Summary: Defendants removed case to this court from North Dakota state courts. On a motion to remand, the Court held that defendants had not shown diversity jurisdiction for purposes of removal.

Case Name: Rachel Dietz v. Kautzman

Case Number: A3-02-23

Docket Number: 8 

Date Filed: 3/27/02

Nature of Suit: 190

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NORTH DAKOTA

SOUTHEASTERN DIVISION

 MEMORANDUM AND ORDER

I.  Introduction

    Before the Court is plaintiff’s motion to remand this case to North Dakota state court (doc. # 5). Defendants resist the motion. As set forth below, the motion is GRANTED, and the case is ORDERED REMANDED.

II. Background

    This is a fraudulent transfer action by which plaintiff Rachel Dietz seeks to void transfers between Robert Kautzman, her ex-husband, and Paul Kautzman, Robert’s brother. In one transaction at issue, Robert Kautzman transferred his interest in Kautzman Millwright, Inc. (KMI), a construction company, to Paul Kautzman. Dietz alleges the transactions are fraudulent attempts to avoid paying divorce judgments she has obtained against him. The divorce took place in North Dakota court and has been the subject of several appeals to the North Dakota Supreme Court.

    There are no federal claims at issue; removal is based solely on diversity. Notably, the state court complaint alleges that Dietz is a citizen of Wyoming and that Robert and Paul Kautzman, as well as KMI, are citizens of North Dakota. The complaint seeks to void the transfers at issue, a money judgment against Paul Kautzman, fees and costs, and any other just and equitable relief.

III. Analysis

    Briefly put, defendants argue that removal is appropriate on the basis of diversity. They assert that, for diversity purposes, Robert Kautzman is a citizen of Arizona and Paul Kautzman is a citizen of Minnesota. While conceding that KMI is a North Dakota corporation, they allege that it is fraudulently joined, as Dietz has not specifically sought relief against it.

    The federal removal statute, 28 U.S.C. § 1441(b), provides:

Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

The upshot of this provision is that removal based on any ground other than a federal question is impermissible if any defendant is a citizen of the state in which the action was brought. Id. Thus, if any defendant here is a citizen of North Dakota, where the action was brought, remand is required.

    A removing defendant bears the burden of establishing federal jurisdiction. See In re Business Men's Assur. Co. of America, 992 F.2d 181, 183 (8th Cir. 1993). Thus, a district court is required to resolve all doubts in favor of the plaintiff and against removal. Id. Further, when determining whether diversity jurisdiction exists, courts rely on the allegations on the face of the complaint. See, e.g., Miller v. Grgurich, 763 F.2d 372, 373 (9th Cir. 1985); Kessler v. Home Life Ins. Co., 965 F.Supp. 11, (D. Kan. 1997) (“Ordinarily, the existence of subject matter jurisdiction based on diversity of citizenship is determined as of the filing of, and on the face of, the complaint in an original action”).

    Here, because the face of the complaint pleads facts which prevent diversity removal jurisdiction - that the Kautzmans are both North Dakota citizens - the Court must remand. Id. The Court recognizes that defendants, in their notice of removal, assert they are not North Dakota citizens “for purposes of diversity.” However, they have not provided any support for this claim beyond its mere assertions. Faced with a similar situation, another district court wrote:

In the instant case, diversity of citizenship cannot be ascertained from the face of Plaintiff’s complaint. In fact, the complaint pleads facts which indicate the absence of diversity. Plaintiff alleges that both he and Defendant Stone are citizens of North Carolina. The complaint clearly alleges facts contrary to the removal notice. The fact that Defendants’ notice of removal alleges that the parties are diverse and the amount of controversy is satisfied is not alone sufficient to establish diversity jurisdiction, especially since the burden is on Defendants, the party seeking to preserve removal, to prove the existence of jurisdictional facts.

See Potter v. Shoney’s, Inc., 108 F.Supp.2d 489, 496-97 (M.D. N.C. 1999) (citations omitted). The Court agrees with this reasoning. Merely contradicting the complaint is insufficient to carry defendants’ burden of establishing federal jurisdiction.

    Based on the face of the complaint, the Court concludes removal is improper under 28 U.S.C. §1441(b). The Court thus has no need to resolve the assertion that KMI has been fraudulently joined. The motion to remand is GRANTED, and the case is ORDERED REMANDED to the court from which it was removed. Plaintiff’s request for fees, however, is DENIED.

    IT IS SO ORDERED.

    Dated this ____ day of March, 2002.

                                  _____________________________

                                  RODNEY S. WEBB, CHIEF JUDGE

                                  UNITED STATES DISTRICT COURT