Harrison Hines v. Azoth Investment SPC Ltd.
- Vernon Broderick
- 1:21-cv-10309
- U.S. District Court · Southern District of New York
- 5
Judge Broderick remanded Harrison Hines v. Azoth Investment SPC because the removing defendants did not establish complete diversity.
Plaintiffs Harrison Hines and Argonautic Ventures Master SPC and defendants Azoth Investment SPC Ltd., Yuchen Shi a/k/a Cassandra Shi, and Tamara Frankel were affected by the remand; the federal court did not resolve their pending motions or underlying claims.
What happened
Harrison Hines and Argonautic Ventures Master SPC sued Azoth Investment SPC Ltd., Yuchen Shi, and Tamara Frankel in state court; the defendants moved the case to federal court and filed motions involving arbitration and dismissal.
Judge Broderick reviewed whether the federal court had authority to hear the case. He found that the removal papers and state-court record did not establish that all plaintiffs and defendants were citizens of different states, as required for diversity jurisdiction.
Judge Broderick remanded the action to the state court from which it came, directed the clerk to close the pending motions, and terminated the federal case without addressing those motions or the underlying claims.
The detailed version
- Harrison Hines v. Azoth Investment SPC Ltd. · No. 1:21-cv-10309
- Vernon Broderick
- Mar. 8, 2022
Background
The plaintiffs brought this action in state court. The defendants removed it to the U.S. District Court for the Southern District of New York on December 3, 2021, asserting diversity jurisdiction under 28 U.S.C. § 1332. The defendants also filed a motion to compel arbitration and to dismiss certain claims for lack of personal jurisdiction and failure to state a claim.
Before considering those motions, the court examined its subject-matter jurisdiction—the court’s legal authority to hear the case. The court explained that diversity jurisdiction generally requires more than $75,000 in controversy and complete diversity, meaning that every plaintiff must be a citizen of a different state from every defendant. The party removing a case to federal court has the burden of establishing those requirements.
Jurisdictional Deficiencies
The state-court complaint described Argonautic Ventures Master SPC as a Cayman Islands company with its principal place of business in Grand Cayman and described Harrison Hines as an individual residing in Puerto Rico. It described Azoth Investment SPC Ltd. as a Delaware corporation with no known principal place of business and stated that Yuchen Shi and Tamara Frankel were each believed to reside in San Francisco, California.
The court held that these allegations did not establish the parties’ citizenship. In particular, allegations about where individuals reside do not by themselves establish citizenship. The court also noted uncertainty about how a segregated portfolio company should be treated for diversity purposes—as a corporation or as an unincorporated association—and stated that it could not speculate about the parties’ citizenship without additional evidence.
Disposition
The court stated that it could either remand the case because the defendants failed to show complete diversity or order additional discovery about citizenship. Applying the preference for resolving doubts against removal and exercising caution about ordering discovery, the court ordered that the action be REMANDED to the state court from which it originated. The clerk was directed to close the open motions on the docket and terminate the federal action. The court did not decide the motion to compel arbitration, the personal-jurisdiction issues, the failure-to-state-a-claim issues, or the underlying claims.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.