Pegasus Holding Group Stables, LLC v. International Equine Acquisitions Holdings, Inc. et al

Filing 28

MEMORANDUM & ORDER - For the foregoing reasons, Plaintiff's Complaint is sua sponte DISMISSED without prejudice for lack of subject matter jurisdiction and the Clerk of the Court is directed to mark this matter CLOSED. So Ordered by Judge Joanna Seybert on 10/7/2013. C/ECF (Valle, Christine)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
PEGASUS HOLDING GROUP STABLES, LLC,
Plaintiff,
-against-

MEMORANDUM & ORDER
13-CV-1541(JS)(ARL)

INTERNATIONAL EQUINE ACQUISITIONS
HOLDINGS, INC., IEAH STABLES, INC.,
IEAH CORPORATION, MICHAEL IAVARONE,
SF BLOODSTOCK, LLC, and SF RACING,
LLC,
Defendants.
---------------------------------------X
APPEARANCES
For Plaintiff:
Michael Paul Siravo, Esq.
Deanna Darlene Panico, Esq.
Bee Ready Fishbein Hatter &
Donovan, LLP
170 Old Country Road, Suite 200
Mineola, New York 11501
For Defendants:
SF Bloodstock, LLC
SF Racing, LLC

Ira
Law
521
New

Remaining Defendants

A. Finkelstein, Esq.
Offices of Ira A. Finkelstein, P.C.
Fifth Avenue, 32nd Floor
York, New York 10175-3299

No appearances.

SEYBERT, District Judge:
On

April

26,

2013,

this

Court

ordered

Plaintiff

Pegasus Holding Group Stables, LLC (“Plaintiff”) to show cause
why its Complaint should not be dismissed for lack of subject
matter jurisdiction.

(OTSC, Docket Entry 12.)

The Court has

since received Plaintiff’s response as well as submissions from
Defendants

SF

Defendants”).

Bloodstock,
(See

Pl.

LLC
Resp.

and
to

SF
OTSC,

Racing,
Docket

LLC

(the

Entry

17;

“SF
SF

4/26/13 Ltr., Docket Entry 13; SF 5/31/13 Ltr., Docket Entry
18.)

For the following reasons, Plaintiff’s Complaint is sua

sponte DISMISSED.
BACKGROUND
Plaintiff

commenced

this

action

against

Defendants

International Equine Acquisitions Holdings, Inc., IEAH Stables,
Inc.,

IEAH

Corp.,

Michael

Iavarone

(collectively

the

“IEAH

Defendants”), and the SF Defendants on March 22, 2013 for common
law

claims

of

breach

of

contract,

conversion,

and

replevin.

Plaintiff seeks “injunctive relief and monetary damages based
upon Defendants’ unlawful actions with respect to the purchase
of two thoroughbred race horses: Diamondrella and Trickmeister.”
(Compl. ¶

1.)

The

Complaint

alleges

federal

subject

matter

jurisdiction on the basis of diversity pursuant to 28 U.S.C.
§ 1332.

(Compl. ¶ 29.)
On April 26, 2013, this Court issued an Order to Show

Cause questioning whether the Court indeed has subject matter
jurisdiction

and

ordering

Plaintiff

to

show

action should not be dismissed for lack thereof.

cause

why

this

That same day,

the SF Defendants wrote to the Court, arguing that an Order to
Show

Cause

was

unnecessary

and

that

Plaintiff

had

failed

to

allege the citizenship of its members, a necessity in alleging
the citizenship of a limited liability corporation (“LLC”).
4/26/13 Ltr.)

(SF

On May 24, 2013, Plaintiff filed its response to

2

the

Order

to

Show

Cause,

arguing,

inter

alia,

that

further

discovery is required to determine the citizenship of the SF
Defendants and that Plaintiff’s citizenship should be based upon
its “relevant members” or its members “with an interest” in the
litigation.

(Pl. Resp. to OTSC at 3.)

The SF Defendants again

wrote to the Court on May 31, 2013, noting that Plaintiff’s
response “admits that [Plaintiff] has two members (Geoffrey W.
Holmes and the Daniel D. Gestwick IRA) that are domiciled in New
York,

the

same

Defendants.”

place

of

citizenship

as

all

of

the

IEAH

(SF 5/31/13 Ltr. at 1.)
DISCUSSION

The

Court

will

first

address

the

applicable

legal

principles before turning to the specifics of this case.
I.

Legal Principles
“‘It is a fundamental precept that federal courts are

courts of limited jurisdiction’ and lack the power to disregard
such

limits

Congress.”

as

have

been

imposed

by

the

Constitution

or

Durant, Nichols, Houston, Hodgson & Cortese-Costa,

P.C. v. Dupont, 565 F.3d 56, 62 (2d Cir. 2009) (quoting Owen
Equip. & Erection Co. v. Kroger, 437 U.S. 365, 374, 98 S. Ct.
2396, 57 L. Ed. 2d 274 (1978)); see also Kokkonen v. Guardian
Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S. Ct. 1673, 128 L.
Ed. 2d 391 (1994).

“If subject matter jurisdiction is lacking

and no party has called the matter to the court’s attention, the

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court has the duty to dismiss the action sua sponte.”

Dupont,

565 F.3d at 62; see also FED. R. CIV. P. 12(h)(3) (“If the court
determines

at

any

time

that

it

lacks

subject-matter

jurisdiction, the court must dismiss the action.”).
“Diversity

jurisdiction

requires

that

all

of

the

adverse parties in a suit . . . be completely diverse with
regard to citizenship.”

Handelsman v. Bedford Vill. Assoc. Ltd.

P’ship, 213 F.3d 48, 51 (2d Cir. 2000) (alteration in original)
(internal quotation marks and citation omitted).

Moreover, a

complaint must allege citizenship of each member of an LLC.

See

Aleph Towers, LLC v. Ambit Texas, LLC, No. 12-CV-3488, 2013 WL
4517278, at *3 (E.D.N.Y. Aug. 23, 2013).

An LLC is a citizen of

every state of which its members are citizens.

See Handelsman,

213 F.3d at 52.
II.

Subject Matter Jurisdiction
Plaintiff argues that its own “relevant members” are

Basileus Holdings, LLC, and IP Global Investors, Ltd., which
are citizens of California and Nevada, respectively.
to OTSC at 3-4.)
to

which

of

Diamondrella.

its

(Pl. Resp.

However, Plaintiff defines relevance according
members

has

an

interest

(Pl. Resp. to OTSC at 4.)

in

the

racehorse

Plaintiff seems to

completely ignore that it also asserts claims relating to the
racehorse Trickmeister, which are owned by citizens of New York.
(see Tagliaferri Decl. ¶ 3) and that the IEAH Defendants are

4

also citizens of New York (see Compl. ¶¶ 3-15; Panico Decl. Exs.
D-F).
Plaintiff’s argument fails for a number of reasons.
First,

“diversity

jurisdiction

in

a

suit

by

or

against

the

entity depends on the citizenship of ‘all the members,’” despite
their relative financial interests in the matter.

Carden v.

Arkoma Assoc., 494 U.S. 185, 195-96, 110 S. Ct. 1015, 108 L. Ed.
2d 157 (1990) (citing Chapman v. Barney, 129 U.S. 677, 682, 9 S.
Ct. 426, 32 L. Ed. 800 (1889)); see also United Steelworkers of
Am., AFL-CIO v. R.H. Bouligny, Inc., 382 U.S. 145, 146, 86 S.
Ct.

272,

15

prevailing

L.

Ed.

principle

2d

217

that

(1965)
an

(affirming

“the

unincorporated

generally

association’s

citizenship is that of each of its members”); Icon M.W., LLC v.
George Hofmeister, --- F. Supp. 2d ----, 2013 WL 2896807, at *2
(S.D.N.Y. June 4, 2013) (finding that despite the de minimis
stake certain members held in an LLC, they are citizens for
purposes of determining the citizenship of an LLC).

Second,

even if the Court were to consider only Plaintiff’s “relevant
members,” as it suggests, its relevant members include citizens
of New York.
New York.

Yet the IEAH Defendants also include citizens of

Thus, complete diversity is not present as Plaintiff

and the IEAH Defendants are both New York citizens.
To the extent that Plaintiff requests that the Court
remove any non-diverse parties, the Court declines to do so.

5

Cf. Marakova v. United States, 201 F.3d 110, 113 (2d Cir. 2000)
(holding that a plaintiff asserting subject matter jurisdiction
has the burden of proving by a preponderance of the evidence
that it exists).
Accordingly,

there

is

no

complete

diversity

of

citizenship and this Court lacks subject matter jurisdiction.
CONCLUSION
For
sua

sponte

the

foregoing

DISMISSED

reasons,

without

Plaintiff’s

prejudice

for

lack

Complaint
of

is

subject

matter jurisdiction and the Clerk of the Court is directed to
mark this matter CLOSED.
SO ORDERED.

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated: October
7 , 2013
Central Islip, NY

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