Glenn Alphonse, Jr. v. Arch Bay Holdings, L.L.C.
618 F. App'x 765
5th Cir.2015Background
- Alphonse defaulted on his mortgage; Arch Bay Holdings, L.L.C. initiated foreclosure in 2010. Alphonse did not challenge the foreclosure in state court and instead sued Arch Bay and loan servicer SLS in federal court under LUTPA and the FDCPA, seeking declaratory relief and damages.
- He alleged wrongful seizure via "robo-signing." The district court dismissed most LUTPA claims and some FDCPA claims; this court previously reversed part of that dismissal and remanded, reviving one FDCPA claim.
- On remand, Alphonse sought to establish diversity jurisdiction after purported dismissal of federal claims; defendants moved for summary judgment and furnished declarations about Arch Bay’s members’ citizenship.
- The district court found no diversity jurisdiction (concluding a member of Arch Bay was domiciled in Louisiana like Alphonse), concluded Alphonse had forfeited/abandoned remaining federal claims for failing to brief them on remand, and declined supplemental jurisdiction over state-law claims.
- Alphonse appealed, arguing federal-question jurisdiction remained, diversity jurisdiction existed, the district court disregarded a magistrate judge’s discovery order, and the court abused its discretion in declining supplemental jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction existed via FDCPA claims | Alphonse contended at least one FDCPA claim survived the earlier appeal and remained live on remand | Defendants argued most FDCPA claims were waived on appeal and the single revived claim was abandoned on remand by failure to brief it | Court held Alphonse abandoned the revived FDCPA claim by not raising it on remand; no federal-question jurisdiction |
| Whether diversity jurisdiction exists (LLC citizenship) | Alphonse argued tracing membership produced an ‘‘absurdity’’ because the non-diverse member was a passive limited partner and hard to locate | Defendants showed a member of Arch Bay was domiciled in Louisiana, defeating complete diversity | Court held LLC citizenship is determined by all members; evidence established a non-diverse member domiciled in Louisiana, so no diversity jurisdiction |
| Whether district court ignored magistrate judge’s discovery order and credibility concerns | Alphonse argued the magistrate permitted further discovery and questioned employer declarations, so the district court should have followed that order | Defendants produced a new declaration from the member corroborating employer statements; district court considered new evidence | Court held the district court did not clearly err or contravene the magistrate’s order; new declaration obviated additional discovery |
| Whether district court abused discretion by declining supplemental jurisdiction over state claims | Alphonse emphasized delay and parties’ litigation investment to argue for retaining jurisdiction | Defendants argued federal claims were gone and remaining claims raise novel/complex state-law issues, favoring remand | Court held declining supplemental jurisdiction was not an abuse of discretion given abandoned federal claims, novel state-law issues, and lack of exceptional resource investment or relitigation risk |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (U.S. 1990) (LLC citizenship for diversity requires examining citizenship of all members)
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (procedures for determining LLC citizenship and diversity jurisdiction)
- Mullins v. TestAmerica, Inc., 564 F.3d 386 (5th Cir. 2009) (tracing citizenship through organizational layers)
- Med. Ctr. Pharmacy v. Holder, 634 F.3d 830 (5th Cir. 2011) (district court may not consider waived claims on remand)
- Louque v. Allstate Ins. Co., 314 F.3d 776 (5th Cir. 2002) (issue abandonment when a party fails to pursue an argument at a crucial time)
- Brookshire Bros. Holding, Inc. v. Dayco Prods., Inc., 554 F.3d 595 (5th Cir. 2009) (factors for exercising supplemental jurisdiction, incl. judicial economy and novel state-law issues)
- Anderson v. City of Bessemer City, 470 U.S. 564 (U.S. 1985) (standard for clear error review of factual findings)