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Damian v. Carey

United States District Court, N.D. Illinois, Eastern Division

March 30, 2017

MELANIE E. DAMIAN, as Special Monitor and Equity Receiver for the Estate of Hunter Wise Commodities, LLC, et al., Plaintiff,
v.
TIMOTHY CAREY and WINSTON & STRAWN LLP, Defendants.

          MEMORANDUM OPINION AND ORDER

          JORGE L. ALONSO, UNITED STATES DISTRICT JUDGE

         Defendants' motion to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(1) is denied for the reasons explained below. The Court determines, however, that it lacks subject-matter jurisdiction, and transfers this action forthwith to the United States District Court for the Southern District of Florida.

         BACKGROUND

         This is an action brought by Melanie E. Damian, who was appointed Special Monitor, Corporate Manager, and Equity Receiver for Hunter Wise Commodities, LLC (“Hunter Wise”) by Judge Donald M. Middlebrooks of the United States District Court for the Southern District of Florida, who presided over a fraud action brought by the Commodity Futures Trading Commission against Hunter Wise and its principals. Damian brings state-law claims in this case, alleging that Winston & Strawn LLP (“Winston”) and a Winston partner, Timothy Carey, committed legal malpractice in their representation of Hunter Wise, and in the alternative that Winston breached its Retainer Agreement with Hunter Wise. The Court assumes the reader's familiarity with the underlying facts, which are recited in its memorandum opinion and order of March 4, 2016. (ECF No. 43.)

         Defendants move to dismiss the complaint for lack of subject-matter jurisdiction.

         DISCUSSION

         A. Legal Standards

         When considering a Rule 12(b)(1) motion to dismiss for lack of subject-matter jurisdiction, a district court accepts as true all well-pleaded factual allegations and draws reasonable inferences from the allegations in favor of the plaintiff. Citadel Sec., LLC v. Chi. Bd. Options Exch., Inc., 808 F.3d 694, 698 (7th Cir. 2015) (citing Capitol Leasing Co. v. FDIC, 999 F.2d 188, 191 (7th Cir. 1993)). The court may also look beyond the allegations of the complaint and consider affidavits and other documentary evidence to determine whether subject-matter jurisdiction exists. Capitol Leasing, 999 F.2d at 191.

         B. Subject-Matter Jurisdiction

         Plaintiff asserts in the complaint that this court has subject-matter jurisdiction under 28 U.S.C. § 754 “and the principles of ancillary or supplemental jurisdiction” set forth in 28 U.S.C. § 1367. (ECF No. 1, Compl. ¶ 11.) Section 754 governs federal receiverships and provides as follows:

A receiver appointed in any civil action or proceeding involving property, real, personal or mixed, situated in different districts shall, upon giving bond as required by the court, be vested with complete jurisdiction and control of all such property with the right to take possession thereof.
He shall have capacity to sue in any district without ancillary appointment, and may be sued with respect thereto as provided in section 959 of this title.
Such receiver shall, within ten days after the entry of his order of appointment, file copies of the complaint and such order of appointment in the district court for each district in which property is located. The failure to file such copies in any district shall divest the receiver of jurisdiction and control over all such property in that district.

28 U.S.C. § 754. Section 1367 provides that “in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under ...


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