1031 Equity Exchange, LLC et al vs Superior Homes, LLC et al

Filing 21

ORDER granting 12 Motion to Dismiss signed by Judge Benjamin H. Settle.(TG)

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1 2 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT TACOMA 3 4 5 6 7 1031 EQUITY EXCHANGE, LLC, et al., Plaintiffs, v. CASE NO. C17-5213 BHS ORDER DISMISSING COMPLAINT FOR LACK OF JURISDICTION SUPERIOR HOMES, LLC, et al., 8 Defendants. 9 10 This matter comes before the Court on Defendants Superior Homes, LLC 11 (“Superior”) and Estela Mata’s (“Defendants”) motion to dismiss (Dkt. 12) and the 12 Court’s order to show cause (Dkt. 19). The Court has considered the pleadings filed in 13 support of and in opposition to the motion, Defendants’ response to the order to show 14 cause, and the remainder of the file and hereby dismisses the complaint for lack of 15 jurisdiction. I. 16 PROCEDURAL HISTORY 17 On March 22, 2017, Plaintiffs 1031 Equity Exchange, LLC (“1031EE”) and Kauai 18 Ocean View Professional Building, LLC (“Kauai Ocean”) (collectively “Plaintiffs”) filed 19 a complaint against Defendants asserting diversity jurisdiction and numerous causes of 20 action based on violations of state law. Dkt. 1. 21 22 On May 1, 2017, Defendants filed a motion to dismiss arguing that the Court should (1) abstain because of a prior action in Hawaii, (2) dismiss because neither ORDER - 1 1 plaintiff is a real party in interest, or (3) dismiss because joinder of the real party in 2 interest would defeat jurisdiction. Dkt. 12. On May 22, 2017, Plaintiffs responded. Dkt. 3 15. On May 23, 2017, Defendants replied and argued for the first time that there is not 4 complete diversity. Dkt. 18. 5 On June 13, 2017, the Court issued an order to show cause regarding an apparent 6 lack of diversity between the parties. Dkt. 19. On June 16, 2016, Defendants responded 7 and agreed with the Court. Dkt. 20. Plaintiffs failed to respond. 8 9 II. DISCUSSION “If the court determines at any time that it lacks subject-matter jurisdiction, the 10 court must dismiss the action.” Fed. R. Civ. P. 12(h)(3) (emphasis added). See also Snell 11 v. Cleveland, Inc., 316 F.3d 822, 826 (9th Cir. 2002) (“Federal Rule of Civil Procedure 12 12(h)(3) provides that a court may raise the question of subject matter jurisdiction, sua 13 sponte, at any time during the pendency of the action . . . .”). Although Defendants 14 improperly raised the issue of diversity jurisdiction for the first time in the reply, the 15 Court must confirm it has jurisdiction before reaching the merits of the dispute. See 16 Morongo Band of Mission Indians v. Cal. State Bd. of Equalization, 858 F.2d 1376, 1380 17 (9th Cir. 1988). As the parties invoking federal jurisdiction, Plaintiffs bear the burden of 18 establishing its existence. Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 377 (1994). 19 District courts have diversity jurisdiction when the parties are citizens of different 20 states and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 21 U.S.C. § 1332(a)(1). “Diversity jurisdiction requires complete diversity between the 22 parties—each defendant must be a citizen of a different state from each plaintiff.” In re ORDER - 2 1 Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1234 (9th Cir. 2008). “In cases where 2 entities rather than individuals are litigants, diversity jurisdiction depends on the form of 3 the entity.” Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 4 2006). “[A]n LLC is a citizen of every state of which its owners/members are citizens.” 5 Id. Thus, if an individual defendant is an owner or member of a plaintiff LLC, “then 6 diversity requirement of section 1332 cannot be satisfied.” Skaaning v. Sorensen, CV 09- 7 00364 DAE-KSC, 2009 WL 3763056, at *3 (D. Haw. Nov. 10, 2009) 8 In this case, Plaintiffs have failed to show complete diversity between the parties. 9 Defendants assert, and Plaintiffs fail to show otherwise, that a member of 1031EE, Frank 10 Sarabia, is a citizen of California, which would result in 1031EE being a citizen of 11 California. Johnson, 437 F.3d at 899. Plaintiffs allege that Superior is a California 12 company. Dkt. 1, ¶¶ 2.3–2.4. Thus, a plaintiff and a defendant are both citizens of the 13 state of California, and the parties lack complete diversity of citizenship. 14 III. 15 16 17 ORDER Therefore, it is hereby ORDERED that Plaintiffs’ complaint is DISMISSED without prejudice for lack of jurisdiction. Dated this 19th day of June, 2017. A 18 19 BENJAMIN H. SETTLE United States District Judge 20 21 22 ORDER - 3

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