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Kenney v. Strauss Troy Co., LPA

United States District Court, E.D. Kentucky, Northern Division, Covington

June 6, 2017

MARY S. KENNEY PLAINTIFF
v.
STRAUSS TROY CO., LPA, ET AL. DEFENDANTS

          MEMORANDUM OPINION & ORDER

          David L. Bunning, United States District Judge

         This matter is before the Court on Plaintiff Mary Kenney's Motion to Remand this legal malpractice action to Kenton County Circuit Court. (Doc. # 13). For the reasons set forth below, Plaintiff's Motion to Remand is denied.

          I. Factual and Procedural Background

          In November of 2016, Plaintiff Kenney filed a complaint in Kenton County Circuit Court alleging legal malpractice against Defendant Philomena Ashdown and respondeat superior liability against Ashdown's employer, naming as Defendants the law firm Strauss Troy Co., LPA (Strauss Troy LPA) and Strauss Troy Co., PSC (Strauss Troy PSC). (Doc. # 1-2). Defendants Ashdown and Strauss Troy LPA removed the case to this Court, claiming the Court has diversity jurisdiction under 28 U.S.C. § 1332(a) because Plaintiff is a citizen of Kentucky and Defendants Ashdown and Strauss Troy LPA are citizens of Ohio. (Doc. # 1). Defendants also asserted that Defendant Strauss Troy PSC is not a professional service corporation organized under Kentucky law, but instead is a fictitious entity for Strauss Troy LPA so that it may do business in Kentucky as a foreign corporation. Id. As a result, Defendants argue, Strauss Troy PSC was improperly joined[1] and should therefore be ignored for the purpose of analyzing whether diversity jurisdiction exists. Id. The Court ordered Plaintiff to respond on the issues of improper joinder and diversity jurisdiction. (Doc. # 7). In her Motion to Remand, Plaintiff did not address the issue of improper joinder, instead conceding that “Strauss Troy Co., LPA does business in Kentucky using the name Strauss Troy Co., PSC” and arguing only that complete diversity does not exist because Strauss Troy LPA, like Plaintiff, is a citizen of Kentucky. (Doc. # 13).

         II. Analysis

         A. Standard of Review

         A defendant may remove any civil action “of which the district courts of the United States have original jurisdiction.” 28 U.S.C. § 1441(a). Once a case is removed, a plaintiff may bring a motion to remand under 28 U.S.C. § 1447(c). “[R]emoval statutes are to be narrowly construed, ” Long v. Brando Mfg. of Am., Inc., 201 F.3d 754, 757 (6th Cir. 2000), and “all doubts as to the propriety of removal are resolved in favor of remand, ” Coyne v. Am. Tobacco Co., 183 F.3d 488, 493 (6th Cir. 1999). The removing defendant bears the burden of establishing federal court jurisdiction by a preponderance of the evidence. See Chapman v. Houston Welfare Rights Org., 441 U.S. 600, 612 n.28 (1979); see also McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006).

         Under 28 U.S.C. § 1332, district courts have original jurisdiction of all civil actions where the amount in controversy exceeds $75, 000 and where there is complete diversity of citizenship-meaning that “all parties on one side of the litigation are of a different citizenship from all parties on the other side of the litigation.” SHR Ltd. P'ship v. Braun, 888 F.2d 455, 456 (6th Cir. 1989). When removal is based on diversity jurisdiction, the citizenship of the defendants as of the time of removal must be considered. Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000). However, the citizenship of improperly joined defendants is disregarded and “does not defeat removal on diversity grounds.” Coyne, 183 F.3d at 493 (internal citations omitted).

         For diversity jurisdiction purposes, “a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). To determine the location of a corporation's principal place of business, courts look to the single place from which a corporation's officers direct, control, and coordinate the corporation's activities-the corporation's “nerve center.” Hertz Corp. v. Friend, 559 U.S. 77, 81 (2010).

         The single issue presented here is whether the parties are completely diverse. Neither party disputes the Plaintiff's or Defendant Ashdown's citizenship. Plaintiff is a citizen of Kentucky. (Doc. # 1-2 at 3). Defendant Ashdown is a citizen of Ohio. (Doc. # 1-2 at 4; Doc. # 1-4). If either Defendant Strauss Troy PSC or Strauss Troy LPA are citizens of Kentucky, complete diversity will not exist, and remand would be required.

         B. Defendant Strauss Troy PSC should be disregarded.

         The Court first addresses whether Defendant Strauss Troy PSC should be disregarded for the purposes of diversity jurisdiction because it was improperly joined. In her Motion to Remand, Plaintiff appears to concede that Strauss Troy PSC should be disregarded, making no attempt to argue that joinder was proper and instead focusing solely on the citizenship of Strauss Troy LPA. (Doc. # 13). However, because Defendants bear the burden of proving improper joinder and establishing diversity jurisdiction, the Court will look beyond Plaintiff's apparent concession to the proof offered by Defendants. See Hertz, 559 U.S. at 96 (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)).

         According to an uncontested declaration filed by Strauss Troy LPA's Vice President, Strauss Troy PSC “is not a legal entity separately organized as a Kentucky or an Ohio corporation.” (Doc. # 1-5 at ¶ 4). Rather, Strauss Troy PSC “is merely a fictitious name under which Strauss Troy LPA [is] registered to do business in the Commonwealth of Kentucky.” Id.; see also Doc. # 1-6 (certificate of authority for Strauss Troy LPA to do business as Strauss Troy PSC in Kentucky). That declaration is consistent with Kentucky law, which allows a business incorporated in another state to seek a certificate of authority to transact business in the Commonwealth using “a fictitious name” if its “real name” “does not satisfy the requirements” of Kentucky law. Ky. Rev. Stat. Ann. §§ 14A.3-040, 14A.3-010(2)(a)(requiring the name of a professional services corporation to end in PSC). For that reason, Strauss Troy PSC is not a separate entity incorporated in Kentucky or in Ohio-Strauss Troy PSC is merely another name for Strauss Troy LPA, and any citizenship it possesses is the same as Strauss Troy LPA's.[2]

         Because Strauss Troy PSC is not a separate entity with citizenship different than Strauss Troy LPA's, the improper joinder analysis is an imperfect fit. The general rule is that the citizenship of improperly joined defendants “will not defeat removal on diversity grounds.” Coyne, 183 F.3d at 493. “To prove [improper] joinder, the removing party must present sufficient evidence that a plaintiff could not have established a cause of action against ...


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