Muslow Land and Timber, Inc. et al v. Chesapeake Exploration Limited Partnership et al

Filing 4

MEMORANDUM ORDER: The plaintiffs must amend their complaint to provide the factual detail necessary to ensure the presence of subject matter jurisdiction before the court will consider granting them any relief in this civil action. Signed by Magistrate Judge Mark L Hornsby on 02/11/09. (crt,Williams, L)

UNITED STATES DISTRICT COURT W E S T E R N DISTRICT OF LOUISIANA S H R E V E P O R T DIVISION

M U S L O W LAND & TIMBER, IN C ., ET AL VERSUS C H E S A P E A K E EXPLORATION L IM IT E D PARTNERSHIP, ET AL

CIVIL ACTION NO. 09-cv-0211

J U D G E WALTER M A G I S T R A T E JUDGE HORNSBY

M E M O R A N D U M ORDER M u s lo w Land & Timber, Inc. and Freyer Investments, Ltd. filed this civil action based o n an assertion of diversity jurisdiction. It is their burden to plead the facts necessary to e n su re diversity of citizenship. The current complaint does not satisfy the plaintiffs' burden b e c a u s e it does not properly set for the citizenship of the parties, as explained below. P la in tif f s should amend their complaint, seeking leave if then necessary under Fed. R. Civ. P r o c . 15, to allege with specificity the citizenship of each party. The deadline for compliance is 45 days after the last defendant makes an appearance in the case. Muslow describes itself as a Louisiana corporation, domiciled in Caddo Parish. A c o rp o ra tio n is deemed to be a citizen of (1) the state in which it was incorporated and (2) the s ta te where it has its principal place of business. 28 U.S.C. § 1332(c)(1). To establish d iv e rsity jurisdiction, a complaint must set forth "with specificity" a corporate party's state o f incorporation and its principal place of business. "Where the plaintiff [or removing party] f a ils to state the place of incorporation or the principal place of business of a corporate party,

th e pleadings are inadequate to establish diversity." Joiner v. Diamond M Drilling Co., 677 F .2 d 1035, 1039 (5th Cir. 1982). The Fifth Circuit requires strict adherence to these s tra ig h tf o rw a rd rules. Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001). See also Getty Oil Corp. v. Insurance Company of North America, 841 F.2d 1254, 1259 (5th Cir. 1 9 8 8 ) ("In cases involving corporations, allegations of citizenship must set forth the state of in c o rp o ra tio n as well as the principal place of business of each corporation"). Muslow has n o t alleged with specificity the state in which it has its principal place of business. One of the named defendants is also alleged to be a corporation. Plaintiffs allege that C h e s a p e a k e Operating, Inc. is a "foreign corporation" domiciled in Oklahoma. Plaintiffs n e e d to allege with specificity the state in which Chesapeake is incorporated and the state in w h i c h it has its principal place of business. The reference to where the corporation is " d o m ic ile d " is too vague to mean with certainty either the state of incorporation or the p rin c ip a l place of business. The use of the precise terminology provided in the statute will a v o id doubt about the existence of subject-matter jurisdiction. F r e y e r describes itself as a partnership domiciled in Texas. One of the defendants, C h e s a p e a k e Exploration Limited Partnership, is described as a partnership domiciled in O k la h o m a with a principal office in Oklahoma. The rules for determining citizenship when a partnership is a party differ from the statutory rule for a corporation. The court must c o n sid e r the citizenship of each partner, both general and limited, to determine the existence o f diversity jurisdiction. Carden v. Arkoma Associates, 110 S.Ct. 1015 (1990); Moran v.

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G u lf South Pipeline Co., L.P., 2007 WL 276196 (W.D. La. 2007) (same rules apply even w h e n there are several thousand limited partners). Accordingly, Chesapeake Louisiana, LP h a s not properly alleged the facts necessary to meet its burden of establishing a basis for d iv e rs ity jurisdiction. If the partners are themselves partnerships, LLCs,1 corporations or other form of e n tity, their citizenship must be alleged in accordance with the rules applicable to that entity, an d the citizenship must be traced through however many layers of members or partners there m a y be. Feaster v. Grey Wolf Drilling Co., 2007 WL 3146363 (W.D. La. 2007). The need f o r such detail was recently demonstrated by Mullins v. Testamerica, Inc., 2008 WL 4888576 (5th Cir. 2008), when the court refused to consider the merits of an appeal until the record d is tin c tly and affirmatively alleged the citizenship of all layers of a limited partnership. P la in tif f s should possess the information to allege their own citizenship, but they may n o t have public access to the citizenship information for the defendants. Parties in the d ef en d an ts ' position ordinarily provide the citizenship information voluntarily, and they are e n c o u ra g e d to do so in this case (once they have been served and joined) so that this p re lim in a ry issue may be resolved as quickly and efficiently as possible. If the defendants w i l l not voluntarily provide the information, the plaintiffs are granted leave to conduct d is c o v e ry on the issue as to any defendant who has appeared. The citizenship of an LLC is determined by the citizenship of all of its members, ju s t as partners determine the citizenship of a partnership. Harvey v. Grey Wolf Drilling C o ., 542 F.3d 1077 (5th Cir. 2008). Page 3 of 4
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T h e Mullins opinion also makes clear that general allegations that all members or p a rtn e rs are of diverse citizenship from the parties on the other side, without factual s p e c if ic ity, is not sufficient. It has been the experience of this court that entities have often a lle g e that all members or partners are of diverse citizenship but, when the entity is required to name each partner and allege his citizenship with particularity, the result is sometimes a la c k of diversity. Such situations must be determined early before there is a waste of r e so u r c e s pursuing the case in a federal court that lacks jurisdiction. The plaintiffs must a m e n d their complaint to provide the factual detail necessary to ensure the presence of su b jec t-m a tter jurisdiction before the court will consider granting them any relief in this civil a c ti o n . T H U S DONE AND SIGNED in Shreveport, Louisiana, this 11th day of February, 2009.

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