Opinion
Case No. 03-2661-JWL
April 15, 2004
MEMORANDUM ORDER
On February 27, 2004, defendant Davis, Ketchmark, Eischens McCreight P.C. filed a motion to dismiss plaintiffs' complaint (doc. #10) for lack of subject matter jurisdiction and on March 2, 2004, defendant Davis, Bethune Jones, LLC filed a motion to dismiss plaintiffs' complaint (doc. #12) for lack of subject matter jurisdiction. After plaintiffs failed to respond to defendants' motions within the time period provided in D. Kan. Rule 6.1(e)(2), the court issued an order to plaintiffs directing them to show good cause why they failed to respond to defendants' motions to dismiss in a timely fashion. The court further directed plaintiffs to respond to defendants' motions to dismiss on or before April 7, 2004 and April 9, 2004, respectively.
On April 5, 2004, plaintiffs filed their timely response to the court's order to show cause and also filed their responses to the motions to dismiss. In response to the show cause order, plaintiffs assert that their counsel miscalculated the response date for the motions to dismiss as April 5, 2004 and that plaintiffs' counsel was out of the office on vacation from March 19, 2004 through March 28, 2004. In fact, the response to the motion to dismiss filed by defendant Davis, Ketchmark, Eischens McCreight P.C. was due on March 22, 2004 and the response to the motion to dismiss filed by defendant Davis, Bethune Jones, LLC was due on March 25, 2004. The court cannot conclude that plaintiffs have shown good cause to excuse their failure to respond to the motion, particularly in the absence of any explanation as to how plaintiffs' counsel miscalculated the response date by fourteen days for the first motion to dismiss and ten days for the second motion to dismiss.
In any event, the court's conclusion that plaintiffs have failed to show good cause is largely irrelevant as the court, after reviewing the motions to dismiss and plaintiffs' response to those motions, concludes that dismissal of plaintiffs' complaint is appropriate for lack of subject matter jurisdiction. In that regard, plaintiffs allege in their complaint that jurisdiction is based on diversity of citizenship pursuant to 28 U.S.C. § 1332. Of course, it has long been the rule that diversity of citizenship is present only when the plaintiffs and defendants are completely diverse; that is, no plaintiff can be a citizen of the same state as any defendant. Salt Lake Tribune Pub. Co. v. ATT Corp., 320 F.3d 1081, 1095-96 (10th Cir. 2003) (citing Owen Equip. Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978)). Plaintiffs admit in their complaint that plaintiff Jerome S. Tilzer is a citizen of Kansas and, according to defendants, defendant Davis, Bethune Jones, LLC is also a citizen of Kansas.
In their complaint, plaintiffs allege that defendant Davis, Bethune Jones, LLC is a limited liability corporation with its principal place of business in Missouri. In their motions, defendants assert that defendant Davis, Bethune Jones is, in fact, a limited liability company-a fact that plaintiffs do not dispute in their response (and, indeed, is supported by affidavits). According to defendants, the citizenship of a limited liability company (as opposed to a corporation) is determined not by looking to the LLC's principal place of business but rather by looking to the citizenship of its members. Indeed, every Circuit Court of Appeals that has addressed this issue has concluded that a limited liability company is a citizen of every state of which any member is a citizen. See GMAC Commercial Credit LLC v. Dillard Dept. Stores, Inc., 357 F.3d 827, 829 (8th Cir. 2004); Belleville Catering Co. v. Champaign Market Place, L.L.C., 350 F.3d 691, 692 (7th Cir. 2003) (citing Cosgrove v. Bartolotta, 150 F.3d 729 (7th Cir. 1998)); Homfeld II, L.L.C. v. Comair Holdings, Inc., 2002 WL 31780184, at *1 (6th Cir. Dec. 3, 2002); Handelsman v. Bedford Village Assocs., 213 F.3d 48, 51-52 (2d Cir. 2000); accord Birdsong v. Westglen Endoscopy Center, L.L.C., 176 F. Supp.2d 1245, 1248 (D. Kan. 2001).
As explained by the Eighth Circuit in GMAC Commercial Credit, a district court's diversity jurisdiction
in a suit by or against [an unincorporated] entity depends on the citizenship of "all the members." Garden v. Arkoma Assocs., 494 U.S. 185, 195-96, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) (quoting Chapman, 129 U.S. at 682, 9 S.Ct. 426). The only exception to this rule is a corporation's citizenship, which is (1) the state of incorporation, and (2) the state where the corporation's principal place of business is located. 28 U.S.C. § 1332(c)(1). The corporation exception coincides with the common law's tradition of treating only incorporated groups as legal persons and accounting for all other groups as partnerships. Puerto Rico. v. Russell Co., 288 U.S. 476, 480, 53 S.Ct. 447, 77 L.Ed. 903 (1933). The Supreme Court has repeatedly resisted extending the corporation exception to other entities. See, e.g., Garden, 494 U.S. at 186, 189, 195-96, 110 S.Ct. 1015 (declining to extend the corporation exception to a limited partnership); United Steelworkers of Am. v. R.H. Bouligny, Inc., 382 U.S. 145, 146-47, 153, 86 S.Ct. 272, 15 L.Ed.2d 217 (1965) (declining to extend the corporation exception to an unincorporated labor union); Great Southern Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 456-57, 20 S.Ct. 690, 44 L.Ed. 842 (1900) (declining to extend the corporation exception to a limited partnership association); Chapman, 129 U.S. at 682, 9 S.Ct. 426 (declining to extend the corporation exception to a joint-stock company).
We recognize numerous similarities exist between a corporation and an LLC, but Congress is the appropriate forum to consider and, if it desires, to apply the same "citizenship" rule for LLCs as corporations for diversity jurisdiction purposes.357 F.3d at 828-29; accord Cosgrove, 150 F.3d at 731 ("Given the resemblance between an LLC and a limited partnership, and what seems to have crystallized as a principle that members of associations are citizens for diversity purposes unless Congress provides otherwise (as it has with respect to corporations, in 28 U.S.C. § 1332(c)(1)), we conclude that the citizenship of an LLC for purposes of the diversity jurisdiction is the citizenship of its members.") (citations omitted)). The court finds the reasoning of these cases persuasive and believes that the Tenth Circuit, if faced with the issue, would join these Circuits and conclude that the citizenship of a limited liability company for diversity jurisdiction purposes is the citizenship of its members.
Plaintiffs do not dispute that recent case law clearly supports the conclusion urged by defendants. Nonetheless, plaintiffs contends that this court, in a previous case, has concluded that a limited liability company's citizenship is dependent upon its principal place of business. Plaintiffs suggest, then, that this court should follow its previous holding. The case upon which plaintiffs rely, however, Tai v. Martin, 1996 WL 227783, at *1 (D. Kan. Apr. 30, 1996) was decided long before any Court of Appeals had looked at the issue and, more importantly, the issue was not even addressed or decided by the court in that case. In fact, it does not appear that the citizenship of the limited liability company was even an issue in the case. Plaintiffs also suggest that the issue of a limited liability company's citizenship for diversity jurisdiction purposes should be resolved by the legislature and, until the legislature addresses the issue, the court should simply adhere to the principal place of business rule. The court declines to adopt this approach for the reasons set out by the Eighth Circuit in GMAC Commercial Credit.
Having concluded, then, that defendant Davis, Bethune Jones is a citizen of each state of which its members are citizens, the court must also conclude that diversity of citizenship does not exist in this case. As defendants' affidavits demonstrate, two of defendant Davis, Bethune Jones' members, Grant Davis and Thomas Jones, are citizens of Kansas and, thus, defendant Davis, Bethune Jones is a citizen of Kansas. As noted above, plaintiff Jerome S. Tilzer is also a citizen of Kansas. Because one of the plaintiffs and one of the defendants share Kansas as their state of citizenship, jurisdiction pursuant to § 1332 is precluded and the court must grant defendants' motions to dismiss this action. IT IS THEREFORE ORDERED BY THE COURT THAT defendant Davis, Ketchmark, Eischens McCreight P.C.'s motion to dismiss (doc. #10) is granted and defendant Davis, Bethune Jones, LLC's motion to dismiss (doc. #12) is granted. Plaintiffs' complaint is dismissed in its entirety.
While it is "well-settled that nondiverse parties may be dismissed in order to preserve diversity jurisdiction" if that party's presence is not required under Rule 19, see Tuck v. United Servs. Auto. Ass'n, 859 F.2d 842, 845 (10th Cir. 1988), plaintiffs have not indicated to the court that they desire to cure the jurisdictional defect by dismissing defendant Davis, Bethune Jones and, indeed, it may well be that this defendant is an indispensable party.
IT IS SO ORDERED.