United States District Court, W.D. Wisconsin
OPINION AND ORDER
STEPHEN L. CROCKER MAGISTRATE JUDGE
lawsuit arises out of a multi-million dollar land contract
involving frac sand. Plaintiff Larchmont Holdings, LLC chose
to file in federal court, claiming diversity jurisdiction
under 28 U.S.C. § 1332(a)(1). Defendants Northshore
Holdings, LLC and William Bethke dispute Larchmont's
claim of diversity and have moved to dismiss this lawsuit for
lack of subject matter jurisdiction under Fed.R.Civ.P.
12(b)(1). See dkt. 11. For the reasons stated below,
I am denying this motion.
who both are residents of Wisconsin contend that two members
of Larchmont (Neal Benham and Richard McHugh) also are
domiciled in Wisconsin rather than Florida, as Larchmont
contends. Thomas v. Guardsmark, LLC, 487
F.3d 531, 534 (7th Cir. 2007) (citizenship of
limited liability company is citizenship of each of its
members); McCready v. EBay, Inc., 453 F.3d 882, 891
(7th Cir. 2006) (no plaintiff may be a citizen of
the same state as any defendant). As the party invoking
federal diversity jurisdiction, Larchmont bears the burden of
demonstrating that the parties are diverse. Appert v.
Morgan Stanley Dean Witter, Inc., 673 F.3d 609, 617
(7th Cir. 2012); Chase v. Shop ‘N Save
Warehouse Foods, Inc., 110 F.3d 424, 427 (7th
Cir. 1997). Larchmont has met this burden in this case.
the briefs and declarations submitted by the parties
indicated that Benham and McHugh probably were domiciled in
Florida, I held an evidentiary hearing on December 7, 2016 to
ensure that no relevant stone was left unturned. See
Nov. 10, 2016 Text Ord., dkt. 26; Midwest Transit, Inc.
v. Hicks, 79 Fed.Appx. 205, 209-10 (7th Cir.
2003) (noting evidentiary hearing likely necessary to
determine credibility of defendant's citizenship claim
where his contacts point to two states as possible
domiciles). Having considered the evidence presented at the
hearing and the record as a whole, I conclude that all of the
members of Larchmont were domiciled in Florida when Larchmont
filed this lawsuit. This makes Larchmont a citizen of
Florida. Because both defendants are citizens of Wisconsin,
diversity exists and this suit can remain in federal court.
setting forth the findings of fact, one preliminary matter
deserves attention: at the evidentiary hearing, defendant Dr.
Bethke testified that the signature on the October 7, 2016
declaration submitted in his name, see dkt. 13, was
not his. At the court's request, defendants investigated
and subsequently reported that Connie Bethke had signed the
affidavit with her husband's permission while he was on a
hunting trip in South Dakota. Dkt. 38. Defense counsel
explained that Dr. Bethke did not remember these events at
the hearing but subsequently was able to refresh his
recollection by discussing this with his wife. Counsel also
explained that Dr. Bethke's memory was impaired by stress
resulting from other events occurring during this time.
Although defendants concede that they have not found any
authority for entering into evidence a declaration signed by
the declarant's spouse, it is not necessary to resolve
this issue because the declaration is not essential to the
court's jurisdictional analysis. Dr. Bethke testified at
the hearing about the facts contained in the declaration, and
Larchmont had an opportunity to cross examine him. Therefore,
I have not considered the first declaration of Dr. Bethke.
drawn the following facts from the evidentiary hearing and
written submissions provided by the parties:
Larchmont Holdings, LLC was organized under Wisconsin law on
December 18, 2012, with its principal place of business in
Eau Claire, Wisconsin. Its members are David Westrate,
Westrate's Roth IRA and traditional IRA, Dr. Neal
Benham's Roth IRA, and Patricia and Richard McHugh. Dkt.
North Shore Services, LLC was organized under Wisconsin law
on October 18, 2000, with its principal place of business in
Eau Claire, Wisconsin. North Shore is wholly owned by
defendant Dr. William Bethke, an individual who is a citizen
of Wisconsin, where he is domiciled and resides. Id.
Benham and Dr. Bethke are practicing dentists who have shared
an office since 1986 under the name All Family Dental. Dkt.
37, exh. 1; dkt. 40 at 12-13. Although Northshore has not yet
filed an answer, Larchmont alleges the following with respect
to the parties' relationship in its complaint:
summer of 2012, Bethke approached Benham, and subsequently
Westrate, with the idea of developing a frac sand project on
approximately 300 acres of recreational land in Jackson
County, Wisconsin that Bethke owned through North Shore
Services. Dkt. 1, ¶ 27. Following various negotiations
throughout the fall of 2012, in December 2012 the direction
of the negotiations changed, leading Benham, Westrate, and
Westrate's friends, Richard and Patricia McHugh, to form
Larchmont Holdings on December 17, 2012 for the purpose of
purchasing the Jackson County property and developing a frac
sand mining and processing operation. Id. at
¶¶ 30, 41. On December 20, 2012, Larchmont and
North Shore entered a contract for Larchmont's purchase
of the land. Id. at ¶ 42. The parties'
business relationship soured over the next few years,
resulting in the filing of this lawsuit on August 19, 2016.
Larchmont alleges fraudulent inducement, frustration of
purpose, unjust enrichment, and reformation of the land
contract. Dkt. 1.
Dr. Neal Benham
1980 until 2001, Dr. Benham owned a home and lived full-time
in Eau Claire, Wisconsin. In October 2001, Dr. Benham and his
wife Jane moved to Florida. They kept their Eau Claire house
as a second property. Since 2001, the Benhams have lived in
six different residences in Florida, the most recent
purchased in January 2015. Since 2002, Dr. Benham has
classified the Florida home as a primary residence and the
Eau Claire home as a secondary residence for insurance
purposes. Jane is a ...