Brown v. Diversified Maintenance Systems, LLC
-CLERK TO FOLLOW UP-DECISION AND ORDER granting 5 Motion to Remand; denying 8 Motion to Amend or Correct. Signed by Hon. Lawrence J. Vilardo on June 9, 2016. (APG)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF NEW YORK
DECISION AND ORDER
DIVERSIFIED MAINTENANCE SYSTEMS, LLC,
Plaintiff Kimberly Brown filed this personal injury action in New York State
Supreme Court, County of Erie, on May 21, 2015. See Docket Item 1 at 1 (¶ 2); Docket
Item 1-2. Defendant Diversified Maintenance Systems, LLC, filed a Notice of Removal
in this Court on March 17, 2016. See Docket Item 1. The defendant asserted that “this
Court possesses jurisdiction over this matter pursuant to 28 U.S.C. § 1332(a) based
upon complete diversity of citizenship.” Id. at 2 (¶ 10). The plaintiff then moved to
remand, arguing that the “Notice of Removal fails to allege facts sufficient to show the
existence of complete diversity of citizenship.” Docket Item 5-1 at 4. In response, the
defendant cross-moved to amend the Notice of Removal. See Docket Item 8.
For the reasons set forth below, the plaintiff’s motion to remand (Docket Item 5)
is GRANTED. The defendant’s cross-motion to amend (Docket Item 8) is DENIED
because the proposed amendment would not remedy the defects in the Notice of
THE PARTIES’ MOTIONS
In its Notice of Removal, the defendant described its citizenship as follows:
Pursuant to 28 U.S.C. § 1332(c)(1), a corporation shall be a citizen of
every state by which it has been incorporated and of the state where it has
its principal place of business. Defendant is incorporated in the State of
Delaware, with its corporate headquarters located in Tampa, Florida.
Docket Item 1 at 2 (¶ 9).
In her motion to remand, the plaintiff argued that the defendant – actually a
limited liability company – failed to apply the “law governing the citizenship of limited
liability companies and, instead, erroneously use[d] the test for determining the
citizenship of a corporation.” Docket Item 5-1 at 1 (emphasis removed). The plaintiff’s
argument was correct: The law is clear that a limited liability company takes the
citizenship of each of its members. See Bayerische Landesbank, N.Y. Branch v.
Aladdin Capital Mgmt. LLC, 692 F.3d 42, 49 (2d Cir. 2012); Handelsman v. Bedford Vill.
Assocs. Ltd. P’ship, 213 F.3d 48, 51-52 (2d Cir. 2000); Altissima Ltd. v. One Niagara
LLC, No. 08-CV-756S(M), 2010 WL 3504798, at *2 (W.D.N.Y. Sept. 2, 2010).
After the plaintiff’s motion papers apprised the defendant of the defendant’s error,
the defendant explained that it had “inadvertently employed the citizenship test for a
corporation” – instead of for a limited liability company – due to a “clerical error.” Docket
Item 8-1 at 3 (¶ 16). Arguing that “[s]uch a technical defect is curable by amendment,”
see id., the defendant cross-moved to amend the Notice of Removal. Docket Item 8.
The defendant attached to its motion a proposed Amended Notice of Removal stating
Defendant is a limited liability company with its sole member being
Diversified Maintenance Systems Holdings, LLC, whose members were
. . . not citizens of New York at the time of the commencement of this
action in state court or at the time of removal.
Docket Item 8-9 at 3 (¶ 11).
The defendant also submitted the Affirmation of its General Counsel, Andrea
Kiehl, Esq., which attached a “redacted version of the ‘Schedule of Unitholders,’ listing
the members of Diversified Maintenance Systems Holdings, LLC, which in turn is the
sole member of the defendant, a limited liability company.” Docket Item 8-12 at 1 (¶ 2).
Ms. Kiehl also stated that she is “familiar with the unitholders listed” on that document
and that “none of them were citizens of New York at the time of the commencement of
this action in state court or at the time of removal.” Id. (¶ 3).
In her response to the cross-motion, the plaintiff now argues that “[e]ven with the
benefit of Plaintiff’s motion to remand identifying the specific defects in Defendant’s
Notice of Removal, the Amended Notice fails to cure the deficiencies” and “fails to prove
that Defendant is a non-New York citizen.” Docket Item 10 at 16. Claiming that the
defendant now has made two unsuccessful attempts to establish its right to a federal
forum, the plaintiff argues that “remand is warranted.” Id. The Court agrees.
“On a motion to remand, the party seeking to sustain the removal, not the party
seeking remand, bears the burden of demonstrating that removal was proper.” Hodges
v. Demchuk, 866 F.Supp. 730, 732 (S.D.N.Y.1994) (citing R.G. Barry Corp. v.
Mushroom Makers, Inc., 612 F.2d 651, 655 (2d Cir.1979) (“the burden falls squarely
upon the removing party to establish its right to a federal forum by competent proof”));
see also Blockbuster, Inc. v. Galeno, 472 F.3d 53, 57 (2d Cir. 2006) (“It is well-settled
that the party asserting federal jurisdiction bears the burden of establishing
jurisdiction.”). Thus, “the party seeking remand is presumed to be entitled to it unless
the removing party can demonstrate otherwise.” Bellido-Sullivan v. Am. Int’l Grp., Inc.,
123 F. Supp. 2d 161, 163 (S.D.N.Y. 2000). “Any doubts as to removability should be
resolved in favor of remand.” Payne v. Overhead Door Corp., 172 F. Supp. 2d 475, 477
(S.D.N.Y. 2001) (citing Somlyo v. J. Lu-Rob Enterprises, Inc., 932 F.2d 1043, 1046 (2d
Without question, the original Notice of Removal (Docket Item 1) was defective.
The defendant tried to remedy that defect with its proposed Amended Notice of
Removal (Docket Item 8-9) and the information submitted in support of the cross-motion
to amend. But the defendant’s attempt to fix the problem still is insufficient.
“In cases where jurisdiction depends upon the citizenship of the parties, such
citizenship . . . should be distinctly and positively averred in the pleadings” or “should
appear affirmatively, and with equal distinctness, in other parts of the record.”
Robertson v. Cease, 97 U.S. 646, 649 (1878). In a related context, the United States
Court of Appeals for the Seventh Circuit explained how a limited liability company
should go about doing that:
We hope to make it clear once and for all (if such a wish for finality were
possible) that an appellant’s naked declaration that there is diversity of
citizenship is never sufficient. . . . In this case, Guardsmark was, at the
time of removal, a limited liability company. For diversity jurisdiction
purposes, the citizenship of an LLC is the citizenship of each of its
members. Camico Mut. Ins. Co. v. Citizens Bank, 474 F.3d 989, 992 (7th
Cir. 2007). Consequently, an LLC’s jurisdictional statement must identify
the citizenship of each of its members as of the date the complaint or
notice of removal was filed, and, if those members have members, the
citizenship of those members as well.
Thomas v. Guardsmark, LLC, 487 F.3d 531, 533-34 (7th Cir. 2007); see Delay v.
Rosenthal Collins Grp., LLC, 585 F.3d 1003, 1005 (6th Cir. 2009) (“When diversity
jurisdiction is invoked in a case in which a limited liability company is a party, the court
needs to know the citizenship of each member of the company.”); Rolling Greens MHP,
L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004) (“a party
must list the citizenships of all the members of the limited liability company”); Prospect
Funding Holdings, LLC v. Fennell, No. 15 Civ. 4176(LLS), 2015 WL 4477120, at *2
(S.D.N.Y. July 15, 2015) (collecting New York district court decisions holding that a
limited liability company must “plead facts establishing their citizenship including, . . . the
identity and citizenship of their members” in order to invoke diversity jurisdiction); see
also Meyerson v. Harrah’s E. Chicago Casino, 299 F.3d 616, 617 (7th Cir. 2002)
(“[T]the citizenship of unincorporated associations must be traced through however
many layers of partners or members there may be.”).
Here, the defendant never affirmatively states its citizenship in its proposed
Amended Notice of Removal or any of its motion papers. Instead, it offers only
conclusory negative assertions: that it “is not a citizen of New York,” see, e.g., Docket
Item 8-14 at 2, 10; Docket Item 8-1 at 4 (¶¶ 21-22), and that the members of its sole
member – which also is a limited liability company – “were likewise not citizens of New
York,” see, e.g. Docket Item 8-9 at 3 (¶ 11); Docket Item 8-1 at 4 (¶ 21). In light of the
case law cited above, that is not good enough.
Ms. Kiehl’s Affirmation and the “Schedule of Unitholders” are likewise unhelpful.
In fact, the redacted “Schedule of Unitholders” contains no information whatsoever
except for a list of addresses. See Docket Item 8-13. It does not name or identify any
of the members of the defendant’s sole member, see id., nor does it even suggest
whether the addresses – which seem to be business addresses – correspond to
individuals, corporations, or other limited liability companies. Essentially, the defendant
asks the Court to take its and its counsel’s word that whoever – or whatever – lives,
works, or perhaps has its headquarters at each of the listed addresses is not a citizen of
New York. See Docket Item 8-12 at 1 (¶ 3).
As numerous federal courts have held, submissions such as the defendant’s
here are insufficient to establish diversity jurisdiction – especially after a plaintiff or a
court has raised questions about whether there is complete diversity of citizenship.
See, e.g., ESPN, Inc. v. N. Pole, Ltd., No. 08-CV-9483(CM), 2009 WL 176624, at *2
(S.D.N.Y. Jan. 22, 2009) (“[N]either the Answer nor any of the papers filed in opposition
to the motion to remand reveals who the constituent members of [defendant LLC] are
. . . . Therefore, the court cannot determine whether diversity of citizenship exists.”);
Tschakert v. Hart Energy Publ’g, LLLP, Civil No. 10CV2598-L(WMC), 2011 WL 52598,
at *1 (S.D. Cal. Jan. 6, 2011) (“Plaintiff alleges in a conclusory manner that each of the
members is not a Massachusetts citizen, and therefore not a citizen of Plaintiff’s state.
In the absence of stating the citizenship of each member of these Defendants, Plaintiff
failed to adequately allege citizenship.”); Jud Enterprises, Inc. v. Lexington Ins. Co.,
Civil Action No. 3:10-CV-2140, 2010 WL 4259613, at *2 (M.D. Pa. Oct. 21, 2010) (“The
conclusory allegation that Lexington is not a citizen of Pennsylvania is insufficient to
meet the defendant’s burden on removal of showing complete diversity.”); Fontan v.
Mucciolo, Cause No. 1:10CV42 LG-RHW, 2010 WL 1528508, at *1 (S.D. Miss. Apr. 14,
2010) (remanding “[b]ecause the Notice of Removal does not allege the citizenship of
[defendant limited liability company’s] members”); N. Star Grain Int’l, LLC v. Hyundai
Syscomm Corp., Civil No. 09-617(JNE/AJB), 2009 WL 1290228, at *2 (D. Minn. May 11,
2009) (“North Star’s conclusory assertion that none of the members of North Star Rail
Intermodal is a citizen of California does not establish that the parties are diverse.”);
Newport Prop. Investments, LLC v. Wilson, No. CV 08-6465-VBF(RCX), 2008 WL
4793111, at *1 (C.D. Cal. Nov. 3, 2008) (“Defendant does not allege the citizenship of
the members of Newport Property Investments, LLC. . . . Accordingly, Defendant's
response to the OSC is inadequate.”) (emphasis in original); Tolemac, LLC v. Jackson,
No. 02 C 594, 2002 WL 239635, at *1 (N.D. Ill. Feb. 19, 2002) (“conclusory
characterization that contains . . . no identification of each of the members themselves
coupled with the necessary information as to the members’ respective states of
citizenship-does not suffice”); see also D.B. Zwirn Special Opportunities Fund, L.P. v.
Mehrotra, 661 F.3d 124, 125-26 (1st Cir. 2011) (“[A]ttempt[ ] to establish diversity in the
negative” with affidavit claiming that “according to the Fund’s records, there were no
members of the limited liability company who were citizens of Rhode Island” was
“insufficient to invoke diversity jurisdiction under 28 U.S.C. § 1332.”)
Moreover, the defendant’s attempt to avail itself of a federal forum while keeping
confidential the members of Diversified Maintenance Systems Holdings, LLC, is not well
taken. See Belleville Catering Co. v. Champaign Mkt. Place, L.L.C., 350 F.3d 691, 694
(7th Cir. 2003) (“[N]o entity that claims confidentiality for its members’ identities and
citizenships is well situated to assert that it could believe, in good faith, that complete
diversity has been established.”); Master v. Quiznos Franchise Co., Civil Action No. 064253(MLC), 2007 WL 419287, at *2-3 (D.N.J. Feb. 1, 2007) (“asserting confidentiality
for the members” of removing defendants “is unacceptable”) (quoting Belleville, supra);
see also Emerald Inv’rs Trust v. Gaunt Parsippany Partners, 492 F.3d 192, 207 n.22 (3d
Cir. 2007) (“It appears that Reckson attempts to keep the identity of its limited partners
confidential insofar as possible. Obviously, however, the district court must know who
they are and where they are citizens and its need for that information will trump
For those reasons, the defendant has failed to carry its burden. The next
question is whether this Court should give the defendant a third opportunity to do so.
While other courts have given litigants multiple chances, including in some of the cases
cited above, they were not obligated to do so. As another district court recently stated
when remanding a case, “[the defendant] has had two opportunities to properly allege
diversity jurisdiction – in its notice of removal, and then in its Jurisdictional Addendum –
and it will not be given a third.” Kroll v. Ceva Freight, LLC, 13 C 8651, 2014 WL 43641,
at *2-3 (N.D. Ill. Jan. 6, 2014). “[I]t is not the court’s obligation to lead counsel through a
jurisdictional paint-by-numbers scheme. Litigants who call on the resources of a federal
court must establish that the tribunal has jurisdiction, and when after multiple
opportunities they do not demonstrate that jurisdiction is present, the appropriate
response is clear.” Id. (quoting Guar. Nat. Title Co. v. J.E.G. Associates, 101 F.3d 57,
59 (7th Cir. 1996)).
Because the defendant failed to adequately allege or establish subject matter
jurisdiction – both in its Notice of Removal and in its attempt to remedy the defect – the
Court GRANTS the plaintiff’s motion to remand (Docket Item 5). The Court has
considered the defendant’s cross-motion to amend (Docket Item 8), which is DENIED
because the proposed amendment would not correct the deficiencies noted explicitly in
the plaintiff’s motion to remand. The Court does not reach the plaintiff’s alternative
arguments for denying the defendant’s cross-motion.
The Court also denies the plaintiff’s request for attorney’s fees under 28 U.S.C.
§ 1447(c). “Absent unusual circumstances, courts may award attorney’s fees under
§ 1447(c) only where the removing party lacked an objectively reasonable basis for
seeking removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). This
Court declines to grant attorney’s fees here given defense counsel’s candor in admitting
an error and making an attempt – albeit an unsuccessful one – to remedy the defects in
the cross-motion to amend.
June 9, 2016
Buffalo, New York
s/ Lawrence J. Vilardo
LAWRENCE J. VILARDO
UNITED STATED DISTRICT JUDGE
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?