301 West 53rd Street Junior Mezzanine LLC v. CCO Condo Portfolio Junior…

Background

Five plaintiff limited liability companies filed an action in New York Supreme Court for New York County under the New York Uniform Commercial Code and New York contract law. They sought an order stopping an auction scheduled for November 12, 2020. The defendant, also a limited liability company, removed the case to the Southern District of New York on November 11, invoking diversity jurisdiction under 28 U.S.C. § 1332.

Jurisdictional issue

The court held that the removal papers and complaint did not establish federal subject matter jurisdiction. For diversity jurisdiction, a limited liability company has the citizenship of each of its members. The defendant’s removal notice instead described the plaintiff LLCs as organized in Delaware with principal places of business in New York. The court explained that an LLC’s place of registration and principal place of business do not establish its citizenship for this purpose.

The notice stated that the defendant was wholly owned by CIM Real Estate Finance Trust, Inc., described as a Maryland corporation with its principal place of business in Arizona. But the papers did not allege the citizenship of every member of each plaintiff LLC or establish that the citizenship of the plaintiff members was different from that of the defendant’s members.

Ruling

Judge Oetken concluded that the notice of removal was defective and that the court lacked subject matter jurisdiction. The court therefore remanded the action to New York Supreme Court for New York County. The opinion did not decide the parties’ underlying New York commercial-code or contract claims.