Underwood Resources, L.L.C. v. Brigadier Oil & Gas, L.L.C. et al

Filing 59

Memorandum Opinion and Order re 57 MOTION for Discovery and Extend Time to Respond to Motions to Dismiss. The court denies without prejudice Plaintiff's Motion to Conduct Jurisdiction Discovery. The court grants in part Plaintiff's Mo tion to Extend Time to Respond to Motions to Dismiss, to the extent that Plaintiff's deadline to respond to all motions to dismiss (Docs. 43, 46, 49, 50, 51, 52, 53) is extended to 6/29/2015. (Ordered by Judge Sam A Lindsay on 6/18/2015) (jrr)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
UNDERWOOD RESOURCES, LLC,
Plaintiff,
v.
BRIGADIER OIL & GAS, LLC, et al.,
Defendants.

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Civil Action No. 3:15-CV-1024-L

MEMORANDUM OPINION AND ORDER
Before the court is Plaintiff’s Motion to Conduct Jurisdiction Discovery and Extend Time
to Respond to Motions to Dismiss (Doc. 57), filed June 16, 2015. The motion is opposed. After
considering the motion, basis for discovery, and applicable law, the court denies without prejudice
Plaintiff’s Motion to Conduct Jurisdiction Discovery and Extend Time to Respond to Motions to
Dismiss (Doc. 57).
Plaintiff requests that it be allowed to conduct jurisdictional discovery before responding to
Defendants’ motions to dismiss for lack of subject matter jurisdiction. Plaintiff also requests an
extension to respond to Defendants’ motions until twenty-one days after such discovery is complete.
Plaintiff contends that, to respond to Defendants’ motions, it is necessary for it to conduct discovery
to determine the residency of the parties to establish that complete diversity of citizenship exists
between the parties. Plaintiff asserts that Defendants’ motions also put at issue Plaintiff’s residency.
According to Plaintiff, the only way to address these issues is through limited discovery and by

Memorandum Opinion and Order - Page 1

requiring each of the remaining Defendants to produce affidavits identifying “the names, addresses,
residences and principal places of business for all individuals, general partners, limited partners,
members, trustees and/or beneficiaries.” Pl.’s Mot. 5.
As the party opposing dismissal and requesting discovery, Plaintiff bears the burden of
demonstrating the necessity of discovery. Davila v. United States, 713 F.3d 248, 264 (5th Cir.
2013); Freeman v. United States, 556 F.3d 326, 341-42 (5th Cir. 2009). A party is “not entitled to
jurisdictional discovery if the record shows that the requested discovery is not likely to produce the
facts needed to withstand a Rule 12(b)(1) motion.” Id. at 342. For the reasons that follow, the court
concludes that Plaintiff has not met its burden of demonstrating the necessity of discovery.
Plaintiff conflates citizenship and residency, although the two are not synonymous. Parker
v. Overman, 59 U.S. 137, 141 (1855). Plaintiff also appears to have a fundamental misunderstanding
of what is necessary to establish diversity of citizenship and therefore misconstrues the basis for
Defendants’ motions to dismiss, which is not Plaintiff’s failure to plead Defendants’ residency. For
diversity purposes, a natural person is considered a citizen of the state where that person is
domiciled, that is, where the person has a fixed residence with the intent to remain there indefinitely.
See Freeman v. Northwest Acceptance Corp., 754 F.2d 553, 555-56 (5th Cir. 1985). Thus,
citizenship in this context means domicile, and “mere residence in [a] [s]tate is not sufficient.”
Preston v. Tenet Healthsystem Mem’l Med. Ctr., Inc., 485 F.3d 793, 799 (5th Cir. 2007) (citation and
quotation marks omitted). “Domicile requires residence in [a] state and an intent to remain in the
state.” Id. at 798 (citing Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 48 (1989)).
Different or additional rules apply to parties that are not natural persons. A partnership or
unincorporated association’s citizenship is determined by the citizenship of each of its partners.

Memorandum Opinion and Order - Page 2

Carden v. Arkoma Assocs., 494 U.S. 185, 195-96 (1990). The citizenship of a limited liability
company “is determined by the citizenship of all of its members.” Harvey v. Grey Wolf Drilling Co.,
542 F.3d 1077, 1080 (5th Cir. 2008) (citations omitted). A corporation is a “citizen of every State
. . . by which it has been incorporated and of the State . . . where it has its principal place of
business[.]” 28 U.S.C. § 1332(c)(1). The citizenship of a trust is that of its trustees. Navarro Sav.
Ass’n v. Lee, 446 U.S. 458, 464 (1980) (citation omitted); Mullins v. Testamerica, Inc., 564 F.3d
386, 398 (5th Cir. 2009) (footnote omitted). The citizenship of a trustee who possesses “customary
powers to hold, manage, and dispose of assets for the benefit of others” is determined by the
citizenship of the trustee, not the trust beneficiaries. Navarro Sav. Ass’n, 446 U.S. at 464 (footnote
omitted). Control of the assets held in the name of the trustee must be “real and substantial.” Id. at
465.
In its First Amended Complaint, Plaintiff has alleged facts regarding the residency of
Defendants, and as far as the court can tell, Defendants do not contend that Plaintiff’s jurisdictional
pleadings are deficient for failure to allege the residency of Defendants. Defendants instead appear
to contend, among other things, that Plaintiff’s residency allegations are insufficient alone to
establish diversity of citizenship. Defendants are correct in asserting that a person’s residency alone
is insufficient as a matter of law to establish citizenship. In other words, Plaintiff must allege more
than mere residency to establish citizenship, and such allegations must affirmatively and distinctly
set forth the basis for a party’s citizenship. “[T]he basis upon which jurisdiction depends must be
alleged affirmatively and distinctly and cannot be established argumentatively or by mere inference.”
Getty Oil, Corp. v. Insurance Co. of North America, 841 F.2d 1254, 1258 (5th Cir. 1988) (citing
Illinois Cent. Gulf R.R. Co. v. Pargas, Inc., 706 F.2d 633, 636 & n.2 (5th Cir. 1983)). The court,

Memorandum Opinion and Order - Page 3

therefore, concludes that Plaintiff’s request for discovery regarding Defendants’ residency, which
Plaintiff has already alleged, is not likely to produce the facts needed to withstand a Rule 12(b)(1)
motion. Further, Plaintiff should not need discovery regarding its own residency or citizenship to
respond to Defendants’ motions to dismiss for lack of subject matter jurisdiction.
Plaintiff also fails to explain why it needs discovery regarding the “principal places of
business for all individuals, general partners, limited partners, members, trustees and/or
beneficiaries.” Pl.’s Mot. 5. Plaintiff’s First Amended Complaint sets forth the principal places of
business for several entities, and Plaintiff does not identify the specific Defendants for which it needs
the principal places of business. Moreover, for purposes of diversity, a party’s principal place of
business is only relevant for corporations, not “individuals, general partners, limited partners,
members, trustees and/or beneficiaries.” Id. Accordingly, the court concludes that Plaintiff has not
met its burden with respect to this requested discovery, and such discovery will not likely produce
the facts needed to withstand Defendants’ Rule 12(b)(1) motions.
For all of these reasons, the court denies without prejudice Plaintiff’s Motion to Conduct
Jurisdiction Discovery (Doc. 57). The court, nevertheless, grants in part Plaintiff’s Motion to
Extend Time to Respond to Motions to Dismiss, to the extent that Plaintiff’s deadline to respond to
all motions to dismiss (Docs. 43, 46, 49, 50, 51, 52, 53) is extended to June 29, 2015.
It is so ordered this 18th day of June, 2015.

_________________________________
Sam A. Lindsay
United States District Judge

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