SBL Enterprises LLC v. Keystone Capital Corporation
- Vyskocil
- 1:21-cv-04459
- U.S. District Court · Southern District of New York
- 7
In SBL Enterprises v. Keystone Capital, Judge Vyskocil dismissed the complaint for insufficient jurisdiction but allowed amendment.
SBL Enterprises LLC and John Slater were required to correct the complaint’s jurisdictional allegations or face the stated consequences. Keystone Capital Corporation, Frank Nocito, and Malcolm Taub were affected because the complaint against them was dismissed without prejudice.
What happened
SBL Enterprises LLC and John Slater sued Keystone Capital Corporation, Frank Nocito, and Malcolm Taub. They relied mainly on federal diversity jurisdiction and alleged that the plaintiffs lived or were based in North Carolina while the defendants were connected to Connecticut or New York.
The court found that the complaint did not adequately establish the parties’ citizenship. It did not identify SBL Enterprises LLC’s members and their citizenship, stated residence rather than citizenship or legal domicile for several individuals, and did not state Keystone Capital Corporation’s state of incorporation. The parties’ agreement to litigate in New York could not create federal subject-matter jurisdiction.
Judge Mary Kay Vyskocil dismissed the complaint without prejudice and granted leave to amend. The plaintiffs had until June 19, 2021, to file an amended complaint; otherwise, the case would be dismissed without prejudice and without leave to amend.
The detailed version
- SBL Enterprises LLC v. Keystone Capital Corporation · No. 1:21-cv-04459
- Vyskocil
- May 19, 2021
Background
SBL Enterprises LLC and John Slater sued Keystone Capital Corporation, Frank Nocito, and Malcolm Taub. The complaint primarily relied on diversity jurisdiction under 28 U.S.C. § 1332, which permits a federal court to hear certain disputes between citizens of different states when the amount in controversy exceeds $75,000. The plaintiffs also alleged that the parties had consented to jurisdiction in New York state courts.
Jurisdictional Defects
The court explained that the parties’ consent could not create federal subject-matter jurisdiction. Because the complaint did not present a federal question, diversity jurisdiction was the only possible basis for the case.
The complaint did not adequately plead complete diversity:
- For SBL Enterprises LLC, the plaintiffs alleged only that it was a North Carolina limited liability company with a principal address in North Carolina. An LLC has the citizenship of each of its members, so the complaint needed to identify the members and their citizenship. - For John Slater, Frank Nocito, and Malcolm Taub, the complaint alleged their states of residence and addresses, but residence does not establish citizenship or legal domicile for diversity purposes. - For Keystone Capital Corporation, the complaint alleged that it was based in Connecticut and authorized to do business in New York, but it did not clearly state the corporation’s state of incorporation. A corporation’s diversity citizenship includes its state of incorporation and its principal place of business.
Ruling
The court determined that it lacked subject-matter jurisdiction and therefore dismissed the complaint in its entirety. Because the court raised the jurisdiction issue on its own, it dismissed the complaint without prejudice and granted leave to amend to correct the identified defects. The plaintiffs were ordered to file an amended complaint by June 19, 2021. The order stated that failure to meet that deadline would result in dismissal of all claims without prejudice and without leave to amend.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.