AAEB5 Fund 17 LLC v. Duval & Stachenfeld, LLP
- Paul Engelmayer
- 1:23-cv-03588
- U.S. District Court · Southern District of New York
- 2
In ZSC NYACK HOTEL FUND LLC v. Duval & Stachenfeld, Judge Engelmayer granted leave to amend allegations needed to establish diversity jurisdiction.
The plaintiffs, which the opinion identifies as limited liability companies, must amend their complaint to provide the citizenship information needed to establish diversity jurisdiction. The defendants are affected because the case’s continuation in federal court depends on that jurisdictional showing.
What happened
ZSC NYACK HOTEL FUND LLC and other plaintiffs sued Duval & Stachenfeld, LLP and other defendants, relying only on diversity of citizenship for federal jurisdiction. The court noted that the plaintiffs are limited liability companies, whose citizenship includes the citizenship of every member.
The complaint identified the plaintiffs’ organization and principal business locations but did not identify the citizenship of their members. The court therefore required an amended complaint identifying the citizenship of individual members and the incorporation and principal business locations of corporate members.
Judge Engelmayer granted the plaintiffs permission to amend by May 16, 2023. He stated that if the plaintiffs could not truthfully allege complete diversity, the complaint would be dismissed without prejudice for lack of subject-matter jurisdiction.
The detailed version
- AAEB5 Fund 17 LLC v. Duval & Stachenfeld, LLP · No. 1:23-cv-03588
- Paul Engelmayer
- May 2, 2023
Background
The plaintiffs filed the complaint on April 28, 2023, asserting diversity of citizenship as the sole basis for federal jurisdiction. The court’s review indicated that the plaintiffs are limited liability companies (LLCs). The complaint alleged that the plaintiffs were organized under Delaware law and had their principal places of business in New Jersey, but it did not allege the citizenship of the LLC members.
Jurisdictional issue
For diversity-jurisdiction purposes, an LLC has the citizenship of each of its members. The court therefore directed the plaintiffs to provide the citizenship of each individual member and, for any corporate member, the corporation’s place of incorporation and principal place of business. These allegations were necessary for the court to determine whether the parties were completely diverse.
Ruling
The court granted the plaintiffs leave to amend the complaint under Federal Rule of Civil Procedure 15(a)(2) by May 16, 2023. The court stated that if the plaintiffs could not truthfully allege complete diversity based on the citizenship of every LLC member, the complaint would be dismissed without prejudice for lack of subject-matter jurisdiction. The order did not dismiss the complaint at that time.
Effect of the order
The plaintiffs were required to file an amended complaint addressing the missing citizenship allegations. The opinion does not state whether they ultimately filed an amendment or whether the court later dismissed the case.
Read the full 2-page opinion on CourtListener, the free public archive maintained by the Free Law Project.