THERESA L. SPRINGMANN, District Judge.
On February 5, 2019, the Court issued an Opinion and Order [ECF No. 23] denying Plaintiff Countryside Bank's Motion to Remand. This matter is now before the Court on Plaintiff's Motion to Reconsider [ECF No. 24] that ruling. Because Defendant Sean Z. Sheikh, Jr. has not met his burden of demonstrating complete diversity between the parties at the time of removal, the Court grants the Motion to Reconsider and remands this case to state court.
Plaintiff Countryside Bank filed its Complaint to Foreclose Commercial Mortgage and for Other Relief [ECF No. 1] in the Lake County, Indiana, Superior Court on December 27, 2017, against Defendants Sean Z. Sheikh, Jr. ("Sean Sheikh"), Bushra Naseer, Central Market of Indiana, Inc., 3232 Central Avenue LLC, Naser Musleh, Hasan Musleh, M.R. Allah, LLC, Zafar Sheikh, Bashir Chaudry, Associated Wholesale Grocers Inc., Wilshire Bank, and unknown owners and non-record claimants. The Complaint alleges that Plaintiff "is a bank chartered under the laws of the State of Illinois." Compl. ¶ 1, ECF No. 1. The Complaint further alleges that Defendants Bushra Naseer, Zafar Sheikh, and Bashir Chaudry are each "an individual resident and citizen of the State of Illinois." Id. ¶¶ 2, 8, 9. Defendant Sean Sheikh is alleged to be a citizen of the State of New York, id. ¶ 3, and Defendant Naser Musleh is alleged to be a citizen of the State of Indiana, id. ¶ 6. The citizenship of Hasan Musleh is not alleged. See Compl.
The Complaint alleges the following claims:
On September 17, 2018, Defendant Sean Sheikh filed a Notice of Removal [ECF No. 2], removing the case to this court based on diversity jurisdiction.
Pursuant to the Court's Order, Plaintiff filed a Status Report [ECF No. 13] on October 31, 2018, reporting the status of the parties in the state court proceedings prior to removal. The exhibits submitted in support of the Status Report provide the following procedural background:
Plaintiff's Status Report and the supporting documents provide the status of each party:
Status Report, ECF No. 13.
On November 1, 2018, Plaintiff moved to remand this case to state court under 28 U.S.C. § 1447(c), arguing the lack of complete diversity based on insufficient citizenship allegations as to Bushra Naseer in the Notice of Removal and asserting that Ms. Naseer was a non-diverse defendant as a citizen of the State of Illinois. [ECF No. 14]. On November 9, 2018, Sean Sheikh filed a response [ECF No. 16], and Plaintiff filed a reply [ECF No. 18] on November 12, 2018.
On February 5, 2019, the Court issued an Opinion and Order [ECF No. 23] denying Plaintiff's Motion to Remand on the basis that Ms. Naseer was no longer a party at the time of removal and, therefore, complete diversity of citizenship existed between Plaintiff Countryside Bank and Defendant Sean Sheikh. On February 6, 2019, Plaintiff filed the instant Motion to Reconsider that ruling. See [ECF No. 24]. Sean Sheikh filed a response [ECF No. 26], and Plaintiff filed a reply [ECF No. 27].
On April 15, 2019, this case was reassigned to the undersigned as presiding judge. [ECF No. 30].
On January 23, 2020, Sean Sheikh filed a "Declaration of Attorney Robert Habib as to 3232 Central Ave LLC" [ECF No. 54], identifying the members of 3232 Central Avenue LLC as Sean Sheikh and Bushra Naseer.
On January 24, 2020, Plaintiff filed, without seeking leave of Court, a Verified Response and Objection to the Exercise of Diversity Jurisdiction [ECF No. 55].
On January 27, 2020, Sean Sheikh filed an "Amended Declaration of Attorney Robert Habib as to 3232 Central Ave LLC" [ECF No. 56] stating that M.R. Allah LLC is a limited liability company whose sole member is Hasan Musleh "who according to documents obtained from the Indiana Secretary of State resides at [an address in] St. John, Indiana." Id. ¶ 8.
On January 27, 2020, Central Market of Indiana, Inc. filed a Motion to Allow Central Market of Indiana, Inc. to File Brief Regarding Pending Jurisdictional Issue [ECF No. 57].
Plaintiff asks the Court to reconsider the February 5, 2019 Opinion and Order, arguing that the conclusion that "under Indiana law, [Bushra] Naseer was no longer a party to the case at the time it was removed" was an error of law that resulted in the improper finding of diversity jurisdiction and denial of the Motion to Remand. Plaintiff, a citizen of Illinois, asks the Court to find that removal was not proper for lack of complete diversity because, at the time of removal, Defendant Bushra Naseer was a party and a citizen of Illinois. On that basis, Plaintiff seeks remand of this action to state court. Sean Sheikh responds that Ms. Naseer was not a party at the time of removal, and, even if she was a party for purposes of diversity jurisdiction, she was not a citizen of Illinois.
"Unlike motions to reconsider final judgments, which are governed by Federal Rule of Civil Procedure 59 or 60, a motion to reconsider an interlocutory order may be entertained and granted as justice requires." Azko Coatings, Inc. v. Aigner Corp., 909 F.Supp. 1154, 1160 (N.D. Ind. 1995). More importantly, the Court must continuously police its subject matter jurisdiction. Hay v. Ind. State Bd. of Tax Comm'rs, 312 F.3d 876, 879 (7th Cir. 2002). "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). On the original Motion to Remand, the parties did not brief the issue of Ms. Naseer's status as a party at the time of removal. Now that the issue has been fully briefed on the instant motion and because the Court has an independent duty to confirm subject matter jurisdiction, the Court finds that reconsideration of the February 5, 2019 Opinion and Order is warranted.
The Notice of Removal alleges that the Court's original subject matter jurisdiction is based on diversity of citizenship under 28 U.S.C. § 1332. See Notice of Removal p. 1, ECF No. 2. Diversity jurisdiction exists when the parties to an action on each side are citizens of different states, with no defendant a citizen of the same state as any plaintiff, and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a), (a)(1). As the party seeking to invoke this Court's jurisdiction, Sean Sheikh bears the burden of demonstrating that the jurisdictional requirements have been met. See Hertz Corp. v. Friend, 559 U.S. 77, 96 (2010); Schur v. L.A. Weight Loss Ctrs., Inc., 577 F.3d 752, 758 (7th Cir. 2009). "[F]ederal courts should interpret the removal statute narrowly, resolving any doubt in favor of the plaintiff's choice of forum in state court." Schur, 577 F.3d at 758. "[A] proponent of federal jurisdiction must, if material factual allegations are contested, prove those jurisdictional facts by a preponderance of the evidence." Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536, 543 (7th Cir. 2006).
For purposes of diversity jurisdiction, the citizenship of a natural person is determined by "domicile," not residence. See Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012) ("But residence may or may not demonstrate citizenship, which depends on domicile . . . . An allegation of `residence' is therefore deficient."); Am's Best Inns, Inc. v. Best Inns of Abilene, L.P., 980 F.2d 1072, 1074 (7th Cir. 1992) (citing Gilbert v. David, 235 U.S. 561 (1915)). A domicile is "the state in which a person intends to live over the long run." Heinen, 671 F.3d at 670. The citizenship of a corporation, including a state bank, is its state of incorporation and its principal place of business. See Dalton v. Teva N. Am., 891 F.3d 687, 690 (7th Cir. 2018); 28 U.S.C. § 1332(c)(1); see also Wachovia Bank v. Schmidt, 546 U.S. 303, 306 (2006) (noting that state banks, usually chartered as corporate bodies by a particular state, fall within the citizenship test of § 1332(c)(1)). In contrast, a limited liability company takes the citizenship of every one of its members such that the "jurisdictional statement must identify the citizenship of each of its members as of the date the complaint or notice of removal was filed, and, if those members have members, the citizenship of those members as well." Thomas v. Guardsmark, LLC, 487 F.3d 531, 534 (7th Cir. 2007).
The federal removal statute provides that, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending." 28 U.S.C. § 1441(a). Thus, if the action meets the requirements for diversity of citizenship, the case may be removed to federal court. See 28 U.S.C. §§ 1332, 1441; see also Ne. Rural Elec. Membership Corp. v. Wabash Valley Power Ass'n, Inc., 707 F.3d 883, 890 (7th Cir. 2013) ("A case filed in state court may be removed to federal court only when the case originally could have been filed in federal court.").
Diversity must be present both at the time the complaint is filed and at the time of removal. See Altom Transp., Inc. v. Westchester Fire Ins., Co., 823 F.3d 416, 420 (7th Cir. 2016) (citing Thomas v. Guardsmark, Inc., 381 F.3d 701, 704 (7th Cir. 2004) (citing Kanzelberger v. Kanzelberger, 782 F.2d 774, 776 (7th Cir. 1986))). However, when an action is not initially removable because of a non-diverse defendant, the federal common law "voluntary-involuntary" rule allows removal when the plaintiff voluntarily dismisses the non-diverse defendant. See Poulos v. Naas Foods, Inc., 959 F.2d 69, 71-72 (7th Cir. 1992) ("[C]ases with non-diverse parties [do] not become removable just because a non-diverse defendant [is] dismissed from the case. Instead, . . . such suits [are] removable only if the plaintiff voluntarily dismissed a non-diverse defendant." (citations omitted)).
In this case, Plaintiff Countryside Bank is a citizen of Illinois. At the time the Complaint was filed in state court, at least four defendants were not diverse from Plaintiff based on their Illinois citizenship: Zafar Sheikh, Bashir Chaudry, Bushra Naseer, and 3232 Central Avenue LLC.
As to Bushra Naseer and 3232 Central Avenue LLC, the first question before the Court on the Motion to Reconsider is whether, for purposes of diversity jurisdiction, they were parties at the time of removal in light of the prior state court final judgments against them. In the briefing on Plaintiff's November 1, 2018 Motion to Remand, Plaintiff took the position that Ms. Naseer was a party, and Defendant Sean Sheikh took the contrary position; however, neither party briefed the issue. The February 5, 2019 Opinion and Order denying the Motion to Remand found that Ms. Naseer was not a party at the time of removal and, thus, did not reach the question of her citizenship. Plaintiff filed the instant Motion to Reconsider that ruling, and the parties have now briefed the legal issue. Subsequently, the case was reassigned to the undersigned as presiding judge.
The Court now finds that, for purposes of determining this Court's diversity jurisdiction, Ms. Naseer was not terminated as a party to the state court action when the state court entered a final default judgment against her under Indiana Trial Rule 54(b) on March 16, 2018. In that state court ruling, Plaintiff obtained a judgment against Ms. Naseer. Thus, Ms. Naseer has not been dismissed—either voluntarily or involuntarily. As a result of that default judgment, Plaintiff can pursue proceedings supplemental against Ms. Naseer to collect on the judgment. The Indiana Supreme Court has described proceedings supplemental as a continuation of the original cause of action. Rose v. Mercantile Nat'l Bank of Hammond, 868 N.E.2d 772, 775-76 (Ind. 2007); see also Caudill Seed & Warehouse Co., Inc. v. Rose, No. 4:15-CV-4, 2016 WL 1553479, at *1 (S.D. Ind. Apr. 18, 2016) (citing PNC Bank v. Broadbent, No. 1:10-CV-546, 2011 WL 3902794, at *1 (S.D. Ind. Aug. 2, 2011) (report and recommendation) (citing Rose, 868 N.E.2d at 775).
Moreover, federal district courts have considered a defendant, against whom a state court default judgment was entered, to be a party at the time of removal for purposes of diversity and removal. In Schlegle & Sons Printing v. United English Breeders & Fanciers Assoc., Inc., the court remanded the case for lack of diversity, finding that the citizenship of the non-diverse defendant against whom default judgment had been entered in state court prior to removal should be considered for diversity purposes. 682 F.Supp. 36, 37-38 (C.D. Ill. 1988). The district court reasoned that the federal district court "would nevertheless have to enforce the default judgment against him" and that "[p]laintiff and . . . [the non-diverse] defendant. . . are still parties to this lawsuit." Id. at 37-38. The court explained that the parties were not diverse at the time the complaint was filed and had not become diverse; thus, the case was not removable and remand was required. Id. at 38.
In American Asset Finance, LLC v. Corea Firm, the plaintiff challenged removal on the basis that not all defendants had joined in the removal as required by 28 U.S.C. § 1446(b)(2)(A). 821 F.Supp.2d 698, 699 (D.N.J. 2011). Prior to removal, the state court had entered a final default judgment against two defendants, and those defendants did not join in the removal. Id. The federal district court held that a defendant against whom a state default judgment has been entered remains part of the case at the time of removal such that the defendant is not a "nominal party" and is required to join in the removal. Id. at 699, 700-02 (citing Schlegle & Sons Printing, 682 F. Supp. at 37)). The court rejected the argument that a final judgment against a defaulted party is analogous to a final judgment against a party dismissed after settlement (which courts have found to render a party "nominal" for purposes of consent to removal). Id. at 700-01. Rather, the court suggested that the entry of default judgment demonstrated that the defendants were "not nominal parties because the plaintiff's entitlement to default judgment against [them] is a judicial recognition that real claims have been asserted against them." Id. at 701.
In this case, Sean Sheikh is correct that it appears that the time for Ms. Naseer to appeal the state court entry of judgment has expired. However, Plaintiff can still pursue proceedings supplemental against Ms. Naseer. Thus, the litigation was not terminated against Ms. Naseer, and she remained a party at the time of removal for purposes of determining this Court's diversity jurisdiction.
Accordingly, the Court turns to the question of whether Ms. Naseer and 3232 Central Avenue LLC were citizens of Illinois at the time the Complaint was filed and at the time of removal. As set forth above, the citizenship of a natural person is determined by "domicile," which is "the state in which a person intends to live over the long run." Heinen, 671 F.3d at 670. "[I]ntent is a state of mind which must be evaluated through the circumstantial evidence of a person's manifested conduct." Sadat v. Mertes, 615 F.2d 1176, 1181 (7th Cir. 1980) (quoting Berhalter v. Irmisch, 75 F.R.D. 539, 541 (W.D.N.Y. 1977)). Such objective factors of intent can include "current residence, voting registration and voting practices, location of personal and real property, location of financial accounts, membership in unions and other associations, place of employment, driver's license and automobile registration, and tax payments." Midwest Transit, Inc. v. Hicks, 79 F. App'x 205, 208 (7th Cir. 2003). "[N]o single factor is conclusive." Id.
First, Sean Sheikh's Notice of Removal represents only that Ms. Naseer "resides overseas since 2012." Notice of Removal ¶ 2. The Notice of Removal does not allege Ms. Naseer's citizenship or domicile nor does it contest the allegation in the Complaint that Ms. Naseer is a citizen of Illinois. Plaintiff presents the following facts to demonstrate that Ms. Naseer was at all relevant times domiciled in Illinois. Plaintiff's underwriting documents for the mortgage loan that underlies this litigation shows that Ms. Naseer, a personal guarantor of the loan, was domiciled in Illinois at the time the loan was made. Br. in Supp. of Mot. to Remand, Ex. B ¶ 3, ECF No. 15. These documents include the following. Ms. Naseer's 2013 individual federal tax return, which reports her "home address" as an address in Lincolnwood, Illinois, is filed jointly with her husband Nazeer Chaudry who still owns the Lincolnwood, Illinois residence based on online reports of the Cook County Recorder of Deeds; the federal tax return also reports partial ownership of two Illinois corporations that use the Lincolnwood, Illinois residence for notices to be sent to her as the Registered Agent. See Id. Ex. B ¶ 3a; Ex. B-1, ECF No. 15-3; Ex. B-2, ECF No. 15-4; Ex. B-11, ECF No. 15-13. Ms. Naseer's 2013 individual Illinois tax return uses the Lincolnwood, Illinois residence as her address and fills in Line 11 to identify herself as an Illinois resident. Id. Ex. B ¶ 3b; Ex. B-3, ECF No. 15-5. A Transunion Consumer Credit Report identifies the Lincolnwood, Illinois residence as Ms. Naseer's current address as of the April 14, 2014 report date. Id. Ex. B ¶ 3c; Ex. B-4, ECF No. 15-6. Correspondence dated May 11, 2014, from ReliaStar Life Insurance Company encloses an Assignment of Life Insurance Policy in which Ms. Naseer uses the Lincolnwood, Illinois residence as her address. Id. Ex. B ¶ 3d; Ex. B-5, ECF No. 15-7. The Loan Summary and Approval reports that, as of December 11, 2014, Ms. Naseer had contracted to purchase the Mortgaged Property and expressed her intention to manage the grocery store operations on the Mortgaged Property. Id. Ex. B ¶ 3e; Ex. B-6, ECF No. 15-8. In a personal financial statement, dated January 27, 2015, Ms. Naseer lists her address as the Lincolnwood, Illinois residence and lists business and residential phone numbers with an Illinois prefix of "847." Id. Ex. B ¶ 3f; Ex. B-7, ECF No. 15-9. A U.S. Small Business Administration Authorization identifies Ms. Naseer as an Illinois resident as of its date of March 24, 2015. Id. Ex. B ¶ 3g; Ex. B-8, ¶ H.3, ECF No. 15-10. Correspondence from Sean Sheikh, which is not dated but was received by Plaintiff on or about November 9, 2017, reports that the Mortgaged Property in Lake Station, Indiana, "is being run and managed by Bushra Naseer," among others. Id. Ex. B ¶ 3h; Ex. B-9, ECF No. 15-11. Ms. Naseer was served with the summons and State Court Foreclosure Complaint by certified mail on December 4, 2017, at an address in Lincolnwood, Illinois, where someone accepted the certified mailing on her behalf and checked the box identifying the person as the "Addressee." Id. Ex. B ¶ 3i; Ex. B-10, ECF No. 15-12. Finally, in an online report from the Illinois Secretary of State, Ms. Naseer shows herself as the registered agent of Sandal, Inc. as of 2018 and lists the Lincolnwood, Illinois residence as her address. Id. Ex. B ¶ 3j; Ex. B-11, ECF No. 15-13.
In the November 9, 2018 response to the Motion to Remand, Sean Sheikh stated that Ms. Naseer left the United States in August 2015 and as of September 17, 2018, had not returned. ECF No. 16, ¶¶ 3, 6. The Court finds that this unsupported statement does not go to Defendant's burden. Sean Sheikh also offered generally the testimony of Ms. Naseer gave under oath on January 18, 2017, in an insurance matter involving Central Market of Indiana. Therein, Ms. Naseer testified that she had lived in Illinois until August 2015, that she was using her Illinois address on her driver's license, and that she had traveled to Pakistan two years earlier to care for her ill mother. Resp. to Mot. to Remand, Ex. pp. 6-7, ECF Nos. 16-1; see also ECF No. 20-1 (copy of transcript Certificate). Ms. Naseer testified that her husband worked in Illinois and supported her financially. Id. pp. 7-8. She testified that she and her husband were not going through a divorce. Id. p. 8. She testified that she continued to receive rental income from Illinois properties. Id. p. 9. The transcript contains the following exchange:
Id. pp. 7. The Court finds that Ms. Naseer's January 18, 2017 testimony does not indicate an intent to remain in Pakistan indefinitely and, therefore, does not show a change of domicile.
Therefore, Ms. Naseer was a citizen of Illinois at the time the Complaint was filed and at the time the case was removed. As a result, 3232 Central Avenue LLC, who has Ms. Naseer as a member, was also a citizen of Illinois at the relevant times. Because complete diversity does not exist between Plaintiff and Defendants Bushra Naseer and 3232 Central Avenue LLC, the Court lacks subject matter jurisdiction and remand is required.
As a final matter, Plaintiff argued for the first time in reply in support of the Motion to Remand and then again in the instant Motion to Reconsider that the forum defendant rule precludes removal under 28 U.S.C. § 1441(b)(2) because Defendant Central Market of Indiana, Inc. is a citizen of Indiana.
Based on the foregoing, the Court hereby GRANTS the Motion to Reconsider, Supported by Brief and Supplemental Authority Demonstrating Lack of Jurisdiction [ECF No. 24] and VACATES the February 5, 2019 Opinion and Order [ECF No. 23].
The Court STRIKES the Verified Response and Objection to the Exercise of Diversity Jurisdiction [ECF No. 25] as having been filed without leave of court and DENIES as moot the Motion to Allow Central Market of Indiana, Inc. to File Brief Regarding Pending Jurisdictional Issue" [ECF No. 57].
The Court GRANTS the Motion to Remand [ECF No. 14] and ORDERS that this case is remanded to state court. The Court declines to make an award of attorney fees under 28 U.S.C. §1447(c) in relation to Plaintiff's Motion to Remand.
In light of the remand, the pending Motion for Summary Judgment [ECF No. 5] is DENIED as moot.
SO ORDERED.
