Ding v. Sun

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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SHIYING DING, individually and

Derivatively on behalf of Qitopia

at Willowbrook Mall LLC,

PLAINTIFFS, MEMORANDUM & ORDER

-against- 21-CV-6968 (KAM)(TAM)

LIANG SUN,

DEFENDANT.

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MATSUMOTO, United States District Judge:

Presently before the Court is the Report and

Recommendation issued August 8, 2022 (“R&R”) by Magistrate Judge

Taryn Merkl, recommending that this Court remand the instant action

back to New York Supreme Court, Queens County for lack of diversity

subject matter jurisdiction pursuant to 28 U.S.C. § 1332. (ECF

No. 15, R&R.) Also before the Court are Defendant’s timely

objections to the R&R and Plaintiff’s reply. (ECF Nos. 16, Defs.

Obj; 21, Pl. Reply.) The Court respectfully overrules Defendant’s

objections and adopts Magistrate Judge Merkl’s R&R in its entirety

for the reasons below, and accordingly, orders that this action be

remanded back to the New York State Supreme Court, Queens County,

New York.

BACKGROUND

On November 5, 2021, Plaintiff Shiying Ding

(“Plaintiff”) filed a civil action, individually and derivatively

on behalf of Qitopia at Willowbrook Mall LLC (“Qitopia LLC”),

against Defendant Liang Sun (“Defendant”) in the Supreme Court of

New York, County of Queens. (ECF Doc. No. 13.) On December 17,

2021, Defendant filed a Notice and Petition for Removal in the

United States District Court for the Eastern District of New York.

(ECF Doc. No. 1.) The basis of the removal was the diversity of

citizenship pursuant to 28 U.S.C. § 1332, Defendant asserting that

this action involved a controversy between citizens of different

states. (ECF Doc. No. 1.) On January 24, 2022, the Defendant

filed a letter requesting a Pre-Motion Conference with the Court

for an anticipated 12(b) Motion to Dismiss and a Motion to Transfer

this matter to the District Court for the District of New Jersey.

(ECF Doc. No. 6.)

On April 13, 2022, Magistrate Judge Taryn A. Merkl,

recognizing that Qitopia LLC shared citizenship with its two

members, Plaintiff and Defendant, entered an Order to Show Cause

directing the parties to file memoranda addressing whether there

was complete diversity for purposes of subject matter

jurisdiction, and whether this action should be remanded. On April

27, 2022, the parties submitted briefing in response to Magistrate

Judge Merkl’s Order to Show Cause, and Plaintiff requested that

the matter be remanded. (ECF No. 13-14.)

On June 6, 2022, in a soundly analyzed R&R, Magistrate

Judge Merkl recommended that the case be remanded for lack of

diversity subject matter jurisdiction, finding that Defendant

failed to demonstrate that Qitopia LLC was a nominal party, and

that its citizenship and distinct stake in the outcome precluded

the exercise of diversity jurisdiction. (ECF Doc. No. 15, R&R at

7-9, 11.) Judge Merkl thus recommended remand of this case to the

Supreme Court for Queens County. On June 21, 2022, the Defendant

submitted objections to the R&R and on June 28, 2022, the Plaintiff

replied, in support of the R&R remanding the case back to state

court. (ECF Nos. 16; 21.)

LEGAL STANDARD

In reviewing the R&R of a Magistrate Judge, the

District Court may “accept, reject, or modify the recommended

disposition; receive further evidence; or return the matter to

the Magistrate Judge with instructions.” Fed. R. Civ. P.

72(b)(3); see also 28 U.S.C. § 636(b)(1). When a party objects

to an R&R, the Court must review de novo those recommendations

in the R&R to which the party objects. See Fed. R. Civ. P.

72(b)(3); United States v. Male Juvenile, 121 F.3d 34, 38 (2d

Cir. 1997). Where a party does not object to a portion of the

R&R, the Court “‘need only satisfy itself that there is no clear

error on the face of the record.’” Galvez v. Aspen Corp., 967

F. Supp. 2d 615, 617 (E.D.N.Y. 2013) (quoting Reyes v. Mantello,

No. 00-cv-8936, 2003 WL 76997, at *1 (S.D.N.Y. Jan. 9, 2003)).

If, however, “the [objecting] party makes only

frivolous, conclusory or general objections, or simply

reiterates [his] original arguments, the Court reviews the

report and recommendation only for clear error.” Velez v. DNF

Assocs., LLC, No. 19-CV-11138, 2020 WL 6946513, at *2 (S.D.N.Y.

Nov. 25, 2020) (quoting Chen v. New Trend Apparel, Inc., 8 F.

Supp. 3d 406, 416 (S.D.N.Y. 2014)); see also Colliton v.

Donnelly, No. 07-CV-1922, 2009 WL 2850497, at *1 (S.D.N.Y. Aug.

28, 2009), aff’d, 399 F. App’x 619 (2d Cir. 2010) (“The vast

majority of [the party’s] objections are patently frivolous and

require no discussion.”); Brown v. Ebert, No. 05-CV-5579, 2006

WL 3851152, at *2 (S.D.N.Y. Dec. 29, 2006) (“[W]here the

objections are ‘merely perfunctory responses, argued in an

attempt to engage the district court in a rehashing of the same

arguments set forth in the original petition,’ the court reviews

the report for clear error.” (quoting Gardine v. McGinnis, No.

04-CV-1819, 2006 WL 3775963, at *4 (S.D.N.Y. Dec. 20, 2006))).

DISCUSSION

The Court finds that Defendant’s objections are of a

frivolous, conclusory, and general nature, thus triggering only

clear error review. Defendant has not sufficiently identified

any specific findings or conclusions in the carefully analyzed

R&R to which he objects to prompt this Court’s de novo review.

See e.g., Barratt v. Joie, No. 96-cv-0324, 2002 WL 335014, at *1

(S.D.N.Y. Mar. 4, 2002)(“When a party makes only conclusory or

general objections, or simply reiterates his original arguments,

the Court reviews the [r]eport and [r]ecommendation only for

clear error.”). Nonetheless, the Court applies both clear error

and de novo review to Defendant’s objections, and affirms

Magistrate Judge Merkl’s meticulously reasoned R&R.

Defendant objects to the Magistrate Judge’s

recommendation that the Court remand the case back to Queens

County, asserting that Plaintiff never amended her complaint,

despite being provided opportunities to do so, and thus, has not

sufficiently established Qitopia LLC as a derivative party that

would undermine diversity jurisdiction. (ECF No. 16, Def. Obj.

at 10.) This argument is without merit, because the Magistrate

Judge found sufficient facts pleaded in the initial complaint,

to base her recommendation to remand for lack of diversity

between the parties. The Magistrate Judge found Plaintiff’s

allegations that Defendant “exclud[ed her] from the LLC’s daily

business affairs,” and that “[w]ithout access to the company’s

operating records and books, Plaintiff is not able to fulfill

her responsibilities as a manager of the LLC” demonstrated that

Qitopia LLC’s presence in the litigation was necessary to accord

complete relief. (ECF No. 15, R&R at 6-7 fn. 2-3.) The

Magistrate Judge found that the facts presented by Plaintiff,

without amendment, were sufficient establish that the LLC is not

a nominal party, and the Court therefore need not decide if the

Plaintiff’s claims against the LLC are derivative or direct.

(Id.) The Defendant, in his objections, insufficiently

addresses the Magistrate Judge’s findings that he failed to show

that Qitopia LLC is a nominal party.

The Defendant also frivolously asserts that because

Plaintiff never filed a formal motion to remand, the R&R “must

be reconsidered [by this Court] in the absence of any such

application on the part of the Plaintiff.” (ECF No. 16, Def.

Obj. at 11.) This argument is frivolous because Federal

District Courts may consider the appropriateness of subject

matter jurisdiction sua sponte. 28 U.S.C. § 1331. Here, the

Court ordered the parties to submit briefing and show cause on

the issue of subject matter jurisdiction. Thus, Plaintiff need

not have moved for a remand. “A district court may raise the

issue of subject matter jurisdiction sua sponte, and due to the

constitutionally limited jurisdiction of the Federal Courts, is

obligated so to do if it lacks jurisdiction.” Bartfield v.

Murphy, 578 F. Supp. 2d 638, 644 (S.D.N.Y. 2008)(citing

Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp.,

109 F.3d 105, 107 (2d Cir. 1997).)

Based on the foregoing reasons, Defendant’s objections

are overruled, and the R&R is adopted in its entirety. On both

clear error and de novo review, the Court, having carefully

reviewed Judge Merkl’s thorough and well-reasoned R&R, affirms

and adopts the R&R in its entirety. Judge Merkl’s findings,

recommendations, and conclusions are supported by her extensive

and exhaustive review of the relevant allegations and filings in

this action as well as applicable case law. Accordingly, the

Clerk of Court is respectfully directed to remand the matter to

New York Supreme Court, Queens County and close the case.

SO ORDERED.

/s/ Kiyo A. Matsumoto_______

Hon. Kiyo A. Matsumoto

United States District Judge

Eastern District of New York

Dated: Brooklyn, New York

February 27, 2023