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Reinschmidt v. Exigence LLC

United States District Court, W.D. New York

April 21, 2014

EXIGENCE LLC (Del.); et al., Defendants.


JEREMIAH J. McCARTHY, Magistrate Judge.

This action has been referred to me by Hon. Richard J. Arcara for supervision of all pretrial proceedings [11].[1] Presently pending are two motions to dismiss or strike portions of the Complaint [7, 8], as well as plaintiff's motion for an extension of time to reply to those motions and to exceed the page limit for response [9]. For the following reasons, I recommend that this action be dismissed for lack of subject matter jurisdiction, and that the pending motions accordingly be denied as moot.


Plaintiff commenced this action on November 25, 2013, seeking various forms of relief against defendants for alleged fraud, conversion, negligent misrepresentation, breach of fiduciary duty, breach of contract, unjust enrichment and equitable estoppel. Complaint [1]. Defendants have moved pursuant to Fed.R.Civ.P. ("Rule") 12(b)(6) and 12(f) to dismiss or strike portions of the Complaint [7, 8].

After reviewing the Complaint, I had concerns as to whether subject matter jurisdiction exists. Although the issue was not raised by defendants, "[c]ourts have an independent obligation to determine whether subject-matter jurisdiction exists, even when no party challenges it." Hertz Corp. v. Friend , 130 S.Ct. 1181, 1193 (2010). Accordingly, by Order to Show Cause ("OSC") dated March 18, 2014 [14], I expressed those concerns and invited the parties' response. While defendants did not respond to the OSC, plaintiff's response [15] has not convinced me that subject matter jurisdiction exists.


"[A] plaintiff premising federal jurisdiction on diversity of citizenship is required to include in its complaint adequate allegations to show that the district court has subject matter jurisdiction". Durant, Nichols, Houston, Hodgson & Cortese-Costa P.C. v. Dupont , 565 F.3d 56, 64 (2d Cir. 2009). Paragraph 47 of the Complaint alleges that "[t]he Court has jurisdiction over this dispute pursuant to 28 U.S.C. §1332(a)(1). The Plaintiff is a Citizen of the State of Tennessee, and none of the Defendants are residents of the State of Tennessee. The matter in controversy exceeds the sum or value of $75, 000, exclusive of interest or costs".

However, several of the named defendants are either partnerships, limited partnerships, or limited liability companies which, as plaintiff admits (plaintiff's Memorandum of Law [15-1], p. 9), are deemed to have the citizenship of each of their partners or members. Therefore, in order to avoid dismissal, plaintiff must specifically allege the citizenship of each of the defendants' partners or members, which he has failed to do. See Manning v. WPX Energy Appalachia, LLC, 2012 WL 1205851, *2 (M.D.Pa. 2012) ("the citizenship of an LLC is determined by the citizenship of its members.... Here, the Complaint fails to allege facts regarding the citizenship of the members of... [the] LLC. As such, the Court cannot determine that diversity jurisdiction applies to this entity. As Plaintiffs have not shown that complete diversity of citizenship exists between the parties, the Court cannot determine that subject matter jurisdiction exists").

Recognizing the deficiency in his Complaint, plaintiff now requests leave to take jurisdictional discovery in order to establish that none of the defendants' members, partners or limited partners are citizens of Tennessee. See plaintiff's Response [15], ¶¶26, 28. However, plaintiff alleges that he himself is "a general partner and member in many of these entities" (Complaint [1], ¶2), and he specifically and unequivocally repeats that allegation throughout the Complaint ( see, e.g., ¶¶83, 84, 87, 125, 129, 130, 131, 235, 243, 244, 250, 251, 254, 255, 256, 258, 263, 264, 265, 266, and 268). Moreover, several of his claims seek to enforce his rights, as partner or member, to inspect the defendants' books and records ( see, e.g. Counts Nineteen, Twenty-One and Twenty-Two). Therefore, his citizenship counts as theirs, meaning that complete diversity does not exist.

In an attempt to avoid dismissal, plaintiff asks me to apply 28 U.S.C. §1653 or, in the alternative, Rule 21. Plaintiff's Memorandum of Law [15-1], pp.10-14. I will address each request separately.

A. 28 U.S.C. §1653

28 U.S.C. §1653 provides that "[d]efective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts". However, §1653 "addresses only incorrect statements about jurisdiction that actually exists, and not defects in the jurisdictional facts themselves". Newman-Green, Inc. v. Alfonzo-Larrain , 490 U.S. 826, 831 (1989).

Plaintiff argues that amendment should be allowed "[u]nless the record clearly indicates that the complaint could not be saved by any truthful amendment" (plaintiff's Memorandum of Law [15-1], p.10), and suggests that "even Plaintiff's own statement... claiming existing ownership in certain Defendants may be amended, if truthful". Plaintiff's Response [15], ¶19(c). I disagree. The Complaint specifically and repeatedly alleged that plaintiff was at that time a partner or member in various defendants, and even sought relief (such as inspection of books and records) which depended on that status.

Those allegations, which were made subject to the requirements of Rule 11, may not now be disavowed merely because plaintiff deems it advantageous to do so. "[A] litigant may not play fast and loose with the courts by freely taking inconsistent positions in a lawsuit and simply ignoring the effect of a prior filed document." In re ...

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