Life Share Collateral Holdings, LLC v. Albers et al

Filing 65

ORDER: Defendant Volios Group, LLCs Motion to Dismiss Plaintiffs Third Amended Complaint 50 is GRANTED. Plaintiffs Third Amended Complaint is DISMISSED WITHOUT PREJUDICE against defendant Volios Group, LLC. (Written Opinion) Signed by Judge Joan N. Ericksen on November 9, 2012. (CBC)

UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Life Share Collateral Holdings, LLC
Plaintiff,
v.

Civil No. 11-3605 (JNE/JJK)
ORDER

Ronald Albers; Raymond Byron Whitaker,
an individual, d/b/a Easy Financial Software
& Solutions, LLC; Reginald Barnes;
Sterling Harris; Volios Group, LLC,
Defendants.
This case is before the Court on a motion filed by defendant Volios Group, LLC, seeking
to dismiss the Third Amended Complaint of plaintiff Life Share Collateral Holdings, LLC
(“LSCH”). For the reasons stated below, the Court grants Volios’s motion.
Volios first argues that the Third Amended Complaint fails to establish this Court’s
subject matter jurisdiction over this case because LSCH pled Volios’s citizenship only “on
information and belief” and not with specificity. “Courts have an independent obligation to
determine whether subject-matter jurisdiction exists . . . .” Hertz Corp. v. Friend, 130 S. Ct.
1181, 1193 (2010). The party seeking the federal forum carries the burden of pleading the
diversity of citizenship of the parties, Walker v. Norwest Corp., 108 F.3d 158, 161 (8th Cir.
1997), and the Eighth Circuit requires that jurisdiction “be affirmatively shown.” Kern v.
Standard Oil Co., 228 F.2d 699, 701 (8th Cir. 1956).
A bright-line rule that jurisdictional allegations may not be made “on information and
belief” appears sometimes to have been applied. See, e.g., Sheikh v. York, No. 11-cv-15533, 2012
WL 1004853, at *2 (E.D. Mich. Mar. 26, 2012) (noting that plaintiff failed to plead the
citizenship of an LLC because the plaintiff relied on information and belief regarding the

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constituent members of the LLC); Fifth Third Bank v. Flatrock 3, LLC, No. 09-CV-06051
(DMC-JAD), 2010 WL 2998305, at *3 (D.N.J. July 21, 2010) (dismissing case for lack of
subject matter jurisdiction when plaintiff alleged citizenship of members of LLC “upon
information and belief”); Virtual Worlds, LLC v. Seaboard Int’l Energy Corp., No. CV 10-4432
PA (JCGx), 2010 WL 2553468, at *2 (C.D. Cal. June 18, 2010) (noting, on a removal petition,
that defendant’s allegation about plaintiff’s citizenship on “information and belief” was
insufficient to invoke court’s diversity jurisdiction).
On the other hand, if other information in the record reveals the existence of complete
diversity, that might satisfy a court that jurisdiction exists. See Medical Assurance Co. v.
Hellman, 610 F.3d 371, 376 (7th Cir. 2010); MBRO Capital, LLC v. Stolzar, No. 3:09-cv-1688
(CSH), 2011 WL 65913, at *1 n.1 (D. Conn. Jan. 5, 2011) (noting that plaintiff adequately
alleged diversity of citizenship when plaintiff alleged, on information and belief, that the three
members of an LLC were citizens of New York); see also Carter G. Bishop & Daniel S.
Kleinberger, Limited Liability Companies: Tax and Business Law ¶ 1.03(3)(b)(ii) (“[B]ecause
LLC membership information is rarely a matter of public record, a third party that invokes
diversity jurisdiction against an LLC may have to proceed first ‘on information and belief’ and
then promptly obtain the court’s assistance to determine the citizenship of each LLC member.”).
The Court is now satisfied in this case that it has jurisdiction. Volios did not assert in its
motion to dismiss that any of its members are citizens of Illinois, which is the state of LSCH’s
citizenship. Of course no such assertion was required of Volios—the burden of showing diversity
is on the party invoking diversity jurisdiction. But here, counsel for Volios candidly admitted
that although LSCH was wrong about Volios Group, LLC, having only one member, no
member’s citizenship would defeat diversity.

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Volios separately argues that LSCH has failed to state a claim for unjust enrichment.
When ruling on a motion to dismiss for failure to state a claim pursuant to Rule 12(b)(6), a court
must accept the facts alleged in the complaint as true and grant all reasonable inferences in favor
of the plaintiff. Mulvenon v. Greenwood, 643 F.3d 653, 656 (8th Cir. 2011). Although a
complaint is not required to contain detailed factual allegations, “[a] pleading that offers ‘labels
and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.’”
Ashcroft v. Igbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544,
555 (2007)). “To survive a 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.’” Id. (quoting Twombly,
550 U.S. at 570). As written, the Third Amended Complaint seeks monetary damages against
Volios in the amount of $2,338,851.50, joint and severally with the other defendants. However,
as LSCH acknowledged at oral arguments, the allegations against Volios are intended to be
allegations of unjust enrichment. “To establish a claim of unjust enrichment under Minnesota
law, a plaintiff must show the defendant knowingly received or obtained something of value for
which the defendant in equity and good conscience should pay.” E-Shops Corp. v. U.S. Bank
Nat’l Ass’n, 678 F.3d 659, 666 (8th Cir. 2012) (quotation omitted). Here, LSCH never alleged
that Volios participated in the fraudulent conduct. Rather, LSCH alleges that Volios was unjustly
enriched because it “received a portion of the commissions [two insurance agents] earned on the
sale of the [life insurance] Policies.” (Dkt. 46 at ¶ 33.) Even under a notice pleading standard, the
Third Amended Complaint does not adequately allege an unjust enrichment claim under
Minnesota law. Therefore, the Court dismisses LSCH’s unjust enrichment claim against Volios.
Therefore, IT IS ORDERED THAT:

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1. Defendant Volios Group, LLC’s Motion to Dismiss Plaintiff’s Third Amended
Complaint [Docket No. 50] is GRANTED.
2. Plaintiff’s Third Amended Complaint is DISMISSED WITHOUT PREJUDICE
against defendant Volios Group, LLC.

Dated: November 9, 2012
s/Joan N. Ericksen

JOAN N. ERICKSEN
United States District Judge

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