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Keeping the Georgia Contracts Case You Brought in State Court Out of the Federal Courts

Poole Huffman, LLC

When you are locked in a dispute that leads to commercial litigation, there are several things that go into a successful outcome. Some of those are related to the facts of the dispute, but others are wholly unrelated to the factual matters. Instead, they turn solely on issues of the law and the rules of court procedure. Success, then, relies on not simply having a strong command of the facts of your case but also issues of law and procedure and how to use those to protect your business. This is one of the many reasons why it pays to rely on an experienced Atlanta commercial litigation attorney to handle your case.

If you have brought your lawsuit in state court, you have obviously done so because you and your legal team have concluded that the state court is the best place to litigate and to obtain a fair outcome that will fully compensate you for the harm you suffered. Given that, what you may have to overcome is an effort by the other side to move the case to federal court.

Fortunately, though, there are several potential ways to attack an effort by the other side to relocate your case from state court to federal court. As a recent breach of contract case illustrates, one of those relates to something called “diversity jurisdiction.”

Federal law gives the federal courts jurisdiction over only a limited number of disputes. If your case involves one or more federal statutory law claims or constitutional claims (something called “federal question” jurisdiction) or involves naming the United States government as a party, then the federal courts have jurisdiction.

Many parties who want their cases tried in federal court don’t have that and, instead, must rely on something called “diversity jurisdiction.” That occurs when none of the plaintiffs are citizens of the same state as any of the defendants and when the amount in dispute is more than $75,000.

Note that this can be any state in common and any pair of opposing parties. So, for example, say your case that you brought in Cobb County Superior Court involves three plaintiffs and six defendants, and the other side has moved your case to the Northern District of Georgia federal court, but you have proof that one of the plaintiffs and one of the defendants are both citizens of Wyoming. With that evidence, you can win a motion to have the case sent back to the state court in Cobb County.

In that recent breach of contract case that was pending in federal court, the plaintiffs originally brought their complaint in state court in Jeff Davis County. The defense preferred to litigate in federal court.

When a case involves multiple corporate and/or business entities (as that one did,) establishing citizenship may be complex. In that case, several of the defendants were Wisconsin citizens. One of the plaintiffs was an LLC with its principal place of business located in Wisconsin. The sole member of the LLC, however, was a Delaware corporation.

If the defense wants your case tried in federal court, it has to prove federal jurisdiction

The defense tried to assert that the plaintiff hadn’t done enough to prove the LLC was a Wisconsin citizen. As the court explained, that’s not the way the law works. When you sue in state court and the defense seeks to move the case to federal court on the basis of diversity jurisdiction, the defense bears the burden of proof for establishing that diversity jurisdiction exists.

That meant the defense had the burden of proving that the LLC wasn’t a Wisconsin citizen, not the other way around. Because the evidence was inconclusive regarding the LLC’s Wisconsin citizenship, that meant diversity jurisdiction had not been proven, and the plaintiff was entitled to have its case returned to its preferred place, the state court in Jeff Davis County.

Achieving success in your commercial litigation action involves many things. It involves a clear understanding of the facts but also requires an in-depth knowledge of the law and the rules of court procedure. Count on the skilled contract litigation attorneys at Poole Huffman, LLC to provide all of those elements of effective representation in order to help you to protect your business’ interests. Contact our attorneys online or by calling 404-373-4008 to schedule your confidential consultation.

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