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Saulsbury Ind. Inc v. Cabot Corp.

United States District Court, W.D. Louisiana, Lafayette Division

October 24, 2019

SAULSBURY IND., INC.
v.
CABOT CORP., ET AL.

          Michael J Juneau Judge

          MEMORANDUM RULING AND ORDER

          CAROL B. WHITEHURST UNITED STATES MAGISTRATE JUDGE

         Before the undersigned is defendant Cleco Power, LLC's (“Cleco”) Rule 12(b)(1) Motion to Dismiss for Lack of Subject Matter Jurisdiction and Alternative Rule 12(b)(6) Motion to Dismiss [Doc. 31]. The motion is opposed by the plaintiff, Saulsbury Industries, Inc. (“Saulsbury”). For the reasons that follow, the motion is DENIED AS PREMATURE, subject to the right of Cleco to re-file the motion after jurisdictional discovery has been completed.

         I. PROCEDURAL AND FACTUAL BACKGROUND

         The instant lawsuit arises out of a dispute over a construction contract involving Saulsbury, defendant Cleco, and defendant Cabot Corporation (“Cabot”), the latter two being the developers of the project. In general terms, Saulsbury argues that the parties amended the contract governing the construction project at issue, while Cleco and Cabot argue the contract was never amended. Saulsbury filed suit in this Court on January 3, 2019, and alleges that the jurisdictional basis in this matter arises under 28 U.S. 1332. In its motion, Cleco argues that this Court lacks subject matter jurisdiction over the plaitnff's claims against it, on grounds the plaintiff has not sufficiently alleged that the plaintiff and Cleco are diverse in citizenship. The plaintiff responds that its allegations in the Complaint are sufficient to establish jurisdiction, but that in the event jurisdiction has not been adequately pled, the proper remedy is not to dismiss the plaintiff's claims against Cleco, but to allow the parties to conduct jurisdictional discovery so that Saulsbury may more sufficiently plead a jurisdictional basis.

         II. LAW AND ANALYSIS

         Cleco filed the instant motion under Rule 12(b)(1), or alternatively, Rule 12(b)(6). It is well settled that when a Rule 12(b)(1) motion is filed in conjunction with other Rule 12 motions, the Court should consider the Rule 12(b)(1) jurisdictional attack before addressing any attack on the merits. Hill v. City of Pasadena, 561 F.2d 606, 608 (5th. Cir. 1977) (per curiam). Therefore, the undersiged will consider Cleco's jurisdictional arguments first.

         Lack of Subject Matter Jurisdiction Under 12(b)(1)

         Rule 12(b)(1) requires dismissal of a complaint for “lack of subject-matter rjurisdiction” if the Court lacks statutory or constitutional power to adjudicate the case. “Federal courts are courts of limited jurisdiction; without jurisdiction conferred by statute, they lack the power to adjudicate claims.” In re FEMA Trailer Formaldehyde Products Liab. Litig. (Mississippi Plaintiffs), 668 F.3d 281, 286 (5th Cir. 2012). “Lack of subject-matter jurisdiction may be found in the complaint alone, the complaint supplemented by the undisputed facts as evidenced in the record, or the complaint supplemented by the undisputed facts plus the court's resolution of the disputed facts.” Id. at 287. Indeed, in Ambraco, Inc. v. Bossclip B.V., 570 F.3d 233, 238 (5th Cir. 2009), the Fifth Circuit stated:

“[U]nder both Rule 12(b)(1) and Rule 12(b)(3), the court is permitted to look at evidence in the record beyond simply those facts alleged in the complaint and its proper attachments.” Id. at 449 (citing Lane ex rel. Lane v. Halliburton, 529 F.3d 548, 557 (5th Cir.2008) (“[T]he court may find a plausible set of facts by considering any of the following: (1) the complaint alone; (2) the complaint supplemented by the undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts.”

         A party invoking federal jurisdiction bears the burden of showing that it has standing to sue. Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992). Standing “determines the court's fundamental power to hear [a] suit.” Rivera v. Wyeth-Ayerst Labs., 283 F.3d 315, 319 (5th Cir.2002). “Whether a party has standing to sue in federal court is a question of federal law.” Paradise Creations, Inc. v. UV Sales, Inc., 315 F.3d 1304, 1308 (Fed.Cir.2003). The party asserting jurisdiction has the burden of establishing jurisdiction. Id.; see also Rivera v. Wyeth-Ayerst Laboratories, 283 F.3d 315, 318-319 (5th Cir. 2002). Furthermore, when jurisdiction depends on diversity of citizenship, “citizenship must be ‘distinctly and affirmatively alleged.'” Getty Oil, Div. Of Texaco v. Ins. Co. of North America, 841 F.2d 1254, 1259 (5th Cir. 1988) (citation omitted) (emphasis in citing source). This rule requires “strict adherence.” Id.

         For purposes of diversity, the citizenship of a limited liability company (“LLC”) is determined by the citizenship of all of its members. Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008). Moreover, for each member of an LLC that is itself an LLC or partnership, its members and their citizenship must be identified and traced up the chain of ownership until one reaches only individuals and/or corporations. Lewis v. Allied Bronze, LLC, 2007 WL 1299251 (E.D. N.Y. May 2, 2007); see also Mullins v. TestAmerica, Inc., 564 F.3d 386, 397 (5 Cir. 2009)(suggesting that to discern the citizenship of an LLC, the court must trace citizenship “down the various organizational layers”); Feaster v. Grey Wolf Drilling Co., 2007 WL 3146363, *1 (W.D. La. Oct. 25, 2007) (“citizenship must be traced through however many layers of members or partners there may be”).

         Similarly, the court must consider the citizenship of each partner, whether limited or general. AmGuard Ins. Co. v. Middleton, No. 18-CV-0261, 2018 WL 3370568, at *2 (W.D. La. July 9, 2018), citing Carden v. Arkoma Associates, 110 S.Ct. 1015 (1990). The Carden rule applies to common law limited partnerships and a Louisiana partnership in commendam. Id., citing 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 an unincorporated association, such as a partnership or LLC, 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. Id., citing 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).

         In its complaint, Saulsbury alleges it is a Delaware corporation with its principal place of business in Boston, Massachusetts. With ...


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