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Transportation & Storage Solutions Inc. v. Klt Industries, Inc.

United States District Court, D. Massachusetts

October 17, 2014



TIMOTHY S. HILLMAN, District Judge.


Plaintiff, Transportation & Storage Solutions Inc. ("TSS") has filed a Complaint against defendant, KLT Industries Inc. ("KLT"), alleging that KLT failed to tender payment on a lease agreement and owes the Plaintiff the sum of $123, 257, pursuant to 28 U.S.C. § 1332. KLT filed a motion to dismiss for lack of subject matter jurisdiction, arguing that the parties lack complete diversity. For the following reasons, the motion to dismiss is granted.


Plaintiff TSS is incorporated in Massachusetts with a principal place of business located in Shrewsbury, Massachusetts. Defendant KLT is a corporation involved in the waste removal and recycling business for cardboard products, providing services throughout the Northeast. More specifically, Defendant's business includes off the ground bale pick-up service, waste hauling, and financing and installing baling and recycling equipment. Plaintiff alleges that Defendant owes $123, 257.03 for the leasing of storage trailers used by Defendant in its cardboard, paper and plastic recycling operations. Defendant received Plaintiff's demand for payment by certified mail on March 29, 2013, but has not tendered payment to this date.

According to public records on the website of the Office of the Secretary of State of Connecticut, Defendant is incorporated in the state of Rhode Island. The Secretary of State's website also lists Defendant's business address as 63 Industrial Park Road, in Putnam, Connecticut, and the President of KLT, Kyle L. Trayner ("Trayner") as Defendant's principal, the designated agent of the company. Defendant acknowledges that an office was once located in Putnam, Connecticut, but asserts that this office was vacated on or around October 30, 2012. Since November of 2012, Trayner primarily directed, controlled, and coordinated almost all of Defendant's corporate activities at offices within Massachusetts. Prior to this, Defendant held offices at 3 Nemco Way, in Ayer, Massachusetts, but vacated this location on November 1, 2013 to move an office located in Marlborough, Massachusetts. Trayner and other corporate officers oversee Defendant's corporate activities from this new location. These officers, who assist in the company's executive management, include Defendant's Controller, Executive Project Manager, and Vice President of Sales. Since November of 2012, all of Defendant's records have been stored offices within Massachusetts. Furthermore, all of Defendant's financial transactions - payments to and from Defendant - have gone through offices in Massachusetts since this same date.

Plaintiff's Complaint invokes diversity jurisdiction of this Court pursuant to 28 U.S.C. §1332, asserting that Plaintiff is a Massachusetts corporation with a principal place of business in Massachusetts, and that Defendant is a Rhode Island corporation with a principal place of business in Connecticut. Defendant asserts that diversity jurisdiction (and thus subject matter jurisdiction) is lacking here because both parties are citizens of Massachusetts, which destroys complete diversity. Thus, Defendant moves to dismiss this action based on lack of subject matter jurisdiction pursuant to Fed R. Civ. P. 12(b)(1).


Standard of Review

Federal courts are courts of limited jurisdiction, possessing authority to only hear cases that: 1) fall within Article III of the Constitution, or 2) are granted by explicit Congressional authority. Viqueira v. First Bank , 140 F.3d 12, 16 (1st Cir. 1998). Once a defendant challenges a court's subject matter jurisdiction through a 12(b)(1) motion to dismiss, the burden shifts to the plaintiff to establish a foundation for jurisdiction by a preponderance of the evidence. Padilla-Mangual v. Pavia Hosp ., 516 F.3d 29, 31 (1st Cir. 2008); Aversa v. United States , 99 F.3d 1200, 1209 (1st Cir. 1996). Dismissal is proper when "[a] court lacks jurisdiction over the claims or the parties." Overton v. Torruella et al. , 183 F.Supp.2d 295, 303 (D. Mass. 2001). In ruling on a Rule 12(b)(1) motion, a court's consideration is not limited to the well pleaded facts in the complaint as it "may consider whatever evidence has been submitted, such as depositions and exhibits." Carroll v. United States , 661 F.3d 87, 94 (1st Cir. 2011) (quoting Aversa , 99 F.3d at 1209-10).

Considerations of 12(b)(1) motions to dismiss require a court to first determine whether a jurisdictional challenge is facial or factual. Strahan v. Roughead , 910 F.Supp.2d 358, 364 (D. Mass. 2012). When motions to dismiss for lack of subject matter jurisdiction involve factual inquiries, a court must consider whether such facts "also implicate elements of the plaintiff's cause of action, " and if so, the court should apply the standard for summary judgment. Torres-Negron v. J & N Records, LLC, 504 F.3d 151, 162-63 (1st Cir. 2007). However, when facts required for the jurisdictional issue and facts regarding the merits are not intermingled, the court is empowered to consider whether jurisdiction is proper based on a review of the evidence. Id. at 163 (quoting Lawrence v. Dunbar , 919 F.2d 1525, 1529 (11th Cir. 1990)).

Diversity Jurisdiction

28 U.S.C. § 1332 provides, in relevant part, that "[t]he district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between - citizens of different states." 28 U.S.C. § 1332(a)(1); McKenna v. Wells Fargo Bank, N.A. , 693 F.3d 207, 212 (1st Cir. 2012). "[A] corporation shall be 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); Rodriguez v. S K & F Co. , 833 F.2d 8, 9 (1st Cir. 1987). The burden of persuasion for establishing diversity jurisdiction is on the party asserting it as a basis for jurisdiction. Kokkonen v. Guardian Life Ins. Co. of America , 511 U.S. 375, 377, 114 S.Ct. 1673, (1994).

Diversity jurisdiction requires complete diversity of citizenship between all plaintiffs and all defendants, requiring that the state of citizenship for 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, (1978); Am. Fiber & Fin., Inc. v. Tyco Healthcare Group, L.P. , 362 F.3d 136, 139 (1st Cir. 2004). "Citizenship is determined as of the date of commencement of an action and, therefore, in cases premised on diversity, ...

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