Corle v. Estate Planning & Preservation, Inc., No. 1:11-CV-226,2011 WL 2836374 (N.D. Ind. July 14, 2011).
In this case, a District Court in Indiana observed that the allegations of federal subject matter jurisdiction may not be made on the basis of information and belief, but only on personal knowledge.
The plaintiff brought a class action directly in the District Court seeking recovery of damages he incurred as the direct and proximate result of the defendant, Estate Planning and Preservation, Inc.’s (“EPP”), unauthorized practice of law. Specifically, the plaintiff and the members of the putative class were solicited by EPP (a Michigan for-profit corporation and not a law firm), and as a result of this solicitation, purchased estate planning documents and materials purporting to be legally appropriate, valid, and enforceable.
The plaintiff and those similarly situated sought disgorgement of the fees they paid EPP for the preparation of their estate planning documents, as well as damages for the review and/or the revision of those documents by an attorney licensed either in Indiana, Ohio, or Michigan. (Editors’ Note: We can’t resist a little bit of …well you should have hired an attorney at the beginning, huh? We don’t go to law school for 3 years (or longer in some instances) for nuthin’).
The plaintiff filed this putative class action, broadly claiming that the District Court had jurisdiction pursuant to CAFA. The Court observed that the complaint, however, was woefully inadequate to establish the Court’s jurisdiction, and thus the plaintiff must clarify the specific jurisdictional basis for his supposed class action.
The Court first remarked that the plaintiff had not made any jurisdictional allegation about damages, and CAFA requires the aggregate amount in controversy to exceed $5 million. (Editors’ Note: you can check out the plaintiff’s complaint here.)
Next, the Court noted that the complaint alleged that the plaintiff was a citizen of Indiana and, “upon information and belief, all the defendants are citizens of Michigan.” The plaintiff claimed that the class would contain citizens of Indiana, Michigan, and Ohio. The Court observed that the allegations of federal subject matter jurisdiction may not be made on the basis of information and belief, but only on personal knowledge. The plaintiff, however, had improperly made his jurisdictional allegations on information and belief, the Court observed.
The Court found that the plaintiff must address the citizenship of the parties because the complaint failed to establish the citizenship of any of the defendants. Specifically, the Court stated that a summary allegation that “all Defendants are citizens of the State of Michigan” was hardly adequate to establish jurisdiction especially when made on information and belief. Although the plaintiff alleged that the defendant Estate Planning and Preservation was incorporated in Michigan, corporations are deemed to be citizens of the state in which they are incorporated and of the state in which they have their principal place of business. Similarly, professional corporations are to be treated like any other corporation for purposes of determining diversity of citizenship. For natural persons, the “residency” of a party is meaningless for purposes of diversity jurisdiction, as “citizenship is what matters,” and that state citizenship is determined by one’s domicile.
Accordingly, the Court ordered the plaintiff to file an amended complaint specifically providing the jurisdictional basis for his putative class action and establishing the requisite amount in controversy. Furthermore, the Court directed the plaintiff to properly allege — on personal knowledge — the citizenship of the defendants as necessary to establish the Court’s diversity jurisdiction.
We suspect that we may see this case again