UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Merchants Automotive Group, Inc.

v. Civil No. 14-cv-318-JD Opinion No.

Advantage Opco, LLC

O R D E R

The plaintiff, Merchants Automotive Group, Inc.

(“Merchants”), brought this action seeking a declaratory

judgment to clarify the obligations of the defendant, Advantage

Opco, LLC (“Advantage”), under a Master Lease Agreement (the

“Lease”). Merchants originally brought suit in New Hampshire

state court, and Advantage removed the case to this court.

Advantage’s notice of removal asserted federal subject

matter jurisdiction based on diversity of citizenship.

(a). Alternatively, in a footnote, Advantage

asserted federal subject matter jurisdiction under

, which vests federal district courts with jurisdiction to

hear certain disputes that arise in, or are related to, a

pending federal bankruptcy proceeding. Merchants has now moved

to remand the case to state court. Advantage opposes the motion

to remand, but also moves for leave to file an amended notice of

removal. Background

This is a complex commercial dispute involving parties that

are in the business of leasing and renting automobiles.

Merchants is a New Hampshire-based retailer and wholesaler of

motor vehicles. Advantage is a Florida limited liability

company and operates a national car rental company that does

business as “Advantage Rent-A-Car.” Advantage’s sole member is

Advantage Holdco, Inc. (“Advantage Holdco”), a Delaware

corporation with its principal place of business in Florida.

Previously, Advantage was owned by Simply Wheelz, LLC

(“Wheelz”). In April of 2013, Wheelz and Merchants entered into

the Lease, whereby Wheelz received approximately $58 million

worth of automobiles to lease to its customers.1

Shortly thereafter, in November of 2013, Wheelz filed for

Chapter 11 bankruptcy protection in the United States Bankruptcy

Court for the Southern District of Mississippi.2 During the

pendency of the bankruptcy proceeding, a Canadian private equity

firm successfully bid to acquire Wheelz’s assets. After the

closing of the acquisition, the private equity firm assigned its

1 The Lease was subsequently amended twice. References to the “Lease” refer to the Lease, as amended.

2 See In re: Simply Wheelz LLC, d/b/a Advantage Rent-A-Car, Chap. 11 Case No. 13-03332-EE (Bankr. S.D. Miss.).

2 rights and obligations to Advantage, its affiliate and the

defendant in this suit. Thus, at present, Advantage rents to

its retail customers vehicles that are owned by Merchants and

that Merchants leased to Wheelz pursuant to the Lease.

Merchants seeks a declaratory judgment that Advantage is liable

as a successor-in-interest to Wheelz under the Lease.

Discussion

Merchants moves to remand the case to state court on the

ground that Advantage did not properly allege diversity of

citizenship in its notice of removal. Merchants also argues

that subject matter jurisdiction does not exist under § 1334

because this case is not adequately related to the Wheelz

bankruptcy proceeding. In response, Advantage moves to amend

the notice of removal and objects to the motion to remand. The

motion to amend is addressed first because the result affects

the motion to remand.

I. Advantage’s Motion to Amend

In its notice of removal, Advantage asserted subject matter

jurisdiction based on diversity of citizenship.3 Advantage

3 Advantage also contended, in a lengthy footnote, that federal jurisdiction existed because the suit “aros[e] in” or was “related to” Wheelz’s pending federal bankruptcy proceeding. See

(b).

3 stated that complete diversity existed because Merchants was a

New Hampshire corporation with a principal place of business in

New Hampshire, and Advantage was a Delaware limited liability

company with a principal place of business in Florida.

Merchants moves to remand on grounds that, as a limited

liability company, Advantage had to demonstrate diversity by

providing the citizenship of all of its members or partners.

Merchants points out that Advantage did not do so in the notice

of removal because Advantage failed to identify its sole member,

Advantage Holdco, and Advantage Holdco’s citizenship. See

Pramco, LLC v. San Juan Bay Marina, Inc.,

(1st Cir. 2006) (noting that the “citizenship of a limited

liability company is determined by the citizenship of all of its

members”).

Advantage moves to amend the notice of removal to allege

that Advantage Holdco, like Advantage, is incorporated in

Delaware and has its principal place of business in Florida.

Merchants objects. The parties dispute whether Advantage can

amend the notice of removal and whether the amendment that

Advantage seeks to make is within the scope of amendments

permissible under

.

4 A. Amendment of a Notice of Removal

A defendant may file a notice of removal setting forth a

“short and plain statement of the grounds for removal” within

thirty days of being served with a complaint.

(a)-(b). During these thirty days, the defendant may freely

amend its notice of removal. 14C Charles Alan Wright & Arthur

Miller, Federal Practice and Procedure § 3733 (4th ed. 2009).

Here, the thirty day period for freely amending the notice of

removal has passed, and the parties dispute whether Advantage’s

proposed amendment should be allowed.

Section 1653 provides that “[d]efective allegations of

jurisdiction may be amended, upon terms, in the trial or

appellate courts.”

. Merchants contends that §

1653 does not permit amendment of a notice of removal.

Merchants supports this contention by reaching back in time to a

case from 1894, Grand Trunk Ry. Co. v. Twitchell,

(1st

Cir. 1894), in which the First Circuit held that a notice of

removal could not be amended. Grand Trunk, however, was decided

long before congressional enactment of § 1653. Merchants argues

that § 1653 cannot be interpreted to abrogate Grand Trunk

because the First Circuit has never held that to be the case.

Merchants cites no authority, however, for the proposition that

5 an ancient case cannot be abrogated by a more recent statute

when the issuing court has not overruled the original case.

The First Circuit has not had the opportunity to address

Grand Trunk in light of congressional enactment of § 1653 and

more recent developments in the law. Other courts, however,

interpret § 1653 to allow amendment of a notice of removal to

state previously-omitted jurisdictional facts in certain

circumstances. See, e.g., Wood v. Crane,

(4th Cir. 2014); Gibson v. Am. Cyanamid Co.,

, 606-

07 (7th Cir. 2014); Menendez v. Wal-Mart Stores, Inc.,

(5th Cir. 2010) (per curiam). Therefore, § 1653

governs the issue of amendment of the notice of removal in this

case.

B. Scope of Amendment Allowed under § 1653

Cases applying § 1653 tend to turn on the nature of the

defective allegation and the revision to the notice of removal

that the defendant seeks to make. “Courts generally allow a

defendant to amend a notice of removal after the thirty day time

limit for ‘technical defects in the jurisdictional allegations,

but not to add a new basis for federal jurisdiction.’” Haber v.

Massey,

(D. Mass. 2012) (quoting In re

Pharm. Indus. Average Wholesale Price,

, 95

6 (D. Mass. 2007)); see also Wood, 764 F. 3d. at 323 (holding that

“district courts have discretion to permit amendments that

correct allegations already present in the notice of removal

. . . [but] have no discretion to permit amendments furnishing

new allegations of a jurisdictional basis”).

The First Circuit has noted that § 1653 is “normally

construed liberally so as to avoid dismissals of complaints on

technical grounds. Thus, [] technical defects in jurisdictional

pleadings usually are not fatal.” Odishelidze v. Aetna Life &

Cas. Co.,

(1st Cir. 1988) (per curiam)

(citations omitted). Furthermore, many courts have held that an

amendment to provide a member of a limited liability company and

its citizenship falls within the amendments allowed under §

1653. See, e.g., Gibson,

; Mallory & Evans

Contractors & Eng’rs, LLC v. Tuskegee Univ.,

(11th Cir. 2011) (per curiam); Rios v. Mall of La., No. 13-740-

BAJ-RLB,

, at *3 (M.D. La. Mar. 25,

2014); Covert v. Auto. Credit Corp.,

(D. Md. 2013). In contrast, the dated cases from other

jurisdictions on which Merchants relies for the proposition that

§ 1653 does not permit amendment in these circumstances involve

different situations and are not persuasive here. See Hubbard

v. Tripp,

(E.D. Va. 1985) (removing

7 party alleged diversity of citizenship at the time of removal,

but not at the time that the complaint was filed); Bradford v.

Mitchell Bros. Truck Lines,

(N.D. Cal.

1963) (removing party failed to identify the citizenship of any

of the plaintiffs in the notice of removal).

C. Application

In the notice of removal, Advantage alleged jurisdiction

based on diversity, but failed to identify Advantage Holdco or

its place of incorporation and principal place of business,

which is the information Advantage seeks to add by amendment.

Advantage contends that such an amendment is appropriate under §

1653 because the amendment would merely cure a defective

allegation. Merchants responds that Advantage Holdco’s

citizenship was never alleged in the first place, so the

proposed amendment cannot be fairly viewed as curing an existing

but defective allegation.

Advantage’s original notice of removal plainly asserted

federal subject matter jurisdiction on the basis of diversity.

The original notice was defective, however, because while it

identified Advantage’s citizenship, it failed to identify

Advantage Holdco as a member of Advantage, and therefore failed

to specify Advantage Holdco’s citizenship. Importantly,

8 Advantage does not now seek to add a new basis for federal

jurisdiction, or to provide allegations regarding diversity

jurisdiction that were entirely absent from the original notice

of removal. Rather, Advantage still seeks to remove on the

basis of diversity jurisdiction, and asks merely to amend the

notice of removal to specify the citizenship of Advantage Holdco

as the sole member of Advantage. The proposed amendment cures a

technical defect, and therefore Advantage’s motion for leave to

file an amended notice of removal is granted.

II. Merchants’ Motion to Remand

Merchants seeks to remand the case to state court on

grounds that Advantage has failed to adequately allege complete

diversity of citizenship, and that this dispute is

insufficiently related to the pending bankruptcy proceeding to

require removal under § 1334. In the alternative, Merchants

takes the position that the court should remand the case on the

basis of

(b), which provides that a district

court may remand any matter removed by virtue of its relatedness

to a bankruptcy proceeding “on any equitable ground.”

Advantage’s amended notice of removal specifies that

Advantage Holdco is a Delaware corporation with a principal

place of business in Florida. Because Merchants is a New

9 Hampshire corporation with a principal place of business in New

Hampshire, there is complete diversity of citizenship, and the

court has subject matter jurisdiction pursuant to § 1332(a).

Therefore, the court need not consider the alternative basis for

jurisdiction under § 1334. Furthermore, § 1452(b) does not

apply when the case has not been removed based on § 1334

relatedness jurisdiction. See In re Mortgs., Ltd.,

(Bankr. D. Ariz. 2011) (“The plain language of [§

1452(b)] clearly apples only to claims that have been removed on

account of bankruptcy jurisdiction.”). For these reasons,

Merchants’ motion to remand is denied.

Conclusion

For the foregoing reasons, Advantage’s motion for leave to

file an amended notice of removal (doc. no. 11) is granted, and

Merchants’ motion to remand (doc. no. 6) is denied.

SO ORDERED.

__________________________ Joseph DiClerico, Jr. United States District Judge

November 20, 2014

cc: Holly J. Barcroft, Esq. Steven J. Dutton, Esq. Bruce W. Felmly, Esq.

10