Lucero v. Carlsbad Medical Center, LLC et al

Filing 24

MEMORANDUM OPINION AND ORDER by Chief District Judge William P. Johnson DENYING 19 Plaintiff's Motion to Remand. (mag)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW MEXICO
______________________
CHRIS LUCERO, as Personal Representative
Of the Estate of Marco Antonio Sanchez,
Plaintiff,
v.

Civ. No. 1:18-00148 WJ/LF

CARLSBAD MEDICAL CENTER, LLC,
COMMUNITY HEALTH SYSTEMS, INC.,
and JOHN DOES 1-10,
Defendants.

MEMORANDUM OPINION AND ORDER
DENYING PLAINTIFF’S MOTION TO REMAND
THIS MATTER comes before the Court upon Plaintiff’s Motion to Remand to the
Second Judicial District Court of New Mexico, filed April 16, 2018 (Doc. 19). Having reviewed
the parties’ pleadings and the applicable law, the Court finds that Plaintiff’s motion is not welltaken and, therefore, is DENIED.
BACKGROUND
This is a Complaint for Wrongful Death based on medical negligence, initially filed in
the Second Judicial District, County of Bernalillo on December 28, 2017, and removed to federal
court on February 14, 2018 on the basis of diversity jurisdiction. The Notice of Removal states
that Defendant Carlsbad Medical Center, LLC (“CMC”) is a Delaware limited liability company,
and that the sole member of CLC is Triad Holdings V, LLC, a Delaware limited liability
company. The sole member of Triad Holdings V, LLC is Tennyson Holdings, I-LC, a Delaware
limited liability company. The sole member of Tennyson Holdings, LLC is Triad Healthcare,

LLC, a Delaware limited liability company. The sole member of Triad Healthcare, LLC is
HMA-TRI Holdings, LLC, a Delaware limited liability company. The sole member of HMATRI Holdings, LLC is CHS/Community Health Systems, Inc. (“CHS/CHSI”), a Delaware
corporation with its principal place of business in Tennessee.

The Notice also states that

Defendant Community Health Systems, Inc. ("CHSI") is a Delaware corporation with its
principal place of business in Tennessee.
Plaintiff contends that this Court lacks subject matter jurisdiction over the case because
there is no diversity of citizenship as required under 28 U.S.C. §1332(c)(1)(C).1
DISCUSSION
Federal courts are courts of limited jurisdiction; thus, there is a presumption against
removal jurisdiction, which the defendant seeking removal must overcome. See Fajen v. Found.
Reserve Ins. Co., 683 F.2d 331, 333 (10th Cir.1982); Martin v. Franklin Capital Corp., 251 F.3d
1283, 1290 (10th Cir. 2001). Removal statutes are strictly construed, and ambiguities should be
resolved in favor of remand. Removal is proper where there is complete diversity of citizenship
between the parties and the amount in controversy exceeds the jurisdictional amount of $75,000.
28 U.S.C. §1332. In seeking removal the removing party has the burden of proving both of these
elements. Huffman v. Saul Holdings, Ltd. P’ship, 194 F.3d 1072 (10th Cir. 1999). Under 28
U.S.C. § 1332(a), the citizenship of all defendants must be different from the citizenship of all
plaintiffs. See McPhail v. Deere & Co., 529 F.3d 947, 951 (10th Cir. 2008). A motion for
remand based on the lack of subject matter jurisdiction arguing lack of diversity jurisdiction is
timely made at any time prior to judgment. 28 U.S.C. § 1447(c).
Plaintiff contends that the case should be remanded because Defendant CMC is a citizen
of New Mexico, not Tennessee, because the physical location of the hospital is Carlsbad, New
1

Separate responses have been filed by Defendants, see Docs. 20 and 21.

2

Mexico is where CMC’s principal place of business is located. It is true that for purposes of §
1332, a corporation is deemed to be a citizen of every State by which it has been incorporated
and the State where it has its principal place of business. See 28 U.S.C. § 1332(c)(1); Tinner v.
Farmers Ins. Co. Inc., 504 Fed. App’x. 710, 713 (10th Cir. 2012). Here, however, CMC is a
limited liability company (“LLC”), which requires a different analysis, at least initially in this
case.
Determining the citizenship of a limited liability company is different than determining
the citizenship of a corporation under § 1332, based on a clear distinction between corporations
and other artificial entities that are not corporations. A limited partnership is not in its own right
a “citizen” of the State that created it within the meaning of the federal diversity statute. See
Carden v. Arkoma Assocs., 494 U.S. 185, 185 (1990) (noting that the Supreme Court has “firmly
resisted extending the well-established rule treating corporations as ‘citizens’ to other artificial
entities”); Mgmt. Nominees, Inc. v. Alderney Investments, LLC, 813 F.3d 1321, 1324 (10th Cir.
2016) (only those entities that are corporations, in the traditional understanding of that word, will
be treated as a person for purposes of diversity jurisdiction); Conagra Foods, Inc. v. Americold
Logistics, LLC, 776 F.3d 1175, 1179 (10th Cir. 2015), as amended (Jan. 27, 2015), aff'd sub
nom. Americold Realty Tr. v. Conagra Foods, Inc., 136 S. Ct. 1012 (2016) (citing Carden v.
Arkoma Assocs., 494 U.S. 185).
Under Tenth Circuit precedent, the citizenship of limited liability companies is
determined by the citizenship of their members and not their principal place of business. Siloam
Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233, 1237-38 (10th Cir. 2015) (rejecting
defendant’s request to determine citizenship of Oklahoma limited liability company “by
reference to its state of organization and the state of its primary business operations” and

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“join[ing] all other circuits that have considered the matter in concluding Siloam Springs takes
the citizenship of all its members”). Limited liability companies are treated as partnerships for
citizenship purposes and are therefore citizens of every state in which any of its members are
citizens. Carden v. Arkoma Assocs., 494 U.S. 185, 195–96, (1990) (the citizenship of business
entities is determined by the citizenship of its members). Further, in determining the citizenship
of a limited liability company, any and all of its members must be considered. See Mgmt.
Nominees, Inc.,813 F.3d at 1237-38 (for purposes of diversity, federal courts must include all the
entities’ members) (citing Carden v. Arkoma Assocs., 494 U.S. at 195–96 (holding that the
citizenship of a limited partnership is determined by the citizenship of each of its partners, both
general and limited); Siloam Springs Hotel, 781 F.3d at 1238 (“in determining the citizenship of
an unincorporated association for purposes of diversity, federal courts must include all the
entities’ members”) (citing Carden v. Arkoma Assocs., 494 U.S. 185, 195–96) (holding that the
citizenship of a limited partnership is determined by the citizenship of each of its partners, both
general and limited).2
Plaintiff does not contest the law on this issue but instead argues that it does not apply
here because the end of the citizenship chain for CMC leads to a corporation, and not individual
members. This situation does indeed make the analysis a bit trickier, but it is resolvable
nonetheless.

2

See also D.B. Zwirn Special Opportunities Fund, L.P. v. Mehrotra, 661 F.3d 124, 125 (1st Cir. 2011) (citizenship
of LLC is determined by citizenship of its members); Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d
Cir. 2010) (same); Delay v. Rosenthal Collins Group, LLC, 585 F.3d 1003, 1005 (6th Cir. 2009) (same); Harvey v.
Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008) (same); Johnson v. Columbia Props. Anchorage, LP,
437 F.3d 894, 899 (9th Cir. 2006) (same); GMAC Commercial Credit, LLC v. Dillard Dep't Stores, Inc., 357 F.3d
827, 829 (8th Cir. 2004) (same); Rolling Greens MHP, L.P. v. Comcast SCH Holdings, LLC, 374 F.3d 1020, 1022
(11th Cir. 2004) (same); Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d 114, 120 (4th Cir. 2004) (same);
Commonwealth Ins. Co. v. Titan Tire Corp., 398 F.3d 879, 881 n.1 (7th Cir. 2004) (same); Handelsman v. Bedford
Village Assocs. Ltd. P'ship, 213 F.3d 48, 51–52 (2d Cir. 2000) (same); THI of N.M. at Vida Encantada, LLC v.
Lovato, 848 F. Supp. 2d 1309, 1317–18 (D.N.M. 2012) (same).

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As with partnerships, where an LLC has as one of its members another LLC, “the
citizenship of unincorporated associations must be traced through however many layers of
partners or members there may be” to determine the citizenship of the LLC. Hart v. Terminex
Int'l, 336 F.3d 541, 543 (7th Cir.2003) (quotation omitted). For example, in Zambelli Fireworks
Mfg. Co. v. Wood, Plaintiff brought suit seeking to enforce a restrictive covenant against
Defendants Pyrotecnico, a competitor, and Matthew Wood who worked in the fireworks industry
as a pyrotechnician and choreographer. 592 F.3d 412, 420 (3d Cir. 2010). The court in that case
found that complete diversity did not exist because of Pyrotecnico’s presence. Plaintiff Zambelli
was a citizen of Pennsylvania, being incorporated under Pennsylvania laws and having its
principal place of business in New Castle, Pennsylvania. Defendant Wood was domiciled in,
and therefore was a citizen of, Florida.

The citizenship of Pyrotecnico was not as

straightforward: it was a Nevada limited liability company with a single member, Pyrotecnico of
Louisiana, LLC, which was a Louisiana limited liability company. Tracing the company’s
citizenship, Pyrotecnico took on the citizenship of the members of Pyrotecnico of Louisiana,
including managing member Stephen Vitale who was a resident of New Castle, Pennsylvania
and therefore a citizen of Pennsylvania for diversity purposes. Because both Plaintiff and a
Pyrotecnico were citizens of Pennsylvania, diversity jurisdiction was destroyed.

Zambelli

Fireworks, 592 F.3d at 420.
In this case, determining the citizenship of CMC requires consideration of four sublayers.

The first four entities (Triad Holdings V, LLC, Tennyson Holdings, I-LC, Triad

Healthcare, LLC and HMA-TRI Holdings, LLC) are all Delaware limited liability companies.
The last company is the sole member of HMA-TRI Holdings, LLC, which is CHS/CHSI—a
corporation, not a limited liability company. If CHS/CHSI were an LLC, the final step would be

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to look to the citizenship of all the members in the entity. However, that information is not only
lacking here but also unnecessary because CHS/CHSI is a corporation. Doc. 1 at 2; Doc. 20 at
3.
For purposes of § 1332, a corporation is deemed to be a citizen of every State by which it
has been incorporated and the state where it has its principal place of business. See 28 U.S.C. §
1332(c)(1). According to the affidavit of Beth McCormick, the Chief Quality Officer and Risk
Manager at CMC, CMC is a Delaware corporation with its principal place of business in
Tennessee, making CMC a citizen of Delaware and Tennessee. Doc. 20-1. Plaintiff agrees
(correctly) that CHS/CHSI is a corporation and thus Defendant CMC must ultimately be
considered a corporation. However, Plaintiff insists that CMC’s principal place of business, as
well as its business operations, are located in Carlsbad, New Mexico and that CMC is therefore a
non-diverse defendant. This contention is simply not supported by the pleadings, and Plaintiff
offers no evidence to counter Ms. McCormick’s affidavit statements. Plaintiff presents exhibits
showing that CMC’s CEO’s and administrators reside in New Mexico, but the residence of a
corporation’s administrators is not the standard used to determine the citizenship of corporations,
and so Plaintiff’s arguments must fail.
Accordingly, the Court finds that the Defendant CMS is a diverse defendant. The last
layer of partners or members in the CMC chain is CHS/CHSI, which is a Delaware corporation
with its principal place of business in Tennessee. Plaintiff does not dispute the citizenship of the
other Defendant in this case, Defendant CHSI, which is also represented to be a Delaware
corporation with its principal place of business in Tennessee. See Doc. 1 at 2. Both Defendants
are not citizens of New Mexico and therefore diversity jurisdiction exists.
THEREFORE,

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IT IS ORDERED that Plaintiff’s Motion to Remand to the Second Judicial District
Court of New Mexico (Doc. 19) is hereby DENIED for reasons described in this Memorandum
Opinion and Order.

_________________________________________
CHIEF UNITED STATES DISTRICT JUDGE

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