Dianna Nidy v. U.S. Bancorp

• Court: Court of Appeals for the Fourth Circuit
• Decided: June 14, 2022
• Docket: 19-1759
• Status: Unpublished

Opinion

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UNPUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 19-1759

DIANNA NIDY, on behalf of herself and all others similarly situated,

Plaintiff - Appellant,

v.

U. S. BANCORP GOVERNMENT LEASING AND FINANCE, INC., as Trustee for the benefit of the holders of COMM 2013-CCRE12 Mortgage Trust Commercial Mortgage Pass-Through Certificates; WELLS FARGO COMMERCIAL MORTGAGE SERVICING,

Defendants - Appellees.

Appeal from the United States District Court for the Southern District of West Virginia, at Charleston. John T. Copenhaver, Jr., Senior District Judge. (2:18-cv-01061)

No. 20-2163

GEORGE LEESON; JACOB CRUM,

Plaintiffs - Appellants,

U. S. BANCORP GOVERNMENT LEASING AND FINANCE, INC., as Trustee for the benefit of COMM 2013-CCRE12 Mortgage Trust Commercial Mortgage Pass-Through Certificates; WELLS FARGO COMMERCIAL MORTGAGE SERVICING,

Defendants - Appellees. USCA4 Appeal: 19-1759 Doc: 50 Filed: 06/14/2022 Pg: 2 of 9

No. 20-2171

THE ELSWICK COMPANY, LLC, d/b/a Anytime Fitness Elkview,

U. S. BANCORP GOVERNMENT LEASING AND FINANCE, INC., as Trustee for the benefit of COMM 2013-CCRE12 Mortgage Trust Commercial Mortgage Pass-Through Certificates; WELLS FARGO COMMERCIAL MORTGAGE SERVICING,

No. 20-2172

CONSTANCE ARTHUR-NELSON,

U. S. BANCORP GOVERNMENT LEASING AND FINANCE, INC., as Trustee for the benefit of COMM 2013-CCRE12 Mortgage Trust Commercial Mortgage Pass-Through Certificates; WELLS FARGO COMMERCIAL MORTGAGE SERVICING,

Appeals from the United States District Court for the Northern District of West Virginia, at Clarksburg. Irene M. Keeley, Senior District Judge. (1:19-cv-00169-IMK; 1:19-cv- 00168-IMK; 1:19-cv-00167-IMK)

Argued: May 3, 2022 Decided: June 14, 2022

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Before DIAZ, RUSHING, and HEYTENS, Circuit Judges.

Vacated and remanded with instructions in part and affirmed in part by unpublished opinion. Judge Heytens wrote the opinion, in which Judge Diaz and Judge Rushing joined.

ARGUED: John Henry Skaggs, CALWELL LUCE DITRAPANO, PLLC, Charleston, West Virginia, for Appellants. Paul E. Chronis, DUANE MORRIS, LLP, Chicago, Illinois, for Appellees. ON BRIEF: Stuart Calwell, Alexander D. McLaughlin, CALWELL LUCE DITRAPANO, PLLC, Charleston, West Virginia, for Appellants. J. Mark Adkins, Gabriele Wohl, BOWLES RICE LLP, Charleston, West Virginia; Meagen E. Leary, Elinor H. Murarova, DUANE MORRIS LLP, Chicago, Illinois, for Appellees.

Unpublished opinions are not binding precedent in this circuit.

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TOBY HEYTENS, Circuit Judge:

In June 2016, a flood swept through Elkview, West Virginia, washing away a

culvert that provided the only access point to the Elk Crossings Mall. Various plaintiffs

seek to recover damages for harms allegedly caused by the collapse of the culvert and the

resulting lack of access to the mall. The courts of first instance dismissed each complaint

for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).

Having carefully reviewed the records, we do not see any reversible error in the

three cases removed from state court and therefore affirm the judgments in those cases. In

the case filed directly in federal court, however, the district court erred in concluding that

the complaint adequately alleged federal subject matter jurisdiction. Accordingly, we

vacate the judgment in that case and remand with instructions to dismiss without prejudice.

I.

We begin with Nidy (No. 19-1759), the case in which we vacate the judgment for

failure to allege the basis for subject matter jurisdiction.

“Federal courts are courts of limited jurisdiction.” Kokkonen v. Guardian Life Ins.

Co. of Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this

limited jurisdiction, and the burden of establishing the contrary rests upon the party

asserting jurisdiction.” Id. (citations omitted). And because having subject matter

jurisdiction is a precondition for any federal court “to say what the law is” in a particular

case, Marbury v. Madison, 5 U.S. 137, 177 (1803), we have an independent obligation to

examine both our own jurisdiction and that of the district court regardless of whether the

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parties raise the issue. See, e.g., Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541

(1986).

Federal Rule of Civil Procedure 8(a)(1) reflects these principles, requiring a

complaint to “contain . . . a short and plain statement of the grounds for the court’s

jurisdiction.” “[T]he facts providing the court jurisdiction must be affirmatively alleged in

the complaint.” Pinkley, Inc. v. City of Frederick, 191 F.3d 394, 399 (4th Cir. 1999).

The complaint in Nidy does not comply with Rule 8. It does not identify any specific

basis for federal jurisdiction, and there is nothing in it to suggest this case “aris[es] under

the Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331. To the contrary,

it appears all Nidy’s claims arise under state law.

That leaves diversity jurisdiction—on which Nidy’s counsel relied when asked

about jurisdiction at oral argument. See 28 U.S.C. § 1332(a). But the complaint does not

allege either the citizenship of the parties or the amount in controversy, nor was counsel

able to identify any other information in the Nidy complaint or record that could satisfy the

requirements for diversity jurisdiction. Oral Arg. 11:10–12:34. Without such information,

the district court could proceed no further. See Fed. R. Civ. P. 12(h)(3).

The district court acknowledged this problem, noting that Nidy had “neglected to

include in her complaint the basis for federal jurisdiction.” JA 223 (No. 19-1759). But the

court nevertheless concluded “there are sufficient facts available” to establish diversity

jurisdiction. Id.

That was error. Citing the complaint’s allegations about Nidy’s employment in West

Virginia, the district court surmised that “Nidy is a West Virginia resident.” JA 223 (No.

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19-1759). But even if that inference were warranted, what ultimately matters for diversity

jurisdiction is citizenship, not residency, and “residency is not sufficient to establish

citizenship.” Johnson v. Advance Am., 549 F.3d 932, 937 n.2 (4th Cir. 2008).

The district court’s treatment of the defendants’ citizenship was similarly

insufficient. Jurisdiction under 28 U.S.C. § 1332(a) requires complete diversity, which

“means that no plaintiff may share a citizenship with any defendant,” Navy Fed. Credit

Union v. LTD Fin. Servs., LP, 972 F.3d 344, 352 (4th Cir. 2020), and business entities are

often citizens of more than one State, see 28 U.S.C. § 1332(c)(1) (“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”). The complaint

names two defendants, one of which is sued in its capacity as a trustee. And although the

complaint includes the “legal address” of the underlying trust, JA 7 (No. 19-1759),

where—as here—“a trustee . . . is sued in [its] own name,” the trustee’s citizenship “is all

that matters for diversity purposes,” Americold Realty Tr. v. Conagra Foods, Inc., 577 U.S.

378, 383 (2016). So, in the end, Nidy’s complaint contains no allegations about either

defendant’s citizenship.

Nor does the complaint contain any allegation concerning the final requirement for

diversity jurisdiction—that “the matter in controversy exceeds the sum or value of $75,000,

exclusive of interest and costs.” 28 U.S.C. § 1332(a). Satisfying this requirement is not

onerous, and “[i]f the plaintiff claims a sum sufficient to satisfy the statutory requirement,

a federal court may dismiss only if it is apparent, to a legal certainty, that the plaintiff

cannot recover the amount claimed.” JTH Tax, Inc. v. Frashier, 624 F.3d 635, 638 (4th

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Cir. 2010) (quotation marks and emphasis omitted). Here, however, the complaint requests

no particular amount.

The district court nonetheless concluded it was “apparent that the amount in

controversy exceeds $75,000,” noting that Nidy “asserts that she lost income and benefits”

when the mall was “closed from June 2016 until August 2017” and that she also requests

punitive damages. JA 223 (No. 19-1759). But the complaint contains no allegations about

the nature or terms of Nidy’s employment, the amount of her compensation, or the value

of her benefits. In addition, the district court did not discuss or explain whether punitive

damages are permitted under the substantive law governing Nidy’s various claims, which

determines whether such damages may be included as part of the amount in controversy.

See Wright & Miller, 14AA Fed. Prac. & Proc. Juris. § 3702.5 (4th ed. 2022); accord Saval

v. BL Ltd., 710 F.2d 1027, 1033 (4th Cir. 1983) (“[C]laims for punitive damages proffered

for the purpose of achieving the jurisdictional amount should be carefully examined.”).

On this record, we cannot satisfy our independent obligation to ensure that federal

jurisdiction exists. And although 28 U.S.C. § 1653 allows jurisdictional allegations to be

amended on appeal, no party has requested an opportunity to do so here. Accordingly, we

vacate the judgment of the district court and remand with instructions to dismiss Nidy’s

complaint without prejudice.

II.

That leaves the judgments in the remaining three cases, which we affirm.

The plaintiffs in these cases are: (1) George Leeson, a nearby landowner who

suffered property damage from the flood, and Jacob Crum, who was stranded at the mall

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after the culvert collapsed (No. 20-2163); (2) The Elswick Company, LLC, d/b/a Anytime

Fitness Elkview, a tenant of the mall that lost business after the flood (No. 20-2171); and

(3) Constance Arthur-Nelson, a customer of the mall and nearby landowner who suffered

property damage from the flood and was inconvenienced by having to shop at more distant

shopping centers (No. 20-2172). Although formulated differently, the complaints assert

some combination of claims sounding in contract and tort, including on behalf of other

putative class members. Generally speaking, plaintiffs contend that defendants are liable

for failing to authorize funds to repair the culvert both before and after the flood.

The cases were originally filed in West Virginia state court but removed to federal

court by the defendants based on diversity of citizenship. * The cases were then transferred

to the bankruptcy court where the mall’s owner was undergoing reorganization. The

bankruptcy court granted the defendants’ motion to dismiss for failure to state a claim, and

the district court affirmed. See Fed. R. Bankr. P. 7012(b) (incorporating Rule 12(b)(6) into

adversary proceedings).

“In reviewing the judgment of a district court sitting in review of a bankruptcy court,

we apply the same standard of review that was applied by the district court.” Copley v.

United States, 959 F.3d 118, 121 (4th Cir. 2020). Thus, “we review the bankruptcy court’s

legal conclusions de novo, its factual findings for clear error, and any discretionary

decisions for abuse of discretion.” Id. Accordingly, because “a motion to dismiss under

* We conclude the notices of removal in each of these cases adequately establish federal subject matter jurisdiction.

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Rule 12(b)(6) tests the legal sufficiency of a claim,” Tabb v. Board of Educ. of Durham

Pub. Schs., 29 F.4th 148, 155 (4th Cir. 2022), we review the bankruptcy court’s decision

here de novo.

Having conducted such a review of the records in these three cases, we have not

identified any reversible error in the decisions to dismiss for failure to state a claim. The

assignment of leases and rents specifically provides that it “shall not operate to place any

obligation or liability for the control, care, management or repair of the Property upon

Lender, nor for the carrying out of any of the terms and conditions of the Leases or any

Lease Guarantees.” JA 166 (No. 20-2163). Additionally, plaintiffs are not parties to the

underlying loan documents, which specifically provide that they “are for the sole and

exclusive use of ” the lender and the mall’s owner “and may not be enforced, nor relied

upon, by any other Person.” Id. at 150. Nor have plaintiffs demonstrated the sort of “special

relationship [with] the alleged tortfeasor” necessary under West Virginia law to permit

recovery in tort in the absence of physical harm or a contractual relationship, Aikens v.

Debow, 541 S.E.2d 576, 589 (W. Va. 2000), or any other valid basis for recovery.

* * *

In No. 19-1759, the judgment of the district court is vacated and the case is

remanded with instructions to dismiss without prejudice. In Nos. 20-2163, 20-2171, and

20-2172, the judgments of the district court are affirmed.

SO ORDERED