United States District Court, W.D. New York
GRETCHEN A. HOWARD, Plaintiff,
LNV CORPORATION, and ELLINGTON MORTGAGE PARTNERS LP, Defendants.
DECISION AND ORDER
Elizabeth A. Wolford Judge.
Gretchen A. Howard ("Plaintiff) filed this action on
March 15, 2016, against Defendants LNV Corporation
("LNV") and Ellington Mortgage Partners LP
"Defendants"). (Dkt. 1). Plaintiff filed an amended
complaint on May 27, 2016. (Dkt. 2). Plaintiff seeks to
invoke this Court's jurisdiction pursuant to 28 U.S.C.
§ 1332 (diversity of citizenship). (Id. at 1).
The amended complaint is insufficient to invoke the
Court's subject matter jurisdiction. (See Dkt.
18 at 1). On December 30, 2016, the Court ordered Plaintiff
to show cause as to why this action should not be dismissed
for lack of jurisdiction. (Id.). Plaintiff was
required to show cause by January 20, 2017. (Id. at
4). Plaintiff has not responded to the Court's
Order. The Court also permitted Defendants to
respond to the Order. (Id. at 4). Both Defendants
responded, providing further information about their
respective citizenships. (Dkt. 19; Dkt. 20).
the Court is not satisfied that it has subject matter
jurisdiction, the case must be dismissed.
Court is bound by the "inflexible rule" requiring
the Court "without exception" to determine sua
sponte if jurisdiction is lacking. Cave v. E. Meadow
Union Free Sch. Dist, 514 F.3d 240, 250 (2d Cir. 2008);
see, e.g., Gonzalez v. Thaler, 565 U.S. 134, 141
(2012) ("[C]ourts are obligated to consider sua
sponte [subject-matter jurisdiction] issues that the
parties have disclaimed or have not presented. Subject-matter
jurisdiction can never be waived or forfeited.")
(internal citation omitted); Henderson ex rel. Henderson
v. Shinseki, 562 U.S. 428, 434 (2011) ("[F]ederal
courts have an independent obligation to ensure that they do
not exceed the scope of their jurisdiction, and therefore
they must raise and decide jurisdictional questions that the
parties either overlook or elect not to press.").
"If a court perceives at any stage of the proceedings
that it lacks subject matter jurisdiction, then it must take
proper notice of the defect by dismissing the action."
Cave, 514 F.3d at 250; see, e.g., Fed. R.
Civ. P. 12(h)(3) ("If the court determines at any time
that it lacks subject-matter jurisdiction, the court must
dismiss the action.").
is well established that [t]he party seeking to invoke
jurisdiction under 28 U.S.C. § 1332 bears the burden of
demonstrating the grounds for diversity exist and that
diversity is complete." Herrick Co., Inc. v. SCS
Commc'ns, Inc., 251 F.3d 315, 322-23 (2d Cir. 2001)
(internal citations omitted).
is a citizen of New York. (Dkt. 2 at 1). The amended
complaint styles LNV as a corporation. (Id.). A
corporation is deemed a citizen of "every State and
foreign state by which it has been incorporated
and of the State or foreign state
where it has its principal place of business. . . ." 28
U.S.C. § 1332 (emphasis added); see, e.g., Hertz
Corp. v. Friend, 559 U.S. 77, 80 (2010). The amended
complaint alleges that "LNV Corporation is organized in
or its primary place of business is Texas." (Dkt. 2 at 1
(emphasis added)). In its response to the Order to Show
Cause, LNV avers that it is a corporation existing under the
laws of Nevada, with its primary place of business in Piano,
Texas. (Dkt. 19 at 1). Thus, LNV is a citizen of Nevada and
Texas, and Plaintiffs citizenship is diverse from that of
complete diversity is required. The amended complaint styles
Ellington as a limited partnership. (Dkt. 2). The citizenship
of a limited partnership is co-equal with the citizenship of
each of the partners. Carden v. Arkoma Assocs., 494
U.S. 185, 196-96 (1990); see, e.g., Herrick Co., 251
F.3d at 322 ("[F]or purposes of establishing diversity,
a partnership has the citizenship of each of its
Ellington Mortgage Partners LP converted from a limited
partnership to a limited liability corporation under the laws
of the state of Delaware in 2011; it is now called Ellington
Mortgage Partners LLC. (Dkt. 9-5 at 8). The LLC has not been
substituted for the LP as a party to this action.
Fed.R.Civ.P. 25(c) allows for substitution, but requires a
motion to effectuate such substitution. See Fed. R.
Civ. P. 25(c) ("If an interest is transferred, the
action may be continued by or against the original party
unless the court, on motion, orders the transferee
to be substituted in the action or joined with the original
party.") (emphasis added). Substitution is not required
after an interest has been transferred. Luxliner P.L.
Export, Co. v. RDI/Luxliner, Inc., 13 F.3d 69, 71 (2d
Cir. 1993). "When a defendant corporation has merged
with another corporation, for example, the case may be
continued against the original defendant and the
judgment will be binding on the successor even if the
successor is not named in the lawsuit." Id.
response to the Court's Order to Show Cause does not
provide any information regarding the LP's partners'
citizenship. (See Dkt. 20). It only describes the
conversion from a limited partnership to a limited liability
corporation, and the LLC's citizenships. (See
id.). Thus, there is insufficient information in the
record for the Court to find that it has subject matter
jurisdiction to decide this case.
the LLC was substituted for the LP, the Court would lack
jurisdiction. An LLC is a citizen of each state in which one
of its members is a citizen. See Bayer is che Landesbank,
N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42,
49 (2d Cir. 2012). The LLC has one member-Ellington Capital
Management LLC ("ECM"). (Dkt. 20 at ¶ 10). ECM
has "one or more members who are citizens of the State
of New York." (Id. at ¶ 11). ECM's
citizenship in New York means that the LLC is a citizen of
New York. If the LLC were a party to the case, there would
not be complete diversity and the Court would lack subject
matter jurisdiction. See Bayerische Landesbank, 692
F.3d at 49 (finding that a subsidiary LLC's citizenship
was co-equal with the citizenship of the parent LLC's
members); DirecTV Latin Am. v. Park 610, LLC, No. 08
Civ. 3987(VM)(GWG), 2009 WL 692202, at *5 (S.D.N.Y. Mar. 18,
2009) (same); Tri-Cty. Metro. Transp. Dist. of Or. v.
Butler Block, LLC, Civil No. 08-259-AA, 2008 WL 2037306,
at *3 (D. Or. May 7, 2008) (holding that the defendant's
parent LLC's citizenship in the same state as the
plaintiff destroyed complete diversity).
has not met her burden of demonstrating that complete
diversity exists. Similarly, Defendants' responses to the
Order to Show Cause fail to show complete diversity. The
Court lacks sufficient information to find that it has
subject matter jurisdiction to decide the case. Therefore,
the case must be dismissed without prejudice. The Clerk of
Court is ordered to terminate the case for lack of subject