MC Louisiana Minerals L L C v. Searcy et al

Filing 19

MEMORANDUM ORDER : Plaintiff will be allowed until 11/2/2012 to file a motion for leave to file an amended complaint that sets forth its citizenship in detail in accordance with the above rules. If diversity is established, the court will set a scheduling conference. If not, the action will be subject to dismissal for lack of subject-matter jurisdiction. Compliance Deadline set for 11/2/2012. Signed by Magistrate Judge Mark L Hornsby on 10/16/12. (crt,Kennedy, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

MC LOUISIANA MINERALS, LLC

CIVIL ACTION NO. 12-cv-1237

VERSUS

JUDGE HICKS

SAM T. SEARCY, ET AL

MAGISTRATE JUDGE HORNSBY

MEMORANDUM ORDER
MC Louisiana Minerals, LLC filed this action against two individuals. The asserted
basis for subject-matter jurisdiction is diversity of citizenship. The individual defendants are
alleged to be citizens of Texas. Plaintiff describes itself as a limited liability company
organized under Oklahoma law with a principal place of business in Oklahoma. It also
alleges: “All of the members of MCLM are citizens of the State of Oklahoma.”
The citizenship of an LLC is determined by the citizenship of all of its members, with
its state of organization or principal place of business being irrelevant. Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077 (5th Cir. 2008). If the members are themselves partnerships,
LLCs, corporations or other form of entity, their citizenship must be alleged in accordance
with the rules applicable to that entity, and the citizenship must be traced through however
many layers of members or partners there may be. Feaster v. Grey Wolf Drilling Co., 2007
WL 3146363 (W.D. La. 2007).
The need for such detail was 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 distinctly and affirmatively alleged the citizenship of a limited partnership, the

citizenship of which is determined by the same rules applicable to an LLC. The Court turned
to the merits only after the citizenship had been traced, with specificity, “down the various
organizational layers” and in accordance with the rules that apply to the various forms of
entities. Mullins v. TestAmerica Inc., 564 F.3d 386, 397-98 (5th Cir. 2009). The Mullins
opinions make clear that general allegations that all members or partners are of diverse
citizenship from the parties on the other side, without factual specificity, are not sufficient.
This court has seen a number of cases where the parties were confident there was
diversity because “all members of the LLC are citizens of” diverse states, but diversity and
subject matter jurisdiction unraveled when the court required the parties to allege citizenship
in detail. Requiring those allegation early in the case avoids the waste of time and resources
that have been seen in cases such as Howery v. Allstate, 243 F.3d 912 (5th Cir. 2001), where
Allstate saw a favorable judgment slip away on appeal because it neglected to plead its
principal place of business when in district court, and Elliot v. Tilton, 62 F.3d 725, 729 (5th
Cir. 1995), where the judgment was vacated on appeal. See also D.B. Zwirn Special
Opportunities Fund, L.P. v. Mehrotra, 661 F.3d 124 (1st Cir. 2011) (ordering detailed
allegations of citizenship of an LLC).
Plaintiff will be allowed until November 2, 2012 to file a motion for leave to file an
amended complaint that sets forth its citizenship in detail in accordance with the above rules.
If diversity is established, the court will set a scheduling conference. If not, the action will
be subject to dismissal for lack of subject-matter jurisdiction.

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THUS DONE AND SIGNED in Shreveport, Louisiana, this 16th day of October,
2012.

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