Berik Stiftung v. Plains Marketing, L.P., et al

Filing 511075923

Case: 09-20631

Document: 00511075923

Page: 1

Date Filed: 04/09/2010

IN THE UNITED STATES COURT OF APPEALS United States Court of Appeals FOR THE FIFTH CIRCUIT Fifth Circuit FILED
April 9, 2010 N o . 09-20631 Lyle W. Cayce Clerk

B E R IK STIFTUNG, P l a i n t if f- A p p e l la n t v. P L A IN S MARKETING, L.P.; PLAINS MARKETING CANADA, L.P., D e fe n d a n ts -A p p e lle e s

A p p e a l from the United States District Court for the Southern District of Texas

B e fo r e DeMOSS, ELROD, and HAYNES, Circuit Judges. D e M O S S , Circuit Judge: A p p e lla n t Berik Stiftung, a legal entity organized under the laws of L ie c h t e n s t e in , appeals the district court's order dismissing its complaint for lack o f subject matter jurisdiction. I. B e r ik Stiftung alleged in its complaint that Appellees Plains Marketing, L .P . and Plains Marketing Canada, L.P. (collectively "Appellees") purchased a s s e ts in a Canadian pipeline without the consent of its true owner, Berik S t ift u n g . Berik Stiftung sought a declaratory judgment that it was the rightful o w n e r of the interest in the pipeline. Berik Stiftung's complaint states that: 1) B e r i k Stiftung is "a foreign corporation organized and existing under the laws

Case: 09-20631

Document: 00511075923

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Date Filed: 04/09/2010

No. 09-20631 o f the country of Liechtenstein;" 2) Plains Marketing is "a Texas corporation w it h its principal place of business in Houston, Texas;" and 3) Plains Marketing C a n a d a is "a corporation organized and existing under the laws of Canada." B e r i k Stiftung named only itself as the complaining party. Appellees moved to d is m is s the compliant alleging, inter alia, that because Berik Stiftung and Plains M a r k e t in g Canada are both foreign citizens, there is not complete diversity am o n g the parties. Berik Stiftung argued that the citizenship of its beneficiaries, in this case the State of Florida, determines its citizenship for purposes of d iv e rs it y jurisdiction. The district court found that, because Berik Stiftung was t h e only named plaintiff and alleged in its complaint that it was "a foreign c o r p o r a tio n organized and existing under the laws of the country of L i e c h t e n s t e in ," it was a foreign citizen for purposes of § 1332(a) and there was n o t complete diversity among the parties. The district court dismissed the c o m p la in t without prejudice. Berik Stiftung timely appealed. II. W e review de novo the district court's dismissal for lack of subject matter j u r i s d ic tio n . Hager v. NationsBank N.A., 167 F.3d 245, 247 (5th Cir. 1999). J u r is d ic tio n a l findings of fact are reviewed for clear error. Krim v. pcOrder.com, I n c ., 402 F.3d 489, 494 (5th Cir. 2005). The district court "has the power to d i s m is s for lack of subject matter jurisdiction on any one of three separate bases: ( 1 ) the complaint alone; (2) the complaint supplemented by undisputed facts e v id e n c e d in the record; or (3) the complaint supplemented by undisputed facts p lu s the court's resolution of disputed facts." Williamson v. Tucker, 645 F.2d 404, 4 1 3 (5th Cir. 1981). The party seeking to assert federal jurisdiction bears the b u r d e n of proving that subject matter jurisdiction exists. See Howery v. Allstate I n s . Co., 243 F.3d 912, 919 (5th Cir. 2001). D is t r ic t courts have original jurisdiction over "all civil actions where the m a tt e r in controversy exceeds the sum or value of $75,000. . . and is between-- 2

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No. 09-20631 (1 ) citizens of different States; (2) citizens of a State and citizens or subjects of a foreign state; (3) citizens of different States and in which citizens or subjects o f a foreign state are additional parties; and (4) a foreign state, defined in section 1 6 0 3 (a ) of this title, as plaintiff and citizens of a State or of different States." 28 U .S .C . § 1332(a) (2006). "The diversity statute requires `complete diversity' of c it iz e n s h ip ." Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir. 1992). A federal c o u r t cannot exercise diversity jurisdiction if one of the plaintiffs shares the s a m e citizenship as any one of the defendants. Id; see also Panalpina W e lttr a n s p o r t GmBH v. Geosource, Inc., 764 F.2d 352, 354-55 (5th Cir. 1985) (e x is te n c e of aliens on both sides of a dispute destroys diversity jurisdiction). III. T h is court must determine whether a stiftung created under Liechtenstein la w is a foreign citizen for purposes of diversity jurisdiction. This issue is res n o v a in this circuit. Berik Stiftung argues that a stiftung is similar to a trust created under U n it e d States law, and thus the citizenship of its beneficiaries is determinative fo r purposes of diversity jurisdiction. The curator of the Berik Stiftung signed a " C o n s e n t of the Curator of Berik Stiftung," which authorized Corbett Lenz and S t a c i e Daley, citizens of the State of Florida, to "represent and bind the F o u n d a t io n in all business matters within the United States and Canada, in c lu d in g but not limited to the pursuit of any legal actions the Foundation may h a v e ." Berik Stiftung argues that this authorization designates Lenz and Daley a s beneficiaries of the Stiftung, and because a stiftung is similar to a trust their c it iz e n s h ip is determinative. Appellees argue that Berik Stiftung is a juridical e n t it y created under foreign law and is therefore a foreign citizen pursuant to § 1332(a). Appellees assert that whether a stiftung most closely resembles a tr u s t, or any other entity under United States law, is irrelevant.

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No. 09-20631 I n Puerto Rico v. Russell & Co., 288 U.S. 476, 481-82 (1933), the Court was t a s k e d with determining the citizenship of a Puerto Rican entity, a "sociedad en c o m a n d i t a ," for diversity jurisdiction. The members of the sociedad were not c it iz e n s of Puerto Rico; if the court considered each individual's citizenship it had ju r is d ic tio n over the matter. Id. at 478. The Court held that the citizenship of a " s o c ie d a d en comandita" was determined not by the citizenship of its individual m e m b e r s but by the citizenship of the entity, because under Puerto Rican civil la w "the sociedad is consistently regarded as a juridical person." Id. at 480-81; s e e also United Steelworkers of America, AFL-CIO v. R. H. Bouligny, Inc., 382 U .S . 145, 151 (1965) (reasoning that the Russell Court was presented with " fit t in g an exotic creation of [Puerto Rican] civil law, the sociedad en comandita, in to a federal scheme which knew it not"). In Cohn v. Rosenfeld, 733 F.2d 625, 628 (9th Cir. 1984), the Ninth Circuit h a d to determine the citizenship of an "anstalt," a legal entity created under L i e c h t e n s t e in law, for purposes of diversity jurisdiction. Finding Russell to be p e r s u a s iv e , Cohn looked to the nature of the anstalt under Liechtenstein law to d e te r m in e whether it was a juridical person. Id. at 628-29. Cohn held that the c o u r t "need not resolve the question of which common law entity anstalts [sic] m o s t nearly resemble." Id. at 629. "Section 1332(a)(2) applies to foreign legal e n t it ie s of all kinds, so long as the entity is considered a juridical person under t h e law that created it." Id. Thus, the relevant inquiry is whether an entity is a "c itiz e n or subject" of a foreign state within the meaning of § 1332(a). Id; see also A u t o c e p h a lo u s Greek-Orthodox Church of Cyprus v. Goldberg & Feldman Fine A r ts , Inc., 917 F.2d 278, 285 (7th Cir. 1990) (holding that a church was " r e c o g n i z e d under and by the laws of the Republic of Cyprus as a distinct ju r id i c a l entity" and thus was a "citizen or subject" of a foreign state for purposes o f § 1332).

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No. 09-20631 U n d e r Liechtenstein law, a stiftung is a "juristische Person," or juridical p e r s o n , and is a legally and economically independent entity. See Personen- und G e s e lls c h a f ts r e ch t [PGR] [Persons and Companies Code] of 1926, art. 552, § 1 (L ie c h te n s te in ); see also PETER MARXER, ET AL., COMPANIES AND TAXES IN L IECHTENSTEIN 87 (11th ed. 2003) ("A [stiftung] can be defined as a fund e n d o w e d for a specific purpose which becomes autonomous and acquires the s t a t u s of a legal person."). "The autonomous fund is separated from the founder's p e r s o n a l assets and then forms the assets of an independent legal entity, namely t h e foundation." MARXER, COMPANIES AND TAXES IN LIECHTENSTEIN 87. Thus, B e r ik Stiftung is a foreign citizen for purposes of diversity jurisdiction. Berik Stiftung asserts that federal courts have already recognized that s tift u n g e n 1 created under Liechtenstein law should be treated as trusts. See E s ta te of Swan v. C.I.R., 24 T.C. 829, 857 (1955), aff'd in part and rev'd in part, O e i Tjong Swan's Estate v. C.I.R., 247 F.2d 144 (2d Cir. 1957); see also I.R.S. P r iv . Ltr. Rul. 200302005 (Jan. 10, 2003) (holding that a stiftung was in the n a t u r e of a trust for tax purposes). Under Liechtenstein law, however, stiftungen a r e distinct from trusts. See MARXER, COMPANIES AND TAXES IN LIECHTENSTEIN 1 0 7 -0 8 , 125. Further, whether a stiftung is characterized as a trust for estate tax p u r p o s e s has no bearing on whether a stiftung is a foreign citizen for diversity ju r is d ic tio n purposes. Liechtenstein law also requires that a trust have a trustee, n a m e d in the trust document or by the court, in order to maintain a legal action in court. See PGR, art. 904. Berik Stiftung did not name a trustee as a party in it s complaint. E v e n assuming arguendo that a stiftung is a trust and the citizenship of it s beneficiaries were determinative for diversity jurisdiction, the record does not s u p p o r t the Stiftung's allegations that Corbett Lenz and Stacie Daley are

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"Stiftungen" is the plural form of stiftung.

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Case: 09-20631

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Date Filed: 04/09/2010

No. 09-20631 c u r r e n t beneficiaries of the Stiftung. The by-laws of the Stiftung state that " [d ] u r in g his lifetime, Mr. Randolph W. Lenz will be the sole and only beneficiary o f the assets and proceeds of the Berik Stiftung." Only after his death do Corbett L e n z and Stacie Daley become beneficiaries. The parties do not dispute that R a n d lo p h Lenz is still living. The district court did not err in holding that the c i t i z e n s h ip of Corbett Lenz or Stacie Daley is irrelevant to the jurisdictional in q u ir y . IV. T h e Stiftung is a juridical entity under the laws of Liechtenstein and is t h u s a foreign citizen for purposes of diversity jurisdiction. Because there is not c o m p l e t e diversity among the parties, the district court did not have subject m a tt e r jurisdiction and its order dismissing Berik Stiftung's complaint is a ffir m e d . AFFIRMED.

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