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Four Winds Distribution, LLC v. The Cincinnati Insurance Co.

United States District Court, D. Colorado

August 20, 2019

FOUR WINDS DISTRIBUTION, LLC, a Colorado corporation, Plaintiff,
v.
THE CINCINNATI INSURANCE COMPANY, an Ohio corporation, Defendant.

          ORDER TO SHOW CAUSE

          Philip A. Brimmer, Chief United States District Judge.

         The Court takes up this matter sua sponte on the Notice of Removal [Docket No. 1]. Defendant states that this Court has jurisdiction pursuant to 28 U.S.C. § 1332. Docket No. 1 at 3-4, ¶ 11.

         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 & County 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 Great Britain 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 Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982) (internal 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). Defendant asserts that this Court has diversity jurisdiction under 28 U.S.C. § 1332. 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). The facts presently alleged are insufficient to establish plaintiff's citizenship.

         Defendant alleges that “[p]laintiff is a limited liability company organized under the laws of the State of Colorado with its principal place of business” in Colorado and that, “[u]pon information and belief, none of Plaintiff's members are citizens of the state of Ohio.” Docket No. 1 at 2, ¶¶ 4-5. These allegations are deficient for two reasons. First, 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.”). Accordingly, whether plaintiff is “organized under the laws” of Colorado with its principal place of business in the state is irrelevant to the issue of plaintiff's citizenship. Second, the Court reads defendant's averment “upon information and belief” to mean that defendant does not have affirmative knowledge of plaintiff's citizenship. Such unsupported allegations do not confer subject matter jurisdiction over this case. See Yates v. Portofino Real Estate Props. Co., LLC, No. 08-cv-00324-PAB-MJW, 2009 WL 2588833, at *3 (D. Colo. Aug. 17, 2009) (requiring plaintiff to “address the citizenship of each of [defendant's] members without resorting merely to their ‘information and belief' as to the same”); U.S. Fire Ins. Co., 2009 WL 2338116, at *3 (finding allegations based on “information and belief” insufficient to confer subject matter jurisdiction). To establish diversity jurisdiction as a threshold matter, defendant must address the citizenship of each of plaintiff's members without resorting to its “information and belief” as to the same. See Yates, 2009 WL 2588833, at *3.

         Because defendant's allegations are presently insufficient to allow the Court to determine the citizenship of plaintiff and whether the Court has jurisdiction, see United States ex rel. General Rock & Sand Corp. v. Chuska Dev. Corp., 55 F.3d 1491, 1495 (10th Cir. 1995) (“The party seeking the exercise of jurisdiction in his favor must allege in his pleading the facts essential to show jurisdiction.” (internal quotation marks omitted)), it is

         ORDERED that, on or before 5:00 p.m. on Friday, August 30, 2019, defendant shall show cause why this case should not be remanded to state court due to the ...


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