MIRO Advisory Services, Ltd. v. D.A. Davidson & Co. et al

Filing 32

ORDER TO SHOW CAUSE AND RESETTING HEARING ON MOTION TO DISMISS 8 . Plaintiff must show cause in writing why this action should not be dismissed for lack of federal subject matter jurisdiction by 7/8/2014. Motion Hearing reset for 8/6/2014 01:00 PM in Courtroom A, 15th Floor, San Francisco. Signed by Judge Nathanael Cousins on 6/24/2014. (lmh, COURT STAFF) (Filed on 6/24/2014)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN FRANCISCO DIVISION

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11 MIRO ADVISORY SERVICES, LTD., a
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corporation incorporated under the laws of
the British Virgin Islands,

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Plaintiff,

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v.

Case No. 14-cv-01618 NC
ORDER TO SHOW CAUSE AND
RESETTING HEARING ON
MOTION TO DISMISS
Re: Dkt. No. 1

15 D.A. DAVIDSON & CO., an ENTITY OF
UNKNOWN FORM, RICHARD L.

16 WENDT TRUST, JWTR - OREGON,
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LLC and JWTR, LLC,
Defendants.

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Plaintiff MIRO Advisory Services, Ltd. brings this action for declaratory relief and

21 negligent misrepresentation against defendants D.A. Davidson & Co.; Richard L. Wendt
22 Trust; JWTR Oregon, LLC; and JWTR, LLC. Dkt. No. 1. The complaint asserts that this
23 Court has subject matter jurisdiction under 28 U.S.C. § 1332 in that this is “a civil action
24 between citizens of a State and citizens or subjects of a foreign state and the matter in
25 controversy exceeds, exclusive of interest and costs, the sum of $75,000.” Dkt. No. 1 ¶ 1.
26 D.A. Davidson & Co. filed a motion to dismiss the complaint for lack of subject matter
27 jurisdiction on the basis that plaintiff has failed to properly allege that the amount in
28 controversy exceeds the $75,000 threshold. Dkt. No. 27. The motion is pending and is set
Case No. 14-cv-01618 NC
ORDER TO SHOW CAUSE

1 for hearing on August 6, 2014. The Court now issues this order because, aside from the
2 amount in controversy issue, the complaint does not contain sufficient allegations to
3 establish the citizenship of all defendants for diversity purposes.
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Federal courts are courts of limited jurisdiction and are presumptively without

5 jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A
6 federal court may dismiss an action on its own motion if it finds that it lacks subject matter
7 jurisdiction over the action. Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see also
8 Fed. R. Civ. P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter
9 jurisdiction, the court must dismiss the action.”). “Absent unusual circumstances, a party
10 seeking to invoke diversity jurisdiction should be able to allege affirmatively the actual
11 citizenship of the relevant parties.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th
12 Cir. 2001).
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The diversity statute provides that “a corporation shall be deemed to be a citizen of

14 every State and foreign state by which it has been incorporated and of the State or foreign
15 state where it has its principal place of business.” 28 U.S.C. § 1332(c)(1). Unlike a
16 corporation, a partnership and an LLC are treated for purposes of diversity as citizens of
17 every state of which their owners/members are citizens. See Johnson v. Columbia
18 Properties Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006); Cosgrove v. Bartolotta, 150
19 F.3d 729, 731 (7th Cir. 1998). Moreover, if any member of a partnership or an LLC is itself
20 a partnership or association (or another LLC), the Court needs to know the citizenship of
21 each “sub-member” as well. V & M Star, LP v. Centimark Corp., 596 F.3d 354, 356 (6th
22 Cir. 2010).
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The complaint here alleges that D.A. Davidson & Co. is “an entity of unknown form

24 with a principal place of business in Montana, and with offices throughout California, and
25 transacting business in this judicial district.” Dkt. No. 1 ¶ 5. The complaint alleges that
26 Richard L. Wendt Trust “is a trust existing under and administered under the laws of the
27 State of Oregon, with offices and operations in Klamath Falls, Oregon.” Id. ¶ 6. The
28 complaint further alleges that defendants JWTR Oregon, LLC and JWTR, LLC are limited
Case No. 14-cv-01618 NC
ORDER TO SHOW CAUSE

2

ng
e
e
Oregon, eac with
ch
1 liability companies organized and existin under the laws of the State of O
pal
f
n
F
on”
at
ly
2 a princip place of business in Klamath Falls, Orego and tha “both are beneficiall
b
t.”
3 owned by the Trust Id. ¶ 7.

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Th complain fails to al
he
nt
llege the cit
tizenship of the memb
f
bers, and any sub-mem
y
mbers,

efendants li
imited liability compan
nies. Furth ermore, the allegations in the com
e
mplaint
5 of the de
a
cient to esta
ablish the citizenship o the defen
of
ndant trust. See Johnso
on,
6 do not appear suffic
d
A
t
rustee or tru
ustees.” (cit
ting Navarr Sav.
ro
7 437 F.3d at 899 (“A trust has the citizenship of its tr
U
64
;
merald Inve
estors Trust v. Gaunt
t
8 Ass’n v. Lee, 446 U.S. 458, 46 (1980))); but see Em
d
ng
p
9 Parsippany Partners, 492 F.3d 192, 205 (3d Cir. 2007) (holdin that “the citizenship of
e
d
iciary shoul control in determini the citiz
ld
n
ing
zenship of a
10 both the trustee and the benefi
0

11 trust”).
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Be
ecause the complaint does not con
c
d
ntain suffic
cient allegat
tions to esta
ablish that t
there is

te
hip
n
and
ndants, by J
July 8, 2014
4,
13 complet diversity of citizensh between plaintiff a all defen
3
f
w
w
t
sed
k
14 plaintiff must show cause in writing why this action should not be dismiss for lack of
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s
tter
tion. If plai
intiff is una to alleg the citize
able
ge
enship of al
ll
15 federal subject mat jurisdict
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nts
t
g
y
ue,
ff
16 defendan without conducting discovery on this issu plaintiff should so indicate in its
6
e
17 response to the order to show cause.
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8

Th hearing on the moti to dismi filed by JWTR Ore
he
o
ion
iss
egon, LLC a JWTR, LLC,
and

inued from July 2 to August 6, 20
A
014, at 1:00 p.m. in Courtroom A, 15th
,
19 Dkt. No. 8, is conti
9
U
t
0
e,
cisco, Calif
fornia.
20 Floor, U.S. District Court, 450 Golden Gate Avenue San Franc
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IT IS SO OR
T
RDERED.

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Date: June 24 2014
4,

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_____
_________
__________
____
Nath
hanael M. C
Cousins
Unit States M
ted
Magistrate J
Judge

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Case No. 14-cv-01618 NC
ORDER TO SHOW CAUSE
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