Rodidaco Inc v. Chesapeake Energy Louisiana Corp

Filing 23

MEMORANDUM ORDER re 21 MOTION for Leave to File Amended Complaint filed by Rodidaco Inc. Plaintiff's Motion for Leave to File Amended Complaint (Doc. 21) is denied without prejudice to filing a new motion, by August 14, 2018, that is accompanied by a proposed amended complaint that contains all necessary citizenship information. Compliance Deadline set for 8/14/2018. Signed by Magistrate Judge Mark L Hornsby on 7/24/2018. (crt,Keller, J)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
SHREVEPORT DIVISION
RODIDACO, INC.

CIVIL ACTION NO. 18-cv-0316

VERSUS

JUDGE DOUGHTY

CHESAPEAKE ENERGY LOUISIANA CORP.

MAGISTRATE JUDGE HORNSBY

MEMORANDUM ORDER
Rodidaco, Inc. filed suit in state court against Chesapeake Energy Louisiana
Corporation (“CELC”) for damages and attorney’s fees in connection with a right-of-way
dispute. CELC removed the case based on an assertion of diversity jurisdiction. It alleged
in its notice of removal that Rodidaco is a Louisiana corporation with its principal place of
business in Louisiana. CELC alleged that it is an Oklahoma corporation with its principal
place of business in Oklahoma.
Rodidaco has filed a Motion for Leave to File Amended Complaint (Doc. 21) that
proposes to add four new defendants. Each new defendant is either a limited partnership
or limited liability company. The proposed amended complaint alleges the state of
organization for each entity and the state in which the principal place of business is located
for two of the entities. The description of two of the new defendants states that they have
no known partners or members in Louisiana. The citizenship allegations in the proposed
amended complaint are not adequate for this court to ensure that it would have subjectmatter jurisdiction if the proposed amendment were allowed.

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). “A party seeking to establish
diversity jurisdiction must specifically allege the citizenship of every member of every
LLC or partnership involved in a litigation.”

Settlement Funding, L.L.C. v. Rapid

Settlements, Ltd., 851 F.3d 530, 536 (5th Cir. 2017). 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. Mullins v.
TestAmerica Inc., 564 F.3d 386, 397-98 (5th Cir. 2009); Feaster v. Grey Wolf Drilling Co.,
2007 WL 3146363 (W.D. La. 2007).
When a partnership is a party, the court must consider the citizenship of each
partner, whether limited or general. Carden v. Arkoma Associates, 110 S.Ct. 1015 (1990).
The Carden rule applies to common law limited partnerships and a Louisiana partnership
in commendam. Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir. 1994); Newport Limited
v. Sears, Roebuck and Co., 941 F.2d 302 (5th Cir. 1991). If partners are themselves
partnerships, LLC’s or other form of association, the citizenship must be traced through
however many layers of members or partners there may be, and failure to do so can result
in dismissal for want of jurisdiction. Mullins v. Testamerica, Inc., 300 Fed. Appx. 259 (5th
Cir. 2008) (court refused to consider the merits of an appeal until the record distinctly and
affirmatively alleged the citizenship of a limited partnership).

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A general allegation that no members or partners share citizenship with an opposing
party is inadequate. Members and partners must be identified and have their citizenship
alleged with specificity even when that task is burdensome. Moran v. Gulf South Pipeline
Co., LP, 2007 WL 276196 (W.D. La. 2007) (collecting cases that required specificity of
limited partners despite there being thousands of them or their interests being miniscule);
Masion v. Liberty Mut. Ins. Co., 2006 WL 1675378 (W.D. La. 2006) (requiring specificity
even though partnership shares were publicly traded and identities of owners changed often
based on trades). See also Mullins, 300 Fed. Appx. at 260 (party’s stated belief that none
of the entities had members and partners in Texas “falls manifestly short of distinctly and
affirmatively alleging [a partnership’s] citizenship”).
Plaintiff’s Motion for Leave to File Amended Complaint (Doc. 21) is denied
without prejudice to filing a new motion, by August 14, 2018, that is accompanied by a
proposed amended complaint that contains all necessary citizenship information. Counsel
for CELC, to the extent they have a relationship to the proposed new defendants, are
directed to assist in promptly gathering the necessary information and sharing it with
counsel for Rodidaco. If Rodidaco is not able to gather all citizenship information for the
proposed new defendants, the motion should set forth what information is known and what
could not be determined.
The court will then assess whether the proposed amendment should be allowed,
given the risk that an unidentified Louisiana member or partner could be discovered later,
which would destroy diversity and require remand to state court. If Rodidaco determines
that the proposed amendment would destroy diversity, the motion for leave to amend must
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be accompanied by a brief that addresses the factors set forth in Hensgens v. Deere & Co.,
833 F.2d 1179 (5th Cir. 1987) that apply when an amendment would destroy diversity.
THUS DONE AND SIGNED in Shreveport, Louisiana, this 23rd day of July, 2018.

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