Williams Field Services Company, LLC v. Kalmanowicz et al

Filing 11

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that: 1) Within twenty-one (21) days of the date of this Order, the Plaintiff may file an amended complaint. 2) The Plaintiffs failure to file an amended complaint will result in dismissal of this action. Signed by Honorable A. Richard Caputo on 9/2/11. (jam, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
WILLIAMS FIELD SERVICES
COMPANY, LLC,
CIVIL ACTION NO. 3:11-cv-1634
Plaintiff,
v.

(JUDGE CAPUTO)

ANTHONY S. KALMANOWICZ
and ANITA L. KALMANOWICZ,
his wife,
Defendants.
MEMORANDUM
Presently before the Court is the Plaintiff’s Amended Verified Complaint (Doc. No. 7)
Because the Amended Complaint fails to adequately plead the existence of subject matter
jurisdiction, the action will be dismissed unless the Plaintiff timely amends.
I. Background
On August 31, 2010, Plaintiff Williams Field Services Company, LLC (“Williams”)
brought its initial complaint against Anthony S. Kalmanowicz and his wife, Anita L.
Kalmanowicz, invoking the Court’s jurisdiction on the basis of diversity of citizenship. That
same day, this Court gave leave to Plaintiff to file an amended complaint for failure to
properly allege subject matter jurisdiction. In pertinent part, Plaintiff’s Amended Complaint
alleges that:
The only member of [Williams Field Services Co, LLC] is Williams Field
Services Group, LLC. The only member of Williams Field Services Group,
LLC is Williams Partners Operating, LLC. The only member of Williams
Partners Operating, LLC is Williams Partners L.P. Williams Partners L.P. is
a publicly traded master limited partnership, ticker symbol WPZ. The general
partner of Williams Partners L.P. is Williams Partners GP LLC. Williams
Partners GP LLC is a wholly owned subsidiary of Williams Companies, Inc.

Each of these entities is a Delaware limited liability company, limited
partnership or corporation with their principal places of business in Tulsa,
Oklahoma.
(Doc. No. 7 at ¶ 11).
II. Analysis
Federal courts have an obligation to address issues of subject matter jurisdiction sua
sponte. Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir. 1999).
Plaintiff alleges that this Court’s basis for jurisdiction is diversity of citizenship pursuant to 28
U.S.C. § 1332. Section 1332(a)(1) gives district courts original jurisdiction to hear cases
where the matter in controversy exceeds the value of seventy-five thousand dollars
($75,000) and is between citizens of different states. In order for jurisdiction to exist, there
must be complete diversity, meaning that each defendant must be a citizen of a different
state from each plaintiff. Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978).
"It is . . . well established that when jurisdiction depends upon diverse citizenship the
absence of sufficient averments or of facts in the record showing such required diversity of
citizenship is fatal and cannot be overlooked by the court, even if the parties fail to call
attention to the defect, or consent that it may be waived." Thomas v. Bd. of Trs., 195 U.S.
207, 211 (1904). Moreover, “[w]hen the foundation of federal authority is, in a particular
instance, open to question, it is incumbent upon the courts to resolve such doubts, one way
or the other, before proceeding to a disposition of the merits.” Carlsberg Res. Corp. v.
Cambria Sav. & Loan Ass’n, 554 F.2d 1254, 1256 (3d Cir. 1977); see also Fed. R. Civ. P.
12(h)(3).
The Amended Complaint fails to allege facts regarding the citizenship of the members

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of Williams Field Services Co, LLC. When considering the citizenship of an LLC, a court
must consider the citizenship of its component members. Zambelli Fireworks Mfg. Co. v.
Wood, 592 F.3d 412, 420 (3d Cir. 2010); Carden v. Arkoma Assocs., 494 U.S. 185, 195
(1990) (quoting Chapman v. Barney, 129 U.S. 677, 682 (1889)) (affirming the “oft-repeated
rule that diversity jurisdiction in a suit by or against [an artificial] entity depends on the
citizenship of ‘all the members’”). Similarly, it is an “accepted rule that, as a partnership, [a
limited partnership] is a citizen of each state or foreign country of which any of its partners
is a citizen,” including limited partners. Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S.
567, 569 (2004); Carden, 494 US at 187; 1 Fed. Proc., L. Ed. § 1:165. Finally, in evaluating
the membership of an LLC, “each membership layer of a limited liability company must be
analyzed to determine its citizenship.” Weinstein v. Sleepy’s Inc., 2008 WL 1809340 at *1
(D.N.J. April 22, 2008) (citing Belleville Catering Co. v. Champaign Mkt. Place, 350 F.3d 691,
693 (7th Cir.2003)).
Plaintiff has correctly amended its complaint to specify the component layers of
ownership in Williams Field Services Co, LLC (Williams). Specifically, Plaintiff alleges that
Williams is comprised of two subsequent layers of LLCs, each serving as the sole member
at its level. However, above these sits Williams Partners L.P., a publically-traded master
limited partnership.1 As it is necessary to determine citizenship of all component entities in
order to evaluate the diversity status of an LLC, it is therefore necessary to determine the
1

“A master limited partnership is a limited partnership whose interests (known as
‘common units’) are publicly traded.” Wood v. Walton, No. WDQ-09-3398, 2010 WL
458574 at *1 n.3 (D.Md. Feb. 2, 2010) (citing Ann E. Conaway Stilson, The Agile
Virtual Corporation, 22 Del. L. Corp. L. 497, 524-25 (1997)). Thus, as a master limited
partnership is an artificial entity of the sort referenced in Carden, 494 U.S. at 195, this
Court sees no reason why limited partnership principles for diversity should not apply.
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diversity status of Williams Partners L.P. Furthermore, as an L.P., Williams Partners L.P.
derives its citizenship status from the totality of its membership. While Plaintiff alleges the
citizenship of the general partner of Williams Partners L.P., it neglects to allege the
citizenship of its limited partners. As the citizenship of all limited partners is a factor in
determining the presence of diversity jurisdiction, the Amended Notice of Removal fails to
allege necessary facts to determine whether diversity jurisdiction exists pursuant to 28
U.S.C. § 1332.
Since the Court cannot determine whether complete diversity of citizenship exists
between the parties, this case is subject to remand. 28 USC § 1447(c); Brown v. JEVIC, 575
F.3d 322, 326 (3d Cir. 2009) (“Removal statutes are to be strictly construed, with all doubts
to be resolved in favor of remand.”); Wis. Dep't of Corr. v. Schacht, 524 U.S. 381, 391 (1998)
(“If at any time before final judgment it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.”). If the Plaintiff can show that diversity of
citizenship jurisdiction exists, thereby saving removal, they will be permitted to do so
pursuant to 28 U.S.C. § 1653. See USX Corp. v. Adriatic Ins. Co., 345 F.3d 190, 204 (3d
Cir. 2003) (noting that Section 1653 gives district courts “the power to remedy inadequate
jurisdictional allegations, but not defective jurisdictional facts.”).
III. Conclusion
The Amended Complaint fails to show the existence of subject matter jurisdiction.
However, the Plaintiff will be given an opportunity to amend its complaint to show that
diversity of citizenship jurisdiction exists. Plaintiff will be given twenty-one (21) days in which
to file an amended complaint. Failure to do so will result in this action being dismissed. An

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appropriate order follows.

September 2, 2011

/s/ A. Richard Caputo

Date

A. Richard Caputo
United States District Judge

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IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA

WILLIAMS FIELD SERVICES
COMPANY, LLC,
Plaintiff,
NO. 3:11-CV-1634
v.
(JUDGE CAPUTO)
ANTHONY S. KALMANOWICZ
and ANITA L. KALMANOWICZ,
his wife,
Defendants.

ORDER

NOW, this 2nd day of September, 2011, IT IS HEREBY ORDERED that:
1) Within twenty-one (21) days of the date of this Order, the Plaintiff may file an amended
complaint.
2) The Plaintiff’s failure to file an amended complaint will result in dismissal of this action.

/s/ A. Richard Caputo
A. Richard Caputo
United States District Judge

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