Keehan Tennessee Investments v. Guardian Capital Advisors, Inc

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS JUN 9 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEEHAN TENNESSEE INVESTMENTS, No. 15-16303
LLC; DAVID KEEHAN; DONALD J.
KEEHAN, Sr.; DURHAM RIDGE D.C. No.
INVESTMENTS, LLC; WESTLAKE 3:14-cv-00500-RCJ-WGC
BRIAR, LLC; KEEHAN TRUST
FUNDING, LLC; DONALD J. KEEHAN,
Jr.; 951 REALTY LTD., MEMORANDUM*
Plaintiffs-Appellants,
v.
GUARDIAN CAPITAL ADVISORS, INC.;
PRAETORIUM SECURED FUND, I, L.P.;
GEORGE V. CRESSON, Individually and
doing business as Development Finance, LP;
KENNETH A. MILLER,
Defendants-Appellees.
Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, District Judge, Presiding
Argued and Submitted April 17, 2017
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Before: REINHARDT and BERZON, Circuit Judges, and MONTGOMERY,
District Judge. **
Plaintiff-Appellants (“Plaintiffs”) appeal the district court’s order awarding
Defendant-Appellees (“Defendants”) Praetorium Secured Fund, I, L.P.
(“Praetorium”) and George Cresson (“Cresson”) $23,365.50 in attorney’s fees and
costs under 28 U.S.C. § 1447(c) for the improper removal of this case from Ohio
state court.1 We have jurisdiction under 28 U.S.C. § 1291, and we reverse.
The underlying dispute in this case concerns financing for a golf course
development project. Plaintiffs initiated the lawsuit by filing a complaint in Ohio
state court, and Defendants later removed the action to the United States District
Court for the District of Ohio, citing diversity jurisdiction under 28 U.S.C. § 1332.
In federal court, Plaintiffs filed an amended complaint that added two
additional defendants. The case was then transferred to the United States District
Court for the District of Nevada, where the district court, sua sponte, ordered the
parties to conduct jurisdictional discovery after perceiving that federal jurisdiction
**
The Honorable Ann D. Montgomery, United States District Judge for
the District of Minnesota, sitting by designation.
1
The district court also awarded attorney’s fees and costs to Defendants Guardian
Capital Advisors, Inc. (“Guardian”) and Kenneth Miller. Plaintiffs appealed that
award, but Guardian and Miller failed to appear before this court. In light of our
conclusion with respect to defendants Praetorium and Cresson, we vacate the
district court judgment awarding attorney’s fees and costs to Guardian and Miller.
See Fed. R. App. P. 31(c); see also Carvalho v. Equifax Info. Servs., LLC, 629 F.3d
876, 887 n.7 (9th Cir. 2010).
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might be lacking. During the course of that discovery, the parties ascertained
jurisdictional facts destroying diversity, and the case was remanded back to Ohio
state court.
The parties both moved for an award of attorney’s fees and costs under 28
U.S.C. § 1447(c). The district court concluded that Plaintiffs were responsible for
the improper removal and awarded fees to Defendants. In this appeal, Plaintiffs
argue that the district court erred by awarding fees to Defendants because the
removal statute permits an award of attorney’s fees and costs only to the non-
removing party. Plaintiffs also argue that, if § 1447(c) permits awarding fees to
the removing party, the district court erred in finding Plaintiffs responsible for the
improper removal and ordering them to pay Defendants’ attorney’s fees and costs.
Even if fees are available to a removing party under the removal statute, a
question we leave for another day, the district court abused its discretion in
awarding fees to Praetorium and Cresson for the improper removal. See Patel v.
Del Taco, Inc., 446 F.3d 996, 999 (9th Cir. 2006) (noting that the decision to award
fees is reviewed for an abuse of discretion).
“The burden of establishing removal jurisdiction . . . lies with the defendant
seeking removal.” Washington v. Chimei Innolux Corp., 659 F.3d 842, 847 (9th
Cir. 2011). For purposes of diversity jurisdiction, limited liability companies
(“LLCs”) and limited partnerships are citizens of every state where their owners,
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members, or partners are citizens. See Johnson v. Columbia Props. Anchorage,
LP, 437 F.3d 894, 899 (9th Cir. 2006) (“[L]ike a partnership, an LLC is a citizen of
every state of which its owners/members are citizens.”). Plaintiffs’ state-court
complaint did not allege facts sufficient to determine whether federal diversity
jurisdiction existed. Although in their notice of removal Defendants made general
allegations about Plaintiffs’ citizenships and recited facts from Plaintiffs’ state-
court complaint, nowhere in the notice of removal did Defendants allege facts
regarding the citizenships of the members of Plaintiff LLCs, even on information
and belief, nor did they request jurisdictional discovery after removal to determine
the relevant additional facts. The district court abused its discretion in awarding
fees to Praetorium and Cresson under these circumstances. Both parties share the
blame and therefore the responsibility for paying their own costs of litigating a
jurisdictionally deficient case in federal court for almost a year.
For the foregoing reasons, the judgment of the district court is reversed. The
case is remanded with directions to vacate the judgment awarding attorney’s fees
and costs to Defendants.
REVERSED.
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