District of Columbia for the Use and Benefit of Z-Modular, LLC v. McN Build, Inc., Civil Action No. 2018-2947

Background

Z-Modular contracted with MCN to provide services on a D.C. housing project; Zurich and Fidelity issued payment bonds for MCN.
Z-Modular sued MCN, Zurich, and Fidelity on contract and related claims; MCN counterclaimed for breach; parties moved for summary judgment.
The Court questioned Z-Modular’s diversity-jurisdiction allegations because Z-Modular failed to allege its members’ citizenship and because defendants share Illinois citizenship with Z-Modular’s alleged principal place of business.
The Court gave Z-Modular 30 days to amend or show cause; Z-Modular filed a motion to amend alleging its sole member was a Delaware corporation with a Texas principal place of business.
Defendants produced public records suggesting a different corporate owner with Illinois ties; Z-Modular then filed a further submission alleging Ohio as the holding company’s principal place of business and submitted a declaration by its president.
The Court denied leave to amend as untimely and futile, dismissed the complaint and MCN’s counterclaim for lack of subject-matter jurisdiction, and denied or granted ancillary procedural motions as stated.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Z‑Modular should be allowed to amend jurisdictional allegations after the Court's 30‑day order	Z‑Modular sought leave to amend and later (in a reply) to assert Ohio citizenship for its sole member	Defendants argued the later filing was a new, untimely motion and should be rejected	The Court treated the reply as a new motion, found it 10 days late, and denied leave as untimely (no extension sought)
Whether Z‑Modular showed excusable neglect for the late filing	Delay was due to misunderstanding about where control was exercised	Public records and prior pleadings undermined Z‑Modular’s explanations; delay was within party’s control	Court found neglect not excusable given shifting positions and lack of reasonable excuse
Whether the proposed amendment would cure subject‑matter jurisdiction (i.e., establish diversity)	Z‑Modular asserted Ohio citizenship of its holding company via declaration	Defendants pointed to corporate filings and prior federal pleadings indicating Illinois ties; evidence contradicted Z‑Modular’s new allegations	Even if timely, amendment would be futile because the record and judicially noticeable materials do not establish diversity
Whether dismissal is appropriate and the fate of MCN’s counterclaim	Z‑Modular argued for leave to resolve jurisdictional defect	Defendants argued lack of diversity required dismissal; MCN’s counterclaim does not supply independent federal jurisdiction	Court dismissed the complaint and MCN’s state‑law counterclaim for lack of subject‑matter jurisdiction

Key Cases Cited

Barkley v. U.S. Marshals Serv. ex rel. Hylton, 766 F.3d 25 (D.C. Cir. 2014) (Rule 15 leave to amend is to be freely given absent reason to deny)
Aguiar v. Drug Enf't Admin., 992 F.3d 1108 (D.C. Cir. 2021) (amendment may be denied as futile if proposed claim would not survive a motion to dismiss)
Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992) (plaintiff bears burden to establish subject‑matter jurisdiction by a preponderance)
Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380 (1993) (factors for excusable neglect analysis)
Smith v. District of Columbia, 430 F.3d 450 (D.C. Cir. 2005) (court may not entertain late filings absent a motion for extension)
Kaempe v. Myers, 367 F.3d 958 (D.C. Cir. 2004) (courts need not accept allegations that contradict exhibits or judicially noticeable materials)
CTS Corp. v. EPA, 759 F.3d 52 (D.C. Cir. 2014) (court must assure itself of its jurisdiction and plaintiff bears duty to plead it)