In breach of contract action, remand was required for new consideration of intervenor’s motion to dismiss instant action for lack of diversity jurisdiction. Dist. Ct. correctly rejected intervenor’s contention that plaintiff improperly failed to join necessary parties that would destroy diversity jurisdiction, where Dist. Ct. observed that under Illinois law, plaintiff may sue any obligated party, but is not required to sue all obligated parties, and thus plaintiff could properly chose not to sue non-diverse potential defendants. However, record showed that: (1) while initially named parties were completely diverse, receivership was appointed for one defendant; (2) said receivership was expanded to include parent company of named defendants that had same Illinois citizenship as plaintiff; and (3) there were allegations that defendants’ parent company made all decisions for its subsidiaries. As such, Dist. Ct. on remand must use nerve center test to determine whether instant named defendants also had Illinois principal place of business on theory that Illinois is where “single enterprise” of defendants’ parent company is located. Ct. of Appeals also dismissed on mootness grounds appeals of certain creditors of defendants, who alleged that Dist. Ct. erred in improperly entering anti-litigation injunction that precluded them from filing involuntary bankruptcy petition against defendants. While said injunction was part of receivership agreement, said creditors filed involuntary injunction anyway, and although Dist. Ct. initially found bankruptcy petition void, it subsequently found it lacked authority to void said petition and declined to hold instant creditors in contempt of court. As such, appeals of creditors were dismissed as moot, where receivership was terminated, bankruptcy petition was allowed to proceed, and no injunction has been entered against instant creditors or any other interested party.
Federal 7th Circuit Court
Civil Court
Diversity Jurisdiction