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April 8, 2003


The opinion of the court was delivered by: Ricardo M. Urbina, District Judge.



This contract case comes before the court on the plaintiffs' motion to remand the case to the Superior Court of the District of Columbia ("Superior Court"), following the defendants' removal of the case to this court on the proferred basis of diversity jurisdiction. Upon consideration of the parties' submissions, the relevant law, and the record of this case, the court grants the plaintiffs' motion to remand specifically because the defendants have failed to sufficiently establish diversity of citizenship. In addition, the court directs the defendants to pay the plaintiffs' costs and expenses incurred as a result of the improper removal.


The defendants — 2200 M Street LLC, Millennium Partners LLC, Millennium Partners Management LLC, and Millennium Manager 1, Inc. — are engaged in developing a real-estate complex in the District of Columbia that includes a Ritz-Carlton hotel, a Sports Club/L.A., and 162 condominium units marketed as "The Residences at the Ritz-Carlton, Washington, D.C." ("Ritz-Carlton Residences"). Compl. at 2.

In August 1999, plaintiff Pauline Johnson-Brown contracted with the defendants to purchase a condominium in the Ritz-Carlton Residences, and plaintiff Lara Michelle Brown joined the contract by addendum. Id. at 5. Soon after taking possession of the condominium in December 2001, the plaintiffs began noticing problems with their unit and the building as a whole. Id. at 7. These problems included faulty and delayed construction, frequent flooding of water and sewage, and varieties of toxic mold growing in the walls that allegedly caused debilitating health problems to the plaintiffs' tenants. Id. at 8, 10. The plaintiffs allege that the defendants fraudulently concealed their knowledge of these problems from the owners, tenants, and potential purchasers of the Ritz-Carlton Residences. Id. at 9, 11.

In July 2002, the plaintiffs filed suit against the defendants in the Superior Court, alleging fraud, negligence, breach of implied and statutory warranties, strict liability, and violations of the D.C. Consumer Protection Act. Id. at 13-18.

On September 3, 2002, the defendants removed the case to this court on the proffered basis of diversity jurisdiction pursuant to 28 U.S.C. § 1332. Defs.' Notice of Removal at 2. In alleging diversity jurisdiction, the defendants identified the citizenship for the three LLC defendants as well as the corporate defendant according to the statutory criteria used for corporations. Id. at 3-4.

The plaintiffs filed their motion to remand the case to the Superior Court on September 26, 2002. In support of remand, the plaintiffs assert that the LLC defendants misidentified their citizenship by misapplying the corporate-citizenship standard and the court therefore cannot exercise jurisdiction over the matter. Pls.' Mot. to Remand at 5, 8. The court agrees.


A. Legal Standard for Remand

Federal courts are courts of limited jurisdiction and the law presumes that "a cause lies outside this limited jurisdiction." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). A district court may assert its jurisdiction over a case when the parties are diverse in citizenship and the amount in controversy exceeds $75,000.00 per plaintiff exclusive of interest and costs. 28 U.S.C. § 1332(a). If the plaintiff originally filed the case in state court but the parties are diverse, the amount in controversy is sufficient, none of the defendants is a citizen of the state in which the district court sits and the defendants all consent to removal, then the defendant has a statutory right to remove the case from the state court and avail himself of the federal court system. Id. § 1441(a)-(b). Nevertheless, if at any time prior to final judgment it becomes clear that there is a defect in removal procedures or that the removal court lacks subject-matter jurisdiction, the removal court must remand the case to the state court from which the defendants originally removed the case. Id. § 1447(c). If the federal court lacks subject-matter jurisdiction, remand is mandatory and not reviewable on appeal. Republic of Venezuela v. Philip Morris Inc., 287 F.3d 192, 196 (D.C. Cir. 2002). The court strictly construes removal status because of federalism concerns. Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100 (1941). Where the need to remand is not self-evident, the court must resolve any ambiguities concerning the propriety of removal in favor of remand. Univ. of S. Alabama v. Am. Tobacco Co., 168 F.3d 405, 411 (11th Cir. 1999); Nwachukwu v. Karl, 223 F. Supp.2d 60, 66 (D.D.C. 2002). Finally, the defendant bears the burden of proving the propriety of removal, and if the defendant cannot meet this burden, the court must remand the case. Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97 (1921); Nat'l Org. for Women v. Mutual of Omaha Ins. Co., 612 F. Supp. 100, 101 (D.D.C. 1985) (Flannery, J.); Gateway 2000, Inc. v. Cyrix Corp., 942 F. Supp. 985, 989 (D.N.J. 1996).

B. Citizenship of Non-Corporate Entities for Purposes of Diversity Jurisdiction
The diversity statute explicitly establishes the citizenship status of corporations as having the dual citizenship of their place of incorporation and their "principal place of business." 28 U.S.C. § 1332(c)(1). Although the diversity statute does not specify the citizenship status for non-corporate legal persons, the Supreme Court has long maintained a bright-line rule limiting corporate citizenship to corporations (the "corporate-citizenship rule"). C.T. Carden v. Arkoma Assocs., 494 U.S. 185, 190 (1990) (explaining that "`the tradition of the common law . . . is to treat as legal persons only incorporated groups and to assimilate all others to partnerships'") (quoting Puerto Rico v. Russell & Co., 288 U.S. 476, 480 (1933)).

Excluded from corporate citizenship by the Supreme Court's bright-line rule, non-corporate entities are analogized to partnerships, which carry the citizenship of their members. Carden, 494 U.S. at 195-96. Throughout a century of rulings, the Court has displayed an "admirable consistency" of jurisprudence by refusing to extend corporate citizenship to other legal persons or entities. Carden, 494 U.S. at 189. In particular, the Court has rejected attempts to extend corporate citizenship to limited partnerships, labor unions, limited-partnership associations, and joint-stock companies. Carden, 494 U.S. at 188-90 (limited partnerships); United Steelworkers of Am. v. R.H. Bouligny, Inc., 382 U.S. 145 ...

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