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Arneault v. Diamondhead Casino Corporation

United States District Court, D. Delaware

September 26, 2017

EDSON ARNEAULT, et al., Plaintiffs,
v.
DIAMONDHEAD CASINO CORPORATION, Defendant.

          Fredrick B. Rosner, Scott J. Leonhardt, Jason A. Gibson, THE ROSNER LAW GROUP LLC, Wilmington, DE Jeffrey A. Wurst, RUSKIN MOSCOU FALTISCHECK, P.C., Uniondale, NY Attorneys for Plaintiffs, Edson Arneault, et al.

          Robert D. Goldberg, BIGGS & BATTAGLIA, Wilmington, DE Deborah A. Vitale, Alexandria, VA Attorneys for Defendant, Diamondhead Casino Corporation

          MEMORANDUM OPINION

          STARK, U.S. DISTRICT JUDGE.

         Pending before the Court are Defendant's motion to dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) (D.I. 6), and Plaintiffs' motion for leave to amend the complaint (D.I. 16).

         I. BACKGROUND

         On October 25, 2016, Plaintiffs Edson R. Arneault, Kathleen and James Devlin, J. Steven Emerson, Steven Rothstein, and Barry Stark and Irene Stark (the “Individual Plaintiffs”), together with Emerson Partners and J. Steven Emerson Roth IRA (collectively, “Plaintiffs”), filed suit against Diamondhead Casino Corporation (“Defendant”) to recover monies allegedly owed to Plaintiffs under certain Collaterized Convertible Senior Debentures. (D.I. 1) (the “Complaint”) Plaintiffs' alleged this Court had subject matter jurisdiction pursuant to diversity of citizenship under 28 U.S.C. § 1332(a). (Id. at ¶ 1)

         On November 21, 2016, Defendant filed a Motion to Dismiss for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) based on Plaintiffs' alleged failure to plead the citizenship of each plaintiff in a manner sufficient for this Court to determine if complete diversity exists. (D.I. 6) It is undisputed that Defendant is incorporated in Delaware and has its principal place of business in Virginia. (D.I 7 at 2)

         On February 17, 2017, Plaintiffs filed an Answering Brief in Opposition to Defendant's Motion to Dismiss. (D.I. 10) With that brief, Plaintiffs also filed five declarations of citizenship, one from each of: Edson R. Arneault (D.I. 12), James Devlin (D.I. 14), [1] J. Steven Emerson (D.I. 13), Steven Rothstein (D.I. 15), and Barry Stark (D.I. 11).[2] The declaration of J. Steven Emerson addresses his citizenship as an individual, as well as the citizenship of Emerson Partners and the J. Steven Emerson Roth IRA. (D.I. 13) (the “Emerson Declaration”)

         On February 21, 2017, Plaintiffs filed a Motion for Leave to Amend the Complaint. (D.I. 16) Plaintiffs submitted a Proposed Amended Complaint, revising the pleadings related to the parties' citizenship. (D.I. 17 Ex. A) (the “Amended Complaint”) Defendant agreed to consent to the filing of Plaintiffs' Proposed Amended Complaint but declined to withdraw its Motion to Dismiss. (D.I. 17) Defendant has not filed a Reply Brief in support of its Motion to Dismiss.

         II. LEGAL STANDARDS

         A. Motion for Leave to Amend

         Pursuant to Fed.R.Civ.P. 15(a), “[a] party may amend its pleading once as a matter of course within . . . 21 days of service of a motion under Rule 12(b).” “In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.” Fed.R.Civ.P. 15(a). The decision to grant or deny leave to amend lies within the discretion of the court. See Foman v. Davis, 371 U.S. 178, 182 (1962); In re Burlington Coat Factory Secs. Litig., 114 F.3d 1410, 1434 (3d Cir. 1997). The Third Circuit has adopted a liberal approach to the amendment of pleadings to “ensure[] that a particular claim will be decided on the merits rather than on technicalities.” Dole v. Arco Chem. Co., 921 F.2d 484, 487 (3d Cir.1990). Generally, then, leave to amend should be granted absent a showing of “undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of the allowance of the amendment, futility of amendment, etc.” Foman, 371 U.S. at 182; see also Oran v. Stafford, 226 F.3d 275, 291 (3d Cir. 2000).

         B. Motion to Dismiss

         1. Challenges to Subject ...


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