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FLT Douglas Equity, LLC v. Talos Holdings, LLC

United States District Court, D. Kansas

July 22, 2019

FLT DOUGLAS EQUITY, LLC, Plaintiff,
v.
TALOS HOLDINGS, LLC, AND JACQUES BAZINET, Defendants.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge.

         This matter comes before the court on defendants Talos Holdings, LLC, (“Talos”) and Jacques Bazinet's Motion to Dismiss. Doc. 14. Plaintiff has filed a Memorandum in Opposition. Doc. 17. For reasons explained below, the court grants plaintiff's request to amend its Complaint, see Doc. 17 at 3, and denies defendants' Motion to Dismiss as moot.

         I. Background

         Plaintiff filed a Complaint alleging various state law claims, invoking 28 U.S.C. § 1332 as the basis for the court's exercise of subject matter jurisdiction over its claims. Plaintiff alleges that the suit “involves citizens of different states” and an amount in controversy exceeding $75, 000. Id. at 2. Plaintiff identifies itself as a limited liability company “organized and existing under Delaware law” with a registered agent also located in Delaware. Id. Plaintiff also identifies defendant Talos as an Arizona limited liability company with a registered agent in Arizona and defendant Bazinet as a citizen of Utah.

         Defendants have filed a Motion to Dismiss. Doc. 14. Their motion makes a facial attack on the jurisdictional allegations made in the Complaint. Specifically, defendants assert that plaintiff, a limited liability company, was required to allege the citizenship of its own members and the citizenship of members of defendant Talos, also a limited liability company. Doc. 15 at 3-4 (citing Carden v. Arkoma Assocs., 494 U.S. 185 (1990)). But, defendants argue, plaintiff has failed to bear its burden of alleging the citizenship of the two LLCs' members and thus hasn't pleaded complete diversity.

need not affirmatively allege the citizenship of each member of a defendant LLC if it is unable to do so after a reasonable investigation. If the plaintiff is able to allege in good faith that the LLC's members are not citizens of its state of citizenship, its complaint will survive a facial challenge.

Doc. 17 at 2-3 (quoting Lincoln Ben. Life Co. v. AEI Life, LLC, 800 F.3d 99, 110 (3d Cir. 2015)). Plaintiff contends that its Complaint satisfies this standard. Alternatively, plaintiff seeks leave to amend any pleading deficiencies that the court identifies.

         II. Legal Standard

         Federal Rule of Civil Procedure 12(b)(1) “allows a court to dismiss a complaint for lack of subject matter jurisdiction.” Pueblo of Jemez v. United States, 790 F.3d. 1143, 1151 (10th Cir. 2015) (citing Becker v. Ute Indian Tribe of the Unitah & Ouray Reservation, 770 F.3d 944, 946 (10th Cir. 2014)). “‘Federal courts are courts of limited jurisdiction,' possessing ‘only that power authorized by Constitution and statute.'” Id. (quoting Gunn v. Minton, 568 U.S. 251, 256 (2013)) (further citation omitted). As such, “[f]ederal subject matter jurisdiction is elemental . . . and its presence must be established in every cause under review in the federal courts.” Id. (quoting Firstenberg v. City of Santa Fe, 696 F.3d 1018, 1022 (10th Cir. 2012)).

         A facial attack to subject matter jurisdiction “questions the sufficiency of the complaint.” Holt v. United States, 46 F.3d 1000, 1002 (10th Cir. 1995) (citation omitted). A factual attack “challenge[s] the facts upon which subject matter jurisdiction depends.” Id. at 1003. Here, defendants present a facial attack because, they assert, they question the sufficiency of the Complaint's jurisdictional allegations. When called to resolve a facial attack, a federal court “must accept the allegations in the complaint as true.” Id. But, when challenged, “the burden is on the party claiming jurisdiction” to establish that it exists. Celli v. Shoell, 40 F.3d 324, 327 (10th Cir. 1994).

         When this burden goes unsatisfied, the court must refrain from exercising subject matter jurisdiction. Pueblo of Jemez, 790 F.3d at 1151 (“A court lacking jurisdiction cannot render judgment but must dismiss the cause at any stage of the proceedings in which it becomes apparent that jurisdiction is lacking.” (quoting Full Life Hospice, LLC v. Sebelius, 709 F.3d 1012, 1016 (10th Cir. 2013))).

         III. Analysis

         A. Sufficiency of Jurisdictional Allegations

         Plaintiff has invoked the court's subject matter jurisdiction under the federal diversity statute. Under that statute, 28 U.S.C. § 1332, federal jurisdiction is proper when “the matter in controversy exceeds the sum or value of $75, 000 . . . and is between . . . citizens of different states.” 28 U.S.C. § 1332(a)(1). For diversity jurisdiction purposes, a limited liability company “takes the citizenship of all its members.” Siloam Springs Hotel, L.L.C. v. Century Sur. Co., 781 F.3d 1233, 1234 (10th Cir. 2015). Because diversity jurisdiction depends on the citizenship of “all of the members” of an unincorporated organization, see Carden, 494 U.S. at 195-96, where an “LLC has, as one of its members another LLC, ‘the citizenship of unincorporated associations must be traced through however many layers of partners or members there may be' to determine the citizenship of the LLC.” Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d Cir. 2010) (quoting Hart v. Terminex Int'l, 336 F.3d 541, 543 (7th Cir. 2003)). As applied to individual persons, the diversity jurisdiction analysis recognizes that, “a person ...


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