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Mtc Development Group, LLC and Patrick M. Palella v. Carter Lewis

November 20, 2011


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


MTC Development Group, LLC and Patrick Palella filed suit in state court against Carter Lewis, David Dolan, and Moorefield Development Training Center, Inc. on September 12, 2011. The complaint alleged that MTC was a "Delaware Limited Liability Company" with its main offices in Chicago and that Palella also worked in Chicago. The complaint also alleged that Moorefield was a West Virginia company doing business in that state, Dolan was a resident of West Virginia, and Lewis was a resident of North Carolina. Plaintiffs asserted claims of breach of contract and, more particularly, breach of an implied duty of good faith and fair dealing. The complaint alleged that Moorehead had contracted with Palella to find investors and financing and that MTC had contracted with Lewis to purchase his interest in Moorefield. Plaintiffs further alleged that the Lewis - MTC deal had not closed as scheduled due to false statements by Dolan acting as agent for Lewis and Moorefield and that MTC and Palella were damaged as a result. MTC also sought specific performance of its contract.

In late September, MTC evidently learned that defendants intended to consummate a separate transaction that MTC believed would render moot its request for specific performance. As a result, on October 5, 2011, MTC filed an emergency motion for a temporary restraining order and gave notice that it would present the motion in state court on the morning of October 7.

In the late afternoon of October 6, the defendants removed the case to federal court. In their removal notice, defendants alleged that this Court had jurisdiction based on diversity of citizenship. More specifically, defendants stated the following as the basis for their claim of diversity jurisdiction:

Diversity. The Complaint alleges that Plaintiff MTC is a Delaware Limited Liability Company with its principal offices in Illinois, (Compl. at ¶ 1) and that Plaintiff Palella is a consultant with a principal place of business in Illinois (Id. at ¶ 2). The Complaint further alleges that Defendant Moorefield is a West Virginia corporation doing business in West Virginia, that Defendant Dolan is a resident of West Virginia, and that Defendant Lewis is a resident of North Carolina. (Id. at ¶¶ 3-5.) Defendants further state that Dolan and Lewis are citizens of the states of Virginia and North Carolina, respectively. Therefore, the diversity of citizenship requirement is satisfied. 28 U.S.C. § 1332(a)(1).

Defs.' Not. of Removal ¶ 9.

Plaintiffs rewrote their motion for temporary restraining order (TRO) to include federal authorities as well as the federal standard for issuance of a TRO. They served notice that they would appear in federal court on the morning of October 7.

When the parties appeared before the Court on October 7, the Court advised counsel for defendants that the notice of removal did not completely describe the citizenship of each plaintiff pursuant to longstanding authority in this Circuit. Specifically, the Court stated:

THE COURT: So, I need to discuss a jurisdictional issue with you, and then I'm going to basically tell you to come back this afternoon, because I have a hearing that I'm sort of in the middle of right now. You guys removed the case. There is -- to say that something is a Delaware limited liability company basically has no meaning in this circuit, and you guys should have dealt with that. If this had been assigned to about a half a dozen judges here, you would have already been remanded back to the state court. I don't happen to be one of those half dozen. But you got to get this cleared up like now. And Cosgrove versus Bartolotta is the name of the case from 1999 [sic] that says that the citizenship of a limited liability company is the citizenship of each one of its members. If there's limited liability companies within the limited liability companies or partnerships or whatever, you've got to trace it all the way down.

So you need to file a supplement to the removal notice by noon basically telling me what the actual citizenship of the plaintiff is. I'm going to expect you guys to cooperate in getting that information to them so I can find out if there's jurisdiction, and then I'm going to hear this at 3:30. DEFENDANTS' COUNSEL: Your Honor, we did try to look on the Secretary of State's office for any information we could find.

THE COURT: It's never going to be on there.

DEFENDANTS' COUNSEL: It's never there.

THE COURT: But then what you need to do is pick up the ...

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