Nehemiah Rebar Services, Inc. v. Hertz et al

Filing 9

ORDER. ORDERED that this case is REMANDED to the District Court for Douglas County, Colorado where it was filed as Case No. 2017CV30308. Signed by Judge Philip A. Brimmer on 05/08/17. (jhawk, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 17-cv-01081-PAB
NEHEMIAH REBAR SERVICES, INC.,
Plaintiff,
v.
MICHAEL HERTZ,
PHIL NICHOLS, and
BLACK IRON STEEL, LLC t/a BLACK IRON REBAR, LLC,
Defendants.

ORDER

The Court takes up this matter sua sponte on defendants’ Notice of Removal
[Docket No. 1]. Defendants state that removal is proper under 28 U.S.C. § 1441(a) and
that the Court has subject matter jurisdiction over this lawsuit pursuant to 28 U.S.C.
§ 1332(a). Docket No. 1 at 2, ¶ 5.
This action was originally filed in the District Court for Douglas County, Colorado.
Docket No. 1 at 1, ¶ 1. Defendants claim that all defendants, including Mr. Hertz and
Mr. Nichols, are citizens of the State of Colorado. Id. at 2, ¶ 5. For actions where
jurisdiction is premised on diversity of citizenship, as here, 28 U.S.C. § 1441(b)(2)
provides that such actions “may not be removed if any of the parties in interest properly
joined and served as defendants is a citizen of the State in which such action is
brought.” The notice of removal does not explain why removal was nonetheless proper
when this case was filed in Colorado and at least one of defendants is a citizen of the

State of Colorado. See Docket No. 1. Therefore, the Court will remand this case. See
Brazell v. Waite, 525 F. App’x 878, 884 (10th Cir. 2013) (unpublished) (explaining that
the “so-called forum-defendant rule” prevents removal even where diversity is
established).
Even if the forum-defendant rule did not bar removal, defendants’ notice of
removal fails to establish that the Court has subject-matter jurisdiction. It is well
established that “[t]he party invoking federal jurisdiction bears the burden of establishing
such jurisdiction as a threshold matter.” Radil v. Sanborn W. Camps, Inc., 384 F.3d
1220, 1224 (10th Cir. 2004). Defendants invoke 28 U.S.C. § 1332 as the basis for this
Court’s diversity jurisdiction. Docket No. 1 at 2, ¶ 5. Section 1332(a)(1) states: “T he
district courts shall have original jurisdiction of all civil actions where the matter in
controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and
is between [] citizens of different States.” The facts as presently averred, however, do
not provide sufficient information regarding the citizenship of defendant Black Iron
Steel, LLC t/a Black Iron Rebar, LLC (“Black Iron”).
The complaint identifies defendant Black Iron as a Colorado limited liability
company (“LLC”). Docket No. 3 at 1, ¶ 4. The state of registration is not relevant to
determining Black Iron’s citizenship and the notice of removal does not provide any
information about the citizenship of any members of Black Iron. See Docket No. 1.
While, for diversity purposes, “a corporation shall be deemed to be a citizen of every
State and foreign state by which it has been incorporated and of the State or foreign
state where it has its principal place of business,” 28 U.S.C. § 1332(c)(1); see Carden v.

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Arkoma Assocs., 494 U.S. 185, 196 (1990), 1 these considerations are irrelevant to the
determination of the citizenship of an LLC. The consensus throughout the circuits is
that an LLC, much like a partnership, is deemed to be a citizen of all of the states of
which its members are citizens. See Siloam Springs Hotel, L.L.C. v. Century Sur. Co.,
781 F.3d 1233, 1237-38 (10th Cir. 2015) (“[I]n determ ining the citizenship of an
unincorporated association for purposes of diversity, federal courts must include all the
entities’ members.”); see also Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412,
419-20 (3d Cir. 2010) (citing cases from eight circuits for the proposition that “every
federal court of appeals to address the question has concluded that a limited liability
company, as an unincorporated business entity, should be treated as a partnership for
purposes of establishing citizenship”). When an entity consists of multiple tiers of
ownership and control, the entire structure must be considered for diversity purposes.
In other words, when an entity is composed of multiple layers of constituent entities, the
citizenship determination requires an exploration of the citizenship of the constituent
entities as far down as necessary to unravel fully the citizenship of the entity before the
court. See U.S. Advisor, LLC v. Berkshire Property Advisors, LLC, No. 09-cv-00697PAB-CBS, 2009 WL 2055206, at *2 (D. Colo. July 10, 2009); SREI-Miami, LLC v.
Thomas, No. 08-cv-00730-MSK-BNB, 2008 WL 1944322, at *1 (D. Colo. May 2, 2008);
see also Hicklin Eng’g, L.C. v. Bartell, 439 F.3d 346, 347 (7th Cir. 2006); Turner Bros.
Crane & Rigging, LLC v. Kingboard Chem. Holding Ltd., 2007 WL 2848154, at *4-5

1

A corporation’s “principal place of business” is “the place where a corporation’s
officers direct, control, and coordinate the corporation’s activities.” Hertz Corp. v.
Friend, 559 U.S. 77, 92-93 (2010).
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(M.D. La. Sept. 24, 2007); cf. Carden, 494 U.S. at 195 (“[W]e reject the contention that
to determine, for diversity purposes, the citizenship of an artificial entity, the court may
consult the citizenship of less than all of the entity’s members.”).
Defendants have not identified the members of Black Iron or those members’
domiciles. Cf. Fifth Third Bank v. Flatrock 3, LLC, 2010 WL 2998305, at *3 (D.N.J. July
21, 2010) (concluding that an allegation that “upon information and belief, the members
of [an LLC] are citizens of New York” was insufficient because plaintiff “failed to identify
or trace the citizenship of each individual member” of the LLC (internal quotation marks
omitted)).2 The Court is therefore unable to determine the citizenship of defendant
Black Iron and whether the Court has jurisdiction. See United States ex rel. General
Rock & Sand Corp. v. Chuska Dev. Corp., 55 F.3d 1491, 1495 (10th Cir. 1995) (“The
party seeking the exercise of jurisdiction in his favor must allege in his pleading the
facts essential to show jurisdiction.”) (citations and internal quotation marks omitted).
For the foregoing reasons, it is ORDERED that this case is REMANDED to the
District Court for Douglas County, Colorado where it was filed as Case No.
2017CV30308.

2

This Court has previously noted that, “[w]hile various state legislatures have
decided to permit the members of LLCs to remain anonymous to the public at large,
Congress has not created an exception to the requirements of diversity jurisdiction
which would allow the members of LLCs to remain anonymous in federal court.” U.S.
Advisor, LLC, 2009 WL 2055206, at *3 (citing Carden, 494 U.S. at 196).
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DATED May 8, 2017.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

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