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Mann v. Bales

United States District Court, N.D. Illinois

October 7, 2016

JACK MANN, Plaintiff,
v.
HEATHER BALES, et al., Defendants.

          Schwab, Magistrate Judge

          MEMORANDUM

          Matthew W. Brann, United States District Judge

         Before the Court for disposition are (1) Defendants Heather Bales and Mann Insurance Agency, Inc.'s Motion to Dismiss, and (2) Defendants George F. Mann, III, Julia A. Mann, Judson H. Mann, G.F. Mann Agency, Ltd., and Global Risk Services' Motion to Dismiss. Magistrate Judge Susan E. Schwab has prepared a Report and Recommendation concerning these Motions. For the following reasons, this Report and Recommendation will be adopted in its entirety. Defendants' Motions to Dismiss will be granted for lack of personal jurisdiction, and the case transferred to the United States District Court for the Northern District of Illinois.[1]

         I. BACKGROUND AND PROCEDURAL HISTORY

         On July 27, 2015, Plaintiff Jack Mann (“Plaintiff”), a prisoner then incarcerated at FCI Allenwood, filed a Complaint against (1) Heather Bales; (2) Judson Mann; (3) George F. Mann, III; (4) Julia A. Mann; (5) G.F. Mann Agency, Ltd.; (6) Mann Insurance Agency, Inc.; (7) Global Risk Services, Ltd; and (8) all members of the Board of Directors of each corporation.[2] Plaintiff alleged within this Complaint that Defendants had converted to their own use his book of business relating to an insurance business. Ownership of this insurance business, Mann Insurance Agency, Inc., had previously been transferred to Plaintiff's ex-wife, Heather Bales, as part of their divorce proceeding. She thereafter sold the insurance company and book of business to Judson Mann, George F. Mann, III, Julia A. Mann, G.F. Mann Agency, Ltd., and Global Risk Services.[3] Based on these facts, Plaintiff asserted seventeen state law claims and one claim under the Telephone Consumer Protection Act of 1991 (“TCPA”).[4]

         On October 14, 2015, Magistrate Judge Schwab directed Plaintiff to file an Amended Complaint on or before November 9, 2015.[5] The court found that it lacked subject matter jurisdiction over the complaint under federal question[6] and diversity jurisdiction.[7] Magistrate Judge Schwab reasoned that (1) the court lacked federal question jurisdiction because Plaintiff had failed to assert an arguable claim under the TCPA, and (2) Plaintiff failed to allege facts from which diversity jurisdiction could reasonably be inferred.

         In accordance with the leave to amend granted by Magistrate Judge Schwab, Plaintiff filed an Amended Complaint on November 3, 2015.[8] The amended pleading again contained seventeen state law claims and a TCPA claim. In addition, however, Plaintiff alleged a claim under the Racketeer Influenced and Corrupt Organizations (RICO) Act.[9] On January 11, 2016, Defendants Heather Bales and Mann Insurance Agency, Inc. (“Bales Defendants”) filed a Motion to Dismiss the Amended Complaint.[10] Defendants George F. Mann, III, Julia A. Mann, Judson H. Mann, G.F. Mann Agency, Ltd., and Global Risk Services (“Mann Defendants”) then filed a Motion to Dismiss.[11] These Motions were subsequently fully briefed by all parties.[12]

         On July 12, 2016, Magistrate Judge Schwab issued a Report and Recommendation concerning these pending Motions to Dismiss.[13] The Report advised the Court to grant Defendants' motions to dismiss due to a lack of personal jurisdiction over the Defendants. The Report further recommended the transfer of this case to the United States District Court for the Northern District of Illinois, pursuant to 28 U.S.C. § 1631. On July 26, 2016, both the Bales Defendants and the Mann Defendants filed Objections to the Report and Recommendation.[14]

         These Objections have since been fully briefed by all parties.[15]

         II. LEGAL STANDARD

         Upon designation, a magistrate judge may “conduct hearings, including evidentiary hearings, and ... submit to a judge of the court proposed findings of fact and recommendations.”[16] Once filed, this Report and Recommendation is disseminated to the parties in the case who then have the opportunity to file written objections.[17] When objections are timely filed, the District Court must conduct a de novo review of those portions of the report to which objections are made.[18]Although the standard of review for objections is de novo, the extent of review lies within the discretion of the District Court, and the court may otherwise rely on the recommendations of the magistrate judge to the extent it deems proper.[19]

         For portions of the Report and Recommendation to which no objection is made, the court should, as a matter of good practice, “satisfy itself that there is no clear error on the face of the record in order to accept the recommendation.”[20]Regardless of whether timely objections are made by a party, the District Court may accept, not accept, or modify, in whole or in part, the findings or recommendations made by the magistrate judge.[21]

         III. DISCUSSION

         Having reviewed those portions of the Report and Recommendation to which no objections were made, the Court is satisfied that, on its face, it has no clear error. As noted above, the Mann Defendants and Bales Defendants have filed Objections to the findings of the Report and Recommendation. Following a de novo review of those portions of the Report to which objection was made, I note that these objections do not contest the finding that this Court lacks personal jurisdiction over Defendants. Rather, they are limited to Magistrate Judge Schwab's recommendation that the case be transferred. The Court adopts the sound reasoning of the Report and Recommendation and will transfer this case to the Northern District of Illinois.

         Title 28 of United States Code Section 1631 permits a court that lacks jurisdiction to transfer a civil action to a district where the action could have originally been brought.[22] Transfer pursuant to Section 1631 is thus appropriate when (1) jurisdiction is wanting in the transferor court, (2) the transfer is in the interest of justice, and (3) the action could have been brought in the transferee court at the time it was filed.[23]

         In their objections, Defendants do not take exception to this Court lacking personal jurisdiction. They do, however, argue that (1) the action could not have been brought in the transferee court at the time it was filed, and (2) transfer is not in the interest of justice.[24] In support of their first contention, Defendants argue that the Report and Recommendation erred by advising transfer and not recognizing that the Northern District of Illinois lacked subject matter jurisdiction. Defendants specifically state that (1) no diversity jurisdiction exists to support subject matter jurisdiction under 28 U.S.C. § 1332, and (2) no federal question jurisdiction exists under 28 U.S.C. § 1331 because Plaintiff has failed to allege plausible TCPA and civil RICO claims.[25]

         A. Plaintiff's Complaint Could Not Have Been Filed in the Northern District of Illinois Based On Diversity of Citizenship Jurisdiction.

         Concerning the first argument, the Court agrees with Defendants that this case could not have been brought in the Northern District of Illinois based on diversity jurisdiction. Because federal courts are of limited jurisdiction, they must possess jurisdiction over a case to address its merits.[26] Under 28 U.S.C. § 1332, a District Court has jurisdiction by way of diversity of citizenship “where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interests and costs, and is between . . . citizens of different states.”[27] The Supreme Court of the United States has interpreted diversity of citizenship to require complete diversity-i.e. diversity between each plaintiff and each defendant.[28]

         To establish citizenship within the meaning of Section 1332, a person must be both “a citizen of the United States and be domiciled within the State.”[29] Concerning domicile, the Supreme Court has stated that:

[T]he domicile of an individual is his true, fixed and permanent home and place of habitation. It is the place to which, whenever he is absent, he has the intention of returning. This general statement, however, is difficult of application. Each individual case must be decided on its own particular facts. In reviewing a claim, relevant criteria include year-round residence, voter registration, place of filing tax returns, property ownership, driver's license, car registration, marital status, vacation employment, etc.'[30]

         Once acquired, a domicile is presumed to continue until circumstances demonstrate otherwise.[31] To demonstrate a change in domicile, an individual must (1) take up residence in a new domicile, and (2) intend to remain there indefinitely.[32] The burden is on plaintiff to establish that diversity of citizenship exists.[33]

         Here, the Court finds that Plaintiff has failed to meet his burden of establishing diversity of citizenship. Prisoners, such as Plaintiff, are presumed to retain their prior citizenship when the gates close behind them.[34] Prior to his incarceration, Plaintiff was a legal resident of the State of Illinois.[35] By operation of law, he is therefore rebuttably presumed to retain this citizenship during his term of incarceration. At the time he commenced suit, [36] Plaintiff was incarcerated at FCI Allenwood, White Deer, Pennsylvania.[37] He could, therefore, overcome this presumption of Illinois citizenship, and thus demonstrate diversity of citizenship, by establishing Pennsylvania as his new domicile.[38]

         Plaintiff however, fails to satisfy the two domiciliary requirements. While he was unquestionably residing in Pennsylvania at the time this action was commenced, he failed to allege intent to remain in the state or to return there following an absence.[39] To the contrary, Plaintiff has expressed an intention to reside in the State of New York following his release.[40] Because Plaintiff does not intend to remain in the state in which he is permanently residing-Pennsylvania- he has failed to rebut the presumption of Illinois citizenship. This failure renders him non-diverse from Defendants whom Plaintiff concedes are all citizens of Illinois.[41]

         B. Plaintiff's Complaint Could Have Been Filed in the Northern District of Illinois Based On Federal Question Jurisdiction.

         Concerning Defendants' argument that Plaintiff failed to establish federal question jurisdiction, the Court finds that Plaintiff alleged arguable federal claims sufficient to grant the Northern District of Illinois federal question subject matter jurisdiction. Defendants claim that the Northern District of Illinois would lack federal question jurisdiction because Plaintiff has failed to allege plausible federal claims.[42] This line of reasoning, however, fails to correctly cite Plaintiff's burden in establishing subject matter jurisdiction based on a federal claim.

         In Steel Co. v. Citizens for a Better Environment, the Supreme Court opined that “the absence of a valid (as opposed to arguable) cause of action does not implicate ...


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