NY Stone Manhattan, LLC v. Cowan Logistics, LLC

Background

NY Stone Manhattan, LLC filed this action against Cowan Logistics, LLC on February 10, 2023. The initial complaint incorrectly named the parties and appeared to concern a different action. NY Stone filed a corrected complaint on February 13.

The court then ordered NY Stone to provide information establishing subject-matter jurisdiction, meaning the court’s legal authority to hear the case, and to file the required Rule 7.1 disclosure statement. The court found that NY Stone had not properly alleged the citizenship of either party. After NY Stone filed a brief disclosure statement, the court gave it another opportunity to establish jurisdiction, show that venue was proper in the Southern District of New York, and file a completed disclosure statement.

NY Stone filed a letter, supporting affidavit, and proper disclosure statement on February 28.

Subject-Matter Jurisdiction

The court held that the supplemental submissions still did not establish diversity jurisdiction. For diversity jurisdiction, the citizenship of a limited liability company is determined by the citizenship of all its members. NY Stone alleged only, on information and belief, that Cowan Logistics was a citizen of Maryland. It did not identify any of Cowan Logistics’ members or state their citizenship, despite being ordered to do so twice.

Because NY Stone did not provide the information necessary to establish the parties’ citizenship, the court held that it lacked subject-matter jurisdiction to proceed.

Venue

The court also found, as an alternative basis for dismissal, that NY Stone had not shown that venue was proper in the Southern District of New York. Federal law permits venue in certain districts based on where a defendant resides, where a substantial part of the events or property involved in the case is located, or, in limited circumstances, where a defendant is subject to the court’s personal jurisdiction.

NY Stone had alleged that venue was proper because one of its members resided in New York. The court explained that the plaintiff’s residence is not a proper basis for venue. NY Stone’s supplemental submissions discussed the division of business among courthouses in the district rather than the statutory venue requirements, and the case it cited did not address venue.

Disposition

The court ordered that the case be dismissed without prejudice for failure to establish a proper basis for subject-matter jurisdiction and venue. It directed the Clerk of Court to close the case.