DT GRAT JTM, LLC et al v. Keeney

Filing 71

MEMORANDUM OPINION & ORDER: 1) Plaintiffs' Motion for Leave to File Supplemental Authority 69 is granted; 2) Defendants' Motion to Dismiss 38 is granted; and 3) Plaintiffs' Complaint 1 and Amended Complaint 15 are dismissed for lack of subject matter jurisdiction; and 4) This matter is dismissed and stricken from the Court's active docket. Signed by Judge David L. Bunning on 11/9/2017.(ECO)cc: COR

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
NORTHERN DIVISION
AT COVINGTON
CIVIL ACTION NO. 17-101-DLB-CJS
DT GRAT JMT, LLC, et al.
V.

PLAINTIFFS

MEMORANDUM OPINION & ORDER

KURTIS KEENEY, et al.

DEFENDANTS
** ** ** ** ** ** ** **

Defendants Kurtis Keeney, Dennis Williams, Nathan Smith, Management-SSK,
LLC (“Management-SSK”), Augusta Home Sales, LLC (“Augusta Home Sales”),
Declaration Homes, LLC (“Declaration Homes”), and MHC Management, LLC (“MHC
Management”) (collectively “Defendants”) seek dismissal of Plaintiffs’ lawsuit. (Doc. #
38). Specifically, Defendants claim that dismissal is appropriate for five separate reasons:
(1) the Court lacks subject matter jurisdiction; (2) the Plaintiffs have failed to join the real
parties in interest; (3) Counts Two, Three, and Four are barred by the statute of limitations;
(4) the Plaintiffs have failed to state a claim upon which relief can be granted; and (5) the
lawsuit, in reality, is a lawsuit to dissolve the various business entities. Id. The Court
having heard oral argument on November 3, 2017, and Plaintiffs’ having subsequently
filed a Motion for Leave to File Supplemental Authority (Doc. # 69) to which the
Defendants have responded (Doc. # 70), the Motion to Dismiss is fully briefed (Docs. #
44, 59, 69), and is ripe for the Court’s review. For the reasons that follow, Defendants’
Motion to Dismiss (Doc. # 38) is granted and Plaintiffs’ claims are dismissed.

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I.

FACTUAL AND PROCEDURAL BACKGROUND
In essence, this action concerns Defendants’ alleged fraudulent conduct, self-

dealing, and mismanagement of thirteen limited-liability companies that are collectively
referred to as the “Park Companies.” Beginning in 2011, Plaintiffs DT GRAT JMT, LLC
(“DT GRAT”), SG LV, LLC (“SG LV”), Temecula Holdings, LLC (“Temecula”), and SG LV
2, LLC (“SG LV 2”) initiated a business relationship with Defendant Keeney, in which DT
GRAT, SG LV, Temecula, SG LV 2, Keeney, and his associates organized thirteen
limited-liability companies to purchase mobile-home parks. (Doc. # 1 at ¶ 9). Together,
the thirteen limited-liability companies are collectively referred to as the “Park
Companies.” Id. at ¶ 17. The individual limited-liability companies that form the Park
Companies are as follows: (1) 10427 Hickory, LLC (“Hickory”); (2) Valley Station 1, LLC
(“Valley Station”); (3) V-Station, LLC (“V-Station”); (4) Paducah MHC, LLC (“Paducah”);
(5) Carrollton MHC, LLC (“Carrollton”); (6) Alexandria MHC, LLC (“Alexandria”); (7)
Campbell 27, LLC (“Campbell”); (8) Owensboro MHC, LLC (“Owensboro”); (9) Walton
MHC, LLC (“Walton”); (10) Cincy MHP, LLC (“Cincy MHP”); (11) Vanderburgh MHC, LLC
(“Vanderburgh”); (12) MH Acceptance, LLC (“MH Acceptance”); and (13) Evansville
MHC, LLC (“Evansville”). Id. Notably, these thirteen limited-liability companies are not
named parties in this action.
Keeney serves as the managing-member of the thirteen limited-liability companies
that form the Park Companies pursuant to each limited-liability company’s operating
agreement. Id. at ¶ 10. Plaintiffs are also members of those limited-liability companies.1

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DT GRAT and SG LG LV 2 together hold a direct or indirect 50% membership interest in Hickory,
Valley Station, V-Station, Paducah, Carrollton, Alexandria, Campbell, Owensboro, Walton, and
Vanderburgh. (Doc. # 15 at 16). Keeney, Smith, and Williams each own a direct or indirect 16.66% interest
in the aforementioned limited-liability companies. Id. Furthermore, SG LV (whose interest was eventually
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(Doc. # 15 at ¶ 16-17). The parties’ membership in these limited-liability companies gave
rise to this lawsuit—namely, Defendants’ alleged fraudulent conduct, self-dealing, and
mismanagement of the limited-liability companies that form the Park Companies.
In addition to the Park Companies, Keeney also separately manages four other
limited-liability companies, referred to by Plaintiffs as the “Keeney Business Entities.” Id.
at ¶ 19. The Keeney Business Entities are: (1) Management-SSK, (2) Augusta Home
Sales, (3) Declaration Homes, and (4) MHC Management, all of which are named
Defendants in this action. Id. Keeney provides management services to the Park
Companies through Management-SSK. Id. at ¶ 18. Plaintiffs do not have a membership
interest in the Keeney Business Entities. Id. However, both Defendants Williams and
Smith have membership interests in the Keeney Business Entities. Id.
The operating agreements for ten of the thirteen limited-liability companies that
form the Park Companies state that “prior to the end of the year, the Manager shall
provide to the Members a proposed annual budget for the next calendar year.”2 (Doc. #
1 at ¶ 31). The operating agreements further provide that “[t]he budget must be approved
in writing by the Members.” Id. However, the Complaint alleges that annual budgets
have “not been consistently provided to Plaintiffs, or approved by the members, yet
Keeney continues to disburse funds without the written consent required by the operating
agreements.” Id. at ¶ 32.

transferred to DT GRAT) holds a 45% membership interest in Cincy MHP, SG LV 2 has a 5% membership
interest, and Keeney, Williams, and Smith each have a 16.66% membership interest in Cincy MHP. Id.
Lastly, DT GRAT holds a 50% membership interest in MH Acceptance, and Keeney, Smith, and Williams
each have a 16.66% membership interest in MH Acceptance. Id. at 17.
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Those ten limited-liability companies are: (1) Alexandria; (2) Campbell; (3) Carrollton; (4) Cincy
MHP; (5) MH Acceptance; (6) Owensboro; (7) Paducah; (8) V-Station; (9) Valley Station; and (10)
Vanderburgh.
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The operating agreements further permit the limited-liability companies to “enter
into a contract, action, or transaction … between the Company and any other Person in
which one or more of its Members, or Manager … have a financial or personal interest,
only if approved by Members holding a Majority Interest.” Id. at ¶ 33. The Complaint
alleges that financial documents show Keeney “made transfers to the Keeney Business
Entities” from ten of the limited-liability companies that form the Park Companies without
seeking consent from Plaintiffs prior to making the transfers, as required by the operating
agreements. Id. at ¶ 35-36. Furthermore, despite Plaintiffs’ requests, Keeney has
allegedly failed to provide an accounting detailing the transactions. Id.
In 2016, Plaintiffs sought to end their business relationship with Keeney, Smith,
and Williams and relied upon Keeney and Management-SSK to sell the mobile-home
parks owned by the Park Companies. (Doc. # 15 at ¶ 40). Keeney provided potential
purchasers financial documents relating to the Park Companies and Plaintiffs became
aware of Keeney’s alleged financial mismanagement. Id. at ¶ 41. Plaintiffs allege that
they uncovered transactions between the Park Companies and the Keeney Business
Entities that occurred without the consent of DT GRAT or SG LV 2. Id. Upon discovering
the transactions, Plaintiffs employed Stephen Mann, an independent, third-party Certified
Public Accountant, to review the financial information provided to them by Keeney. Id. at
¶ 43. Mann concluded that the amounts misappropriated by Keeney to the Keeney
Business Entities total $11,720,821.11.3 Id. The Amended Complaint further alleges that
Defendants Smith, Williams, and the Keeney Business Entities “knowingly participated

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Keeney has indicated that $200,000 of the $11,720,821.11 went to benefit the Park Companies.
Id. at ¶ 55. The remaining transfers by Keeney out of the Park Companies to the Keeney Business Entities
allegedly were not used for the benefit of the Park Companies. Id.
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and gave Keeney substantial assistance or encouragement in effectuating the transfer of
funds from the Park Companies to the Keeney Business Entities.” Id. at ¶ 48.
Because of the Defendants’ alleged misdeeds, Plaintiffs have brought claims
alleging breach of contract, breach of fiduciary duty, aiding and abetting breach of
fiduciary duty, and fraud.4 (Doc. # 15 at 26-27).
II.

ANALYSIS
A.

Standard of Review

To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). The standard is met when the facts in the
complaint allow “the court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.” Id. The complaint need not contain “detailed factual
allegations,” but must contain more than mere “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action.” Id. Instead, the “[f]actual allegations
must be enough to raise a right to relief above the speculation level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 (2007).
B.

The Court lacks subject matter jurisdiction.

Federal courts are courts of limited jurisdiction which may exercise only those
powers authorized by the Constitution or a statute. Douglas v. E.G. Baldwin & Assocs.,
Inc., 150 F.3d 604, 606 (6th Cir. 1998) (citing Kokkonen v. Guardian Life Ins. Co. of
Am., 511 U.S. 375, 377 (1994)). Courts must first presume that a cause of action lies

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Despite discussions otherwise at Oral Argument, Plaintiffs’ seek both an accounting of the Park
Companies and money damages from Defendants’ Management-SSK, Augusta Home Sales, Declaration
Homes, and MHC Management. (Doc. # 25 at 4-5).
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outside of the court’s limited jurisdiction, “‘and the burden of establishing the contrary
rests upon the party asserting jurisdiction.’” Id. (quoting Kokkonen, 511 U.S. at 377).
Thus, the first question this Court must consider is whether it has jurisdiction to hear this
case. Id. at 606-07 (citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541
(1986)).
Plaintiffs have alleged that subject-matter jurisdiction exists pursuant to 28 U.S.C.
§ 1332 because this is a civil action involving citizens of different states and the amount
in controversy exceeds $75,000. (Doc. # 15 at 7). As the action is currently plead,
complete diversity exists between the parties. That is because Plaintiffs are citizens of
Nevada, Ohio, and Michigan, and Defendants are citizens of Kentucky. (Doc. # 57 at 12). However, the Court’s analysis must not end there. The Court must consider whether
the proper parties are presently before the Court.
Defendants present a compelling argument for why this Court lacks subject-matter
jurisdiction, despite its apparent existence. Defendants argue that Plaintiffs failed to join
the real parties in interest as required by Rule 17(a) of the Federal Rules of Civil
Procedure.5 (Doc. # 38 at 1). According to Defendants, the proper Plaintiffs in this action
are the thirteen limited-liability companies known as the Park Companies, and not the
individual members of those limited-liability companies. (Doc. # 38-1 at 5-6). Defendants
believe that those limited-liability companies are the real parties in interest because
“individual members of LLCs may only bring claims in their individual capacity when they
have suffered a separate and distinct injury from that of the LLC.” Id. at 6. Defendants
argue that the current Plaintiffs have not suffered an injury that is separate and distinct

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Defendants have also filed a Motion to Substitute Parties (Doc. # 37) seeking the same relief.

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from the injury allegedly suffered by the Park Companies. Id. Thus, Defendants contend
that the Plaintiffs’ claims are derivative, and under Rule 17(a), the Court must substitute
the current Plaintiffs for the thirteen-limited liability companies collectively referred to as
the Park Companies. Id. The Court agrees.
Rule 17(a) of the Federal Rules of Civil Procedure requires an action to be
“prosecuted in the name of the real party in interest.” To determine who the real party in
interest is, the Court must determine whether the current action is direct or derivative.6
The parties strongly disagree on this point. Plaintiffs assert that they are the real parties
in interest because this is a direct, not derivative, cause of action. Id. at 5. Specifically,
Plaintiffs argue that the important distinction is that the alleged misdeeds involve wrongs
to certain members—not all members—of the thirteen limited-liability companies that are
collectively referred to as the Park Companies. (Doc. # 44 at 2). That is, because the
misdeeds were to the benefit of some members of the limited-liability companies—
Defendants—and to the detriment of other members of the limited-liability companies—
Plaintiffs. Id. Plaintiffs believe that it is this distinction that makes Plaintiffs the real
parties in interest, rather than the thirteen limited-liability companies known as the Park
Companies. Thus, Plaintiffs argue that they are entitled to bring a direct claim for the
distinct harms they suffered from the Defendants’ misconduct.

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A federal court sitting in diversity must apply “the choice of law rules of the forum state.” Hayes v.
Equitable Energy Res. Co., 266 F.3d 560, 566 (6th Cir. 2001). A federal court exercising diversity
jurisdiction must “follow the decision of the state’s highest court when that court has addressed the relevant
issue.” Savedoff v. Access Grp., Inc., 524 F.3d 754, 762 (6th Cir. 2008). If the issue has not been resolved
by the state’s highest court, a federal court “must anticipate how the relevant state’s highest court would
rule’” and may rely on the state’s intermediate appellate court and other persuasive authority in making this
determination. Id. It is undisputed by the parties that Kentucky law applies. Furthermore, the Kentucky
Supreme Court has yet to render a decision articulating whether an action is direct or derivative in the
limited-liability context. Thus, the Court will rely on the decisions from the Kentucky Court of Appeals and
other persuasive authority in making its decision.
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Although Plaintiffs argue that the correct parties are before the Court, the
Complaint and Amended Complaint belie this assertion. The harm alleged in this action
is harm to the Park Companies as a whole—that is to say, each of the thirteen limitedliability companies that form the Park Companies—and not the individual members of
those limited-liability companies. Plaintiffs’ pleadings support this conclusion. Plaintiffs
allege that “Keeney has transferred millions of dollars from Park Companies to entities
in which he, and upon information and belief Williams and Smith, but not the Plaintiffs,
have financial and personal interests without the required consent of the Plaintiffs
resulting in $11,720,821.11 (excluding interest) due and owing to the Park Companies.”
(Doc. # 15 at 4) (emphasis added). Further, Plaintiffs assert that “Keeney committed
fraud when he failed to disclose to Plaintiffs that the funds transferred out of the Park
Companies did not benefit or add value to the Park Companies.” Id. (emphasis added).
Plaintiffs rely on Pixler v. Huff, No. 3:11-cv-207-JHM, 2012 WL 3109492 (W.D. Ky.
July 31, 2012), to support their argument that the breach-of-contract, breach-of-fiduciary
duty, and fraud claims are direct claims, rather than derivative. In Pixler, the district court
stated that the claims of fraud, breach of fiduciary duty, breach of contract, and
promissory estoppel “each allege an injury by Plaintiff that is separate and distinct from
any injury suffered by [the LLC] or the other members. Thus, these claims are direct
claims that may be brought by Plaintiff in her individual capacity.”7 However, Plaintiffs’
reading of Pixler is too broad; although breach-of-contract, breach-of-fiduciary duty, and
fraud claims may sometimes be direct claims, that is not always the case. If those claims
fail to allege a separate and distinct injury, they will be derivative.

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The Court assumes, despite the lack of analysis, that the Plaintiff in Pixler was able to demonstrate
a separate and distinct injury. To the extent Pixler held otherwise, the Court finds it unpersuasive.
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Additionally, during oral argument, Plaintiffs argued that Ky. Rev. Stat. Ann. §
275.337(1) allows them, as members of the Park Companies, to bring a direct action
against Defendants. That section provides that “[a] member may maintain a direct action
against a limited liability company, another member, or a manager to redress an injury
sustained by, or to enforce a duty owed to, the member if the member can prevail without
showing an injury or breach of duty to the company.” Ky. Rev. Stat. Ann. § 275.337(1)
(emphasis added). Although it is true that a member of a limited-liability company may
maintain a direct action against another member, that is only the case “if the member
can prevail without showing an injury or breach of duty to the company.” Id. This is
precisely what Plaintiffs fail to do.
Another case in this district provides a framework for determining when claims are
direct or derivative. See 2815 Grand Realty Corp. v. Goose Creek Energy Inc., 656 F.
Supp. 2d 707, 715-16 (E.D. Ky. 2009). In Goose Creek, the district court held that a
plaintiff may maintain direct claims against a defendant only where he has suffered an
injury that is separate and distinct from that which would be suffered by other members
or the limited-liability company as an entity. Id. at 715. In the context of corporations,
the general rule is that a shareholder of a corporation does not have a personal or
individual right of action for damages based solely on an injury to the corporation. Id.
Such a suit can only be brought by the corporation itself or by a shareholder derivatively
since only the corporation has an action for wrongs committed against it. Id. Put another
way, when the injury is separate and distinct, the shareholder may maintain an individual
action in his own right—a direct claim. Id.

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The Sixth Circuit in Kepley v. Lanz, 715 F.3d 969 (6th Cir. 2013), provides an
example of a factual scenario where a shareholder’s harm—or in this case, a member’s
harm—is separate and distinct from the harm suffered by the other shareholders or the
corporate entity. In Kepley, the Plaintiffs alleged that the Defendant’s threat forced them
to sell their shares of stock at a price lower than the fair market value. Id. at 971. The
Sixth Circuit considered the focus to be on: (1) the nature of the duty owed and (2) the
nature of the injury suffered. Id. at 973. The Sixth Circuit found that the Defendant’s
duty not to sell his stock was owed to both the corporation and the Plaintiffs. However,
the nature of the injury was suffered only by the Plaintiffs. The Sixth Circuit noted that
“[t]here [was] nothing in the record to suggest that any of the other shareholders sold
their stock or were pressured to do so.” Id. Thus, the Plaintiffs suffered “an injury that
was not suffered by either the corporation or the other shareholders. Their injury is
therefore, separate and distinct.” Id. at 974.
To follow the Sixth Circuit’s analysis in Kepley, Defendants’ duty ran to both the
members of the limited-liability companies and to the limited-liability companies
themselves. The liability of members and mangers of limited-liability companies is
outlined in Ky. Rev. Stat. Ann. § 275.170.8 In Kentucky, a managing member of a limitedliability company owes fiduciary duties to other members of the limited-liability company
and to the limited-liability company itself. Patmon v. Hobbs, 280 S.W.3d 589, 595 (Ky.
Ct. App. 2009). Although it may be true that Plaintiffs, as members of the thirteen limited-

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To summarize the statute, “a member or manager must account to and hold as trustee for a limited
liability company any profit or benefit derived from the use of company property by that member or manager
including, but not limited to, confidential, proprietary, or other matters entrusted to that person’s status as a
manger or member.” Patmon v. Hobbs, 280 S.W.3d 589, 595 (Ky. Ct. App. 2009).
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liability companies that form the Park Companies, were owed fiduciary duties by
Defendant Keeney, so too were the limited-liability companies.
However, unlike the Plaintiffs in Kepley, the nature of the Plaintiffs’ alleged injury
would be suffered by both the individual members—like Plaintiffs—and the limited liability
companies.

As explained in Goose Creek, claims based on the depreciation or

diminution in the value of a shareholder’s corporate stock are generally not recognized
as the type of direct, personal injury which is necessary to sustain a direct cause of
action. Goose Creek Energy Inc., 656 F. Supp. 2d 715. That is because a diminution in
the value of corporate stock resulting from some depletion of or injury to the corporate
assets is an injury to the corporation; the shareholder’s injury is merely incidental. Id.
Here, Plaintiffs allege harm from the diversion of funds from Park Companies to
the Keeney Business Entities. Although couched in terms of breach of contract, breach
of fiduciary duty, and fraud, “[t]he crux of these claims is that the [Park Companies’] assets
and funds were misappropriated by the various Defendants, depriving Plaintiff[s] of [their]
contractual share of the profits from [the Park Companies’] business profits.” Pixler, 2012
WL 3109492 at *4. As such, Plaintiffs’ claims “are actually asserting an injury to [the Park
Companies], the diminution/theft/misappropriation of its assets, which in turn resulted in
an injury to the Plaintiff[s’], the deprivation of the Plaintiff[s’] share of the profits from [the
Park Companies].” Id. Plaintiffs’ injury is only “an incidental one that runs from” their
status as a member of the thirteen limited-liability companies that form the Park
Companies, not from Defendants’ wrongful actions against them individually.

Id.

Therefore, Plaintiffs have “failed to demonstrate a specific injury to themselves outside of
the “diminution in the value of the corporate stock resulting from some depletion of or

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injury to the [limited-liability company’s] assets.” Goose Creek Energy Inc., 656 F. Supp.
2d at 715. Accordingly, the Plaintiffs’ claims are derivative and must be brought by the
Park Companies or on Park Companies’ behalf pursuant to Rule 17(a) of the Federal
Rules of Civil Procedure.
Plaintiffs’ reliance on the limited-liability companies’ operating agreements does
not transform their claims into direct claims. Plaintiffs argue that their injury is separate
and distinct from the harm to the thirteen limited-liability companies that form the Park
Companies because “Defendant Keeney failed to obtain approvals from Plaintiffs that he
was bound to obtain under the Operating Agreements and as a fiduciary, including
consent to budgets and to transactions with other companies that he and other
Defendants owned.” (Doc. # 44 at 7). Furthermore, Plaintiffs allege that “[h]e did not
observe his contract or common law duties to disclose to them his conflict of interest in
connection with unauthorized transfers to third parties.” Id. Plaintiffs argue that their
injury is separate and distinct because “Defendants actively benefitted from the diversion
of funds.” Id. Again, Plaintiffs’ reliance on the operating agreements is misplaced. “But
for the limited liability companies, those claims would not exist.” Trident-Allied Assocs.,
LLC v. Cypress Creek Assocs., LLC, 317 F. Supp. 2d 752, 754 (E.D. Mich. 2004). Those
“very Agreements . . . served as the basis for the creation of the LLC in the first instance.”
Id. (citing Trademark Retail, Inc. v. Apple Glen Investors, LP, 196 F.R.D. 535, 540 (N.D.
Ind. 2000)). Put simply, Plaintiffs’ claims are derivative, not direct, whether styled as
breach of contract, breach of fiduciary duty, or fraud.
Plaintiffs have failed to demonstrate how the injury they suffered is different from
the injury suffered by the limited-liability companies that form the Park Companies. The

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test is not simply whether one member was harmed differently than another member; the
test is whether the member was harmed differently than the limited-liability company itself
or the other members. Thus, for Plaintiffs’ to have a direct claim, the injury they suffered
must be different than the harm suffered by the limited-liability companies—Hickory,
Valley Station, V-Station, Paducah, Carrolton, Alexandria, Campbell, Owensboro,
Walton, Cincy MHP, Vanderburgh, and MH Acceptance—not just the other members. In
short, the existence of the limited-liability companies must be respected.

Taylor v.

Moskow, No. 13-10802-FDS, 2013 WL 5508157, *4 (D. Mass. October 1, 2013).
Accordingly, the Plaintiffs’ claims are derivative and must be brought by the Park
Companies or on the Park Companies’ behalf pursuant to Rule 17(a) of the Federal Rules
of Civil Procedure.
Having determined that the thirteen limited-liability companies known as the Park
Companies are the real parties in interest pursuant to Rule 17(a), the Court must ascertain
the citizenship of those limited-liability companies. For purposes of diversity jurisdiction,
courts have created a distinction between incorporated entities and unincorporated
entities. A corporation is a citizen of its incorporating state and its principal place of
business. See Hertz Corp. v. Friend, 559 U.S. 77, 93 (2010). However, “[t]he general
rule is that all unincorporated entities—of which a limited-liability company is one—have
the citizenship of each partner or member.” Delay v. Rosenthal Collins Grp., LLC, 585
F.3d 1003, 1005 (6th Cir. 2009). Therefore, membership is the key inquiry in determining
a limited-liability company’s citizenship for jurisdictional purposes. In fact, “a member of
a limited liability company may itself have multiple members—and thus may itself have
multiple citizenships.” Id.

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Both the Plaintiffs and Defendants are members of twelve of the thirteen limitedliability companies that form the Park Companies.9 Because Plaintiffs DT GRAT and SG
LV 2 and Defendants Keeney, Smith, and Williams are all members of Hickory, Valley
Station, V-Station, Paducah, Carrollton, Alexandria, Campbell, Owensboro, Walton,
Cincy MHP, Vanderburgh, and MH Acceptance, each of those limited-liability companies
has the citizenship of its members: Nevada, Ohio, Michigan, and Kentucky. Given that
each of the limited-liability companies, as the substituted Plaintiffs, and Defendants are
citizens of Kentucky, complete diversity of citizenship does not exist. Accordingly, the
Court lacks subject-matter jurisdiction and this action must be dismissed.

Having

determined that the Court lacks subject-matter jurisdiction, is its unnecessary—and would
be improper—for the Court to address the parties’ other arguments.
III.

CONCLUSION
Accordingly, for the reasons stated herein,
IT IS ORDERED as follows:
(1) Plaintiffs’ Motion for Leave to File Supplemental Authority (Doc. # 69) is

granted;
(2) Defendants’ Motion to Dismiss (Doc. # 38) be, and is hereby granted; and
(3) Plaintiffs’ Complaint (Doc. # 1) and Amended Complaint (Doc. # 15) are
dismissed for lack of subject matter jurisdiction; and
(4) This matter is dismissed and stricken from the Court’s active docket.

9

Plaintiff Temecula is the sole member of Evansville. The members of Temecula are DT GRAT, DT
Sarrifian Trust, and CT Sarrifian Trust, all of which are citizens of Nevada. Thus, Evansville is also deemed
to be a citizen of Nevada for jurisdictional purposes.
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This 9th day of November, 2017.

K:\DATA\Opinions\Covington\2017\17-101 MOO.docx

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