115 F.4th 657
5th Cir.2024Background
- Philadelphia Indemnity Insurance Company filed a federal declaratory action against several Megalomedia entities, claiming no duty to defend or indemnify them.
- The Megalomedia entities counterclaimed for breach of contract and various torts.
- Summary judgment resolved the contract claims, while a bench trial resolved the tort claims.
- The asserted basis for jurisdiction was diversity of citizenship under 28 U.S.C. § 1332.
- The parties relied on the LLCs’ places of business, not the states of each LLC member for citizenship allegations.
- Upon review, the Fifth Circuit found the record lacked evidence of each LLC’s member citizenship, a requirement for diversity jurisdiction with LLCs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether diversity jurisdiction exists based on the citizenship of LLC members | Diversity exists; pled principal places of business/nature of business | Jurisdiction proper; did not dispute method | Allegations are insufficient; must plead and prove each LLC member’s citizenship |
| Whether parties’ stipulation to diversity is sufficient | Stipulation sufficient for jurisdiction | Stipulation sufficient for jurisdiction | Stipulation cannot confer subject matter jurisdiction |
| Whether appellate court can cure jurisdictional defects via § 1653 | Defect can be cured on appeal if facts are present | Defect can be cured on appeal if facts are present | Can only be cured if record contains citizenship facts; record here is insufficient |
| Appropriate remedy for lack of jurisdictional evidence | Proceed on the merits regardless | Proceed on the merits regardless | Remanded for jurisdictional discovery; panel retains jurisdiction |
Key Cases Cited
- Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806) (establishes requirement of complete diversity among parties for federal jurisdiction)
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008) (LLC citizenship determined by citizenship of all its members)
- Lujan v. Defs. of Wildlife, 504 U.S. 555 (1992) (party invoking jurisdiction bears burden of establishing required facts at each litigation stage)
- Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694 (1982) (subject-matter jurisdiction cannot be conferred by stipulation of the parties)