Kelley v. CALUMET MONTANA REFINING, LLC

Filing 20

ORDER: IT IS ORDERED that Defendant Calumet's 14 Motion to Dismiss is GRANTED without prejudice. Signed by Judge Brian Morris on 9/27/2018. (SLR)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
CV-18-63-GF-BMM
ZACKARY KELLEY,
Plaintiffs,
vs.

ORDER

CALUMET MONTANA REFINING,
LLC,
Defendants.

Defendant Calumet Montana Refining, LLC, (“Calumet”) filed a motion to
dismiss for lack of subject matter jurisdiction. (Doc. 14). Plaintiff Zackary Kelley
(“Plaintiff”) opposes this motion to the extent that this case should be dismissed
without prejudice to allow Plaintiff to refile his case in the Montana State District
Court pursuant to Montana’s “saving statute,” 27-2-407, MCA. (Doc. 16 at 1-2).
Plaintiff suffered personal injuries from an incident at defendant Calumet’s
refinery on May 4, 2015. (Doc. 1 ¶ 8). Plaintiff is a resident and citizen of Texas.
(Doc. 1 ¶ 1). Plaintiff timely filed his complaint in federal court claiming diversity
jurisdiction. (Doc. 1). Diversity jurisdiction apparently existed because the
amount in controversy exceeds $75,000 and Calumet is a citizen of Delaware with
its principal place of business in Indiana. (Doc. 1 ¶ 2).

1

Calumet then filed a Corporate Disclosure Statement. (Doc. 10). The
Disclosure Statement listed Calumet Specialty Products Partners, LP (“Calumet
Specialty Products”) as an owner of Calumet. (Doc. 10). Calumet Specialty
Products is a publicly traded Limited Partnership that includes unit holders—a total
of 53,109 individuals and private companies—throughout the United States. (Doc.
10). One of these unit holders is domiciled in Texas. (Doc. 10).
The federal court’s diversity jurisdiction extends to “all civil actions where
the matter in controversy exceeds…$75,000…and is between…[c]itizens of
different States.” 28 U.S.C. § 1332(a)(1). In cases where entities rather than
individuals are litigants, diversity jurisdiction depends on the form of the entity. A
corporation is a citizen only of (1) the state where its principal place of business is
located, and (2) the state in which it is incorporated. 28 U.S.C. § 1332(c)(1). An
unincorporated association such as a partnership has the citizenships of all its
members. Carden v. Arkoma Assocs., 494 U.S. 185, 195-196, (1990).
Limited Liability Corporations (“LLC”) resemble both partnerships and
corporations; therefore, “an LLC is a citizen of every state of which its
owners/members are citizens.” Johnson v. Columbia Properties Anchorage, LP,
437 F.3d 894, 899 (9th Cir. 2009) (joining “sister circuits” by holding LLC’s
should be treated like partnerships in matters of diversity).

2

Calumet is an LLC with an ownership structure that prevents complete
diversity because Plaintiff and Calumet are both citizens of Texas. Here, Calumet
Specialty Products is an owning member of defendant Calumet. Calumet Specialty
Products is a publicly traded Limited Partnership having thousands of members.
Calumet Specialty Products has a member residing in Texas and is therefore itself
a citizen of Texas. Because Calumet Specialty Products is a citizen of Texas, and
Calumet Specialty Products is an owner of defendant Calumet, Calumet is also a
citizen of Texas.
The caselaw governing an LLC’s domicile and citizenship is extremely
favorable to the corporate structure, which seems to nurture a way for LLC’s to
escape the federal courts via diversity conflicts. Neither Congress nor the Supreme
Court have ruled on the issues arising from an LLC’s citizenship. Many Circuit
courts, however, choose to mirror the law governing a partnership’s citizenship.
Here, diversity is broken simply because Calumet is an LLC owned by a Limited
Partnership company with 53,109 domiciles, and one happens to reside in the same
state as Plaintiff.

3

ORDER
Accordingly, IT IS ORDERED that Defendant Calumet’s motion to dismiss
(Doc. 14) is GRANTED without prejudice.
DATED this 27th day of September, 2018.

4