Bellecourt v. Indian Harbor Ins. Co.

• Decision Date: 25 March 2022
• Docket Number: Civil Action 22-cv-00049-PAB
• Parties: ANDRE BELLECOURT, Plaintiff, v. INDIAN HARBOR INSURANCE COMPANY, and CONSTITUTION STATE SERVICE, LLC, Defendants.
• Court: U.S. District Court — District of Colorado

ANDRE BELLECOURT, Plaintiff, v. INDIAN HARBOR INSURANCE COMPANY, and CONSTITUTION STATE SERVICE, LLC, Defendants.

Civil Action No. 22-cv-00049-PAB

United States District Court, D. Colorado

March 25, 2022

ORDER TO SHOW CAUSE

PHILIP A. BRIMMER, Chief United States District Judge

The Court takes up this matter sua sponte on the Notice or Removal [Docket No. 1] filed by defendant Indian Harbor Insurance Company (“Indian Harbor”). Indian Harbor asserts that this Court has jurisdiction pursuant to 28 U.S.C. § 1332. Docket No. 1 at 2.

In every case and at every stage of the proceeding, a federal court must satisfy itself as to its own jurisdiction, even if doing so requires sua sponte action. See Citizens Concerned for Separation of Church & State v City & Cnty. of Denver, 628 F.2d 1289, 1297 (10th Cir. 1980). Absent an assurance that jurisdiction exists, a court may not proceed in a case. See Cunningham v. BHP Petroleum Gr. Brit. PLC, 427 F.3d 1238, 1245 (10th Cir. 2005). Courts are well-advised to raise the issue of jurisdiction on their own, regardless of parties' apparent acquiescence. First, it is the Court's duty to do so. Tuck v. United Servs. Auto. Ass'n, 859 F.2d 842, 844 (10th Cir. 1988). Second, regarding subject matter jurisdiction, “the consent of the parties is irrelevant, principles of estoppel do not apply, and a party does not waive the requirement by failing to challenge jurisdiction.” Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982) (citations omitted). Finally, delay in addressing the issue only compounds the problem if, despite much time and expense having been dedicated to the case, a lack of jurisdiction causes it to be dismissed. See U.S. Fire Ins. Co. v Pinkard Constr. Co., No. 09-cv-00491-PAB-MJW, 2009 WL 2338116, at *3 (D. Colo. July 28, 2009).

“The party invoking federal jurisdiction bears the burden of establishing such jurisdiction as a threshold matter.” Radil v. Sanborn W. Camps, Inc., 384 F.3d 1220, 1224 (10th Cir. 2004). Indian Harbor asserts that the Court has diversity jurisdiction under 28 U.S.C. § 1332. Docket No. 1 at 2. Pursuant to that section, “district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75 000, exclusive of interest and costs, and is between . . . citizens of different States.” 28 U.S.C. § 1332(a). “For purposes of federal diversity jurisdiction, an individual's state citizenship is equivalent to domicile.” Smith v. Cummings, 445 F.3d 1254, 1259 (10th Cir. 2006). “To establish domicile in a particular state, a person must be physically present in the state and intend to remain there.” Id. at 1260. While, at the pleading stage, the Court takes as true all “well-pled (that is, plausible, conclusory, and non-speculative) facts, ” Dudnikov v. Chalk & Vermilion Fine Arts, 514 F.3d 1063, 1070 (10th Cir. 2008), the allegations regarding the citizenship of defendant Constitution State Service, LLC (“Constitution State”) are not well-pled. Additionally, Indian Harbor does not indicate whether Constitution State consents to removal.

Indian Harbor argues that the citizenship of Constitution State should be ignored for the purposes of determining diversity jurisdiction because Constitution State is not a “real and substantial party.” Docket No. 1 at 6-7. “[T]he ‘citizens' upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy. Thus, a federal court must disregard nominal or formal parties and rest jurisdiction only upon the citizenship of real parties to the controversy.” Anderson v. Lehman Bros. Bank, FSB, 528 Fed.Appx. 793, 795 (10th Cir. 2013) (unpublished) (quoting Lenon v. St. Paul Mercury Ins. Co., 136 F.3d 1365, 1369 (10th Cir. 1998)). “Although there is no mechanical or bright line rule for determining when a party should be viewed as merely a nominal or formal party for the purpose of diversity jurisdiction, the Tenth Circuit recognizes as nominal parties those parties with no real interest in a suit or against whom no relief is sought.” Hunt v. Jack V. Waters, D.C., P.C., 403 F.Supp.3d 1036, 1067 (D.N.M. 2019) (internal quotations marks, alterations, and citations omitted). While Constitution State may have a valid defense in this case, plaintiff seeks relief against it and the Court does not consider it to be a nominal party. Additionally, there is no indication that plaintiff fraudulently joined Constitution State in order to avoid removal, see Anderson, 528 Fed.Appx. at 795 (“Fraudulent joinder . . . . can occur when the plaintiff joins a resident defendant against whom no cause of action is stated in order to prevent removal under a federal court's diversity jurisdiction.” (internal quotation marks omitted)), as Indian Harbor contends that Constitution State is diverse.^[1] Accordingly, the Court will consider the citizenship of Constitution State in determining whether it has jurisdiction.

There are two issues with removal: the allegations are insufficient to determine the citizenship of Constitution State and Constitution State did not join in the removal.

Indian Harbor alleges the principal place of business and state of incorporation of Constitution State, see Docket No. 1 at 7; however, Constitution State is a limited liability company. The citizenship of a limited liability company is determined, not by its state of organization or principal place of business, but by the citizenship of all of its members. See Siloam Springs Hotel, LLC v. Century Sur. Co., 781 F.3d 1233, 1237-38 (10th Cir. 2015) (“[I]n determining the citizenship of an unincorporated association for purposes of diversity, federal courts must include all the entities' members.”). The Notice of Removal does not identify Constitution State's members and their citizenship, leaving the Court unable to determine the citizenship of Constitution State. See Den 8888, LLC v. Navajo Express, Inc., No. 21-cv-00321-STV, 2021 WL 463623, at *3 (D. Colo. Feb. 9, 2021); U.S. Advisor, LLC v. Berkshire Prop. Advisors, LLC, No. 09-cv-00697-PAB-CBS, 2009 WL 2055206, at *2 (D. Colo. July 10, 2009) (citing Hicklin Eng'g, L.C. v. Bartell, 439 F.3d 346, 347 (7th Cir. 2006)); Alphonse v. Arch Bay Holdings, L.L.C., 618 Fed.Appx. 765, 768 (5th Cir. 2015) (unpublished) (“[W]e have observed that the appropriate tests for citizenship involve tracing [entities'] citizenships down the various organizational layers where necessary.” (internal citation omitted)); Underwriters at Lloyd's, London v. Osting-Schwinn, 613 F.3d 1079, 1092 (11th Cir. 2010) (remanding case in which party invoking the court's diversity jurisdiction did not disclose the identity and citizenship of each member of an unincorporated entity); Delay v. Rosenthal Collins Grp., LLC, 585 F.3d 1003, 1005 (6th Cir. 2009) (“When diversity jurisdiction is invoked in a case in which a limited liability company is a party, the court needs to know the citizenship of each member of the company. And because a member of a limited liability company may itself have multiple members - and thus may itself have multiple citizenships - the federal court needs to know the citizenship of each ‘sub-member' as well.”); Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C., 374 F.3d 1020, 1022 (11th Cir. 2004) (“[A] party must list the citizenships of all the members of the limited liability company.”); Prospect Funding Holdings, LLC v. Fennell, 2015 WL 4477120, at *2 (S.D.N.Y. July 15, 2015) (collecting New York district court decisions holding that a limited liability company must “plead facts establishing their citizenship including, . . . the identity and citizenship of their members” in order to invoke diversity jurisdiction).

Additionally, Indian Harbor has not complied with 28 U.S.C. § 1446. Section 1446 states that, “[w]hen a civil action is removed solely under section 1441(a), all defendants who have been properly joined and served must join in or consent to the removal of the action.” 28 U.S.C. § 1446(b)(2)(A). The copy of the state court docket filed by Indian Harbor indicates that Constitution State was served on December 1, 2021, Docket No. 1-11 at 2, which is before the notice of removal was filed. Courts understand § 1446 to mean that “a petition filed by less than all the named defendants is considered defective if it fails to contain an explanation for the absence of co-defendants.” Scheall v. Ingram, 930 F.Supp. 1448, 1449 (D. Colo.1996); see also Cornwall v. Robinson, 654 F.2d 685, 686 (10th Cir. 1981) (“A co-defendant . . . did not join in the petition for removal and the petition was thus procedurally defective.”).

A removal that does not comply with the express statutory requirements for removal “can fairly be said to render the removal ‘defective' and justify a remand.” Huffman v. Saul Holdings Ltd P'ship, 194 F.3d 1072, 1077 (10th Cir. 1999) (quoting Snapper, Inc. v. Redan, 171 F.3d 1249, 1253 (11th Cir. 1999)); see also Centura Health Corp. v. Agnew, No. 18-cv-00569-RBJ, 2018 WL 3454976, at * 3 (D. Colo. July 18,...