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Branson Label, Inc. v. City of Branson

United States Court of Appeals, Eighth Circuit

July 17, 2015

The Branson Label, Inc., a Florida Corporation, Plaintiff - Appellant
v.
City of Branson, Missouri; Empire District Electric Co.; HCW Development Company, LLC; HCW Private Development, LLC; HCW North, LLC, Defendants - Appellees

Submitted February 12, 2015

Appeal from United States District Court for the Western District of Missouri - Springfield.

For The Branson Label, Inc., a Florida Corporation, Plaintiff - Appellant: Paul A. Del Aguila, Brett M. Doran, Paul T. Fox, Gregory Edward Ostfeld, Greenberg & Traurig, Chicago, IL; S. Jacob Sappington, Randy P. Scheer, Sanders & Warren, Springfield, MO.

For City of Branson, Missouri, Defendant - Appellee: John Hein, Sarah Elizabeth Holdener, William L. Sauerwein, Sauerwein & Simon, Saint Louis, MO.

For Empire District Electric Co., Defendant - Appellee: Joshua Boyd Christensen, Dan R. Nelson, Lathrop & Gage, Springfield, MO.

For HCW Development Company, LLC, HCW Private Development, LLC, HCW North, LLC, Defendants - Appellees: Jill R. Rembusch, Daniel J. Welsh, Summers & Compton, Saint Louis, MO.

Before RILEY, Chief Judge, LOKEN and SMITH, Circuit Judges.

OPINION

SMITH, Circuit Judge.

The Branson Label, Inc., a Florida corporation (" Florida Branson Label" ), appeals the district court's[1] dismissal of its suit. The district court found that Florida Branson Label collusively manufactured subject-matter jurisdiction in violation of 28 U.S.C. § 1359. Florida Branson Label argues that the district court erred by adopting the wrong legal test for determining collusion. Further, it argues that the corporate acts leading up to the commencement of this action were not done to manufacture diversity but were motivated by legitimate business purposes. We affirm.

I. Background

This action and related actions in Missouri state court chronicle the decade-long dispute over ownership of 27 acres of land in Branson, Missouri. Florida Branson Label claims that it has an unbroken chain of title to this land that can be traced back to the 1950s. Through a quitclaim deed, the land was passed from the original owners to Tori, Inc. (" Tori" ). Tori was administratively dissolved, and through various quitclaim transactions, Peter and Darlene Rea acquired the land. In 1992, the Reas quitclaimed the deed to the Branson Label, a Missouri corporation (" Missouri Branson Label" ) that they owned. Florida Branson Label was merged with Missouri Branson Label, therefore acquiring the ownership interest in the land. Thus, Florida Branson Label alleges that the City of Branson, Missouri; the Empire District Electric Company; HCW Development Company, LLC; HCW Private Development, LLC; and HCW North, LLC (collectively, " Appellees" ) infringed on its property rights by breaking ground on its land on May 15, 2004, to develop the Branson Landing, a mixed-use retail, residential, and entertainment complex.

In addition to Florida Branson Label's claim, Douglass Coverdell also claims ownership of the disputed land. Coverdell's claim to title arises from Tori's quitclaim of the deed to him in 1999.[2] Coverdell's claim of ownership has spurred at least two actions in the Circuit Court of Taney County.[3]

Marvin Elfant, a businessman living in Florida, has funded Coverdell's lawsuits through his businesses Nekome, LLC (" Nekome" ) and ME Holdings, LLC (" ME Holdings" ). Both Nekome and ME Holdings are Delaware LLCs, but Elfant runs their operations from his home in Florida. Elfant's investment in the Coverdell actions, however, suffered setbacks in May, June, and August 2013, when Missouri state courts issued rulings adverse to Coverdell's claim of ownership.

In the spring of 2013, the Reas entered negotiations with Elfant for Nekome to buy Missouri Branson Label. On July 18, 2013--after the Coverdell actions sustained negative decisions from the state courts--an oral agreement was reached for Nekome to acquire Missouri Branson Label. In a memorandum to Elfant, his tax advisors described " the acquisition of the stock of [Missouri Branson Label]" as being " deemed by [Elfant] to be an important element in the legal strategy to realize a success[] on [his] ...


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