GSP Securities LLC v. AJM Investment Inc.

Background

GSP Securities LLC filed a complaint against AJM Investment Inc. and alleged federal jurisdiction based on diversity of citizenship under 28 U.S.C. § 1332. GSP alleged that more than $75,000 was at stake. It described itself as a Delaware limited liability company with its principal place of business in New York and identified its members as Emigrant Bancorp and Salvatore Galatioto. GSP described Emigrant Bancorp as a Delaware corporation with its principal place of business in New York and Galatioto as a New York resident. GSP described AJM Investment Inc. as an Illinois corporation with its principal place of business in Chicago, Illinois.

Jurisdictional problem

The court explained that an LLC’s citizenship is determined by the citizenship of each member, not by the LLC’s place of incorporation or principal place of business. For an individual, citizenship depends on domicile—the person’s true, fixed home and principal establishment—not merely residence. Because GSP alleged only that Galatioto was a New York resident, it did not adequately allege his citizenship. That omission prevented GSP from properly establishing its own citizenship for diversity-jurisdiction purposes.

Ruling

The court stated that defective jurisdictional allegations can be amended and that amendments are allowed when necessary to avoid dismissal on purely technical grounds. Judge Vernon S. Broderick ordered GSP to file either an amended complaint or a declaration regarding Galatioto’s citizenship within 14 days after the order was filed. The opinion did not dismiss the action and did not address the merits of GSP’s claims.

Classification

This is a procedural order because the court addressed whether the complaint adequately established federal subject-matter jurisdiction, without deciding the underlying dispute.