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Merchants Automotive Group, Inc. v. Advantage Opco, LLC

United States District Court, D. New Hampshire

November 20, 2014

Merchants Automotive Group, Inc.,
v.
Advantage Opco, LLC No. 2014 DNH 241

ORDER

JOSEPH DiCLERICO, Jr., District Judge.

The plaintiff, Merchants Automotive Group, Inc. ("Merchants"), brought this action seeking a declaratory judgment to clarify the obligations of the defendant, Advantage Opco, LLC ("Advantage"), under a Master Lease Agreement (the "Lease"). Merchants originally brought suit in New Hampshire state court, and Advantage removed the case to this court.

Advantage's notice of removal asserted federal subject matter jurisdiction based on diversity of citizenship. 28 U.S.C. § 1332(a). Alternatively, in a footnote, Advantage asserted federal subject matter jurisdiction under 28 U.S.C. § 1334, which vests federal district courts with jurisdiction to hear certain disputes that arise in, or are related to, a pending federal bankruptcy proceeding. Merchants has now moved to remand the case to state court. Advantage opposes the motion to remand, but also moves for leave to file an amended notice of removal.

Background

This is a complex commercial dispute involving parties that are in the business of leasing and renting automobiles. Merchants is a New Hampshire-based retailer and wholesaler of motor vehicles. Advantage is a Florida limited liability company and operates a national car rental company that does business as "Advantage Rent-A-Car." Advantage's sole member is Advantage Holdco, Inc. ("Advantage Holdco"), a Delaware corporation with its principal place of business in Florida.

Previously, Advantage was owned by Simply Wheelz, LLC ("Wheelz"). In April of 2013, Wheelz and Merchants entered into the Lease, whereby Wheelz received approximately $58 million worth of automobiles to lease to its customers.[1]

Shortly thereafter, in November of 2013, Wheelz filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Mississippi.[2] During the pendency of the bankruptcy proceeding, a Canadian private equity firm successfully bid to acquire Wheelz's assets. After the closing of the acquisition, the private equity firm assigned its rights and obligations to Advantage, its affiliate and the defendant in this suit. Thus, at present, Advantage rents to its retail customers vehicles that are owned by Merchants and that Merchants leased to Wheelz pursuant to the Lease. Merchants seeks a declaratory judgment that Advantage is liable as a successor-in-interest to Wheelz under the Lease.

Discussion

Merchants moves to remand the case to state court on the ground that Advantage did not properly allege diversity of citizenship in its notice of removal. Merchants also argues that subject matter jurisdiction does not exist under § 1334 because this case is not adequately related to the Wheelz bankruptcy proceeding. In response, Advantage moves to amend the notice of removal and objects to the motion to remand. The motion to amend is addressed first because the result affects the motion to remand.

I. Advantage's Motion to Amend

In its notice of removal, Advantage asserted subject matter jurisdiction based on diversity of citizenship.[3] Advantage stated that complete diversity existed because Merchants was a New Hampshire corporation with a principal place of business in New Hampshire, and Advantage was a Delaware limited liability company with a principal place of business in Florida. Merchants moves to remand on grounds that, as a limited liability company, Advantage had to demonstrate diversity by providing the citizenship of all of its members or partners. Merchants points out that Advantage did not do so in the notice of removal because Advantage failed to identify its sole member, Advantage Holdco, and Advantage Holdco's citizenship. See Pramco, LLC v. San Juan Bay Marina, Inc., 435 F.3d 51, 54-55 (1st Cir. 2006) (noting that the "citizenship of a limited liability company is determined by the citizenship of all of its members").

Advantage moves to amend the notice of removal to allege that Advantage Holdco, like Advantage, is incorporated in Delaware and has its principal place of business in Florida. Merchants objects. The parties dispute whether Advantage can amend the notice of removal and whether the amendment that Advantage seeks to make is within the scope of amendments permissible under 28 U.S.C. § 1653.

A. Amendment of a Notice of Removal

A defendant may file a notice of removal setting forth a "short and plain statement of the grounds for removal" within thirty days of being served with a complaint. 28 U.S.C. §§ 1446(a)-(b). During these thirty days, the defendant may freely amend its notice of removal. 14C Charles Alan Wright & Arthur Miller, Federal Practice and Procedure § 3733 (4th ed. 2009). Here, the thirty day period for freely amending the ...


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