United States District Court, N.D. Indiana, Hammond Division, Lafayette
NANSHAN AMERICA ADVANCED ALUMINUM TECHNOLOGIES, LLC, Plaintiff,
FRANK NEMICK, Defendant.
OPINION AND ORDER
DEGUILIO, United States District Court Judge
case, Plaintiff Nanshan America Advanced Aluminum
Technologies, LLC alleges that Defendant Frank Nemick, one of
its former employees, breached his fiduciary duty to Nanshan
when he steered work at Nanshan's facilities to entities
that he controlled or had a financial interest in, without
disclosing those interests to Nanshan. Nanshan moved for
partial summary judgment as to liability on its breach of
fiduciary duty claim. Mr. Nemick did not respond to the
motion, and his time to do so has passed, so this matter is
ripe for ruling. For the following reasons, the Court grants
the motion for partial summary judgment.
SUBJECT MATTER JURISDICTION
proceeding to the substance of the motion for summary
judgment, the Court must first address the basis for its
jurisdiction over this case, as Courts have an independent
duty to confirm the presence of subject matter jurisdiction.
Nanshan invokes this Court's diversity jurisdiction under
28 U.S.C. § 1332(a)(2), which applies to cases between
“citizens of a State and citizens or subjects of a
foreign state” where the matter in controversy exceeds
$75, 000. The amount in controversy is met, so the question
is whether the requirement of complete diversity is also met.
Though this case previously involved additional parties,
those parties were voluntarily dismissed, so the Court can
confine its analysis to the remaining parties: Nanshan and
Mr. Nemick. In its supplemental filing, Nanshan properly
alleged that Mr. Nemick is a citizen of Ohio, as he is an
individual who is domiciled in Ohio. Nanshan's
citizenship is more complicated, though. As a limited
liability company, Nanshan has the citizenship of its
members. Cosgrove v. Bartolotta, 150 F.3d 729, 731
(7th Cir. 1998). Nanshan's sole member is an entity named
Shandong Nanshan Aluminum Co., Ltd. (“Shandong”),
which is organized under the laws of China, so the Court must
determine the citizenship of that entity.
entities are organized under the laws of foreign nations,
courts must determine whether those entities are comparable
to corporations-in which case they are citizens of their
places of incorporation and of their principal place of
business-or whether they are more comparable to any other
type of unincorporated entity-in which case they have the
citizenship of each of their members or partners. InStep
Software LLC v. Instep (Beijing) Software Co., Ltd., 577
F. App'x 612 (7th Cir. 2014); BouMatic, LLC v. Idento
Operations, BV, 759 F.3d 790 (7th Cir. 2014)
(“Classification of a foreign business entity can be
difficult, because other nations may use subsets of the
characteristics that distinguish corporations from other
business entities in the United States.”);
Fellowes, Inc. v. Changzhou Xinrui Fellowes Office
Equipment Co., 759 F.3d 787 (7th Cir. 2014). In making
that determination, courts evaluate whether the entities
share the attributes that distinguish corporations from other
unincorporated business forms in the United States, such as
whether the entity has “indefinite existence,
personhood (the right to contract and litigate in its own
name), limited liability for equity investors, and alienable
shares, among other features.” Fellowes, 759
F.3d at 788.
to Nanshan's supplemental filing, Shandong is organized
as a “Gufen Youxian Gongsi, ” which is also
referred to as a “company limited by shares.”
Such an entity provides limited liability for equity
investors and also shares the features of personhood,
including the right to contract and litigate in its own name.
It also appears that the entity has a perpetual existence
unless otherwise specified in its articles of association.
Shares are also alienable, as such companies can be listed on
a stock exchange, and Shandong is in fact listed on the
Shanghai Stock Exchange. The entities are also governed by a
board of directors, which employs a manager who is
responsible for the company's operations. Company Law of
the People's Republic of China, art. 108, 113. A Gufen
Youxian Gongsi is also required to be treated as a
corporation for U.S. tax purposes. 26 C.F.R. §
Seventh Circuit has held that entities from other countries
that share these characteristics qualify as corporations for
the purposes of diversity jurisdiction. E.g.,
BouMatic, 759 F.3d at 791. It has also held that
companies “limited by shares” under the laws of
other countries are equivalent to corporations for these
purposes. Superl Sequoia Ltd. v. Carlson Co., Inc.,
615 F.3d 831, 832 (7th Cir. 2010) (holding that a “Hong
Kong business organization ‘limited by
shares'” is “equivalent to a corporation in
the United States”); Lear Corp. v. Johnson Electric
Holdings Ltd., 353 F.3d 580, 583 (7th Cir. 2003)
(“[A] business organization ‘limited by
shares' under Bermuda law is equivalent in all legally
material respects to a corporation under state law.”).
Thus, the Court finds that Shandong is properly treated as a
corporation for purposes of diversity jurisdiction. And
because it is incorporated and has its principal place of
business in China, Shandong (and thus Nanshan) is a citizen
of China, meaning that complete diversity exists and the
Court has subject matter jurisdiction under §
1332(a)(2). Accordingly, the Court proceeds to the merits of
Federal Rule of Civil Procedure 56(e), if a party
“fails to properly address another party's
assertion of fact” in responding to a motion for
summary judgment, the court may “consider the fact
undisputed for the purposes of the motion.” Here, Mr.
Nemick failed to respond to Nanshan's motion for partial
summary judgment, so the Court accepts the following facts
submitted by Nanshan as undisputed.
2011, Nanshan hired Mr. Nemick as an equipment engineer for
an aluminum manufacturing facility Nanshan was constructing
in Lafayette, Indiana. Nanshan hired Mr. Nemick because of
his experience and expertise in the aluminum extrusion
industry. Mr. Nemick's duties included obtaining bids and
quotes from vendors and contractors to do work on behalf of
Nanshan. Also in 2011, while employed by Nanshan, Mr. Nemick
formed ME Simone Industries, LLC, of which he was the sole
owner. Simone had no employees and its articles of
incorporation identified Mr. Nemick's residence as its
principal place of business. Mr. Nemick did not inform
Nanshan of his ownership of Simone.
received both direct and indirect benefits from contracts Mr.
Nemick was responsible for through his employment with
Nanshan. In his capacity as an employee of Nanshan, Mr.
Nemick directed the purchase of dock levelers from Simone for
over $200, 000. To fulfill the order, Simone purchased the
equipment from other companies and then resold it to Nanshan.
Mr. Nemick testified that he added a five percent markup
beyond what Simone paid for the equipment, meaning he
personally profited (through his sole ownership of Simon)
through the contracts he directed as part of his employment
with Nanshan. Simone also received indirect payments from
Nanshan, as five vendors or contractors working on
Nanshan's project made payments to Simone totaling almost
$2 million. One of Nanshan's vendors, Overhead Hoist and
Crane, Inc., paid Simone over $1 million for Nanshan-related
work. Mr. Nemick estimated that he personally made between
$50, 000 and $100, 000 for that work.
Nemick was also a half-owner of another entity, Lafayette
Industrial, which he formed with another individual shortly
before he began working for Nanshan. Lafayette Industrial did
a significant amount of work for Nanshan as a contractor. It
also subcontracted work to Simone, for which it paid Simone
over $700, 000. Mr. Nemick did not disclose his ownership
interest in either Simone or Lafayette Industrial to Nanshan,
and Nanshan was not aware that Mr. Nemick was personally
profiting from the contracts for which he was responsible.
Mr. Nemick's responsibilities as an employee of Nanshan
also included reviewing the work performed by Simone and
Lafayette Industrial, and Mr. Nemick admitted that those
roles created a conflict of interest.
initially filed a complaint in this case against Overhead
Hoist and Lafayette Industrial. In an amended complaint, it
added Mr. Nemick as a defendant, and asserted claims
including breach of fiduciary duty, constructive fraud, and
conspiracies to engage in that conduct. The other parties
have each resolved and dismissed their claims, so only
Nanshan's claims against Mr. Nemick remain pending. Mr.
Nemick initially appeared by counsel, but his attorney has
since withdrawn, and Mr. Nemick is now proceeding pro se.
Accordingly, Nanshan served Mr. Nemick with the required
notice to a pro se litigant of the motion for summary
judgment, advising Mr. Nemick of the need to submit evidence
in response to the motion if he disagrees with any of its
factual assertions. Mr. Nemick did not respond, and the time
to do so has passed, so the motion is now ripe.