United States District Court, D. Colorado
SECOND ORDER TO SHOW CAUSE
A. Brimmer, Chief United States District Judge.
matter comes before the Court on the order to show cause
[Docket No. 36] entered by Magistrate Judge Tafoya on
February 11, 2019 and defendants' Response to the Order
to Show Cause [Docket No. 43] filed on February 21, 2019.
Defendants assert that this Court has subject matter
jurisdiction pursuant to 28 U.S.C. § 1332. Docket No. 1
at 1, ¶ 3.
removed this case from the District Court for Baca County,
Colorado on August 27, 2018. Docket No. 1. On February 11,
2019, Judge Tafoya entered an order stating that she was
unable to determine whether the Court had subject matter
jurisdiction because defendants had failed to allege the
citizenship of the members of defendant KeHE Distributors
a/k/a KeHE Enterprises, LLC. See Docket No. 36
(citing Siloam Springs Hotel, L.L.C. v. Century Surety
Co., 781 F.3d 1233 (10th Cir. 2015), for the proposition
that “an LLC, as an unincorporated association, takes
the citiz enship of all of its members”). Judge Tafoya
directed the defendants to show cause why this case should
not be remanded to state court due to the Court's lack of
subject matter jurisdiction. Id.
filed their response to the show cause order on February 21,
2019. Docket No. 43. In the response, defendants correctly
trace the citizenship of KeHE Distributors to KeHE
Distributors Holdings, LLC (“KDH”). See
Docket No. 43 at 1, 3 (stating that KeHE Distributors, a/k/a
KeHE Enterprises, LLC, is 100% owned by KeHE Distributors,
LLC, which is 100% owned by KeHE Distributors Holdings, LLC).
However, defendants' allegations fail to establish the
citizenship of KDH's members. Defendants assert that KDH
is owned by several entities, including KeHE Distributors,
Inc. (“KDI”), Prudential Capital Partners III,
L.P. (“PC Partners”), PCP-III K-Food
Distributions Holdings, L.P. (“PCP-III”),
Prudential Capital Partners Management Fund III, L.P.
(“PCPMF”), and KH Group Investors, LLC
(“KHGI”). Id. at 3. Defendants further
allege the state of organization and principal place of
business for each entity. See Id. However, the names
of PC Partners, PCP-III, and PCPMF end with “L.P,
” meaning that these entities are limited partnerships,
not corporations. The citizenship of a limited partnership is
determined not by its state of organization or principal
place of business, but by the citizenship of all of its
partners. See Carden v. Arkoma Assocs., 494 U.S.
185, 195-96 (1990). Because defendants have not identified
all of the partners of PC Partners, PCP-III, and PCPMF or the
citizenship of those partners, the Court is presently unable
to determine the citizenship of the limited partnerships.
Cf. Fifth Third Bank v. Flatrock 3, LLC, 2010 WL
2998305, at *3 (D.N.J. July 21, 2010) (concluding that an
allegation that “upon information and belief, the
members of [an LLC] are citizens of New York” was
insufficient because plaintiff “failed to identify or
trace the citizenship of each individual member” of the
LLC (internal quotation marks omitted)).
allegations with respect to KHGI are also deficient.
Defendants state that KHGI is owned by a Michigan corporation
and “several Florida-based trusts” whose trustees
and beneficiaries are residents of Michigan. Docket No. 43 at
4. The citizenship of a trust is “derived from all the
trust's members, which includes the trust's
beneficiaries.” Nichols v. Chesapeake Operating,
LLC, 718 Fed.Appx. 736, 739 n.1 (10th Cir. 2018)
(unpublished) (internal quotation marks omitted) (quoting
Conagra Foods, Inc. v. Americold Logistics, LLC, 776
F.3d 1175, 1181 (10th Cir. 2015), aff'd sub nom,
Americold Realty Trust v. Conagra Foods, Inc., 136
S.Ct. 1012 (2016)). Here, defendants allege that the trustees
and beneficiaries of the Florida-based trusts are
“residents of Michigan.” Docket No. 43 at 4.
However, residency in a state without an intent to remain is
not determinative of a party's citizenship for purposes
of diversity jurisdiction. See Middleton v.
Stephenson, 749 F.3d 1197, 1200 (10th Cir. 2014)
(“[A] person acquires domicile in a state when the
person resides there and intends to remain there
indefinitely.”); Whitelock v. Leatherman, 460
F.2d 507, 514 (10th Cir. 1972) (“[A]llegations of mere
‘residence' may not be equated with
‘citizenship' for the purposes of establishing
diversity.”); see also Mississippi Band of Choctaw
Indians v. Holyfield, 490 U.S. 30, 48 (1989)
(“‘Domicile' is not necessarily synonymous
with ‘residence,' and one can reside in one place
but be domiciled in another.” (citations omitted)).
summary, defendants' response to the February 11, 2019
show cause order does not sufficiently establish the
citizenship of KDH for purposes of diversity jurisdiction.
The Court is therefore unable to determine the citizenship of
defendant KeHE Distributors a/k/a KeHE Enterprises, LLC or
whether the Court has subject matter jurisdiction. Wherefore,
it is ORDERED that, on or before
5:00 p.m. on March 13,
2019, defendants shall show cause why this case
should not be remanded to state court due to the Court's
lack of subject matter jurisdiction.
Defendants requested - and were granted
- an extension of time to file their response. See