Black Water Management LLC v. Mark Sprenkle , 691 F. App'x 715 ( 2017 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 16-2261
BLACK WATER MANAGEMENT LLC,
Plaintiff - Appellant,
v.
MARK D. SPRENKLE; COLIN HEALY; KEVIN HEALY; TBT NETWORK
LLC, d/b/a Tim Be Told; TIMOTHY OUYANG; LUAN NGUYEN; JACOB
JAMES BARREDO; ANDREW DANIEL CHAE; STEVE VORLOP,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern District of Virginia, at
Richmond. M. Hannah Lauck, District Judge. (3:15-cv-00365-MHL)
Submitted: May 30, 2017 Decided: June 8, 2017
Before MOTZ, THACKER, and HARRIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Joseph R. Pope, WILLIAMS MULLEN, Richmond, Virginia, for Appellant. Robert K.
Caudle, III, CAUDLE AND CAUDLE, P.C., Richmond, Virginia; P. Matthew Roberts,
GODWIN-JONES & PRICE, P.C., Richmond, Virginia; Scott D. Stovall, COWAN
GATES, Richmond, Virginia; William R. Baldwin, III, MEYER, BALDWIN, LONG &
MOORE, LLP, Richmond, Virginia, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
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PER CURIAM:
Black Water Management, LLC (BWM), appeals the district court’s order
dismissing its complaint for lack of subject matter jurisdiction pursuant to Fed. R. Civ. P.
12(b)(1). The district court dismissed BWM’s complaint because complete diversity of
citizenship among the parties was lacking. See 28 U.S.C. § 1332(a)(1) (2012); Cent. W.
Va. Energy Co. v. Mountain State Carbon, LLC, 636 F.3d 101, 103 (4th Cir. 2011).
Reviewing the district court’s dismissal de novo, we agree that BWM did not meet
its burden of proving jurisdiction. See Demetres v. East West Const., Inc., 776 F.3d 271,
272 (4th Cir. 2015); Robb Evans & Assoc., LLC v. Holibaugh, 609 F.3d 359, 362 (4th Cir.
2010). BWM failed to establish that Defendant Mark D. Sprenkle, a resident of Virginia,
was no longer a managing member of BWM at the time of the complaint’s filing. Despite
BWM’s argument to the contrary, Sprenkle became a managing member of the company
pursuant to the Operating Agreement even without contributing any initial capital to
BWM. * See Va. Code Ann. § 13.1-1038.1(C) (2016); Ribstein & Keatinge, Limited
Liability Companies § 5:7 (updated Dec. 2016). Furthermore, BWM offered no evidence
of additional capital calls that could have caused a reduction in Sprenkle’s membership
interest under the Operating Agreement.
*
Although BWM argues for the first time in its reply brief that this court should
consider the Assignment Agreement executed by Sprenkle in conjunction with the
Operating Agreement, BWM conceded in its opening brief that the Assignment Agreement
had no legal effect.
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Assuming that a capital call occurred, BWM’s complaint acknowledged that
Sprenkle contributed capital to BWM by causing a musical act to execute a management
agreement with the company after the company’s formation. See Va. Code Ann.
§ 13.1-1027(A) (1999). Accordingly, Sprenkle was entitled to retain at least some portion
of his membership interest based on the service that he provided to BWM. We therefore
conclude that BWM failed to establish that Sprenkle was no longer a managing member of
the company when it filed the complaint.
Because a limited liability company’s citizenship is determined by the citizenship
of its members, BWM was a citizen of both Colorado and Virginia when the complaint
was filed. See Cent. W. Va. Energy Co., 636 F.3d at 103. Consequently, complete diversity
of citizenship among the parties was lacking as both BWM and several of the defendants
shared Virginia citizenship, and thus, the district court lacked subject matter jurisdiction.
We therefore affirm the district court’s judgment. We dispense with oral argument
because the facts and legal contentions are adequately presented in the materials before this
court and argument would not aid the decisional process.
AFFIRMED
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