Saraca Media Group Inc. v. Zhuang
- Colleen McMahon
- 1:20-cv-02780
- U.S. District Court · Southern District of New York
- 5
In Saraca Media Group v. Zhuang, Judge McMahon granted Zhuang’s motion to dismiss because the parties lacked diversity jurisdiction.
Saraca Media Group, Inc.’s state-law claims were dismissed from federal court because the court found no diversity jurisdiction; the opinion does not state whether the claims were refiled elsewhere.
What happened
Saraca Media Group, Inc. sued Liehong Zhuang over state-law claims including breach of contract, conversion, fraud, negligence, and attorney’s fees. The company sought monetary and injunctive relief.
Zhuang asked the court to dismiss the case, arguing that the parties did not have the different citizenship required for federal diversity jurisdiction. He also argued that Mr. Guo Wengui was an essential party whose addition would destroy diversity.
Judge McMahon ruled that complete diversity was lacking and granted Zhuang’s motion to dismiss. The court found that Saraca was a citizen of Delaware and New York, while Zhuang was a foreign citizen who was a lawful permanent resident domiciled in New York, which prevented diversity jurisdiction under the cited statute.
The detailed version
- Saraca Media Group Inc. v. Zhuang · No. 1:20-cv-02780
- Colleen McMahon
- July 16, 2020
Background
Saraca Media Group, Inc. brought state-law claims against Liehong Zhuang for breach of contract, conversion, fraud, negligence, and recovery of attorney’s fees. Saraca sought monetary and injunctive relief and alleged that the amount in controversy exceeded $75,000.
Saraca alleged that it was incorporated in Delaware and had its principal place of business in New York City. It alleged, on information and belief, that Zhuang was a foreign citizen who resided in New York. Saraca claimed federal diversity jurisdiction under 28 U.S.C. § 1332.
Zhuang moved to dismiss under Rule 12(b)(1), which allows dismissal when the court lacks subject-matter jurisdiction—the legal power to hear the case. He argued that complete diversity was absent because both parties were domiciled in New York. He also argued that Mr. Guo Wengui was an indispensable party whose joinder would destroy diversity.
Court’s analysis
The court explained that a corporation is a citizen of both the state where it is incorporated and the state where it has its principal place of business. Based on Saraca’s allegations, the court found that Saraca was a citizen of Delaware and New York.
The court accepted that Zhuang was a foreign citizen and considered his assertion that he had lawful permanent resident status and lived in New York. Under 28 U.S.C. § 1332(a)(2), federal diversity jurisdiction does not exist in a suit between a state citizen and a foreign citizen who is lawfully admitted for permanent residence in the United States and domiciled in the same state. The court explained that lawful permanent residents are treated like citizens for this jurisdictional rule.
The court stated that Saraca had the burden of proving the jurisdictional facts. It found that Saraca had not adequately rebutted Zhuang’s assertion that he was a lawful permanent resident living in New York. The court therefore concluded that there was no diversity jurisdiction over the state-law claims. The opinion’s reasoning rests on the lack of complete diversity; it does not separately decide the indispensable-party argument.
Disposition
Judge Colleen McMahon granted Zhuang’s motion to dismiss. The conclusion states that the motion was “GRANTED.”
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.