United States District Court, W.D. Louisiana, Shreveport Division
AMGUARD INSURANCE CO.
DARRYLYN MIDDLETON, ET AL
L. Hornsby, U.S. Magistrate Judge
and Joyce Middleton own property in Mansfield, Louisiana. A
pine tree on the property was leaning on power lines owned by
CLECO Power, LLC. The Mansfield Fire Department responded to
a call about an electrical problem, and the pine tree fell on
the fire truck and destroyed it. The City of Mansfield made a
claim on its insurance policy issued by AmGuard Insurance
filed this subrogation suit against the Middletons and CLECO
to recover more than $300, 000 it paid under its policy.
AmGuard's complaint invokes diversity jurisdiction, which
puts the burden on AmGuard to allege facts that show complete
diversity of citizenship. The original complaint did not meet
that burden. The court issued a Memorandum Order (Doc. 3)
that directed AmGuard to file an amended complaint and
attempt to set forth the necessary facts to show complete
has now filed an Amended Complaint (Doc. 22) in an effort to
meet its burden. It has specified that it is a corporation
organized under Pennsylvania law with its principal place of
business in Pennsylvania. It is also specified that the
Middletons are both domiciled in Louisiana. The problem comes
with defendant CLECO Power, LLC.
amended complaint states that the attorneys have been
cooperating in providing available information about the
citizenship of its members, but the organization is
apparently quite complicated.
citizenship of an LLC is determined by the citizenship of all
of its members, with its state of organization or principal
place of business being irrelevant. Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077 (5th Cir. 2008). “A
party seeking to establish diversity jurisdiction must
specifically allege the citizenship of every member of every
LLC or partnership involved in a litigation.”
Settlement Funding, L.L.C. v. Rapid Settlements,
Ltd., 851 F.3d 530, 536 (5th Cir. 2017). If the members
are themselves partnerships, LLCs, corporations or other form
of entity, their citizenship must be alleged in accordance
with the rules applicable to that entity, and the citizenship
must be traced through however many layers of members or
partners there may be. Mullins v. TestAmerica Inc.,
564 F.3d 386, 397-98 (5th Cir. 2009); Feaster v. Grey
Wolf Drilling Co., 2007 WL 3146363 (W.D. La. 2007).
amended complaint states that CLECO Power, LLC is a
“wholly-owned subsidiary” of another LLC, which
is in turn a wholly-owned subsidiary of another LLC, which is
itself a wholly-owned subsidiary of CLECO Partners, LP.
Presumably, the statement that one LLC is wholly owned by
another LLC is intended to mean that the second LLC is the
sole member of the original LLC. There are other ways, such
as by using other entities, that an LLC could wholly own and
control another LLC without actually being a member of it.
But it is membership that is critical for determining
citizenship for diversity purposes, so allegations in this
regard should be clear about what entities are actually
members of others. Terms such as wholly-owned subsidiary
leave room for doubt.
the membership issue with respect to the CLECO entities can
be addressed with specificity, that brings us to CLECO
Partners, LP. The amended complaint does not say so, but the
name of this entity suggest that it is a limited partnership.
Any future amendments should clarify its status.
partnership is a party, the court must consider the
citizenship of each partner, whether limited or general.
Carden v. Arkoma Associates, 110 S.Ct. 1015 (1990).
The Carden rule applies to common law limited
partnerships and a Louisiana partnership in commendam.
Whalen v. Carter, 954 F.2d 1087, 1094 (5th Cir.
1994); Newport Limited v. Sears, Roebuck and Co.,
941 F.2d 302 (5th Cir. 1991). If partners are themselves
partnerships, LLC's or other form of association, the
citizenship must be traced through however many layers of
members or partners there may be, and failure to do so can
result in dismissal for want of jurisdiction. Mullins v.
Testamerica, Inc., 2008 WL 4888576 (5th Cir. 2008)
(court refused to consider the merits of an appeal until the
record distinctly and affirmatively alleged the citizenship
of a limited partnership).
amended complaint alleges that CLECO Partners, LP “is
owned by” three entities. Presumably, this means that
the three entities are partners in or members of the entity.
The next amendment should clarify this with a specific
the owners is MIP CLECO Partners, LP. Its general partner is
Macquarie Infrastructure Partners III, GP, LLC, “whose
members are a Delaware corporation, a UK Corporation, and a
Delaware LLC with a New York resident as its sole
member.” The amended complaint states that, upon
information and belief, no limited partners have been
identified as citizens of Pennsylvania. This is not adequate.
Delaware corporation is not identified, and its principal
place of business is not alleged. The same is true with
respect to the UK corporation. As for the unidentified
limited partners, the court has required that limited
partners be identified and have their citizenship alleged
with specificity even when that task is burdensome or even
impossible. Moran v. Gulf South Pipeline Co., LP,
2007 WL 276196 (W.D. La. 2007) (collecting cases that
required specificity of limited partners despite there being
thousands of them or their interests being miniscule);
Masion v. Liberty Mut. Ins. Co., 2006 WL 1675378
(W.D. La. 2006) (requiring specificity even though
partnership shares were publicly traded and identities of
owners changed often based on trades).
second owner of CLECO Partners, LP is said to be British
Columbia Investment Management Corporation
(“BCI”). It is alleged to be a limited
partnership whose general partner is a Canadian corporation
with a principal place of business in Canada. As for limited
partners, the amended complaint states only that, upon
information and belief, no limited partners have ...