Mueller v. Potsch, 4:11-cv-00047

Mueller is domiciled in Germany and is a German citizen; Jura Films North America, LLC has Mueller and Presecky as members, making it a citizen of Germany and Illinois; Jura-Plast GmbH is a German entity domiciled in Germany, presumably a German citizen; Potsch’s citizenship/domicile was questioned for diversity purposes; Magistrate Judge Cherry conducted an evidentiary hearing and found Potsch is a U.S. citizen domiciled in Indiana; the district court adopted Cherry’s findings and held diversity jurisdiction exists; the court then addressed default judgment and limited equitable relief (accounting and transfer of funds) rather than granting full injunctive relief at this stage.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether diversity jurisdiction exists despite Potsch’s citizenship	Mueller argues Potsch is a U.S. citizen, so diversity exists	Potsch's dual/foreign status could defeat diversity	Diversity exists; Potsch is an Indiana U.S. citizen only.
Whether default judgment is appropriate for equitable relief	Default judgment could support the requested relief	Not enough to justify default injunction without a complete record	Default judgment denied without prejudice pending accounting.
What preliminary relief the court may grant in aid of an accounting	Court should order full injunctive relief as requested	Injunction requires more certainty about merger terms and funds	Limited preliminary relief granted: accounting and transfer of $59,070.29 (plus interest) from trust; further relief to be determined after accounting.

Wisconsin Knife Works v. National Metal Crafters, 781 F.2d 1280 (7th Cir. 1986) (court must assess jurisdictional questions sua sponte)
Yasuda Fire & Marine Ins. v. Continental Gas Co., 37 F.3d 345 (7th Cir. 1994) (court must resolve jurisdictional questions independently)
Intec USA, LLC v. Engle, 467 F.3d 1038 (7th Cir. 2006) (diversity may be destroyed by foreign or dual citizenship)
e360 Insight v. The Spamhaus Project, 500 F.3d 594 (7th Cir. 2007) (default judgments may not automatically yield equitable relief; need proper basis)
Medcom Holding Co. v. Baxter Travenol Laboratories, Inc., 984 F.2d 223 (7th Cir. 1993) (damages are not necessarily adequate substitute for breach of merger agreements)
Allegheny Energy, Inc. v. DQE, Inc., 171 F.3d 153 (3d Cir. 1999) (collects cases on remedies in default/injunction contexts)
Panalpina Welttransport GmBh v. Geosource, Inc., 764 F.2d 352 (5th Cir. 1985) (assumed corporate status for diversity purposes; caution on entity citizenship)