Houston Specialty Insurance Co v. Chesapeake Operating L L C et al

Filing 19

MEMORANDUM ORDER. Defendants are directed to promptly provide their detailed citizenship information to counsel for Plaintiff so that this preliminary issue may be resolved as quickly and efficiently as possible. Plaintiff will be allowed until May 2 7, 2015 to file an amended complaint that contains the necessary citizenship information. Any amended complaint filed after that date will require a motion for leave to amend. Fed. R. Civ. Pro. 15(a). The court will set a scheduling conference if the amended complaint establishes that there is diversity. Otherwise, the case will be subject to dismissal for lack of subject-matter jurisdiction. Signed by Magistrate Judge Mark L Hornsby on 5/11/15. (crt,Kennedy, T)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION

HOUSTON SPECIALTY INSURANCE CO.

CIVIL ACTION NO. 15-cv-0047

VERSUS

JUDGE FOOTE

CHESAPEAKE OPERATING, LLC, ET AL

MAGISTRATE JUDGE HORNSBY

MEMORANDUM ORDER
Houston Specialty Insurance Company (“Plaintiff”) filed this civil action based on an
assertion of diversity jurisdiction, so the burden is on Plaintiff to set forth the facts necessary
to determine that there is complete diversity of citizenship. Plaintiff describes itself as a
Texas corporation with its principal place of business in Texas. Those allegations are
adequate with respect to Plaintiff.
Plaintiff describes the three defendants as limited liability companies. The complaint
does not identify the members of the LLCs. Rather, Plaintiff alleges that “upon information
and belief,” all members of the LLCs are citizens of Oklahoma, Louisiana, and Louisiana,
respectively. Those allegations are not sufficient to meet Plaintiff’s burden of showing that
it has filed its complaint in a court of proper jurisdiction.
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.
Defendants are directed to promptly provide their detailed citizenship information to
counsel for Plaintiff so that this preliminary issue may be resolved as quickly and efficiently
as possible. Plaintiff will be allowed until May 27, 2015 to file an amended complaint that
contains the necessary citizenship information. Any amended complaint filed after that date

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will require a motion for leave to amend. Fed. R. Civ. Pro. 15(a). The court will set a
scheduling conference if the amended complaint establishes that there is diversity.
Otherwise, the case will be subject to dismissal for lack of subject-matter jurisdiction.
THUS DONE AND SIGNED in Shreveport, Louisiana, this 11th day of May, 2015.

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