattel Mortgage Security Agreement with Heller. At the same time, as inducement to Heller to make the loans and to extend credit to Pace, each of the Defendants entered into guaranty agreements ("Guarantee Agreements") with Heller. In the Guaranty Agreements, Defendants agreed to pay Heller "on demand . . . the due and punctual payments and performance of all indebtedness of Pace to Heller." (Guaranty Par. 1). Pace and Defendants failed to make the payments required under the agreements. In July of 2002, Pace, Defendants, and Heller entered into a Voluntary Surrender and Transfer Agreement whereby Pace agreed to voluntarily convey title to the Aircraft to Heller. Heller brought the present action against the Defendants seeking to recover the difference between the value of the Aircraft and the $18 million due and owing to Heller pursuant to the Guarantee Agreements. Defendants' obligation for the deficiency and the amount of the deficiency are the sole issues presented by Heller's complaint. Defendants have made a demand for a jury trial, and Heller has made a motion to strike this demand. Pace has also made a motion to intervene in the current action.

  LEGAL STANDARDS

  Federal Rule of Civil Procedure 12(b)(1) requires a court to dismiss an action when it lacks subject matter jurisdiction. United Phosphorus, Ltd. v. Angus Chemical Co., 322 F.3d 942, 946 (7th Cir. 2003). When reviewing a motion to dismiss brought under Rule 12(b)(1), this court "must accept as true all well-pleaded factual allegations, and draw reasonable inferences in favor of the plaintiff." Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995) (citing Rueth v. United States Environmental Protection Agency, 13 F.3d 227, 229 (7th Cir. 1993)). For the purpose of determining subject matter jurisdiction, this court "may properly look beyond the jurisdictional allegations of the complaint and view whatever evidence has been submitted on the issue to determine whether in fact subject matter jurisdiction exists." Ezekiel, 66 F.3d at 897 (quoting Capitol Leasing Co. v. Federal Deposit Insurance Corp., 999 F.2d 188, 191 (7th Cir. 1993)). However the burden of proof "on a 12(b)(1) issue is on the party asserting jurisdiction." United Phosphorus, Ltd., 322 F.3d at 946.

  In ruling on a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6), the court must draw all reasonable inferences that favor the plaintiff, construe the allegations of the complaint in the light most favorable to the plaintiff, and accept as true all well-pleaded facts and allegations in the complaint. Thompson v. Illinois Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002); Perkins v. Silverstein, 939 F.2d 463, 466 (7th Cir. 1991). The allegations of a complaint should not be dismissed for a failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46 (1957). Nonetheless, in order to withstand a motion to dismiss, a complaint must allege the "operative facts" upon which each claim is based. Kyle v. Morton High School, 144 F.3d 448, 444-45 (7th Cir. 1998); Lucien v. Preiner, 967 F.2d 1166, 1168 (7th Cir. 1992). The plaintiff need not allege all of the facts involved in the claim and can plead conclusions. Higgs v. Carter, 286 F.3d 437, 439 (7th Cir. 2002); Kyle, 144 F.3d at 455. However, any conclusions pled must "provide the defendant with at least minimal notice of the claim," Id., and the plaintiff cannot satisfy federal pleading requirements merely "by attaching bare legal conclusions to narrated facts which fail to outline the bases of [his] claim." Perkins, 939 F.2d at 466-67. DISCUSSION

  I. Motion to Dismiss for Lack of Jurisdiction

  The Gordons contend that this action should be dismissed because Heller has not provided sufficient evidence that this court has subject matter jurisdiction. Heller asserts in its complaint that this court has diversity subject matter jurisdiction. (Comp. Par. 6). The party seeking to invoke the court's jurisdiction bears the burden of showing that subject matter jurisdiction exists. See NLFC, Inc. v. Devcom Mid-America, Inc., 45 F.3d 231, 237 (7th Cir. 1995) (stating that "[t]he party invoking federal jurisdiction bears the burden of establishing the elements of jurisdiction."). Diversity jurisdiction exists if "the matter in controversy exceeds the sum or value of $75,000" and the action is "between . . . citizens of different States. . . ." 28 U.S.C. § 1332(a). For the purposes of diversity of citizenship "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business. . . ." 28 U.S.C. § 1332(c)(1). In the Seventh Circuit a corporation's principal place of business is deemed the "place where the corporation has its nerve center." Krueger v. Cartwright, 996 F.2d 928, 931 (7th Cir. 1993).

  The Gordons argue that they dealt with an entity entitled Commercial Equipment Finance Group ("CEFG") whose main offices are located in California. The Gordons theorize that CEFG is the same entity as Heller and that Heller's principal place of business is thus in California. If Heller's principal place of business was in fact in California, since the Gordons are citizens of California, there would not be complete diversity which is required for diversity jurisdiction. The Gordons speculate that Heller is located in California, but is attempting to conceal that fact by providing documentation showing that its parent company's corporate headquarters are located in Illinois. (Ans. 3). The Gordons contend that Heller purposefully creates confusion between the names "Heller Financial Leasing" and "Heller Financial Inc., Leasing." (Ans. 3). However, the Gordons provide no basis for such a conclusion or any explanation regarding how the Gordons came up with the two names mentioned by the Gordons.

  In fact it is the Gordons themselves that vaguely refer to entities throughout their briefs and are confused regarding the proper titles of entities. For example, after the Gordons make reference in their answer to "Heller Financial Leasing" and "Heller Financial Inc., Leasing," the Gordons make reference to an entity termed "Financial." (Ans. 2). However, both of the above names contain the word "Financial." Another example is the Gordons' reference in its answer to "Heller Financial" which again is included in both of the above mentioned names referred to by Heller. (Ans. 3).

  Heller filed a supplemental brief with the court to which it attached a declaration that is signed by Ron Lis ("Lis"), a Vice President for Heller Financial Leasing, Inc., which is the named plaintiff in the instant action. In the declaration Lis verifies that the corporate headquarters for Heller, the named plaintiff in this action, are located in Chicago, Illinois. Lis also states that CEFG which the Gordons contend they dealt with in California, is not a separate corporation from Heller. Lis states that CEFG is merely a division of Heller and has always been a division of Heller. The Gordons have not provided any evidence to refute the assertions made by Lis. Instead, the Gordons claim that they need further documentation and irrefutable proof that Lis is not lying in his declaration. Heller has provided a signed declaration indicating that this court has subject matter jurisdiction and the Gordons have offered absolutely no evidence that calls into doubt the sworn statement by Lis. Therefore, we deny the motion to dismiss for lack of subject matter jurisdiction.

  II. Motion to Dismiss in Favor of Duplicative Parallel Action

  The Gordons seek to dismiss this action based on the fact that a similar action involving the same parties is pending in a California federal bankruptcy court. A district court may dismiss a suit "for reasons of wise judicial administration . . . whenever it is duplicative of a parallel action already pending in another federal court." Serlin v. Arthur Andersen & Co., 3 F.3d 221, 224 (7th Cir. 1993) (quoting Ridge Gold Standard Liquors v. Joseph E. Seagram, 572 F.Supp. 1210, 1213 (N.D. Ill. 1983)). In determining whether another action is duplicative a district court has a "a great deal of latitude and discretion. . . ." Id. (quoting Ridge Gold, 572 F.Supp. at 1210). An action is duplicative of the present action if the "claims, parties, and available relief do not significantly differ between the two actions." Id. (quoting Ridge Gold, 572 F.Supp. at 1213). When a district court determines that another parallel proceeding should be given "priority" the action before the district court ...


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