Willis Carto archive

Including information about his associates

[stamp]
"FILED
01 DEC 11 PM 2:11
CLERK OF THE DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
[B Reed]
DEPUTY”

[stamp]
"ENTERED ON [12/12/01]”

United States District Court
Southern District of California

Hereford Corporation and Hans-Dirk Oldemeier,

Plaintiffs,

v.

Legion for the Survival of Freedom, Willis Carto and Elisabeth Carto,

Defendants.

 

Case No. 01CV2040 DTM (JFS)

Order dismissing case for lack of subject matter jurisdiction

On November 6, 2001, plaintiffs filed this action claiming that this court has diversity jurisdiction pursuant to 28 U.S.C. section 1332. The complaint was unclear as to whether complete diversity existed between the parties because the citizenship of plaintiff Hereford Corporation and defendant Legion for the Survival of Freedom Inc. were not fully plead in the complaint. The Court therefore ordered the parties to show cause why this case should not be dismissed for lack of jurisdiction. The parties submitted their responses to this order to show cause. After reviewing the responses, the court finds that complete diversity does not exist between the parties.

In response to the order to show cause, plaintiffs submitted an amended complaint in which they alleged that plaintiff Hereford Corporation is a corporation under Panama law with its principal place of business in Panama. The amended complaint also alleges that plaintiff Hans Dirk Oldemeier is a citizen of Germany and that defendant Legion for the Survival of Freedom is incorporated in Texas with its principal place of business in Texas. Defendants Willis and Elisabeth Carto are residents and citizens of California. According to plaintiffs' allegations in the amended complaint, complete diversity exists between the parties.

Defendants Legion for the Survival of Freedom ("LSF"), in their response to the order to show cause, disputed plaintiffs' allegations of citizenship. LSF claimed that their principal place of business is located in California and they are therefore California citizens. They also contended that plaintiff Herefore Corporation his its principal place of business in California and is therefore a citizen of California as well as a citizen of Panama. Neither party disputes the citizenship of plaintiff Hans-Dirk Oldemeier and defendants Willis and Elisabeth Carto.

The court finds that Herefore Corporation his its principal place of business in California and is therefore a California citizen. Because defendants Willis and Elisabeth Carto are also citizens of California, complete diversity does not exist between the parties.

Alien corporations are subject to 28 U.S.C. section 1332(c) which provides that a corporation is i citizen of both its state of incorporation and the state of its principal place of business. See Danjaq v. Pathe Communications, 979 F.2d 772, 773 (9th Cir. 1992). Defendant Legion for the Survival of Freedom submitted the deposition testimony of Willis Carto as proof that Hereford Corporation’s principal place of business is in California. (Exh. 8, Supp. Decl. of Bryan Sampson) On May 29, 1996, Willis Carto was deposed in the matter of Willis Carto v. Larry Rooker, 95 CV 1001 BTM (AJM), a case before the Southern District of California. He testified at this time that Hereford Corporation was a Panamanian holding company that existed solely to own the home of the Cartos (the Quail Ridge property) located in Escondido, California. Carto testified that the Hereford Corporation, since its formation, has not held any other property or had any other function than to own the property located in Escondido, California.

Plaintiffs refute the fact that Hereford Corporation has dual citizenship in Panama and California. They argue that Hereford Corporation does not have any offices, directors, shareholders or other connection to the State of California aside from the ownership of the Quail Ridge property. They contend that merely owning property in California does not make California Hereford’s principal place of business. Plaintiffs point out that “LSF’s opposing papers do not show that Hereford Corporation does any business, has any headquarters, office, or presence in the state of California.”

A plaintiff, as the party asserting federal diversity jurisdiction, has the burden of pleading and proving that federal subject matter jurisdiction exists. See McNutt v. General Motors, 298 U.S. 178, 186 (1936). In this case, the court finds that plaintiffs have failed to meet this burden. Plaintiffs merely point out that defendants have not conclusively shown that Hereford’s principal place of business is in California. The court recognizes that Mr. Carto’s testimony took place in 1996 and that Hereford Corporation could have since engaged in other business activities outside of California. However, plaintiffs, who have the burden of proof, do not refute the fact that the sole function and business activity of the Hereford Corporation is to hold ownership of the California property in question. Nor do they provide the court with any evidence of any other business that Hereford Corporation conducts that would convince the court that the principal place of business lies elsewhere. Plaintiffs never even allege that Hereford engages in any other business besides owning the Quail Ridge property.

The court therefore finds that the Hereford Corporation’s sole business activity is to hold ownership of the Quail Ridge property located in Escondido, California. The Ninth Circuit has held that “where a majority of a corporation’s business activity takes place in one state, that state is the corporation’s principal place of business, even if the corporate headquarters are located in another state.” See Industrial Tectonics v. Aero Alloy 912 F.2d 1090, 1094 (9th Cir. 1990) Since all of Hereford’s business activity takes place in California, the court finds that Hereford Corporation is a citizen of California. Since defendants, Elisabeth and Willis Carto are also California citizens, complete diversity does not exist in this case. The court therefore dismisses this case for lack of subject matter jurisdiction.

Plaintiffs objected to the evidence presented by defendant Legion for the Survival of Freedom and moves to strike some of their exhibits. The court considered as evidence on this matter Exhibit 8 which contained the deposition testimony of Willis Carto. Plaintiffs however only objected to this exhibit to the extent that it establishes Willis Carto’s intent in forming the Hereford Corporation. The court has not considered Mr. Carto’s reasons for forming the Hereford Corporation in coming to its decision. The court has not considered any of the other evidence to which plaintiffs have objected in reaching the above decision. Therefore, the court denies the motion to strike as moot.

Conclusion

The court orders this case DISMISSED without prejudice for lack of subject matter jurisdiction. Plaintiffs' motion to strike is DENIED. All other hearing dates in this matter are VACATED.

IT IS SO ORDERED.

Dated: [December 11, 2001]

[Barry Ted Moskowitz]
HONORABLE BARRY TED MOSKOWITZ
United States District Judge

Copies to:

Magistrate Judge Stiven

All parties and counsel of record