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813 F.3d 1321
10th Cir.
2016
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Background

  • Alderney Investments, LLC (Wyoming LLC) was formed in 1999; its members (past and present) have been foreign entities.
  • Dispute arose over beneficial ownership among relatives of Rudolf Skowronska; Management Nominees, Inc. (MNI), a foreign corporation, claimed to be sole member of Alderney.
  • Alderney was administratively dissolved after Edyta (purported transferee) filed articles of dissolution; MNI sued in federal district court seeking declaratory relief and reinstatement.
  • District court granted summary judgment for MNI, declaring MNI the sole member and ordering relief; Alderney and Edyta appealed and raised subject-matter jurisdiction for the first time on appeal.
  • The principal legal question on appeal was whether Alderney should be treated as a corporation (citizenship = state of incorporation/principal place of business) or as an unincorporated association (citizenship = citizenship of all members) for diversity jurisdiction purposes.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether a Wyoming LLC is treated as a corporation for diversity or as an unincorporated association whose citizenship is that of all members MNI: Alderney should be treated like a corporation (measure citizenship by state of organization/principal place of business) Alderney/Edyta: Alderney is an unincorporated association; citizenship derives from its members Court: Alderney is an unincorporated association; citizenship determined by all members (per Siloam Springs/Carden)
Whether the district court had subject-matter jurisdiction under 28 U.S.C. § 1332(a) MNI: Diversity exists (relied on corporate treatment of LLC) Alderney/Edyta: No complete diversity because members are foreign entities and MNI is foreign Court: No complete diversity (all parties are foreign); district court lacked subject-matter jurisdiction; judgment vacated and case remanded with instructions to dismiss

Key Cases Cited

  • Siloam Springs Hotel, L.L.C. v. Century Surety Co., 781 F.3d 1233 (10th Cir. 2015) (LLC treated as unincorporated association for diversity; citizenship = members')
  • Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (diversity jurisdiction depends on citizenship of all members of unincorporated associations)
  • Conagra Foods, Inc. v. Americold Logistics, LLC, 776 F.3d 1175 (10th Cir. 2015) (affirming member-based citizenship analysis for certain unincorporated entities)
  • Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567 (2004) (absence of requisite diversity requires dismissal)
  • Gschwind v. Cessna Aircraft Co., 232 F.3d 1342 (10th Cir. 2000) (foreign parties on both sides defeat § 1332(a)(2) diversity)
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Case Details

Case Name: Management Nominees, Inc. v. Alderney Investments, LLC
Court Name: Court of Appeals for the Tenth Circuit
Date Published: Feb 19, 2016
Citations: 813 F.3d 1321; 2016 WL 683836; 15-8011
Docket Number: 15-8011
Court Abbreviation: 10th Cir.
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