Georgene Vairo on Holston Invs., Inc. v. Lanlogistics, Corp., and the Citizenship of a Dissolved Corporation

Georgene Vairo on Holston Invs., Inc. v. Lanlogistics, Corp., and the Citizenship of a Dissolved Corporation

Excerpt:

In a succinct per curiam opinion, the Eleventh Circuit sensibly holds that a formally dissolved corporation has no principal place of business. Accordingly, for diversity jurisdiction purposes, such a corporation will be deemed a citizen only of the states in which it is incorporated. Holston Invs., Inc. v. Lanlogistics, Corp., 677 F.3d 1068, 2012 U.S. App. LEXIS 7760 (11th Cir. Apr. 17, 2012) (per curiam).

Facts and Procedural Background. Plaintiffs, including an individual citizen of Florida, brought an action for breach of contract against a corporation in federal court, asserting diversity jurisdiction [see 28 U.S.C. § 1332]. The defendant had been incorporated in Delaware and had maintained its corporate headquarters in Florida, but the corporation had dissolved. The Florida Secretary of State had processed and filed documents withdrawing the defendant's authority to transact business in Florida. The plaintiffs filed this lawsuit on June 6, 2008-more than four months after the defendant had formally forfeited its authority to conduct business in Florida. Two years later, after summary judgment had been entered for the plaintiff, the defendant moved to vacate the judgment, challenging the district court's subject matter jurisdiction. The defendant asserted that it was still a citizen of Florida and, therefore, the parties were not diverse. The district court denied the motion, and the Eleventh Circuit affirmed this part of the district court's judgment, concluding that the district court had diversity jurisdiction because the defendant was a citizen only of Delaware.

Basic Subject Matter Jurisdiction Rules: The opinion began with a recitation of some important black letter principles relevant to whether subject matter jurisdiction existed. First, federal subject matter jurisdiction is determined based on the facts that exist at the time a law suit is filed, and not at the time of the events that gave rise to the action [see Smith v. Sperling, 354 U.S. 91, 93 n.1, 77 S. Ct. 1112, 1 L. Ed. 2d 1205 (1957)]. Additionally, complete diversity is required: the citizenship of each plaintiff must be different from that of each defendant [see Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978)].

Circuit Split on Citizenship of Dissolved Corporations. Section 1332 of Title 28, as amended by the Jurisdiction and Venue Clarification Act of 2011, specifies that a corporation is "deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business" [28 U.S.C. § 1332(c)(1)]. However, the statute does not address how to deal with a corporation that has been dissolved by the time a law suit is filed. Thus, the issue before the Eleventh Circuit was whether the dissolved corporation continued to have its principal place of business in Florida. The Eleventh Circuit had not decided this issue, but the four other circuits that had ruled on the issue disagreed, taking essentially three different approaches.

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Holston Invs., Inc. v. Lanlogistics, Corp., 677 F.3d 1068, 2012 U.S. App. LEXIS 7760 (11th Cir. Apr. 17, 2012) (per curiam)

28 U.S.C. § 1332

Smith v. Sperling, 354 U.S. 91, 93 n.1, 77 S. Ct. 1112, 1 L. Ed. 2d 1205 (1957)

Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S. Ct. 2396, 57 L. Ed. 2d 274 (1978)