TransFirst Group Inc v. Magliarditi
2:17-cv-00487
D. Nev.Jul 22, 2016Background
- TransFirst (three corporate plaintiffs) sued Dominic J. Magliarditi and related individuals/entities alleging post-judgment fraudulent transfers, unjust enrichment, and alter-ego liability, seeking damages, injunctive relief, and a receiver.
- Plaintiffs invoked diversity jurisdiction and a federal claim under the Federal Uniform Fraudulent Transfer Act (28 U.S.C. § 3304), and asserted the court’s continuing jurisdiction to enforce an earlier federal judgment (from Civil Action No. 3:06-CV-2303-C).
- The court reviewed subject-matter jurisdiction sua sponte before addressing Plaintiffs’ ex parte application for emergency relief.
- The court concluded the federal fraudulent-transfer statute claim was inapplicable because it applies only to debts to the United States, and no such debt was alleged.
- The court found ancillary (enforcement) jurisdiction inappropriate because the present suit raises new liabilities, different facts (postjudgment transfers and alter-ego theories), and seeks relief beyond enforcing the prior judgment against new parties.
- The Complaint also failed to plead citizenship adequately for most parties (LLCs, trusts, partnerships, natural persons), so complete diversity was not affirmatively and distinctly alleged; the court ordered an amended complaint by August 22, 2016 or face dismissal for lack of subject-matter jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction exists under the Federal Uniform Fraudulent Transfer Act | Plaintiffs invoked § 3304 for fraudulent-transfer claims | Defendants (implicitly) dispute federal-question basis; court examines statute's scope | Court: § 3304 applies only to debts to the United States; no such debt alleged, so federal-question jurisdiction fails |
| Whether ancillary jurisdiction over postjudgment fraudulent-transfer and alter-ego claims is appropriate to enforce prior federal judgment | Plaintiffs argue the court has continuing jurisdiction to enforce the prior judgment and may exercise ancillary jurisdiction | Defendants (implicitly) contend the new suit asserts new theories against new parties and is not mere enforcement | Court: Ancillary jurisdiction improper because the suit asserts new liabilities, different facts, seeks new relief, and targets mostly non-parties to prior suit |
| Whether diversity jurisdiction exists (complete diversity pleaded) | Plaintiffs allege diversity but provide limited citizenship allegations | Defendants (implicitly) contest sufficiency; court assesses pleading rules for citizenship of individuals, LLCs, partnerships, trusts, corporations | Court: Citizenship allegations are deficient for nearly all parties; complete diversity not adequately pleaded |
| What remedy for jurisdictional defects | Plaintiffs seek to proceed and obtain emergency relief | Defendants seek dismissal or rejection of emergency relief until jurisdiction proven | Court: Plaintiffs ordered to file an amended complaint by Aug 22, 2016 curing jurisdictional pleading defects or the action will be dismissed for lack of subject-matter jurisdiction |
Key Cases Cited
- Ruhgras AG v. Marathon Oil Co., 526 U.S. 574 (1999) (federal courts must independently ensure subject-matter jurisdiction at all stages)
- Peacock v. Thomas, 516 U.S. 349 (1996) (limits on ancillary jurisdiction to enforce federal judgments against third parties)
- H.C. Cook Co. v. Beecher, 217 U.S. 497 (1910) (historical rule on limits of ancillary jurisdiction)
- Getty Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254 (5th Cir. 1988) (requirement that basis for diversity be pleaded affirmatively and distinctly)
- Corfield v. Dallas Glen Hills LP, 355 F.3d 853 (5th Cir. 2003) (complete diversity requirement between each plaintiff and each defendant)
- Stafford v. Mobil Oil Corp., 945 F.2d 803 (5th Cir. 1991) (failure adequately to allege diversity mandates remand or dismissal)
- Navarro Sav. Ass’n v. Lee, 446 U.S. 458 (1980) (citizenship of a trust is that of its trustees)
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (LLC citizenship is determined by the citizenship of all members)
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (partnership/unincorporated association citizenship determined by each partner)