Reported / Citable
Background
Linda Goehrs, acting as temporary trustee of the Holi Ann Hardin Trust No. 1, sued Dakota Fontenot in Harris County Probate Court No. 1 for alleged breach of fiduciary duty and trust mismanagement. She alleged that Dakota and his wife, Madison Fontenot, mismanaged and misappropriated trust assets.
The trust’s other two primary beneficiaries intervened and later added Madison as a defendant on fraudulent-transfer claims. Madison removed the case with Dakota’s consent, asserting that complete diversity existed when she was joined because she and Dakota had moved to the U.S. Virgin Islands. The district court initially denied remand but sua sponte reconsidered that interlocutory ruling.
The Court’s Holding
Judge David Hittner vacated the earlier order denying remand and remanded the case to Harris County Probate Court No. 1. Complete diversity was absent when the action began because both Goehrs and Dakota were domiciled in Texas.
Madison could not rely on 28 U.S.C. § 1446(b)(3) to measure diversity when she was added to the case. Adding Madison did not eliminate Dakota, the nondiverse defendant, and Dakota’s later move to the U.S. Virgin Islands could not cure the jurisdictional defect under the time-of-filing rule. Caterpillar Inc. v. Lewis did not apply because no diversity-destroying party had been dismissed. The court granted remand but denied intervenors’ request for costs and fees.
Key Takeaways
- Diversity jurisdiction is determined by the parties’ citizenship when the action is filed.
- A defendant’s later change of domicile does not cure an original lack of complete diversity.
- A district court may reconsider an interlocutory order denying remand and must remand a removed case once it determines subject-matter jurisdiction is absent.
Why It Matters
The order underscores that § 1446(b)(3) does not make a case removable merely because a later pleading adds a defendant after an existing defendant has changed citizenship. A case initially lacking diversity becomes removable only through a jurisdictionally meaningful change, such as the voluntary dismissal of the nondiverse party.