United States District Court, E.D. New York
COURTYARD APARTMENTS PROPERTY 1, LLC, COURTYARD APARTMENTS PROPERTY 2, LLC, COURTYARD APARTMENTS PROPERTY 3, LLC, COURTYARD APARTMENTS PROPERTY 4, LLC, COURTYARD APARTMENTS PROPERTY 5, LLC, COURTYARD APARTMENTS PROPERTY 6, LLC, COURTYARD APARTMENTS PROPERTY 7, LLC, COURTYARD APARTMENTS PROPERTY 8, LLC, COURTYARD APARTMENTS PROPERTY 9, LLC, COURTYARD APARTMENTS PROPERTY 10, LLC, COURTYARD APARTMENTS PROPERTY 12, LLC, COURTYARD APARTMENTS PROPERTY 13, LLC, COURTYARD APARTMENTS PROPERTY 14, LLC, COURTYARD APARTMENTS PROPERTY 15, LLC, COURTYARD APARTMENTS PROPERTY 16, LLC, and COURTYARD APARTMENTS PROPERTY 17, LLC, Plaintiffs,
HAROLD ARI ROSENBLUM, WOODLARK ENTERPRISES, THE WOODLARK CORPORATION doing business as The Woodlark Companies, WOODLARK CAPITAL, LLC, WOODLARK COURTYARD, LLC, WOODLARK OPPORTUNITY FUND, LLC, COURTYARD APARTMENTS, LLC, and DERRICK MILAM, Defendants.
MEMORANDUM AND ORDER
R. HURLEY UNITED STATES DISTRICT JUDGE.
commenced this action on May 12, 2017 asserting claims for
“negligent misrepresentation, fraudulent inducement,
fraud, breach of contract, conversion, wasting of assets, and
breach of fiduciary [sic][.]” (Compl. ¶ 4.)
Plaintiffs allege that this Court has jurisdiction pursuant
to 28 U.S.C. § 1332 because the parties are diverse in
citizenship and the amount in controversy exceeds $75, 000.
(Id. ¶ 6.) Plaintiffs are a group of Delaware
limited liability companies, each “with its natural
U.S. citizen or domestic corporation owner, with its same
natural citizen sole owner” with a principal business
or residential address in one of eight states, allegedly none
of which are in the State of Florida. (Amended Compl. [DE 6]
¶ 9; Response to Order to Show Cause [DE 7] at 2.)
Rosenblum is a “resident” of the State of Florida
whose citizenship is not alleged. (Amended Complaint ¶
10.) Plaintiffs do not allege the citizenship of Defendant
Milam. (See Id. ¶ 24.) The remaining Defendants
are all companies allegedly formed by Defendant Rosenblum,
but the Amended Complaint is devoid of allegations regarding
their citizenship, stating only that they are
“headquartered and doing business from the State of
Florida.” (See Id. ¶¶ 6, 11-22.)
accordance with its obligation to ensure that subject matter
jurisdiction exists, on January 25, 2018, this Court ordered
Plaintiffs to show cause in writing why the action should not
be dismissed for lack of subject matter jurisdiction. On
February 7, 2018, Plaintiffs filed an Amended Complaint,
which again failed to address the citizenship of all of
either Plaintiffs' or Defendants' members. In the
Amended Complaint, Plaintiffs allege that Defendant Rosenblum
“formed, and solely owned, or controlled as Managing
Member” the corporate defendants. (Amended Complaint
¶ 12.) Plaintiffs make no other allegations concerning
the citizenship of Defendants' members, nor do Plaintiffs
distinguish between which of the defendant corporations
Rosenblum solely owned and which he just controlled.
February 7, 2018, Plaintiffs responded to the Court's
order to show cause by letter (“Response to Order to
Show Cause”), which claims that “complete
diversity is now properly alleged” because the
Complaint was amended to show that the corporate owners of
the Plaintiffs LLCS incorporated in Delaware do not maintain
their principal place of business in Florida and the sole
owner of these same Plaintiff LLCs does not maintain his/her
principal residence in the State of Florida. (Response to
Order to Show Cause [DE 7] at 2.) This is effectively
nonresponsive to the Court's order to show cause and does
nothing to address the myriad deficiencies regarding subject
matter jurisdiction in both the Complaint and the Amended
Complaint. Thus, as explained below, the case is dismissed
for lack of subject matter jurisdiction.
Principles Regarding Diversity Jurisdiction
jurisdiction exists when all plaintiffs are citizens of
states diverse from those of all defendants. Pennsylvania
Pub. Sch. Employees' Ret. Sys. v. Morgan Stanley &
Co., Inc., 772 F.3d 111, 117- 18 (2d Cir. 2014) (citing
Exxon Mobil Corp. v. Allapattah Servs., Inc., 545
U.S. 546, 553 (2005)). The party asserting diversity
jurisdiction has the burden to prove the same.
Pennsylvania Pub. Sch. Employees' Ret. Sys., 772
F.3d at 118. “[D]iversity of citizenship should be
distinctly and positively averred in the pleadings, or should
appear with equal distinctness in other parts of the
record[.]” Leveraged Leasing Admin. Corp. v.
PacificCorp Capital, Inc., 87 F.3d 44, 47 (2d Cir. 1996)
(internal quotation marks omitted). “A conclusory
allegation in the Complaint regarding diversity of
citizenship does not extinguish the Court's
responsibility to determine, on its own review of the
pleadings, whether subject matter jurisdiction exists.”
Richmond v. International Bus. Machs. Corp., 919
F.Supp. 107, 108 (E.D.N.Y. 1996), aff'd, 841
F.2d 1116 (2d Cir. 1988).
purpose of diversity jurisdiction, “a statement of the
parties' residence is insufficient to establish their
citizenship.” Davis v. Cannick, 2015 WL
1954491, at *2 (E.D.N.Y. 2015); Young-Gibson v.
Patel, 476 Fed. App'x 482, 483 (2d Cir. June 12,
2012). “For purposes of diversity jurisdiction, [an
individual's] citizenship depends on his domicile.”
Linardos v. Fortuna, 157 F.3d 945, 948 (2d Cir.
citizenship of a limited liability company
(“LLC”) is determined by the citizenship of each
of its members. See, e.g., Bayerische Landesbank, New
York Branch v. Aladdin Capital Management LLC, 692 F.3d
42, 49 (2d Cir. 2012); Handelsman v. Bedford Vill.
Assocs. Ltd P'ship, 213 F.3d 48, 51-52 (2d Cir.
2000). “A complaint premised upon diversity of
citizenship must allege the citizenship of natural persons
who are members of a limited liability company and the place
of incorporation and principal place of business of any
corporate entities who are members of the limited liability
company.” New Millennium Capital Partners, III, LLC
v. Juniper Grp. Inc., 2010 WL 1257325, at *1 (S.D.N.Y.
Mar. 26, 2010), (citing Handelsman, 213 F.3d at
51-52)); Bishop v. Toys “R” Us-NY LLC,
414 F.Supp.2d 385, 389 n.1 (S.D.N.Y. 2006),
aff'd, 385 Fed. App'x 38 (2d Cir. 2010).
The Amended Complaint
viewed against the foregoing principles, diversity
jurisdiction has not been properly pled in this case as there
are numerous fatal shortcomings in the Amended Complaint that
are neither adequately addressed nor remedied by the Response
to the Order to Show Cause. First, Plaintiffs make a blanket
statement that each of the sixteen Plaintiffs are limited
liability companies “with its same natural citizen sole
owner and same principal place of business and residential
address  listed as follows[.]” (Amended Compl. ¶
9.) The Court is unpersuaded that this is sufficient to
allege citizenship of each of the members of the sixteen
limited liability companies. Moreover, Plaintiffs have failed
to even allege the members, let alone the members'
citizenship, of certain of the Plaintiffs such as those of
the David J. Keudell Revocable Trust. See Amerigold
Logistics, LLC v. ConAgra Foods, Inc., 136 S. Cit. 1012,
1016-17 (2016) (explaining that for purposes of diversity
jurisdiction, a trust as an unincorporated entity
“possesses the citizenship of all of its
members”). This shortcoming alone is fatal to diversity
jurisdiction, however, there are also significant issues with
Plaintiffs' allegations regarding the citizenship of all
noted above, Plaintiffs make no allegations concerning the
citizenship of each of the Defendants' members, relying
on confusing statements about Defendant Rosenblum's
involvement in the companies. Reference is also made to other
non-defendants who apparently have or had some stake in the
Defendant companies at some point in time. (See
Amended Compl. ¶ 23 (stating that Sean K. O'Brien,
“a defendant in a separate action and not herein . . .
was both 51% owner of Courtyard and Chief Operating Officer
of Capital”).) No. further information is provided
regarding Mr. O'Brien.
Plaintiffs ask that the Court provide guidance or further
directive as to its Order to Show Cause, the Court declines
to do so here. Plaintiffs have had three proverbial
“bites at the apple” to properly allege subject
matter jurisdiction; in the Complaint, the Amended Complaint,
and the Response to the Order to Show Cause. Plaintiffs have
failed to do so on all occasions. It is not the Court's
responsibility to do research for Plaintiffs' counsel on
how to properly allege subject matter jurisdiction.