OPINION & ORDER

KAREN K. CALDWELL, Chief District Judge.

This matter is currently before the Court upon the motion of the plaintiff, Eric Friedlander, to remand this action to Fayette Circuit Court and for an award of attorneys' fees and costs pursuant to 28 U.S.C. § 1447(c) [DE #3]. This motion is fully briefed and is ripe for review. For the reasons set forth below, the motion will be granted in part and denied in part.

I. FACTUAL AND PROCEDURAL BACKGROUND

Friedlander filed his original Complaint against the Defendants, James Figuerado ("Figuerado"), St. Thomas Glen Resorts, LLC (the "LLC"), and Fifth Third Bank ("Fifth Third")in Fayette Circuit Court on November 27, 2013 [DE #1-1]. A First Amended Complaint was subsequently filed against the same Defendants on December 19, 2013 [DE #1-2]. In the First Amended Complaint, Friedlander asserts claims against Fifth Third for fraud, breach of fiduciary duty, interference with a prospective business advantage, breach of implied covenant of good faith and fair dealing, aiding and abetting fraud, and gross negligence. He also asserts a claim against Figuerado, the majority member of the LLC, for breach of fiduciary duty. Finally, Friedlander asserts claims against the LLC for breach of contract and for an accounting.

There is no dispute that Friedlander is a Kentucky citizen, Figuerado is a Florida citizen, the LLC has Kentucky and Florida citizenship, and Fifth Third is an Ohio citizen. Nevertheless, on January 2, 2014, Fifth Third filed its Notice of Removal pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, alleging that that this Court has original jurisdiction over this matter under 28 U.S.C. § 1332(a) because there is complete diversity of citizenship between Friedlander and the properly joined defendants, and the amount in controversy exceeds $75,000, exclusive of interest and costs. [DE #1]1. Specifically, Fifth Third contends that the LLC has been fraudulently joined to defeat diversity jurisdiction and thus its citizenship should not be considered for diversity purposes. Alternatively, Fifth Third contends that the LLC is only a nominal party whose citizenship is not considered when determining diversity jurisdiction.

Friedlander has filed a timely motion to remand [DE #3]. He contends that this Court lacks subject matter jurisdiction over this case as there is not complete diversity of citizenship between the parties. Specifically, he argues that he has a colorable cause of action against the LLC in state court, that his claims against the LLC are not derivative, and that Fifth Third has not produced clear and convincing evidence that he cannot establish a cause of action against the LLC under Kentucky law. In addition to a remand to state court, Friedlander also moves for an award of attorneys' fees and costs under 28 U.S.C. § 1447(c).

II. FRAUDULENT JOINDER

A case may only be removed to federal court if it could have been originally brought in federal court, and as there is no federal question in this case, jurisdiction is only proper if the parties are completely diverse and the amount in controversy exceeds $75,000. See 28 U.S.C. § 1332(a), 1441(a). As the party invoking jurisdiction, the defendants have the burden of proving diversity jurisdiction. Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 871 (6th Cir. 2000).

Friedlander, a Kentucky citizen, filed this action in state court. It is undisputed that the LLC is also a citizen of Kentucky, and therefore, complete diversity of citizenship does not exist under 28 U.S.C. § 1332(a)(1). The issue, then, is whether the LLC was fraudulently joined so as to defeat diversity jurisdiction. The burden is on the defendants to show fraudulent joinder, and as with any dispute over removal, all doubts are to be resolved against removal. See Brierly v. Alusuisse Flexible Packaging, Inc., 184 F.3d 527, 534 (6th Cir. 1999); Alexander v. Elec. Data Sys. Corp., 13 F.3d 940, 949 (6th Cir. 1994). To prove fraudulent joinder, the removing party must present clear and convincing evidence that a plaintiff could not have established a cause of action against non-diverse defendants under state law. Alexander, 13 F.3d at 949; Parker v. Crete Carrier Corp., 941 F.Supp. 156, 159 (E.D.Ky 1996). The Sixth Circuit has explained the relevant considerations in analyzing a claim of fraudulent joinder as follows:

Coyne v. American Tobacco Co., 183 F.3d 488, 493 (6th (citations omitted).

Thus, the question before the Court is not whether the plaintiff will prevail at trial on their claims against the LLC or whether the Court believes that LLC was joined to defeat diversity. See Jerome-Duncan, Inc. v. Auto-By-Tel, LLC, 176 F.3d 904, 907 (6th Cir. 1999)(holding that a plaintiff's motive in joining a non-diverse defendant is "immaterial to our determination regarding fraudulent joinder"). The question is whether, resolving all ambiguities in favor of Friedlander, the defendants have shown there is no colorable basis for predicting that he could prevail against the non-diverse LLC in state court.

When deciding issues of fraudulent joinder, the Court must "apply a test similar to, but more lenient [to a plaintiff] than, the analysis applicable to a Rule 12(b)(6) motion to dismiss." Casias v. Wal-Mart Stores, Inc., 695 F.3d 428, 433 (6th Cir. 2012).. "[T]he benefit of the doubt given a plaintiff as a party of the fraudulent joinder inquiry should be more deferential than even that given under Rule 12(b)(6)." See Little v. Purdue Pharma., L.P., 227 F.Supp.2d 838, 845 (S.D.Ohio 2002). In reviewing allegations of fraudulent joinder, the Court may "pierce the pleading" and consider evidence normally reserved for summary judgment, such as affidavits submitted by the parties. Id. However, [t]he court may look to material outside the pleadings for the limited purpose of determining whether there are `undisputed facts that negate the claim.'" Id. (quoting Walker v. Phillip Morris USA, Inc., 443 Fed.Appx 946, 955-56 (6th Cir. 2011).

III. ANALYSIS

While Friedlander's Amended Complaint asserts several causes of action, his two claims against the LLC are relevant to this motion. Specifically, Count VIII of the First Amended Complaint asserts a claim against the LLC for breach of contract. This Count alleges as follows:

[DE #1-2]. Friedlander's claim for an accounting in Count IX against the LLC alleges as follows:

[DE #1-2].

The issue, then, is whether the defendants have established, by clear and convincing evidence, that Friedlander cannot establish a cause of action against the LLC under Kentucky law. In support of this argument, Fifth Third first argues that the LLC has been fraudulently joined because Friedlander has released all his claims against the LLC and Figuerado. Fifth Third points to a Consent and Authorization Agreement, dated November 7, 2008, between Figuerado and the LLC, and signed by Friedlander, states "The Members hereby release any and all claims which the Members may have against the Buyer [Figuerado], the Company [the LLC] and Fifth Third Bank, and each of their agents, officers, directors and shareholders, and attorneys" [DE #5-8]. Fifth Third also points to Section 9.6 of the November 7, 2008 Loan Assumption and Modification Agreement, also signed by Friedlander, which provides that the "Minority Company Members [including Friedlander] and the Company each agree . . . to unconditionally release, aquit and forever discharge each other" [DE #5-9]. Friedlander, however, argues that he signed these agreements under circumstances of extreme economic duress. Whether or not this purported waiver is enforceable is a factual dispute and cannot be part of the fraudulent joinder analysis.

Next, Fifth Third argues that the LLC was fraudulently joined because Friedlander cannot establish a cause of action against the LLC under Kentucky law. Fifth Third contends that Figuerado, as the Managing Member, had the authority to control certain affairs of the LLC and that all of Friedlander's claims should be against Figuerado, not the LLC. While the Amended Operating Agreement indeed vested Figuerado with authority and responsibility over certain affairs of the LLC, the Kentucky Limited Liability Act makes clear that "[a] limited liability company is a legal entity separate and distinct from its members." KRS 271.010(2). Furthermore, a Kentucky limited liability company ". . . .shall have the powers to do all things necessary or convenient to carry out its business and affairs." KRS 275.010(1). The Amended Operating Agreement acknowledges the independent power and separateness of the LLC in Section 6, providing:

[DE #1-2, Section 6]. Under this provision, the LLC, not the manager is duty-bound to make, at a minimum, annual distributions to its members assuming the availability of funds. Any failure by the LLC to make the required distributions to a member places the member in a position of a creditor of the LLC, and, under KRS 275.235, creates a cause of action against the LLC arising from the obligation. This is precisely the claim that Friedlander is asserting in Count VIII of his First Amended Complaint. Accordingly, Friedlander has asserted a colorable cause of action against the LLC for failure to pay distributions as required by the Amended Operating Agreement. As a result, Fifth Third has failed to show, by clear and convincing evidence, that Friedlander does not have a colorable claim against the LLC under state law.

Finally, Fifth Third argues that this Court has subject matter jurisdiction over this action because the LLC is only a nominal party and Friedlander's claims against it are derivative in nature. A shareholder derivative action "is a lawsuit brought by a shareholder on behalf of a corporation. Generally, a shareholder can only sue on behalf of a corporation when the corporation has a valid cause of action, but has refused to use it . . . if the suit is successful, the proceeds go to the corporation, not to the shareholder who brought the suit." Legal Information Institute, Cornell University Law School, (http.//ww.law.cornell.edu/wex/shareholder_deriviative_suit). Construing the First Amended Complaint most favorably to Friedlander, the Court finds that his breach of contract and accounting claims are not derivative in nature because he is seeking recovery on his own behalf rather than on behalf of the LLC. The cases Fifth Third relies upon in support of its argument that the LLC is a nominal party are simply not relevant to this matter. Fifth Third has cited no caselaw requiring this Court to find that the citizenship of a limited liability company can be ignored in a lawsuit by a member seeking to enforce his or her individual rights against the company.

Instead, Kentucky law specifically provides that a failure by a limited liability company to make required distributions to a member places the member is a position of a creditor of the company, and creates a cause of action arising from the obligation. Specifically, KRS 275.235 provides:

KRS 275.235. Under this statute, if Friedlander successfully enforces his right against the LLC to obtain the consulting fee authorized by Section 7(e) of the Amended Operating Agreement, the LLC will be liable for paying the fee, and the resulting judgment will be for the benefit of Friedlander, not the LLC. While Fifth Third argues that Friedlander's claims are essentially against Figuerado, not the LLC, one of the fundamental purposes of a limited liability company is to immunize its members and managers from personal liability for debts, obligations, and/or other liability of the limited liability company arising in contract, tort or otherwise. See KRS 275.150. This limitation on liability may only be eliminated by the terms of the Operating Agreement.

See Racing Inv. Fund 2000, LLC v. Clay Ward Agency, Inc., 320 S.W.3d 654, 659 (Ky. 2010). In this case, the members and manager of the LLC did not clearly or unequivocally assume personal liability for the LLC's obligations. In fact, the Amended Operating Agreement provides:

[DE #1-2, Section 12(c)]. For these reasons, Friedlander's claims against the LLC are not derivative and the LLC is a real party in interest, not a nominal defendant.

For all these reasons, Fifth Third has failed to establish diversity jurisdiction. Accordingly, Friedlander's motion to remand will be granted and this matter will be remanded to Fayette Circuit Court.

IV. FRIEDLANDER'S MOTION FOR ATTORNEYS' FEES AND COSTS

Friedlander seeks to recover his attorneys' fees and costs associated with filing this motion under 28 U.S.C. § 1447(c). This statute allows the Court to exercise its discretion to require Fifth Third to pay "just costs and any actual expenses, including attorney fees, incurred as a result of the removal." 28 U.S.C. § 1447(c). In order to justify such an award, "[a]bsent unusual circumstances, [a court] may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal." Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). "Conversely, when an objectively reasonable basis exists, fees should be denied." Id. Here, although Fifth Third's arguments regarding nominal defendants and fraudulent joinder came up short, the Court cannot say that the arguments were "objectively unreasonable." Accordingly, the Court will decline to exercise its discretion to award attorneys' fees and costs to Friedlander.

V. CONCLUSION

For the reasons set forth above, the Court hereby ORDERS as follows: