Glenn Alphonse, Jr. v. Arch Bay Holdings, L.L.C. , 618 F. App'x 765 ( 2015 )

Case: 14-31320 Document: 00513112901 Page: 1 Date Filed: 07/13/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
FILED
July 13, 2015
No. 14-31320
Summary Calendar Lyle W. Cayce
Clerk
GLENN E. ALPHONSE, JR.,
Plaintiff-Appellant
v.
ARCH BAY HOLDINGS, L.L.C.; SPECIALIZED LOAN SERVICING, L.L.C.,
Defendants-Appellees
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:12-CV-330
Before REAVLEY, DENNIS, and SOUTHWICK, Circuit Judges.
PER CURIAM: *
Glenn Alphonse, Jr. appeals the district court’s dismissal of his claims
for lack of subject matter jurisdiction. We AFFIRM.
Arch Bay Holdings, L.L.C. initiated foreclosure proceedings on
Alphonse’s house in 2010 after he defaulted on his mortgage. Alphonse did not
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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contest these proceedings in state court. Instead, he filed suit in federal court
against Arch Bay and the mortgage servicer Specialized Loan Servicing, L.L.C.
(“SLS”), under the Louisiana Unfair Trade Practices Act (“LUTPA”) and
Federal Debt Collection Practices Act (“FDCPA”). Alphonse sought declaratory
relief and damages. He alleged that Arch Bay wrongfully seized and possessed
his home through “robo-signing,” a means of “attesting to foreclosure-related
facts without first-hand knowledge.” Alphonse v. Arch Bay Holdings, L.L.C.,
548 F. App’x 979, 981 & n.3 (5th Cir. 2013) (citations and quotations omitted).
The district court granted the defendants’ motion to dismiss as to all of
the LUTPA claims and one of the FDCPA claims, with the Rooker-Feldman
doctrine being one of the bases for dismissal. We reversed, noting that we had
found Rooker-Feldman inapplicable when faced with similar facts in Truong v.
Bank of Am., N.A., 717 F.3d 377 (5th Cir. 2013). See id. at 981-82. We noted
that “[t]he district court also dismissed Alphonse’s various FDCPA claims that
were not otherwise barred under Rooker-Feldman, but Alphonse does not press
these claims on appeal.” Id. at 981.
On remand, Alphonse filed a memorandum seeking to establish diversity
jurisdiction “now that his causes of action under Federal Law have been
dismissed.” The defendants moved for summary judgment. In an order
soliciting information regarding the defendants’ citizenship, the district court
remarked that “any challenge to the dismissal of the FDCPA claims has been
forfeited by the plaintiff and those claims are not mentioned in his opposition
to the defendants’ motion for summary judgment.” The court dismissed for
lack of jurisdiction, finding a lack of diversity and noting that “any challenge
to the dismissal of the FDCPA claims has been forfeited . . . .” The court
declined to exercise supplemental jurisdiction over the remaining state-law
claims. Alphonse timely appealed to this court.
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DISCUSSION
Alphonse claims that both federal question and diversity jurisdiction
exist in this case, or, alternatively, that the court should have exercised
supplemental jurisdiction. He also claims that the district court failed to follow
the magistrate judge’s discovery order. We separately address each claim.
I. Federal Question Jurisdiction
The existence of federal question jurisdiction hinges upon whether
Alphonse has waived his FDCPA claims. As this court recognized, and as
Alphonse concedes, he waived all but one of those claims during his initial
appeal. See id. at 981. As a result, the district court was not permitted to
consider those claims on remand. See Med. Ctr. Pharmacy v. Holder, 634 F.3d
830, 836 (5th Cir. 2011). Alphonse maintains, however, that he did not waive
his remaining FDCPA claim, which was the subject of the reversal by this court
in the initial appeal. We disagree.
Alphonse’s failure on remand to brief the one FDCPA claim that we
revived in the first appeal constitutes abandonment of that claim. “[A] party
may not allude to an issue in the district court, abandon it at the crucial time
when the district court might have been called to rule upon it, and then
resurrect the issue on appeal.” See Louque v. Allstate Ins. Co., 314 F.3d 776,
779 n.1 (5th Cir. 2002); see also Savers Fed. Sav. & Loan Ass’n v. Reetz, 888
F.2d 1497, 1501 (5th Cir. 1989) (collecting cases).
Some language in the district court’s rulings on remand could be
interpreted to mean that no federal claims were left after the first appeal and
remand. If that was the district court’s interpretation, and we are not sure
that it was, Alphonse needed to explain to the district court why one FDCPA
claim remained for review on remand. Not having done so, Alphonse waived
the FDCPA claim.
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II. Diversity Jurisdiction
We review subject matter jurisdiction de novo. Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1079 (5th Cir. 2008). Subject matter jurisdiction
on the basis of diversity “requires that all persons on one side of the controversy
be citizens of different states than all persons on the other side.” Id. (citation
and quotations omitted). When one of the parties is an LLC, its citizenship is
determined by the citizenship of all of its members. Id. at 1080. Citizenship
is based on domicile, i.e., where an individual resides and intends to remain.
Acridge v. Evangelical Lutheran Good Samaritan Soc’y, 334 F.3d 444, 448 (5th
Cir. 2003).
The defendants argue that one of Arch Bay’s members is, like Alphonse,
a citizen of Louisiana. Their declarations indicate that the member has resided
in Louisiana since 1994 and been registered to vote in the state since 1996.
Moreover, the member has raised children in Louisiana, holds a Louisiana
driver’s license, owns vehicles registered in Louisiana, and is an active member
of numerous social and cultural organizations in the state. We have held that
such factors may be used to establish domicile. See id.Alphonse does not contest these facts or offer any evidence that the
member is not a citizen of Louisiana. Instead, he argues that the standard
established in Harvey “can be stretched to an illogical absurdity.” He claims
that such an absurdity exists in this case because the non-diverse member is
in fact a member of a member of one of Arch Bay’s members, is a limited
partner with no managerial responsibilities, and was difficult to locate. These
arguments are unpersuasive.
The Supreme Court has explicitly “reject[ed] the contention that to
determine, for diversity purposes, the citizenship of an artificial entity, the
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court may consult the citizenship of less than all of the entity’s members.”
Carden v. Arkoma Assocs., 494 U.S. 185, 195 (1990). Applying Carden, this
court, as well as all other circuits to address the issue, have held that “the
citizenship of a LLC is determined by the citizenship of all of its members.”
Harvey, 542 F.3d at 1080 (collecting cases). Moreover, no case law has
suggested that this conclusion may be disregarded when one of the LLC’s
members is an artificial entity comprised of additional entities. Indeed, we
have observed that the “appropriate tests for citizenship” involve “tracing
[entities’] citizenships down the various organizational layers where necessary
. . . .” Mullins v. TestAmerica, Inc., 564 F.3d 386, 397 (5th Cir. 2009); see also
Hicklin Eng’g, L.C. v. Bartell, 439 F.3d 346, 347-48 (7th Cir. 2006).
Accordingly, we reject Alphonse’s contention that less than all of an LLC’s
members may be considered when determining its citizenship.
III. Magistrate Judge’s Preliminary Discovery Order
We review a district court’s discovery-related rulings for abuse of
discretion. See Krim v. BancTexas Grp., Inc., 989 F.2d 1435, 1441 (5th Cir.
1993) (collecting cases). This includes a decision to defer to a magistrate
judge’s discovery order. The court must defer to such an order unless the order
is clearly erroneous or contrary to law. See 28 U.S.C. § 636(b)(1)(A); FED. R.
CIV. P. 72(a). An order is clearly erroneous if the court “is left with the definite
and firm conviction that a mistake has been committed.” Anderson v. City of
Bessemer City, 470 U.S. 564, 573 (1985) (citations and quotations omitted).
Alphonse claims the district court failed to follow the magistrate judge’s
discovery order permitting him to conduct additional discovery regarding the
citizenship of Arch Bay’s non-diverse member. He also asserts that the district
court accepted the claims in the declarations from the member’s employers
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despite the fact that the magistrate judge expressed doubts about their
credibility. Because the magistrate judge’s order and credibility
determinations were not clearly erroneous or contrary to law, Alphonse
maintains, the court abused its discretion by failing to adopt them.
As Arch Bay notes, the district court did not fail to follow the magistrate
judge’s discovery order. Rather, it relied on the non-diverse member’s
declaration, a document that was not before the magistrate judge when it
issued its order. That declaration outlined the member’s extensive ties to
Louisiana and corroborated the information contained in the declarations from
two of his employers. Alphonse has not addressed this contention or argued
that the court abused its discretion by relying on the declaration. Moreover,
the magistrate judge did not actually find that the declarations from the non-
diverse member’s employers lacked credibility. Although it expressed
sympathy with Alphonse’s claims to that effect, it noted that “that’s not for me,
that’s for [the district court] to evaluate . . . .” Thus, the district court did not
fail to follow the magistrate judge’s orders or contravene its findings. It simply
found that new evidence, taken in conjunction with evidence already in the
record, obviated the need for additional discovery.
IV. Supplemental Jurisdiction
We review a district court’s decision to decline supplemental jurisdiction
for abuse of discretion. Batiste v. Island Records, Inc., 179 F.3d 217, 226 (5th
Cir. 1999). A district court may decline to exercise supplemental jurisdiction
if: “(1) the claim raises a novel or complex issue of State law, (2) the claim
substantially predominates over the claim or claims over which the district
court has original jurisdiction, (3) the district court has dismissed all claims
over which it has original jurisdiction, or (4) in exceptional circumstances,
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there are other compelling reasons for declining jurisdiction.” 28 U.S.C. §
1367(c). Other relevant factors include “judicial economy, convenience,
fairness, and comity.” Brookshire Bros. Holding, Inc. v. Dayco Prods., Inc., 554
F.3d 595, 601-02 (5th Cir. 2009). As a general rule, “a court should decline to
exercise jurisdiction over remaining state-law claims when all federal-law
claims are eliminated before trial . . . .” Id. at 602.
As we have discussed, Alphonse has abandoned his federal claims. The
remaining claims involve novel and complex issues of state law. See Alphonse,
548 F. App’x at 984-86. As a result, the first three Section 1367(c) factors,
considerations of comity, and the general rule supporting dismissal when all
federal claims are eliminated all weigh in favor of declining supplemental
jurisdiction.
Alphonse does not contest these considerations but emphasizes that the
case has been ongoing for several years and that the parties have expended
resources on discovery, dispositive motions, and an appeal to this court. Thus,
he argues, considerations of judicial economy and convenience weigh in favor
of maintaining jurisdiction. This position finds some support in our case law.
We have held that, in certain situations, a district court may abuse its
discretion by declining to exercise supplemental jurisdiction over a suit after
the parties have invested a significant amount of resources in the matter, even
when no federal claims remain. See Brookshire Bros., 554 F.3d at 595, 602-603(collecting cases).
In Brookshire Brothers and our precedents cited therein we emphasized
that the suits did not involve novel and complex issues of state law. See id.Nevertheless, the presence of novel issues of state law is not controlling. As
we have noted, when analyzing supplemental jurisdiction, “no single factor is
dispositive, and this Court must review the district court’s decision in light of
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the specific circumstances of the case at bar.” Id. at 602. Indeed, we observed
in Brookshire Brothers that “even if this case involved novel or complex state
law issues, the significant amount of judicial resources invested by the district
court would lead us to find that the district court abused its discretion in
remanding this case.” Id. at 603.
Here, the “specific circumstances” demonstrate that the court did not
abuse its discretion by declining to exercise supplemental jurisdiction. First,
the resource expenditures are not analogous to those in Brookshire Brothers.
That case “generat[ed] more than 1,300 entries in the district court docket.
The district court decided forty-one dispositive motions, fourteen Daubert
motions, and seven other motions in limine. Discovery had closed and the
parties were making final preparations for trial. Trial . . . was continued four
times.” Id. at 598. While the resources expended by the parties in this case
are not insubstantial, they do not approach this exceptional level. Moreover,
Alphonse has not argued that the research or discovery he conducted in the
district court would need to be repeated in state proceedings. Absent such a
risk, the investment of resources does not constitute a compelling reason to
maintain supplemental jurisdiction. See Parker & Parsley Petroleum Co. v.
Dresser Indus., 972 F.2d 580, 587-88 (5th Cir. 1992).
Second, other common-law factors supported retaining jurisdiction in
Brookshire Brothers. In particular, the court noted the “significant risk that
[the plaintiff] will attempt to re-litigate in state court rulings made against it
by the district court . . . .” Brookshire Bros., 554 F.3d at 603. Alphonse has not
argued that such a danger exists here. Indeed, a large portion of the
proceedings in the district court related to the court’s disposition of Alphonse’s
FDCPA claims and attempts to determine whether resolution of the state-law
claims was appropriate. Thus, as in Parker & Parsley, “we do not expect the
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relitigation of other matters to pose undue hardship. The defendants can
hardly contest jurisdiction, and we do not see other obstacles to resolution of
the case in the state court, save those that ought to be there . . . .” 972 F.2d at
588.
Given the presence of novel and complex issues of state law in this case,
as well as Alphonse’s failure to argue or demonstrate that issues relating to
resource expenditures or re-litigation weighed in favor of maintaining the case
in the federal forum, the court did not abuse its discretion by declining to
exercise supplemental jurisdiction.
AFFIRMED.
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