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Paws UP Ranch, LLC v. Martin

United States District Court, D. Nevada

September 30, 2019

PAWS UP RANCH, LLC et al., Plaintiffs,
v.
MARTIN, Defendants.

          ORDER

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court is Defendant's Motion for Attorneys' Fees. ECF No. 14.

         II. PROCEDURAL BACKGROUND

         Defendant removed this action to federal court on June 21, 2018. ECF No. 1. On June 27, 2018, Plaintiffs filed an Emergency Motion to Remand to State Court, ECF No. 5, and Defendant responded on July 11, 2018, ECF No. 10. The Emergency Motion was withdrawn on July 18, 2018, ECF No. 12, and Defendant filed a Motion for Attorneys' Fees on July 24, 2018, ECF No. 14. Plaintiffs responded on August 7, 2018, ECF No. 15, and Defendant replied on August 14, 2018, ECF No. 16. A hearing was held on this motion and others on January 7, 2019. ECF No. 40.

         III. FACTUAL BACKGROUND

         Defendant, who is a citizen of Montana, removed this petition to federal court on the basis of diversity jurisdiction, asserting “upon information and belief” that Paws Up Ranch, LLC (“Paws Up”) is a Nevada company because it's one member/officer is QZM, Inc., a Nevada corporation, and that Camel, LLC (“Camel”) is a Wyoming limited liability company, and that the Wyoming Secretary of State indicates that Camel is a citizen of Wyoming and Nevada. ECF No. 1 at 2. Plaintiffs asserted in an Emergency Motion to Remand that both Paws Up and Camel are Montana citizens. ECF No. 5 at 2. Specifically, they stated that Paws Up is a Nevada company with a single member, Monroe Capital Partners, L.L.C. (“MCP”), which transferred 99% of its interests in Paws Up to Nadine Lipson. Id. at 3. Further, MCP also transferred 99% of its interests in Camel to Lipson. Because Lipson is a natural person who “has called Montana her home for more than 20 years and has no present intention of relocating to another state, ” id. at 3, Plaintiffs asserted that there was no basis for diversity jurisdiction and the case was improperly removed, id. at 4. Plaintiffs attached Lipson's signed affidavit to their motion, stating she is a Montana resident. Ex. 1 at 2, ECF No. 5-2. Plaintiffs requested attorneys' fees pursuant to 28 U.S.C. § 1447(c). Id. at 8.

         In response to the Emergency Motion, Defendant asserted that Lipson's Nevada residency was clear; that Lipson had held herself out in previous actions as a Nevada resident, that she was registered to vote in Nevada along with her husband, who is the owner or manager of several Nevada businesses, that Lipson's businesses are run out of Las Vegas, and that she lists Nevada property as her residence and has maintained a residence in Las Vegas for nearly twenty years. ECF No. 10 at 1-3. Defendant further asserted that he had a good faith basis for removal and that Plaintiffs failed to meet and confer in good faith before filing the Emergency Motion. Id. at 3-6. Finally, Defendant listed several public records, including court filings and affidavits by Lipson under oath, that indicate that Lipson herself has asserted she is a citizen of the State of Nevada. Id. at 6-13.

         Plaintiffs withdrew their Emergency Motion one week after Defendant's response, stating that the Emergency Motion was filed “based on facts in their possession at the time” and that Plaintiffs were unaware of the facts raised in Defendant's response. ECF No. 12 at 2-3.

         Defendant then filed the instant Motion for Attorneys' Fees, asserting, inter alia, that the Emergency Motion was improper and necessitated that Defendant be reimbursed for the time spent in response.

         IV. LEGAL STANDARD

         A. Equitable Power to Award Attorneys' Fees

         Under the “American rule, ” attorney's fees may not be awarded absent statutory or contractual authorization, or a finding of bad faith. Alyeska Pipeline Serv. Co. v. Wilderness Soc., 421 U.S. 240, 257 (1975). “[F]ederal courts, in the exercise of their equitable powers, may award attorneys' fees when the interests of justice so require. Indeed, the power to award such fees ‘is part of the original authority of the chancellor to do equity in a particular situation,' and federal courts do not hesitate to exercise this inherent equitable power whenever ‘overriding considerations indicate the need for such a recovery.'” Hall v. Cole, 412 U.S. 1, 4-5 (1973) (citations omitted).

         “Thus, it is unquestioned that a federal court may award counsel fees to a successful party when his opponent has acted ‘in bad faith, vexatiously, wantonly, or for oppressive reasons.' In this class of cases, the underlying rationale of ‘fee shifting' is, of course, punitive, and the essential element in triggering the award of fees is therefore the existence of ‘bad faith' on the part of the unsuccessful litigant.” Id. at 5 (citations omitted). “The imposition of sanctions in this instance transcends a court's equitable power concerning relations between the parties and reaches a court's inherent power to police itself, thus serving the dual purpose of “vindicat[ing] judicial authority without resort to the more drastic ...


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