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Shaeffer v. Wallace

United States District Court, D. Colorado

December 21, 2018

DAVID SHAEFFER, M.D., an individual; AMBER REISS-HOLT, M.D., an individual; and THE PAGOSA MEDICAL GROUP, LLC, a Colorado limited liability company, Plaintiff,
RYAN WALLACE, an individual, Defendant.



         This case was originally filed in the District Court of Archuleta County, Colorado (No. 2018CV30022). Defendant Ryan Wallace removed the case to this Court based on diversity jurisdiction pursuant to 28 U.S.C. §1332(a). ECF No. 1. The case is before the Court on plaintiffs' motion to remand. ECF No. 18. For the reasons stated herein, the motion to remand is GRANTED.


         Plaintiffs, Colorado citizens, filed an action in Colorado state court on March 12, 2018 against Defendant Ryan Wallace, alleging breach of fiduciary duty, fraud and conversion in a partnership dispute. On May 25, 2018, defendant removed the case to this court pursuant to 28 U.S.C. §§ 1332(a) & 1441(a), alleging that diversity of citizenship exists because contrary to plaintiffs' allegations, defendant is not a citizen of Colorado. Instead, defendant “claims St.Thomas in the U.S. Virgin Islands as his place of residency, ” and when in the continental United States, “spends the majority of his time in Kansas.” ECF No. 1 at ¶ 15.

         Plaintiffs filed a motion to remand, ECF No. 18, alleging that defendant was indeed domiciled in Pagosa Springs, CO throughout his relationship with plaintiffs, and that he had not changed his domicile prior to the filing of this lawsuit. ECF No. 18 at 3. Dr. Shaeffer filed an affidavit with this motion describing his relationship with defendant in Colorado, and statements defendant made to him about his intentions to remain in Colorado. ECF No. 18-2. Defendant filed a response opposing the petition for remand, ECF No. 19, and attached a declaration stating that though he purchased property in Pagosa Springs in 2017 and lived there, he never intended to stay there. He considers the U.S. Virgin Islands his primary and permanent home, and even if the Court finds he established a domicile in Colorado, his domicile had changed back to the U.S. Virgin Islands by the time the case was removed. ECF No. 19 at 2. Plaintiffs filed a reply, ECF No. 20, doubling down on defendant's ties to Colorado. Because plaintiffs and defendant painted such different pictures of the life Mr. Wallace established in Colorado in 2017, or didn't, I ordered an evidentiary hearing to assess credibility. On December 14, 2018, both Mr. Shaeffer and Mr. Wallace testified before the Court in this evidentiary hearing. This motion has been fully briefed and is ripe for review.


         Federal courts have original jurisdiction over all civil actions between citizens of different states and in which the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332(a)(1). Diversity exists when no plaintiff and no defendant are citizens of the same state. Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014). The Territory of the Virgin Islands, a United States Territory, qualifies as a “state” for purposes of the diversity jurisdiction statute. Brown v. Francis, 75 F.3d 860, 865 (3d Cir. 1996) (citing 28 U.S.C. § 1332(d)). A case is properly removed to federal court on the basis of diversity jurisdiction if the jurisdictional requirements exist at the time of removal. See Pfeiffer v. Hartford Fire Ins. Co., 929 F.2d 1484, 1488 (10th Cir. 1991) (citing Pullman Co. v. Jenkins, 305 U.S. 534, 537 (1939)) (“[t]he propriety of removal is judged on the complaint as it stands at the time of the removal”). The party invoking diversity jurisdiction bears the burden of proving its existence by a preponderance of the evidence. Middleton v. Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014).

         In the case of natural persons, state citizenship for purposes of 28 U.S.C. § 1332 is the equivalent of domicile. Wallace v. HealthOne, 79 F.Supp.2d 1230, 1233 (D. Colo. 2000).

         Domicile “is the combination of physical presence in a location and an intent to remain there indefinitely.” Martinez v. Martinez, 62 Fed.Appx. 309, 313 (10th Cir. 2003) (citing Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989). “Mere mental fixing of citizenship is not sufficient. What is in another man's mind must be determined by what he does as well as by what he says.” Id. In determining a person's domicile for diversity-jurisdiction purposes, a district court should consider the totality of the circumstances:

It's an all-things-considered approach, and any number of factors might shed light on the subject in any given case. See, e.g., Wright et al., supra, § 3612, at 536-41 (listing “the party's current residence; voter registration and voting practices; situs of personal and real property; location of brokerage and bank accounts; membership in unions, fraternal organizations, churches, clubs, and other associations; place of employment or business; driver license and automobile registration; payment of taxes; as well as several other aspects of human life and activity”)

Middleton, 749 F.3d at 1201.

         Once a person establishes a domicile, a presumption arises that his domicile remains the same. Middleton, 749 F.3d at 1200 (citing Mitchell v. United States, 88 U.S. 350, 353 (1874)). “But that presumption is a rebuttable one, and the party seeking to rebut it bears only a burden of production - not persuasion. In other words, the party seeking to rebut the presumption need only produce sufficient evidence suggesting that domicile has changed; the party need not prove it.” Middleton, 749 F.3d at 1200 (emphasis in the original).


         A. Mr. Wallace's Domicile Upon Moving to ...

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