Morel Operating Co., L.L.C. v. Hill Top Research, Inc.
Filing
73
OPINION re: 24 MOTION for Partial Summary Judgment filed by Hilltop Research Corporation, DW Healthcare Partners, 37 CROSS MOTION for Partial Summary Judgment filed by Morel Operating Co., L.L.C., 40 CROSS MOTION for Partial Summary Judgment f iled by Morel Operating Co., L.L.C., 56 MOTION to Strike Portions of Declarations of Mordechai Lipkis and Rita Wasner Submitted in Opposition to Defendants' Motion for Summary Judgment and Defendants' Combined Reply filed by Hillto p Research Corporation, DW Healthcare Partners, 61 MOTION to Strike Document No. 48 filed by Morel Operating Co., L.L.C. For the foregoing reasons, the parties' motions are denied without prejudice. This disposes of Motions 24, 30, 37, 40, 56, and 61 on the Clerk's record. (Signed by Judge Thomas P. Griesa on 3/30/2012) (lmb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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MOREL OPERATING CO., L.L.C.,
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Plaintiff,
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– against –
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HILLTOP RESEARCH, INC., et al.,
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Defendants.
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05 Civ. 10574 (TPG)
OPINION
This action asserts breach of contract and other state law claims,
in which plaintiff attempts to invoke the diversity jurisdiction of this
court. The parties’ dispute concerns a lease agreement originally entered
into between Hilltop Research Inc. (“Hilltop 1”) and Morel Operating Co.,
L.L.C. (“Morel”). The parties filed cross motions for summary judgment
and motions to strike, and plaintiff also filed a motion for leave to file a
third amended complaint. On January 9, 2012, the court granted the
parties a one month stay of the litigation so that the parties could
conduct settlement negotiations.
It now appears that, with the parties before the court, there is no
diversity of citizenship jurisdiction.
For purposes of diversity jurisdiction, a corporation is a citizen of
both its state of incorporation and the state of its principal place of
business. 28 U.S.C. § 1332(c)(1). A limited partnership is a citizen of the
states where each of its partners are citizens. PDP Special Situation
Fund, L.P. v. Westrock Group, Inc., 10 Civ. 1303 (SHS), 2011 U.S. Dist.
LEXIS 104698, at *2 (S.D.N.Y. Sep. 13, 2011). A limited liability
company’s citizenship is that of each of its members. Handelsman v.
Bedford Village Assocs. Ltd. Pshp., 213 F.3d 48, 51-52 (2d Cir. 2000).
Plaintiff Morel is a limited liability company that has members
domiciled in New York. Morel has New York citizenship for diversity
purposes. The only defendant in the original complaint was Hilltop 1, a
corporation incorporated in Ohio with a principal place of business in
Ohio. Hilltop 1 is a citizen of Ohio for diversity purposes. Thus, when
this case was originally filed, there was complete diversity between the
parties.
However, on November 2, 2007, Morel amended its complaint to
add DW Healthcare Partners LP (“DW”) as an additional defendant. On
December 8, 2009, Morel again amended its complaint and added
another new defendant, Hill Top Research Inc (“Hilltop 2”). Hilltop 2 is a
Delaware corporation whose principal place of business is in Ohio, so its
inclusion in the suit does not defeat complete diversity. By order dated
December 16, 2011, the court directed the parties to supply the court
with evidence of the domicile of defendant DW, which the parties
promptly did.
It now appears that DW is a limited partnership with at least two
limited partners who are citizens of New York. These two limited
partners, Yeshiva University and United Jewish Appeal-Federation for
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Jewish Philanthropies, Inc., are both not-for-profit corporations
organized under New York law with their principal places of business in
New York. Because these limited partners are citizens of New York, DW
is a citizen of New York for diversity purposes. Westrock Group, Inc.,
2011 U.S. Dist. LEXIS 104698, at *2.
This means that there is no complete diversity of citizenship, and
thus no diversity jurisdiction on the present record.
Morel has requested an opportunity to amend its complaint in
order to avoid a dismissal for lack of subject-matter jurisdiction. The
Supreme Court “has encouraged courts to preserve diversity jurisdiction,
if possible.” Allendale Mut. Ins. Co. v. Excess Ins. Co., 62 F. Supp. 2d
1116, 1121 (S.D.N.Y. 1999). One such method of preserving diversity
jurisdiction would be for the court to dismiss a dispensable, non-diverse
party pursuant to Federal Rule of Civil Procedure 21. Id. at 1122-23.
Rule 21 provides that on “motion or on its own, the court may at any
time, on just terms, add or drop a party.” The court must determine
whether the defendant is dispensable within the meaning of Federal Rule
of Civil Procedure 19, whether the plaintiff consents to such dismissal,
and whether the remaining defendants would be prejudiced by such
dismissal. Allendale Mut. Ins. Co., 62 F. Supp. 2d at 1122-23.
Here, Morel has requested the opportunity to dismiss its claims
against DW, the apparently nondiverse defendant, to preserve diversity
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jurisdiction over this case. The parties have not briefed the issue of
whether DW should be dismissed from the case.
Morel should move to dismiss DW. It will then appear if this is
consented to or if there is any opposition.
There are now pending before the court cross-motions for
summary judgment and to strike, and a motion by plaintiff regarding a
third amended complaint. The court has held these motions for a
substantial period of time pending settlement negotiations, and such
negotiations are continuing as of the present time.
In view of the fact that, in the present posture of the case, the
court lacks subject-matter jurisdiction, these motions are denied without
prejudice. This means that, if the jurisdictional problem is solved as
indicated above, and if the case is not settled, the parties are free to
re-file the motions as they deem appropriate.
Conclusion
For the foregoing reasons, the parties’ motions are denied without
prejudice.
This disposes of Motions 24, 30, 37, 40, 56, and 61 on the Clerk’s
record.
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SO ORDERED.
Dated: New York, New York
March 30, 2012
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Thomas P. Griesa
U.S. District Judge
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