United States District Court, E.D. Kentucky, Southern Division, London
MEMORANDUM OPINION & ORDER
Gregory F. Van Tatenhove, United States District Judge
Court recently granted Plaintiff Henley Mining's Motion
to Reconsider [R. 11] the Court's earlier order invoking
Burford abstention. Now, the Court turns to the
motion from which it previously abstained: Defendant David E.
Parton's Motion to Dismiss. [R. 7.] For the following
reason, the motion is DENIED.
David Parton and his two brothers were equal owners and
directors in three corporations: Parton Bros. Contracting,
Inc.; Bud Equipment, Inc.; and Pine Mtn. Security, Inc. [R.
7-1 at 2.] On or around March 2015, David Parton and his
brothers closed and consolidated their businesses into Henley
Mining, Inc. [R. 7-1 at 2.] The Parton brothers partially
dissolved certain corporations by distributing, “a
substantial portion of the Corporations' cash and
distribution in-kind of certain assets to Defendant and the
Brothers.” Id. Mr. Parton strongly disagreed
with merging the corporations into Henley Mining and
registered his dissenting vote at a Special Shareholders
Meeting in October 2016. Id. After the merger, the
Corporations paid Mr. Parton what they considered an accurate
amount of money pursuant to the Dissenters' Rights
Statute, but Mr. Parton challenged the amount owed to him.
Mining, Inc. filed a Complaint in diversity in this Court
seeking a determination of fair value pursuant to
Kentucky's Dissenters' Rights Statutes. See
Ky. Rev. Stat. Ann. §271B.13-010. In May, 2017, Mr.
Parton filed a motion to dismiss the case on the grounds that
this Court lacked subject matter jurisdiction. [R. 7.] After
considering the motion, applicable law, and the arguments of
the parties, the Court elected to abstain from hearing the
controversy, invoking the doctrine of Burford
abstention. [R. 10.] Henley Mining moved this Court to
reconsider its previous ruling, on the grounds that the Court
made a clear error of law. [R. 11.] The Court granted that
motion [R. 14], and now turns again to the Motion to Dismiss.
to dismiss for lack of subject matter jurisdiction pursuant
to Rule 12(b)(1) come in two varieties: a facial attack or a
factual attack. Gentek Bldg. Prods., Inc., v.
Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007).
A facial attack “questions merely the sufficiency of
the pleading.” Id. When a motion raises a
facial attack, the Court must accept all the
“allegations in the complaint as true, ” and
“if those allegations establish federal claims,
jurisdiction exists.” Id. On the other hand, a
factual attack is “not a challenge to the sufficiency
of the pleading's allegations, but a challenge to the
factual existence of subject matter jurisdiction.”
United States v. Ritchie, 15 F.3d 592, 598 (6th Cir.
1994). When the 12(b)(1) motion factually attacks subject
matter jurisdiction, “no presumptive truthfulness
applies to the allegations, ” and the court “must
weigh the conflicting evidence to arrive at the factual
predicate that subject-matter does or does not exist.”
Gentek Bldg. Prods., Inc., 491 F.3d at 330. All of
Defendants' 12(b)(1) arguments are properly analyzed
below as factual attacks on subject matter jurisdiction.
It is a
longstanding truism that federal laws are “the supreme
Law of the land; . . . any Thing in the Constitution or Laws
of any state to the Contrary notwithstanding.”
Altria Group, Inc. v. Good, 555 U.S. 70, 76 (6th
Cir. 2008) (quoting U.S. Const., Art. VI, cl. 2). Consistent
with the Supremacy Clause, federal jurisdiction prevails over
conflicting state forum provisions. See Fidelity Federal
Sav. And Loan Ass'n v. de la Cuesta, 458 U.S. 141,
152-53, 102 S.Ct. 3014, 73 L.Ed.2d 664 (1982). As stated in
Farm Bank v. Reardon, “[c]onflict preemption
occurs where compliance with both federal and state
regulations is a physical impossibility, or where state law
stands as an obstacle to the accomplishment and execution of
the full purposes and objectives of Congress.”
State Farm Bank v. Reardon, 539 F.3d 336, 342 (6th
Cir. 2008) (quoting Gade v. Nat'l Solid Wastes Mgmt.
Ass'n, 505 U.S. 88, 89, 112 S.Ct. 2374, 120 L.Ed. 73
Court exercises diversity jurisdiction over this matter
pursuant to 28 U.S.C. § 1332. This Court has original
“diversity” jurisdiction over all civil actions
when “the matter in controversy exceeds the sum or
value of $75, 000, exclusive of interest and costs, and the
dispute is between” those who are “citizens of
different states.” 28 U.S.C. § 1332(a)(1). The
parties do not dispute that they are diverse or that the
amount in controversy requirement is met.
Mr. Parton argues that this Court lacks subject matter
jurisdiction to hear this case because “[t]he
Dissenter's Rights Statute is clear that a
corporation's petition for determination of the fair
value of its shares must be filed ‘in the Circuit Court
of the county where a corporation's principal office . .
. is located.'” [R. 7-1 at 4 (citing K.R.S. §
271B13-300(2)).] For Henley Mining, that means Bell County,
Kentucky. The Dissenter's Rights Statutes include the
proviso that the circuit court of the county in which a
corporation has its principal office shall have
“plenary and exclusive” jurisdiction over
dissenter's rights actions involving that corporation.
K.R.S. § 271B.13-300(4). For these reasons, Mr. Parton
believes that Bell Circuit Court-and only Bell Circuit
Court-has jurisdiction over this case. Therefore, the issue
is whether federal diversity jurisdiction must cede to the
“plenary and exclusive” language of
Kentucky's Dissenter's Rights statutes. The Court
finds that it must not.
speaking, “[j]urisdiction is created by the law of the
court's creating and cannot be defeated by the
extraterritorial operation of a [state] statute . . ., even
though it created the right of action.” Marshall v.
Marshall, 547 U.S. 293, 314 (2006). Diversity
jurisdiction is authorized by 28 U.S.C. § 1332, a
federal statute. The Kentucky legislature's inclusion of
the “plenary and exclusive” language in the
dissenter's right statute directly infringes upon the
Court's congressionally authorized diversity
jurisdiction. The Supremacy Clause mandates that it must