N47 Associates LLC v. Alba Services Inc., 1:21-cv-03490

Plaintiffs N47 Associates LLC and New York Marine & General Insurance Co. filed the complaint on April 22, 2021, asserting diversity jurisdiction under 28 U.S.C. § 1332 and an amount in controversy over $75,000.
Complaint alleged N47 is a Delaware LLC authorized to do business in New York; New York Marine is a New Jersey corporation; Alba Services is a New York corporation; Accredited Surety is a Florida corporation/licensed insurer.
Plaintiffs did not allege the citizenship of N47’s members (LLC membership), nor did they allege the principal places of business (nerve centers) for the corporate parties.
The court has an obligation to inquire sua sponte into subject-matter jurisdiction and requires plaintiffs to plead facts establishing complete diversity.
Because the pleadings failed to establish the citizenship of the LLC’s members and the corporations’ principal places of business, the court dismissed the complaint for lack of subject-matter jurisdiction.
Dismissal was without prejudice and with leave to amend; plaintiffs were given until June 19, 2021 to file an amended complaint curing the jurisdictional defects.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the complaint adequately pleads diversity jurisdiction under § 1332	Plaintiffs alleged plaintiff-citizenship as Delaware and New Jersey and defendants as Florida and New York, and amount in controversy exceeds $75,000	No defendant-asserted jurisdictional facts in the record; defendants did not supply competing jurisdictional proof	Complaint fails to plead complete diversity; jurisdiction not established
Whether an LLC’s citizenship can be shown by stating its state of organization/authorization to do business	Plaintiffs stated N47 is incorporated in Delaware and authorized in New York	Not asserted	LLC citizenship requires identifying each member’s citizenship; mere incorporation/authorization is insufficient
Whether a corporation’s citizenship is established by stating where it is licensed or authorized to do business	Plaintiffs listed states where corporations are incorporated and licensed/authorized	Not asserted	Corporate citizenship requires stating state of incorporation and principal place of business (nerve center), not licensing status
Whether the court may act sua sponte and the appropriate remedy	Plaintiffs sought to proceed in federal court based on alleged diversity	Defendants did not oppose sua sponte jurisdiction review	Court must raise jurisdictional defects sua sponte; lacking jurisdiction, dismissal is mandatory; dismissal without prejudice and leave to amend granted

Da Silva v. Kinsho Int'l Corp., 229 F.3d 358 (2d Cir.) (district courts must inquire into subject-matter jurisdiction sua sponte)
Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274 (U.S.) (courts’ duty to assure jurisdiction exists)
Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428 (U.S.) (courts must raise and decide jurisdictional questions)
Arbaugh v. Y & H Corp., 546 U.S. 500 (U.S.) (when court lacks subject-matter jurisdiction, it must dismiss the complaint)
Aurecchione v. Schoolman Transp. Sys., Inc., 426 F.3d 635 (2d Cir.) (plaintiff bears burden to prove subject-matter jurisdiction)
Lincoln Prop. Co. v. Roche, 546 U.S. 81 (U.S.) (diversity jurisdiction requires complete diversity)
Bayerische Landesbank, N.Y. Branch v. Aladdin Capital Mgmt. LLC, 692 F.3d 42 (2d Cir.) (LLCs take citizenship of each member)
Handelsman v. Bedford Vill. Assocs. Ltd. P’ship, 213 F.3d 48 (2d Cir.) (LLC/corporate citizenship principles)
Hertz Corp. v. Friend, 559 U.S. 77 (U.S.) (principal place of business / nerve center test)
In re Bank of Am. Corp. Secs., 757 F. Supp. 2d 260 (S.D.N.Y.) (failure to allege LLC members’ citizenship defeats diversity jurisdiction)
Creaciones Con Idea, S.A. de C.V. v. MashreqBank PSC, 75 F. Supp. 2d 279 (S.D.N.Y.) (being licensed/authorized to do business in a state does not establish corporate citizenship)