Opinion
For Michael Stone, Plaintiff: Meir J Westreich, Meir J Westreich Law Offices, Pasadena, CA.
For Mathew Zuckerman, Defendant, Pro se, Littleton, CO.
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS; DENYING DEFENDANT'S REQUEST TO STAY UNDER THE COLORADO RIVER DOCTRINE AS MOOT; DENYING REQUEST TO QUASH SERVICE AS MOOT
MARGARET M. MORROW, UNITED STATES DISTRICT JUDGE.
On September 15, 2014, Michael Stone filed this action against Mathew Zuckerman, Alkane Inc. (" Alkane"), Alterna Fuels, Inc. (" Alterna"), and Laura Jakobsen, as trustee of the Mathew Mark Zuckerman Family Trust (the " Trust"). On February 17, 2015, Zuckerman filed a motion to dismiss the case for lack of subject matter jurisdiction. Alternatively, he asks that the court abstain from hearing the matter under Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 96 S.Ct. 1236, 47 L.Ed.2d 483 (1976), or quash Stone's service of the complaint and summons on him. On April 20, 2015, Stone opposed Zuckerman's motion.
Complaint, Docket No. 1 (Sept. 15, 2014).
Defendant's Motion to Dismiss This Case Pursuant to Fed.R.Civ.P. 12(b)(1) and (5) (" Motion"), Docket No. 17 (Feb. 17, 2015).
Id.
Memorandum in Opposition to Motion to Dismiss (" Opposition"), Docket No. 28 (Apr. 20, 2015).
I. FACTUAL BACKGROUND
The complaint alleges that, beginning in 2009, Zuckerman solicited Stone for investment capital. Zuckerman purportedly offered to give Stone stock options in Alkane or lent capital secured by Alkane stock in exchange for investment capital. After repeated solicitations, Stone purportedly provided approximately $250,000 in capital for Alkane.
Complaint, ¶ 8.
Id.
Id.
Stone alleges that, unbeknownst to him, Zuckerman operated Alkane for his exclusive profit. Zuckerman purportedly transferred intellectual property to Alkane and reflected the transfer as a capital loan to Alkane. Stone asserts that Zuckerman recorded the loan at an inflated value and profited by selling the intellectual property and using all of the proceeds to repay the loan he had purportedly made in an amount exceeding $1,000,000. By doing this, Zuckerman purportedly " stripp[ed] the company of any operating capital." Stone also alleges that, before Alkane sold the intellectual property, Zuckerman used it to increase the value and public trading price of Alkane stock. Once the stock price had increased, Zuckerman and several other investors purportedly sold much of their stock, and made a substantial insider profit. Stone and other outside investors were purportedly induced to purchase substantial quantities of stock and make capital loans secured by Alkane stock on the strength of the increasing value of Alkane stock.
Id., ¶ 9.
Id., ¶ 9(a).
Id.
Id.
Id., ¶ 9(b).
Id.
Id., ¶ 9(c).
The complaint alleges that after Alkane and Zuckerman failed to make timely payments on Stone's capital loan, Stone entered into an exchange agreement (the " Agreement") with them. The Agreement, which was purportedly executed on August 21, 2010, was secured by Zuckerman's personal guarantee, and provided that Alkane and Zuckerman would give Stone 12.5 million shares of unrestricted Alkane stock no later than September 6, 2011. In the event Alkane and Zuckerman did not timely transfer the shares, Stone was purportedly entitled to recover $450,000. If Alkane and Zuckerman failed to pay the $450,000, Zuckerman was allegedly required to personally pay Stone $250,000 and pay for legal and accounting services required to comply with Securities and Exchange Commission (" SEC") reporting requirements.
Id., ¶ 10.
Id.
Id.
Id.
Following execution of the Agreement, Alkane and Zuckerman purportedly failed to comply with SEC reporting requirements and voluntarily removed Alkane from good standing on the public stock exchange; Stone alleges these actions rendered any remaining Alkane stock - including the shares he owned - worthless. In addition to failing to comply with SEC reporting requirements, Alkane and Zuckerman also purportedly failed to make the cash payments due under the Agreement. Stone alleges that thereafter, Zuckerman merged Alkane with Alterna in order to place the remaining Alkane assets beyond the reach of creditors. He also purportedly deposited his profits from insider trading in the Mathew Mark Zuckerman Family Trust.
Id., ¶ 11.
Id., ¶ 12.
Id., ¶ 13.
Based on these facts, Stone alleges that Alkane and Zuckerman breached the Agreement; breached the covenant of good faith and fair dealing implied in the Agreement; breached their fiduciary duties; and defrauded Stone by making material misrepresentations and concealing material facts.
Id., ¶ 22; see also id., ¶ ¶ 23-44.
II. DISCUSSION
A. Defendant's Motion to Dismiss For Lack of Subject Matter Jurisdiction
1. Legal Standard Governing Motions to Dismiss Under Rule 12(b)(1)
Federal courts are courts of limited jurisdiction, and may adjudicate only those cases authorized by the Constitution and by Congress. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Attorneys Trust v. Videotape Computer Products, Inc., 93 F.3d 593, 594-95 (9th Cir. 1996). " The presumption is that a federal court lacks jurisdiction in a particular case until it has been demonstrated that jurisdiction over the subject matter exists." 13 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction 2D § 3522 n. 3 (1984). Plaintiffs bear the burden of proving that the court has subject matter jurisdiction to hear the action. See, e.g., Sopcak v. Northern Mountain Helicopter Serv., 52 F.3d 817, 818 (9th Cir. 1995); Stock West, Inc. v. Confederated Tribes, 873 F.2d 1221, 1225 (9th Cir. 1989).
A defendant mounting a Rule 12(b)(1) challenge to the court's jurisdiction may do so either on the face of the pleadings or by presenting extrinsic evidence for the court's consideration. See Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004) (" A Rule 12(b)(1) jurisdictional attack may be facial or factual. White v. Lee, 227 F.3d 1214, 1242 (9th Cir. 2000) (citation omitted). In a facial attack, the challenger asserts that the allegations contained in a complaint are insufficient on their face to invoke federal jurisdiction. By contrast, in a factual attack, the challenger disputes the truth of allegations that, by themselves, would otherwise invoke federal jurisdiction. See Morrison v. Amway Corp., 323 F.3d 920, 924 n. 5 (11th Cir. 2003) (a jurisdictional challenge was a factual attack where it 'relied on extrinsic evidence and did not assert lack of subject matter jurisdiction solely on the basis of the pleadings')"); White, 227 F.3d at 1242 (" Rule 12(b)(1) jurisdictional attacks can be either facial or factual").
Zuckerman proffers a declaration in support of his motion, and thus makes a factual attack on subject matter jurisdiction. The Ninth Circuit has held that the district court should apply a standard similar to that used in deciding summary judgment motions to a factual attack on jurisdiction under Rule 12(b)(1). Evidence outside the pleadings may be considered, but all factual disputes must be resolved in favor of the nonmoving party. See Dreier v. United States, 106 F.3d 844, 847 (9th Cir. 1996) (" [W]e will consider items outside the pleading that were considered by the district court in ruling on the 12(b)(1) motion, but resolve all disputes of fact in favor of the non-movant. . . . [T]he standard we apply upon de novo review of the record is similar to the summary judgment standard that the district court purported to apply"); In re Facebook Privacy Litigation, 791 F.Supp.2d 705, 710 (N.D. Cal. 2011) (" [I]n the absence of a full-fledged evidentiary hearing, disputes in the facts pertinent to subject-matter [jurisdiction] are viewed in the light most favorable to the opposing party. The disputed facts related to subject-matter jurisdiction should be treated in the same way as one would adjudicate a motion for summary judgment" (internal citation omitted)); Ambros-Marcial v. United States, 377 F.Supp.2d 767, 771 (D. Ariz. 2005) (" Where a motion 'properly should be labeled a dismissal for lack of jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1), ' the Court may 'consider items outside the pleading . . . but [shall] resolve all disputes of fact in favor of the non-movant . . . similar to the summary judgment standard . . ., '" quoting Dreier, 106 F.3d at 847). " Once the moving party has converted the motion to dismiss into a factual motion by presenting affidavits or other evidence properly brought before the court, the party opposing the motion must furnish affidavits or other evidence necessary to satisfy its burden of establishing subject matter jurisdiction." Savage v. Glendale Union High Sch., 343 F.3d 1036, 1039 n. 2 (9th Cir. 2003).
2. Whether the Court Has Diversity Jurisdiction to Hear Plaintiff's Claims
a. Legal Standard Governing Diversity Jurisdiction
Stone's complaint invokes the court's diversity jurisdiction under 28 U.S.C. § 1332. Under 28 U.S.C. § 1332(a), " [t]he district courts . . . have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000.00, exclusive of interest and costs, and is between . . . citizens of different states." 28 U.S.C. § 1332(a); see also Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003) (" [J]urisdiction founded on [diversity] requires that the parties be in complete diversity and the amount in controversy exceed $75,000"). In any case where subject matter jurisdiction is based on diversity, there must be complete diversity, i.e., all plaintiffs must have citizenship different than all defendants. See Strawbridge v. Curtiss, 7 U.S. 267, 2 L.Ed. 435, (3 Cranch) 267 (1806); see also Caterpillar, Inc. v. Lewis, 519 U.S. 61, 68 n. 3, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996).
Complaint, ¶ ¶ 1-6.
b. Whether the Amount in Controversy Requirement is Satisfied
Although neither party disputes that the amount in controversy requirement is satisfied, the court nonetheless evaluates the allegations in the complaint to assure itself that more than $75,000 is at issue. Generally, the amount in controversy claimed by a plaintiff in good faith will be determinative of the jurisdictional amount, unless it appears to a legal certainty that the value of the claim is less than $75,000. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89, 58 S.Ct. 586, 82 L.Ed. 845 (1938). Stone alleges that defendants breached the Agreement by failing to make payments of at least $450,000. Given this allegation, and the fact that Zuckerman does not dispute this element of the jurisdictional test is satisfied, the court concludes that the requisite jurisdictional amount is in controversy.
See Complaint, ¶ ¶ 2, 10.
c. Whether the Complete Diversity Requirement is Satisfied
The court next evaluates whether there is complete diversity of citizenship between the parties, i.e., whether Stone has citizenship different than all defendants. See Strawbridge, 7 U.S. (3 Cranch) 267, 2 L.Ed. 435; see also Caterpillar, Inc., 519 U.S. at 68 n. 3. Zuckerman does not dispute that Stone's citizenship is diverse from Alkane's, Alterna's, and Jakobsen's citizenship. He contends, however, that complete diversity is lacking because he, like Stone, is a citizen of California and not a citizen of Colorado, as the complaint alleges.
Motion at 2-4.
An individual is a citizen of the state in which he or she is domiciled. See Gilbert v. David, 235 U.S. 561, 569, 35 S.Ct. 164, 59 L.Ed. 360 (1915) (holding that a person is a citizen of the state in which she has her domicile, i.e., a permanent home where she intends to remain or to which she intends to return); Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) (" A person's domicile is her permanent home, where she resides with the intention to remain or to which she intends to return"). Thus, a party's residence alone does not determine his or her citizenship for purposes of diversity jurisdiction. Kanter, 265 F.3d at 857 (" [T]he diversity jurisdiction statute, 28 U.S.C. § 1332, speaks of citizenship, not residency. To be a citizen of a state, a natural person must first be a citizen of the United States. The natural person's state citizenship is then determined by her state of domicile, not her state of residence. . . . A person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state").
" [D]etermination of an individual's domicile involves a number of factors (no single factor controlling), including: current residence, voting registration and voting practices, location of brokerage and bank accounts, location of spouse and family, membership in unions and other organizations, place of employment or business, driver's license and automobile registration, and payment of taxes." Lew v. Moss, 797 F.2d 747, 750 (9th Cir. 1986).
Zuckerman has submitted a sworn declaration stating that, " [a]t the time [he] was served with the [c]omplaint in this matter, [he] was a resident of the State of California" and that " [i]t is [his] unequivocal intention to return to California upon [his] release" from custody on tax evasion charges. Zuckerman identifies several indicia of his intent to return and remain in California following his release from custody - (1) he has a California driver's license; (2) he has requested that he be released from federal custody to San Jose, California; (3) his household goods and a vehicle were located in California at the time this action was filed; (4) he has a son and daughter who reside in California; and (5) " [his] current body of work" " require[s] that [he] live in Silicon Valley." While he acknowledges that he was residing in Colorado when the action was filed on September 15, 2014, he states he was there only " temporarily during the pendency of the [t]ax [e]vasion case [against him] in the Colorado Federal District Court."
See Affidavit of Mathew Zuckerman in Support of Motion to Dismiss (" Zuckerman Decl."), Docket No. 18 (Feb. 17, 2015), ¶ ¶ 1, 9.
Zuckerman Decl., ¶ ¶ 2, 4-8.
Id., ¶ 3.
Stone does not appear to dispute Zuckerman's contention that he was once a California domiciliary. He argues, however, that Zuckerman changed his domicile and is now a Colorado citizen. As the United States Supreme Court has recognized, " [a] domicile once acquired is presumed to continue until it is shown to have been changed." Mitchell v. United States, 88 U.S. 350, 353, 22 L.Ed. 584, 10 Ct. Cl. 120 (1874). " The Ninth Circuit has [thus] required a party alleging a newly acquired domicile to produce 'substantial evidence' to rebut the presumption favoring his previously established domicile." Arnold v. Melwani, CV. NO. 09-00030 DAE, 2013 WL 205430, *15 (D. Guam Jan. 9, 2013) (citing Lew, 797 F.2d at 752); see also Lew, 797 F.2d at 751 (" [T]he courts have created a presumption in favor of an established domicile as against a newly acquired one, " citing Holmes v. Sopuch, 639 F.2d 431, 434 (8th Cir. 1981); Hawes v. Club Ecuestre El Comandante, 598 F.2d 698, 701 (1st Cir. 1979); Janzen v. Goos, 302 F.2d 421, 425 (8th Cir. 1962); Stine v. Moore, 213 F.2d 446, 447 (5th Cir. 1954)); Heinz v. Havelock, 757 F.Supp. 1076, 1079 (C.D. Cal. 1991) (" [C]ourts have created a presumption in favor of an established domicile as against a newly acquired one" (citation omitted)). " To constitute a new domicile, two things are indispensable: First, residence in the new locality; and, second, the intention to remain there." Mitchell, 88 U.S. at 353.
Opposition at 1.
Id. at 1-4.
As evidence that Zuckerman is now a Colorado domiciliary, Stone proffers various documents - including court filings, internet entries, and tax filings. After considering all of the evidence, the court is not persuaded that Stone has carried his burden of adducing " substantial evidence" Zuckerman is no longer a California citizen.
See Declaration of Meir J. Westreich in Opposition to Motion to Dismiss, or to Quash Service of Process, or for Abstention (" Westreich Decl."), Docket No. 28-1 (Apr. 20, 2015).
Stone argues that " Zuckerman has not had a residence in California since 2011." As evidence of this, he proffers a printout from the Los Angeles County Recorder's office, which purportedly reflects sales since 2007 of real property located at 10080 Valley Spring Lane, Toluca Lake, California. The printout indicates that the property has been sold at least four times since August 2007 - on August 24, 2007; June 3, 2011; August 17, 2012; and December 27, 2012. Noticeably absent from the document, however, is any reference to the owners and prior owners of the property who were parties to the real estate sales; there is no indication that Zuckerman was either a buyer or seller of the Toluca Lake residence. To demonstrate that he was, Stone relies on excerpts from a Westlaw public records search conducted on August 23, 2010, which lists the Toluca Lake address.
Opposition at 3.
See Westreich Decl., Exh 3.
Id.
Id.
See id., Exh. 6 at 3.
The court is not persuaded that this shows Zuckerman did not maintain a residence in California following the purported sale of the Toluca Lake residence. As an initial matter, the Westlaw report does not relate to Zuckerman; rather, it contains a list of prior addresses for Zuckerman's wife, Sandra Zuckerman, based on information obtained from various credit bureaus. It reflects that Experian showed the Toluca Lake residence was " first reported" as one of Sandra's prior addresses on September 17, 2009. Given that the Los Angeles Recorder's office recorded a sale of the property on June 3, 2011, Stone intimates that Zuckerman sold the house in 2011 and thereafter moved to Colorado. Depending on the manner in which terms in the credit reports should be interpreted - which is not explained by any competent evidence - the information appears inconsistent; the address cannot have been a prior address in 2009 if the couple were owners of and living in the residence in until 2011.
See generally Exh. 6.
Id. at 3.
Even if one assumes that Zuckerman shared the residence with his wife and that they sold it in June 2011, moreover, this does not compel the conclusion that Zuckerman maintained no other residence in California following the sale of the Toluca Lake property in 2011. Indeed, based on the evidence Stone has adduced, it appears quite possible that Zuckerman and his wife owned property and/or resided in California after selling the Toluca Lake residence; the Westlaw report, in fact, indicates that credit bureaus reported at least seven other California addresses for Sandra. Stone proffers no evidence that Zuckerman did not reside at these other addresses following the purported sale of the Toluca Lake residence in 2011. Given Zuckerman's representation that " all of [his] household goods and a vehicle were located in California" at the time he was served, and evidence that Sandra - and perhaps Zuckerman - are associated with seven other California addresses, it is clearly possible that Zuckerman resided in California after 2011.
Zuckerman Decl., ¶ 5.
The report indicates that these properties were " first reported" and " last reported" for Sandra in years prior to 2011. For example, a Toluca Lake property identified only by house number without a street name was " first reported" on November 27, 2001 and " last reported" on November 9, 2002; the property at 4336 Talofa Avenue in Toluca Lake was first reported on September 30, 2008 and last reported on January 21, 2009; and, as noted, the property located at 10080 Valley Spring Drive was first and last reported on the same day - September 17, 2009. (Westreich Decl., Exh. 6 at 3.) Two other California properties - one at 196 Sunkist Lane in Los Altos and one at 19120 Sprague Street in Tarzana - were first reported on June 18, 1998 and January 14, 2002, respectively, and last reported on November 4, 1999, and January 14, 2002. (Id. )
Stone next argues that Zuckerman is domiciled in Colorado because he resided at 120 Letey Lane, Woody Creek, Colorado, at the time the action was filed and process was served. This, however, is not in dispute. Zuckerman acknowledges that he was residing in Colorado at the time he was served because of the federal criminal case pending against him.
Opposition at 2-4.
Zuckerman Decl., ¶ 3.
The mere fact Zuckerman resided in Colorado when the complaint was filed and he was served is not sufficient to establish that Colorado is his domicile. See Bobo v. City of Fresno, No. 6:14-CV-01070-MC, 2014 WL 3784103, *1 (D. Or. July 31, 2014) (" Though plaintiff may currently be residing in Oregon, '[a] person residing in a given state is not necessarily domiciled there, and thus is not necessarily a citizen of that state'" (citation omitted)); see also Kanter, 265 F.3d at 857 (" Residency alone, however, is not sufficient to show an intent to remain; only domicile is determinative"). " Moreover, where one's physical location is not voluntary, it does not necessarily reflect his or her 'intent to remain' in that location." Owens v. Nuxoll, No. 2:12-CV-01482 KJN, 2013 WL 5553897, *14 (E.D. Cal. Oct. 8, 2013) (citing Branon v. Debus, 289 Fed.Appx. 181, 183 (9th Cir. Aug. 7, 2008) (Unpub. Disp.); Hardaway v. Nooth, No. 3:10-CV-3107-ST, 2011 WL 7276958, *4 n. 2 (D. Or. Oct. 6, 2011)). Given Zuckerman's explanation that he was " residing in Colorado temporarily" while he on bond during the pendency of a criminal prosecution that began in 2012, the fact that he resided there when served " does not necessarily reflect his [ ] 'intent to remain'" in Colorado. See Owens, 2013 WL 5553897 at *14; see also Preston v. Tenet Healthsystem Memorial Medical Center, Inc., 485 F.3d 804, 818 (5th Cir. 2007) (" [W]e find no precedential support for the notion that a forced relocation . . . destroys the presumption of continued domicile, " citing Denlinger v. Brennan, 87 F.3d 214, 216 (7th Cir. 1996) (" Since domicile is a voluntary status, a forcible change in a person's state of residence does not alter his domicile"). Indeed, this is the conclusion the court must draw absent production of contradictory objective evidence by Stone. See Atias v. Platinum HR Management, LLC, *8 (C.D. Cal. July 16, 2014) (ruling on plaintiff's motion to remand for lack of diversity jurisdiction, and rejecting a contention that the court should disregard defendant's statements concerning her domicile where plaintiff produced no contradictory evidence and defendant's statement was thus " not inconsistent with the facts"). Cf. Lew, 797 F.2d at 750 (" [S]tatements of intent [as to domicile] are entitled to little weigh when in conflict with facts " (emphasis added)). A s evidence of Zuckerman's purported intent to remain in Colorado indefinitely, Stone proffers " an internet entry showing [Zuckerman's] current census data." The undated, untitled screenshot shows that " Matthew M. Zuckerman" resides at 300 Puppy Smith Street, Aspen, Colorado. Stone apparently asserts this evidence shows that Zuckerman owned additional real property in Colorado at the time the action was filed. It is unclear, however, that the evidence demonstrates what Stone suggests. As an initial matter, the evidence concerns the address of a " Matthew Zuckerman"; this name is spelled differently than Zuckerman's, which has a single " t." More fundamentally, the record does not reflect when the address information for Matthew Zuckerman was last updated and/or retrieved. Given the fact that domicile " is determined as of the time the lawsuit is filed, " Lew, 797 F.2d at 750 (citing Hill v. Rolleri, 615 F.2d 886, 889 (9th Cir. 1980)), and the screenshot is not dated, it is not probative of Zuckerman's domicile as of September 15, 2014.
See Westreich Decl., ¶ 7; id., Exh 4.
Id., Exh. 4.
Opposition at 2-3.
Stone asserts that Zuckerman has owned the Woody Creek residence since at least 2006 and that he resided there prior to the commencement of the criminal tax fraud case. As evidence of this, he proffers the Westlaw report that purportedly shows the prior addresses of Zuckerman's wife. As noted, the report reflects mailing addresses based on reports by credit bureaus. It shows that, as of July 1, 2010, Experian reported the Woody Creek residence as Sandra Zuckerman's " last known address." It also shows that the Woody Creek residence was last reported as being associated with Sandra on August 1, 2006. Based on this information, Stone apparently asserts that Zuckerman and his wife have resided in Woody Creek, Colorado, since at least 2010 - two years prior to the commencement of Zuckerman's criminal proceedings. While such an inference might arise if the court assumed that Zuckerman shared the residence with his wife and that a credit bureau's report of an individual's " last known address" reflected the person's current, and primary, residence, drawing such an inference would be unreasonable in this case. This is because other information in the same report undermines such a conclusion. TransUnion, for example, reported that Sandra's current address was 520 S. Murphy Avenue, Sunnyvale, California. It stated that this address information was current through July 31, 2010 - thirty days after Experian reflected a Woody Creek address. Given the conflicting information referenced in the Westlaw report, the court cannot conclude that objective evidence demonstrates Zuckerman has resided with his wife at the Woody Creek address, as opposed to a residence in California, since 2010.
Id.
Westreich Decl., Exh. 6.
Id. at 2-3.
Id. at 3. The court notes that, on its face, the Experian report appears to be internally inconsistent - as it reports the Woody Creek address as Sandra's " last known address, " while also listing two California addresses in Toluca Lake that were each reported subsequent to the " last reported" date for Woody Creek. Absent any explanation as to the meaning and/or significance of these references, the court finds the report unreliable.
Id. at 4.
Id.
Experian's report concerning Sandra's addresses, moreover, appears to be internally inconsistent. As noted, Experian reported that, as of August 16, 2010, its database reflected that Sandra's " last known address" was 120 Letey Lane, Woody Creek, Colorado, 81656. (Westreich Decl., Exh. 6 at 3.) It also reported that the address was " first reported" on December 16, 2004, and " last reported" on August 1, 2006. (Id. ) The same report, however, under the heading " other address information, " stated that Sandra had two California addresses subsequent to the " last reported" date for the Woody Creek address - (1) 4336 Talofa Avenue, Toluca Lake, California 91602, which was " first reported" on September 30, 2008, and " last reported" on January 21, 2009; and (2) 10080 Valley Spring Lane, Toluca Lake, California 91602, which was " first reported" and " last reported" on September 17, 2009. (Id. ) The report does not explain the significance of the " first" and " last reported" dates, or what relationship, if any, they have to an individual's actual residence at the address. If the dates reflect periods of actual residence, the TransUnion report suggests that Sandra's most current address/residence is Toluca Lake, California, rather than Woody Creek, Colorado.
The remaining evidence Stone adduces also does not contradict Zuckerman's assertion that he remains domiciled in California, and cannot support a finding that Stone has adduced " substantial evidence" of a domicile change. Stone asserts that Zuckerman is paying Colorado income tax and that he filed self-prepared tax returns for himself and for his business in Colorado in 2013. He proffers excerpts from Zuckerman's Form 1040 for the 2013 tax year; Schedule C to that return, which reflected profit and loss from his sole proprietorship - Z Fuels, Inc.; and his 2013 Colorado income tax return. Each lists the Woody Creek address as Zuckerman's mailing address. Where an individual pays taxes can be relevant in determining his domicile. See Lew, 797 F.2d at 752. Here, however, the evidence is not compelling; the fact that Zuckerman paid taxes while admittedly residing in Colorado during the three-year pendency of the criminal prosecution against him does not contradict Zuckerman's declaration that he always intended to return to California after his release from prison. Indeed, it was likely necessary for Zuckerman to work during the three years the criminal action against him was pending. Given the fact that he relocated to Colorado while on bond, it follows logically that he worked in Colorado and had to pay Colorado income taxes. Thus, the fact that Zuckerman filed tax returns in Colorado in 2013 - while the criminal charges against him were pending - does not undermine his statement that he resided only temporarily in the state and intends to return to California following his release from federal custody. Since Zuckerman's business is a sole proprietorship, moreover, it necessarily follows that wherever he is located, his business also will be. The fact that Schedule C to Form 1040 listed the Woody Creek address as Z Fuels' address, therefore, does not undermine Zuckerman's statement that Colorado was only his temporary residence.
Opposition at 2; Westreich Decl., Exh. 7.
Westreich Decl., Exh. 7.
Id. at 1, 3-4.
Stone, moreover, has not proffered evidence that contradicts Zuckerman's explanation for residing in Colorado and that more strongly support Stone's assertion that Zuckerman changed his domicile to Colorado - e.g., tax filings for years that predated the commencement of the criminal action. Contrary to Zuckerman's assertion that he resided only temporarily in Colorado due to the criminal charges, such evidence might tend to show that he was voluntarily present in Colorado at an earlier time; this could support a finding that he intended to remain there indefinitely. Absent such evidence, however, the inferences Stone wishes to have the court draw from the tax filings do not contradict Zuckerman's declaration.
Stone also contends Zuckerman's intent to remain in Colorado indefinitely is demonstrated by the sentencing statement he filed in the federal tax case. In the statement, Zuckerman asks that " he [be permitted to] serve any term of imprisonment at the Federal Prison Camp in Englewood, CO, " because this will permit " more visitation time with his family and friends." While the request suggests that Zuckerman had familial and social contacts in Colorado as of September 2014, and thus supports Stone's argument, it does so only slightly. Other evidence Stone has adduced demonstrates that the majority of Zuckerman's family lives in California; his sons Michael and Joshua, and his daughter Kelly live in California, while his remaining children - Heidi and Lora - reside in Colorado and Copenhagen, Denmark, respectively.
Opposition at 1-3.
Westreich Decl., Exh. 2 at 4; Zuckerman Decl., ¶ 8.
Opposition at 2-3.
Finally, Stone asserts that Zuckerman owned the Woody Creek residence - at which he resided during the pendency of the criminal prosecution - prior to its sale in 2014. Stone argues that Zuckerman's ownership of the residence weighs heavily in favor of a finding that Colorado is his domicile. The court is not persuaded. As an initial matter, a review of the evidence Stone has adduced does not support his assertion that Zuckerman owned the Woody Creek residence. The sale agreement for 120 Letey Lane, Woody Creek, Colorado, dated September 23, 2014, and accompanying and escrow instructions, reflect that Joshua Zuckerman is the owner/seller of the property and that Zuckerman, through his dba Intermountain Marketing and Finance, Inc., is the mortgagee. Although Stone asserts that Joshua was merely the " paper owner" of the residence, and that Zuckerman actually owned the property, he adduces no evidence to this effect. Rather, he bases his argument on the fact that Zuckerman, through Intermountain Marketing and Finance, received the bulk of proceeds from the sale of the property. Stone's conclusion does not necessarily flow from the objective facts presented; indeed, based on Zuckerman's relationship to the property as reflected in the documents, it is possible that he received the bulk of the sale proceeds to pay off a note in his favor as mortgagee. Moreover, although Stone asserts that the fact that Zuckerman maintained a bank account in Colorado demonstrates that he is domiciled there, it weighs only slightly in favor of such a finding. As one court has observed, " [i]t is [ ] not uncommon to maintain several bank accounts, even if no[t] domiciled in a particular location." International Venture Associates v. Hawayek, No. C 13-01254 RS, 2013 WL 2646188, *3 (N.D. Cal. June 12, 2013).
Opposition at 2-3.
See Westreich Decl., Exh. 5 at 1-2.
Opposition at 2; Westreich Decl., Exh. 5 at 2.
More fundamentally, even if the court were to assume, as Stone apparently does, that Zuckerman owned the Woody Creek residence, that fact, although probative of Zuckerman's intent to remain in Colorado, does not weigh heavily in favor of such a finding. As Stone's evidence demonstrates, it is possible that Zuckerman and his wife had owned or resided in twelve different properties in Colorado and California as of August 2010. Such evidence suggests that the Zuckermans likely owned real property in Colorado and/or California in which they did not reside. Purchasing and owning investment property in a state does not strongly support a finding of domicile. See, e.g., Opuna, LLC v. Sabbagh, Civil No. 05-00488 SOM/LEK, 2006 WL 2374750, *2 (D. Haw. Aug. 15, 2006) (concluding that an individual was domiciled in Washington notwithstanding the fact that he " purchased homes in Hawaii as investment properties and vacation homes").
See Westreich Decl., Exh. 6. Indeed, Experian reported that Sandra had been associated with five California addresses as of August 2010 (see id. at 3), while TransUnion reports that Sandra had been associated with four California addresses other than those reported by Experian as of the same date. (See id. at 4.) As it appears possible that Sandra and Zuckerman may have resided an interest in the Woody Creek property for some eight years after it was " last reported" by Experian, it is equally likely that Zuckerman and his wife had an ownership interest in these California properties at the time the complaint was filed, notwithstanding the fact that they were " last reported" years earlier.
In sum, the court does not believe that the evidence proffered by Stone constitutes " substantial evidence" contradicting Zuckerman's stated intention to return to California or his explanation for residing in Colorado at the time this action was filed in 2014. Instead, the evidence is consistent with the conduct of one who was residing in Colorado while on bond in a pending criminal prosecution - (1) he lived at a residence in Colorado; and (2) he earned income, maintained a bank account, paid taxes, and operated a sole proprietorship from his residence in Colorado. Although Stone asserts that Zuckerman sold his only California residence in 2011, and resided in Colorado prior to the commencement of the criminal prosecution against him, the evidence he has proffered, as noted, does not establish this. Rather, it reflects information concerning addresses associated with Zuckerman's wife that was compiled more than four years prior to the commencement of this suit, and relies on records that support an equally plausible inference Zuckerman and his wife did not reside in Colorado in 2010, but rather in California.
See Westreich Decl., Exh. 6.
Id., Exhs. 5-6.
While Zuckerman proffers only an affidavit asserting that he remains a California domiciliary, the presumption that such an affidavit is entitled to little weight is inapplicable where, as here, it is not in conflict with the objective facts and evidence adduced by the party invoking federal jurisdiction. Compare McNatt v. Allied-Signal, Inc., 972 F.2d 1340, 1992 WL 190621, *1 (9th Cir. Aug. 11, 1992) (Unpub. Disp.) (noting that a party's stated intent to maintain his domicile in Arizona, rather than in California as previously, " should be treated with some skepticism" where it conflicted with objective jurisdictional facts); Lew, 797 F.2d at 750 (" [S]tatements of intent [as to domicile] are entitled to little weigh when in conflict with facts"). Recognizing that " [t]he presumption is that a federal court lacks jurisdiction in a particular case until it has been demonstrated that jurisdiction over the subject matter exists, " 13 Charles A. Wright, Arthur R. Miller & Edward H. Cooper, Federal Practice & Procedure: Jurisdiction 2D § 3522 n. 3 (1984), that Stone bears the burden of proving that the court has subject matter jurisdiction to hear the action, see, e.g., Sopcak, 52 F.3d at 818; Stock West, Inc., 873 F.2d at 1225, and that to carry such a burden in this case, Stone must overcome the presumption in favor of Zuckerman's established California domicile by proffering " 'substantial evidence' to rebut the presumption favoring his previously established domicile, " Arnold, 2013 WL 205430 at *15 (citing Lew, 797 F.2d at 752), the court concludes, based on the evidence in the record, that Stone has failed to carry his burden. Accordingly, it finds that it lacks subject matter jurisdiction, and dismisses the case for that reason.
At the hearing, Stone argued that the evidence he had proffered demonstrated that Zuckerman had changed his domicile from California to Colorado at the time this action was filed because the purchase/sale agreement for the Woody Creek property provided that his wife could reside at the property for two years after the closing date. (See Westreich Decl., Exh. 5 at 1.) Citing this fact, and the fact that Zuckerman asked to be designated to the federal penitentiary in Colorado, Stone asserted that Zuckerman was a Colorado domiciliary at the time the complaint was filed. The court cannot agree.
III. CONCLUSION
For the reasons stated, the court concludes that it lacks subject matter jurisdiction to hear plaintiff's claims; accordingly, it grants defendant Mathew Zuckerman's motion to dismiss under Rule 12(b)(1) of the Federal Rules of Civil Procedure. In light of this dismissal, the court denies Zuckerman's request for dismissal under the Colorado River abstention doctrine and his motion to quash service of process as moot.
JUDGMENT
On May 21, 2015, the court entered an order granting defendant Mathew Zuckerman's motion to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) of the Federal Rules of Civil Procedure. Accordingly, IT IS ORDERED AND ADJUDGED that this action be dismissed without prejudice for lack of subject matter jurisdiction.
Stone apparently assumes that the " last reported" date correlates with the last day that Sandra and/or Zuckerman lived at each address, and thus maintains that Zuckerman did not reside at any of these addresses after 2011. The inference is not supported by competent evidence, however, and in fact is undermined by the report upon which he relies. As noted, the report does not explain the significance, if any, of the date on which an address was " last reported." It is far from clear that Sandra's and/or Zuckerman's association with a given address ceased on the day it was " last reported" by a credit bureau. Indeed, it appears that this is not the case - Experian reported that the Woody Creek residence was Sandra's " current" or " last known" address as of August 16, 2010. (Id. ) The address, however, was " last reported" on August 1, 2006. (Id. ) It thus appears clear that the " last reported" date does not correlate directly with residence at the property. Contrary to Stone's assertion that Zuckerman and his wife did not reside at any of the California addresses after 2011 because each was " last reported" at an earlier date, therefore, it is possible that Zuckerman continued to reside at one or more of the addresses. Consequently, the report does not prove that Zuckerman and his wife did not reside in California after the purported sale of the 10080 Valley Spring residence in 2011.
As noted, although Zuckerman has social and familial ties to Colorado, it is undisputed that he has similar connections to California as some of children reside here. There is, moreover, no direct evidence that his wife resides in Colorado beyond an unsigned proposed purchase/sale agreement that would have given her an option to occupy the property for an additional two years. Assuming that Zuckerman's wife does reside in Colorado, this would support Stone's argument, but would not constitute substantial evidence of a change in domicile. The fact that Zuckerman's wife may have had the option to reside at Woody Creek until 2016 is not conclusive with respect to Zuckerman's intent to stay in Colorado indefinitely - particularly given that the option period coincides with Zuckerman's two-year sentence. See News - United States Attorney's Office for the District of Colorado, available at http://www.justice.gov/usao/co/news/2014/sept/9-17-14.html (last visited May 21, 2015). Even if the court were to assume that the option provision was some evidence of an intent to remain in Colorado, standing alone, it is not dispositive. Rather, the court must assess the totality of the evidence adduced by both parties to determine whether Stone has met his burden of demonstrating that the court has subject matter jurisdiction to hear this action. As discussed, the remaining evidence Stone has proffered does not indicate that Zuckerman changed his domicile, but rather is consistent with his explanation that he was residing in Colorado temporarily, and intended to return to California and remain there indefinitely following completion of his sentence in the criminal tax case. Consequently, the court is compelled to conclude that Stone has failed to satisfy his burden of demonstrating that the court has diversity jurisdiction to hear the action.