Mullins v. Testamerica Inc. , 300 F. App'x 259 ( 2008 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
November 13, 2008
No. 07-10340 Charles R. Fulbruge III
Clerk
BILLY J MULLINS JR; FARAWAY ENTERPRISES
Plaintiffs-Appellees-Cross-Appellants
v.
TESTAMERICA INC; SAGAPONACK PARTNERS LP
Defendants-Appellants-Cross-Appellees
Appeals from the United States District Court
for the Northern District of Texas
USDC No. 3:02-CV-106
Before KING, HIGGINBOTHAM, and WIENER, Circuit Judges.
PER CURIAM:*
On October 31, 2008, pursuant to our “duty to raise the issue of subject
matter jurisdiction sua sponte,” see H&D Tire & Auto.-Hardware, Inc. v. Pitney
Bowes Inc., 227 F.3d 326, 328 (5th Cir. 2000) (emphasis added), we requested
that the parties identify and provide citations to record evidence substantiating
the citizenship of all limited and general partners of Defendant Sagaponack
Partners, L.P., both as of the date when the case was removed to federal court
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
No. 07-10340
solely on the basis of diversity jurisdiction and as of the date when Plaintiffs
filed their second amended complaint adding Sagaponack as a defendant (after
it was initially dismissed for want of personal jurisdiction). This inquiry was
precipitated by deficient allegations of diversity in the notice of removal and the
second amended complaint with respect to Sagaponack’s citizenship.
When jurisdiction is based on diversity, we adhere strictly to the rule that
citizenship of the parties must be “‘distinctly and affirmatively alleged.’” Getty
Oil Corp. v. Ins. Co. of N. Am., 841 F.2d 1254, 1259 (5th Cir. 1988) (quoting
McGovern v. Am. Airlines, Inc., 511 F.2d 653, 654 (5th Cir. 1975)). “Failure
adequately to allege the basis for diversity jurisdiction mandates dismissal.”
Stafford v. Mobil Oil Corp., 945 F.2d 803, 805 (5th Cir. 1991). As noted in our
recent request, the citizenship of a limited partnership such as Sagaponack is
that of all its partners, general and limited. See Carden v. Arkoma Assocs., 494
U.S. 185, 189, 192-97, 110 S. Ct. 1015, 1018-22 (1990); Corfield v. Dallas Glen
Hills LP, 355 F.3d 853, 856 & n.3 (5th Cir. 2003). The notice of removal in this
case identified Sagaponack as “a limited partnership existing under the laws of
the State of New York” and asserted that “Sagaponack is now and was at the
time this action was commenced a citizen of the State of New York and of no
other state.” No mention was made of Sagaponack’s partners, let alone their
respective states of citizenship. The second amended complaint similarly failed
to disclose the citizenship of Sagaponack’s partners, describing Sagaponack
(inconsistently) as a “Delaware limited partnership.” Under Carden, these
allegations are facially insufficient to establish the existence of diversity
jurisdiction.
In their responses to our request, the parties concede that no record
evidence substantiates the citizenship of Sagaponack’s partners. Instead,
Defendants contend that Plaintiffs have not disputed that none of Sagaponack’s
partners is a citizen of Texas, as is each Plaintiff. The absence of a dispute
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No. 07-10340
between the parties regarding the existence of diversity jurisdiction is irrelevant,
however, because “subject-matter jurisdiction cannot be created by waiver or
consent.” Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir. 2001). We also
reject Defendants’ reliance on the district court’s statement in its final judgment
that the court “had jurisdiction over the subject matter and the parties to this
proceeding.” Given the dearth of allegations and evidence in the record to
support the citizenship of Sagaponack, this conclusion does not definitively
establish diversity jurisdiction.
Defendants also disclose, for the first time, an extensive list of general and
limited partners who are or were citizens of California, Colorado, Illinois, New
Jersey, New York, Massachusetts, Michigan, Nevada, Canada, and the British
Virgin Islands at the time of removal or of the filing of the second amended
complaint. Notably, these allegations conflict with Defendants’ previous
assertion that Sagaponack was a citizen of “New York and no other state” at the
time suit was filed and later removed. Moreover, Defendants’ disclosure remains
inadequate. Defendants list numerous limited partners, including a limited
liability company, several trusts, two limited partnerships, and several other
businesses of unknown type, for which they provide no citizenship information.
Defendants’ stated belief “[t]o the best of [their] knowledge” that none of these
entities has members, partners, trustees, or principal places of business in Texas
or is organized under Texas law falls manifestly short of distinctly and
affirmatively alleging Sagaponack’s citizenship. See, e.g., Ill. Cent. Gulf R.R. Co.
v. Pargas, Inc., 706 F.2d 633, 636 & n.2 (5th Cir. 1983) (“[T]he basis upon which
jurisdiction depends must be alleged affirmatively and distinctly and cannot be
established argumentatively or by mere inference.” (quoting 5 CHARLES ALAN
WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1206, at 78-
79 (1969 & Supp. 1983)) (internal quotations omitted)); see also, e.g., Barkhorn
v. Adlib Assocs., Inc., 345 F.2d 173, 174 (9th Cir. 1965) (“Parties cannot confer
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No. 07-10340
jurisdiction on a federal court simply by expressing confidence in it.”).
Defendants invoke 28 U.S.C. § 1653, which confers discretion upon trial
and appellate courts to allow parties to cure defective jurisdictional allegations
by amending their pleadings. See § 1653 (“Defective allegations of jurisdiction
may be amended, upon terms, in the trial or appellate courts.”); Nadler v. Am.
Motors Sales Corp., 764 F.2d 409, 413 (5th Cir. 1985). Although this statute is
liberally construed, we have permitted direct amendments to pleadings on
appeal only when “our discretionary examination of the record as a whole
discloses at least a substantial likelihood that jurisdiction exists . . . .” Nadler,
764 F.2d at 413 (granting leave to amend because allegations regarding the
plaintiffs’ state of “residence” suggested where they resided for diversity
purposes, and deposition testimony in the record indicated that the defendant
corporation was incorporated in a different state); see also, e.g., Carlton v.
BAWW, Inc., 751 F.2d 781, 789 (5th Cir. 1985) (allowing amendment on appeal
when the record plainly reflected that jurisdiction existed). Here, we find no
evidence in the record, and the parties have cited none, suggesting that
Sagaponack is substantially likely to be completely diverse from Plaintiffs. At
the same time, and taking into account that the parties have never disputed the
existence of diversity, we have some reason to believe that diversity jurisdiction
exists. Under these circumstances, the appropriate course is to remand the case
to the district court for amendment of the jurisdictional allegations,
supplementation of the record (if necessary), a hearing (if necessary), and
findings by the district court on the citizenship of the parties. See Molett v.
Penrod Drilling Co., 872 F.2d 1221, 1227-29 (5th Cir. 1989) (per curiam); Strain
v. Harrelson Rubber Co., 742 F.2d 888, 889-90 & n.2 (5th Cir. 1984) (per curiam);
Ill. Cent. Gulf R.R. Co., 706 F.2d at 638. In order to expedite the eventual
disposition of the appeal that precipitated this inquiry, we direct the district
court to enter the necessary findings no later than January 9, 2009. If the
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No. 07-10340
district court concludes that diversity jurisdiction does not exist, it should vacate
the judgment and remand the action to state court and so notify this court.
Conclusion
We therefore REMAND this case in full to the district court. The Clerk of
this court shall provide the district court with copies of our October 31, 2008
request, the parties’ letter responses, and this opinion. We will retain the record
in this court unless it is requested by the district court. If the district court
concludes that it has diversity jurisdiction, the Clerk of the district court shall
promptly supplement the appellate record with copies of the new filings below
and the district court’s opinion on jurisdiction and forward the supplemental
record to this court. The parties will be required to file a new notice of appeal
(and cross-appeal, if necessary) covering the entire case. However, no further
briefing will be necessary unless a party elects to appeal the district court’s
finding of jurisdiction, in which case supplemental letter briefs may be filed
addressing this issue on a short briefing schedule to be established by the Clerk
of this court. The case will be returned to this panel for disposition.
REMANDED. Each party shall bear its own costs.
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