Markwell v. Equitybuild, Inc dba EB Equitybuild Capital, Inc et al

Filing 45

ORDER entered DENYING 44 MOTION for Reconsideration of 43 Order of Remand.(Signed by Chief Judge Lee H Rosenthal) Parties notified.(leddins, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
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Plaintiff,
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v.
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EQUITYBUILD, INC. D/B/A EQUITYBUILD §
CAPITAL, et al.,
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Defendants.
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July 30, 2018
David J. Bradley, Clerk

ANSON MARKWELL,

CIVIL ACTION NO. H-18-1274

ORDER
The court remanded this case based on a lack of diversity jurisdiction because Anson
Markwell, the plaintiff, is a Texas citizen, and several of the defendants, limited liability companies
to which Equitybuild allegedly fraudulently transferred properties, are Texas citizens. (Docket Entry
No. 43). Before the court remanded the case, the LLC defendants moved to dismiss for lack of
personal jurisdiction. (Docket Entry No. 42). The defendants moved for reconsideration of the
remand order, asking the court to reserve determination of subject-matter jurisdiction until after it
resolves the motion to dismiss, because “[i]f that motion is granted, complete diversity will be
restored.” (Docket Entry No. 44).
District courts have discretion about the order in which to address personal and subjectmatter jurisdiction.
[W]e recognize that in most instances subject-matter jurisdiction will involve no
arduous inquiry. See Marathon Oil v. Ruhrgas, 145 F.3d 211, 229 (5th Cir. 1999)
(en banc) (Higginbotham, J., dissenting) (“engag[ing]” subject-matter jurisdiction
“at the outset of a case . . . [is] often . . . the most efficient way of going”). In such
cases, both expedition and sensitivity to state courts’ coequal stature should impel
the federal court to dispose of that issue first. See Cantor Fitzgerald, L.p. v. Peaslee,
88 F.3d 152, 155 (2d Cir. 1996) (a court disposing of a case on personal jurisdiction
grounds “should be convinced that the challenge to the court’s subject-matter
jurisdiction is not easily resolved”).

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 587–88 (1999). The Supreme Court has held that
“there is no mandatory ‘sequencing of jurisdictional issues,’” and that a federal court has “leeway
to choose among threshold grounds for denying audience to a case on the merits.” Sinochem Int’l
Co. v. Malay Int’l Shipping, 549 U.S. 422, 431 (2007) (quoting Ruhrgas, 526 U.S. at 584).
“[N]either Ruhrgas nor Sinochem change the general expectation that federal courts address
subject-matter jurisdiction at the outset in the ‘mine run of cases’ and reach other issues first only
where the jurisdictional issue is ‘difficult to determine’ and the other grounds are relatively ‘less
burdensome.’” Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 100 (5th Cir. 2018).
“[A]lthough federal courts normally must resolve questions of subject-matter jurisdiction before
reaching other threshold issues, this rule is subject to the qualification that courts facing multiple
grounds for dismissal should consider ‘the complexity and subject-matter jurisdiction issues raised
by the case, as well as concerns of federalism, and of judicial economy and restraint in determining
whether to dismiss claims due to a lack of personal jurisdiction before considering challenges to its
subject-matter jurisdiction.’” Id. (quoting Alpine View Co. Ltd. v. Atlas Coco AB, 205 F.3d 208, 213
(5th Cir. 2000)).
Deciding whether the court has subject-matter jurisdiction does not require an “arduous
inquiry” because the plaintiff and the LLC defendants are Texas citizens. Ruhrgas, 526 U.S. at 587.
Nor do the parties dispute that the LLC defendants are Texas citizens for jurisdictional purposes.
Because subject-matter jurisdiction is not “difficult to determine,” this case falls within the “general
expectation” that federal courts address subject-matter jurisdiction first in the “mine run of cases.”
Sangha, 882 F.3d at 100. The “complexity of [the] subject-matter jurisdiction issues raised by the
case” and “concerns of federalism and of judicial economy and restraint” also weigh in favor of

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addressing subject-matter jurisdiction before considering the personal-jurisdiction arguments.
Sangha, 882 F.3d at 100.
The court lacks subject-matter jurisdiction. The motion for reconsideration, (Docket Entry
No. 44), is denied.
SIGNED on July 30, 2018, at Houston, Texas.
______________________________________
Lee H. Rosenthal
Chief United States District Judge

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