Aboretum Silverleaf Income Fund LP v. Katofsky

Background

Plaintiffs Arboretum Silverleaf Income Fund LP and ACF Credit Program, LLC sued Jeff Katofsky and Ernest Barreca, as trustee of the SKG Family Trust, and the SKG Family Trust. The action sought enforcement of two guarantee agreements signed by the individual defendants. Plaintiffs had previously filed a related federal case, voluntarily dismissed it without prejudice after being ordered to address subject-matter jurisdiction, and then filed the present action in New York state court.

Katofsky, an attorney representing himself, removed the state-court action to the Southern District of New York under the federal removal statutes, claiming diversity jurisdiction. Diversity jurisdiction generally requires that no plaintiff share a state of citizenship with any defendant. The federal court had earlier ordered Katofsky to explain why the case should not be remanded because his removal notice did not adequately establish the citizenship of the plaintiffs and one defendant.

Motion to Remand

Plaintiffs moved to remand under 28 U.S.C. § 1447(c). They submitted two sworn affidavits from Michael Miroshnikov, president of ASIF GP LLC, Arboretum’s general partner. Based on his review of Arboretum’s business records, Miroshnikov stated that Arboretum had at least 50 limited partners who were residents and citizens of California.

The court explained that limited partnerships and limited liability companies take their citizenship from all of their members or partners. The affidavits therefore showed that Arboretum was a citizen of California. The court also found that both individual defendants were California citizens. Because a plaintiff and defendants shared California citizenship, complete diversity was absent.

Katofsky’s Objections

Katofsky argued that Plaintiffs had not filed an opening memorandum of law, had provided an improper briefing schedule, had submitted an unsworn affidavit, and relied on inadmissible statements. The court rejected each objection. It exercised its discretion to overlook the missing opening memorandum because Plaintiffs’ other filings made their arguments clear. It found that the briefing schedule followed the applicable local rule and that Katofsky had not shown prejudice or requested additional briefing.

The court also found that both Miroshnikov affidavits were sworn before a notary. It further held that, regardless of whether evidence supporting a remand motion must be admissible in the same way as trial evidence, a corporate representative may submit affidavits based on knowledge obtained by reviewing corporate books and records. The court found that Miroshnikov had done so.

Disposition

The court granted Plaintiffs’ motion to remand. It remanded the action to the Supreme Court of the State of New York, New York County, because the federal court lacked subject-matter jurisdiction. The court stated that any pending motions were moot and directed the Clerk of Court to close the case. The opinion notes that the federal caption and docket contained spelling errors, and that the court used “Arboretum,” “SKG,” and “Program” instead.