Lightstone Acquisitions III, LLC v. Phillips
- Alvin Hellerstein
- 1:20-cv-06051
- U.S. District Court · Southern District of New York
- 2
Lightstone Acquisitions III v. Phillips was remanded for lack of jurisdiction, Judge Hellerstein ruled, because the plaintiffs’ citizenship was not adequately alleged.
The plaintiffs and defendants were affected because the case was sent back to New York Supreme Court, New York County; the federal court did not reach the underlying dispute.
What happened
In The Lightstone Group, LLC, Lightstone Acquisitions III, LLC, and LSG 365 Bond Street, LLC v. Grant Phillips, Scott B. Phillips, David Berlin, John S. Wirt, and Pamela Cocalas Wirt, the parties disputed whether plaintiffs could file an amended complaint adding parties. The Clerk refused the filing because plaintiffs had not first obtained permission from the court.
While reviewing the proposed amended complaint, the court found a problem with federal jurisdiction. All three plaintiffs were limited liability companies, whose citizenship depends on the citizenship of their members. Because the complaint did not identify the members’ citizenship, the court could not determine whether the plaintiffs and defendants were citizens of different states.
Judge Alvin K. Hellerstein declined to direct the Clerk to accept the amended complaint and said plaintiffs must seek permission by motion. He ordered the case remanded to New York Supreme Court, New York County, because removal to federal court was improper for lack of jurisdiction.
The detailed version
- Lightstone Acquisitions III, LLC v. Phillips · No. 1:20-cv-06051
- Alvin Hellerstein
- Nov. 4, 2020
Background
The parties sent the court a joint letter concerning the Clerk’s refusal to accept an amended complaint that would add parties. The Clerk refused because the plaintiffs had not obtained leave of court. The court declined to order the Clerk to accept the filing and stated that the plaintiffs must seek permission by motion.
Jurisdictional problem
The court identified a defect while reviewing the proposed amended complaint. The three plaintiffs are limited liability companies. For purposes of diversity jurisdiction, a limited liability company is considered a citizen of every state in which its members are citizens. The plaintiffs had not alleged the citizenship of each member of each plaintiff. As a result, the court could not determine whether there was diversity of citizenship between each plaintiff and each defendant.
Disposition
The court held that removal to federal court was improper and ordered the case remanded to New York Supreme Court, New York County, for lack of jurisdiction. The court stated that if a basis for federal jurisdiction later appears, the parties could then consider whether removal remains possible. The opinion does not decide the underlying dispute between the parties.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.