M & M Electric Services Co L L C v. Pelican Refining Co L L C
2:21-cv-00569
W.D. La.Feb 8, 2022Background
- Plaintiffs (M & M Electric Services Co. LLC and its two Louisiana-member owners, the McCains) sued Pelican in Louisiana state court alleging unpaid rent under a 2008 lease for storage of refinery equipment; plaintiffs seek > $402,000.
- Pelican removed to federal court asserting diversity jurisdiction (28 U.S.C. § 1332), alleging complete diversity and amount in controversy satisfied.
- Pelican asserted it is a single-member LLC whose sole member is Bayoil (a Bahamian corporation with principal place of business in Houston, Texas) and submitted unsworn declarations by Francis Spagnoletti under 28 U.S.C. § 1746 describing trust/share ownership and transactions making Bayoil sole member.
- Plaintiffs moved to remand, challenging Pelican’s proof of citizenship: they argued the § 1746 declarations are insufficient and pointed to Louisiana Secretary of State filings and the absence of Bayoil on the Texas business registry to cast doubt on Pelican/Bayoil’s non‑Louisiana citizenship.
- Pelican submitted a second § 1746 declaration and a Bahamian CESRA form purporting to show Bayoil’s Bahamian status and Texas principal place of business.
- The magistrate judge recommended denial of the remand motion, concluding Pelican met its burden to establish diversity: the § 1746 declarations were proper evidence and state filing nuances did not defeat federal-law determination of corporate/LLC citizenship.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether complete diversity exists (citizenship of Pelican LLC) | Pelican’s citizenship is not shown; Louisiana filings and other records create ambiguity as to members | Pelican is a single‑member LLC; sole member Bayoil is a Bahamian corporation with principal place in Texas | Held: Diversity exists; Pelican proved its sole‑member status and Bayoil’s citizenship |
| Whether unsworn § 1746 declarations suffice as evidence for removal | Declarations are unsworn and lack corroboration (trust status, authority, Bayoil’s Texas activities) | Declarations comply with § 1746 and are admissible evidence equivalent to affidavits | Held: § 1746 declarations are sufficient evidence to establish facts for removal |
| Whether Louisiana formation/Secretary of State filings control citizenship | Pelican’s Louisiana organization and filings make its citizenship uncertain or Louisiana | State formation/filings are irrelevant; federal law determines citizenship for diversity | Held: State filings irrelevant to diversity citizenship; do not defeat defendant’s proof |
| Whether absence of Bayoil on Texas registration defeats Texas principal place of business | Lack of Texas registration suggests Bayoil is not Texan and raises doubt | Registration not required to establish principal place of business; registry absence irrelevant | Held: Absence from Texas registry does not negate Bayoil’s principal place of business in Texas |
Key Cases Cited
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (LLC citizenship governed by citizenship of all members)
- Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392 (5th Cir. 2013) (removing party bears burden; ambiguities construed against removal)
- Carriere v. Sears, Roebuck and Co., 893 F.2d 98 (5th Cir. 1990) (affidavits may be used to support removal)
- Teal Energy USA, Inc. v. GT, Inc., 369 F.3d 873 (5th Cir. 2004) (citizenship for diversity is federal question; state formation/registration do not control federal citizenship analysis)