CMFG Life Insurance Company et al v. Morgan Stanley & Co., LLC
Filing
107
ORDER Regarding Jurisdiction. Second Amended Complaint containing good faith allegations sufficient to establish complete diversity of citizenship due 8/17/2016. Signed by District Judge James D. Peterson on 8/3/16. (jat)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF WISCONSIN
CMFG LIFE INSURANCE COMPANY,
MEMBERS LIFE INSURANCE COMPANY, and
CUMIS INSURANCE SOCIETY,
Plaintiffs,
v.
ORDER
13-cv-577-jdp
MORGAN STANLEY & CO., LLC,
Defendant.
Plaintiffs CMFG Life Insurance Company, MEMBERS Life Insurance Company, and
CUMIS Insurance Society (collectively, CUNA Mutual) filed this case against defendant
Morgan Stanley & Co., LLC three years ago, seeking to rescind the purchase of several
residential mortgaged-backed securities. CUNA Mutual invokes this court’s diversity
jurisdiction, pursuant to 28 U.S.C. § 1332. Dkt. 56, ¶ 136. But because the allegations in the
amended complaint are insufficient to determine whether diversity jurisdiction actually
exists, the court will direct CUNA Mutual to file a second amended complaint containing the
necessary allegations.
“Federal courts are courts of limited jurisdiction.” Int’l Union of Operating Eng’rs, Local
150 v. Ward, 563 F.3d 276, 280 (7th Cir. 2009) (citation omitted). Unless the party
invoking federal jurisdiction establishes complete diversity of citizenship among the parties
and an amount in controversy exceeding $75,000, or raises a federal question, the court must
dismiss the case for lack of jurisdiction. Smart v. Local 702 Int’l Bhd. of Elec. Workers, 562 F.3d
798, 802 (7th Cir. 2009). Federal courts “have an independent obligation to determine
whether subject-matter jurisdiction exists, even when no party challenges it.” Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010). The party invoking federal jurisdiction bears the burden of
establishing that jurisdiction is proper. Smart, 562 F.3d at 802-03.
Here, CUNA Mutual contends that diversity jurisdiction exists because: (1) the
amount in controversy exceeds $75,000; and (2) the parties are completely diverse. For the
latter to be true, however, CUNA Mutual cannot be a citizen of the same state as Morgan
Stanley. Id. at 803. As of now, the court cannot confirm that this is the case.
Morgan Stanley is a limited liability company. “[T]he 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). But CUNA Mutual does not allege the names or citizenships of any of
Morgan Stanley’s members. Instead, CUNA Mutual alleges that Morgan Stanley is a
Delaware corporation with its headquarters in New York. This information is not relevant to
determining an LLC’s citizenship. Hukic v. Aurora Loan Servs., 588 F.3d 420, 429 (7th Cir.
2009).
The amended complaint also does not allege whether the three plaintiffs are
corporations, LLCs, or something else; CUNA Mutual merely identifies each plaintiff as an
“Iowa . . . insurance company” with headquarters in Wisconsin. Dkt. 56, ¶¶ 131-33. If the
plaintiffs are LLCs, CUNA Mutual must identify each entity’s members and their
citizenships, as discussed. If the plaintiff entities are corporations, CUNA Mutual must
identify each entity’s state of incorporation and the state where it has its principal place of
business. Hertz, 559 U.S. at 88.
Before dismissing this case for lack of subject matter jurisdiction, the court will allow
CUNA Mutual to file a second amended complaint that establishes subject matter
jurisdiction by alleging the names and citizenships of each of Morgan Stanley’s members and
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by identifying plaintiffs’ corporate structure and their citizenships. In alleging the LLCs’
citizenships, CUNA Mutual should be aware that if any members of the LLCs are themselves
a limited liability company, partnership, or other similar entity, then it must allege the
individual citizenships of each of those members as well: “the citizenship of unincorporated
associations must be traced through however many layers of partners or members there may
be.” Meyerson v. Harrah’s E. Chi. Casino, 299 F.3d 616, 617 (7th Cir. 2002).
ORDER
IT IS ORDERED that:
1. Plaintiffs CMFG Life Insurance Company, MEMBERS Life Insurance Company,
and CUMIS Insurance Society will have until August 17, 2016, to file and serve a
second amended complaint containing good faith allegations sufficient to establish
complete diversity of citizenship for purposes of determining subject matter
jurisdiction under 28 U.S.C. § 1332.
2. Failure to timely amend will result in prompt dismissal of this matter for lack of
subject matter jurisdiction.
Entered August 3, 2016.
BY THE COURT:
/s/
________________________________________
JAMES D. PETERSON
District Judge
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