Trafigura AG v. Enterprise Products Operating LLC
995 F. Supp. 2d 641
S.D. Tex.2014Background
- This declaratory judgment action concerns Trafigura AG’s request for indemnification from Enterprise Products Operating LLC under an indemnity provision in a cargo sale agreement.
- Trafigura alleges Enterprise refused to defend or indemnify in an arbitration arising from cargo contamination claims against Trafigura.
- Trafigura filed a complaint seeking a declaration of entitlement to indemnification and breach of contract; a first amended complaint asserts diversity jurisdiction.
- Enterprise moves to dismiss for lack of subject matter jurisdiction on the basis of complete diversity; Trafigura contends MLPs like Enterprise are not simply partnerships for citizenship.
- The court must determine how to treat the citizenship of a master limited partnership (MLP) and whether Trafigura sufficiently alleged complete diversity.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| MLP citizenship determination rule. | Trafigura argues MLPs should be treated like corporations for citizenship. | Enterprise argues MLPs' citizenship is based on all underlying members. | MLP citizenship based on underlying members. |
| Sufficiency of diversity pleading. | Trafigura alleges Swiss citizenship of Trafigura and Texas LLC Enterprise with interests; $75k+ in controversy. | Enterprise asserts missing citizenship of Enterprise’s two members prevents complete diversity. | Dismissal required for lack of complete diversity. |
| Application of Russell exception. | Trafigura urges Russell exception could apply to MLPs. | Court should adhere to Carden bright-line rule and not extend Russell. | No Russell exception applied; apply Carden rule. |
Key Cases Cited
- Carden v. Arkoma Assocs., 494 U.S. 185 (1990) (unincorporated entities' citizenship is determined by members' citizenship)
- Puerto Rico v. Russell & Co., 288 U.S. 476 (1933) (exception for certain civil-law entities recognizing corporate-like personality)
- Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir.2008) (citizenship of LLCs/partnerships tracked to members)
- Howery v. Allstate Ins. Co., 243 F.3d 912 (5th Cir.2001) (burden to distinctly plead citizenship in diversity cases)