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Homequest Mortgage, LLC v. HRB Tax Group, Inc.

United States District Court, D. Kansas

August 5, 2014

HOMEQUEST MORTGAGE, LLC, ET AL., Plaintiffs,
v.
HRB TAX GROUP, INC., Defendant.

MEMORANDUM AND ORDER

DANIEL D. CRABTREE, District Judge.

Plaintiffs HomeQuest Mortgage, LLC, Donna L. Huffman, and Laurell E. Huffman brought an arbitration action against defendant HRB Tax Group, Inc. and lost. Plaintiffs now seek an order vacating the arbitration award.

HomeQuest Mortgage is a family partnership owned by Donna Huffman and Laurell E. Huffman. In 2009, plaintiffs hired defendant to perform various federal income tax-related services. Plaintiffs became dissatisfied with defendant's performance and eventually initiated arbitration proceedings, accusing defendant of negligence, misrepresentation, and violating the Kansas Consumer Protection Act. On June 19, 2013, an arbitrator denied all of plaintiffs' claims and ordered plaintiffs to pay $300.00 to defendant for expenses.

Plaintiffs filed a "Petition" to vacate the arbitration award in Kansas state court on September 18, 2013, but did not serve it on defendant until December 13, 2013. Though plaintiffs style their request to vacate the arbitration award as a "Petition, " § 6 of the Federal Arbitration Act "makes clear that a request to vacate or affirm an arbitration award shall be made in the form of a motion - not in the form a complaint or other pleading." Cessna Aircraft Co. v. Avcorp Indus., Inc., 943 F.Supp.2d 1191, 1195 (D. Kan. 2013). Thus, the Court will refer to, and analyze, plaintiffs' "Petition" as a Motion to Vacate. Defendant removed plaintiffs' Motion to Vacate on January 10, 2014.

Defendant has filed an Opposition to plaintiffs' Motion to Vacate or, in the alternative, Motion to Dismiss (Doc. 4) and a Motion to Confirm the Arbitration Award (Doc. 5). Plaintiffs have filed a Motion to Remand (Doc. 12). For the reasons explained below, the Court denies plaintiffs' Motion to Remand. In addition, it denies plaintiffs' Motion to Vacate and grants defendant's Motion to Confirm the Arbitration Award.

I. Motion to Remand

Defendant removed this action to federal court on January 10, 2014. Plaintiffs' Motion to Remand asserts several arguments contending that the Court should not exercise subject matter jurisdiction over this case.

"Federal courts are courts of limited jurisdiction; they must have a statutory basis for their jurisdiction." Dutcher v. Matheson, 733 F.3d 980, 984 (10th Cir. 2013). Defendant argues that the Court has subject matter jurisdiction over this action based on diversity of citizenship under 28 U.S.C. § 1332. As the party removing this case to federal court, defendant bears the burden of establishing jurisdiction by a preponderance of the evidence. Id. at 985. To invoke diversity jurisdiction, a party must show that complete diversity of citizenship exists between the adverse parties and that the amount in controversy exceeds $75, 000. Symes v. Harris, 472 F.3d 754, 758 (10th Cir. 2006). In addition, defendant must prove that it timely removed the case under 28 U.S.C. § 1446(b).

A. Diversity of Citizenship

Complete diversity does not exist when any plaintiff has the same residency as even a single defendant. Dutcher, 733 F.3d at 987. It is undisputed that plaintiffs are Kansas residents. However, the parties disagree about the proper defendant in this case.

Plaintiffs' Motion to Vacate asserted claims against "H&R Block, " but "H&R Block" is not a legal entity with capacity to be sued. HRB Tax Group, Inc. is a subsidiary of H&R Block, Inc. and is the entity with which plaintiffs contracted for tax preparation services. Furthermore, plaintiffs served their summons on a field office owned and operated by defendant HRB Tax Group. The written arbitration names "H&R Block, " not HRB Tax Group, as the "Respondent, " but the award discusses alleged misconduct in "tax-related services" performed by HRB Tax Group. As a result, defendant HRB Tax Group believed that plaintiff brought claims against it, accepted service of plaintiffs' Motion to Vacate, and removed this action to federal court.

More importantly, regardless of whether plaintiffs sued H&R Block, Inc. or HRB Tax Group, the Court's analysis of the merits of the parties' arguments is exactly the same. Both entities are Missouri corporations and both entities have their principal place of business in Kansas City, Missouri. As a result, complete diversity exists in either case. For purposes of this Order, the term "defendant" will continue to refer to HRB Tax Group.

Plaintiffs next argue that 28 U.S.C. § 1332(c) destroys diversity because the provision renders defendant a Kansas citizen. Section 1332(c) provides that "in any direct action against the insurer of a policy or contract of liability insurance... to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of - (A) every State and foreign state of which the insured is a citizen." However, this provision applies only to actions in which "the insured is a tortfeasor and the plaintiff is seeking damages through the insured's provider." Helvey v. Am. Nat. Life Ins. Co. of Tex., No. 12-1109, 2012 WL 2149676, at *2 (D. Kan. June 13, 2012). Plaintiffs do not seek ...


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