Hart, Melissa v. Terminex Int'l ( 2003 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 02-1714
MELISSA HART and JOHN HART,
Plaintiffs-Appellants,
v.
TERMINEX INTERNATIONAL, a Delaware corporation,
doing business as BALANTYNE PEST CONTROL,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 95 C 1811—Joan Humphrey Lefkow, Judge.
____________
ARGUED MAY 21, 2003—DECIDED JULY 14, 2003
____________
Before FLAUM, Chief Judge, and POSNER and MANION,
Circuit Judges.
FLAUM, Chief Judge. After eight years in federal court
and consideration by four federal judges (two magistrate
and two district court) this case comes before us on ap-
peal. This substantial consumption of federal resources
makes it all the more regrettable that we must now
order the dismissal of the case for lack of subject matter
jurisdiction rendering everything that has occurred in
those eight years a nullity. The mandate of limited fed-
eral jurisdiction must be honored by all and the parties to
2 No. 02-1714
the instant litigation have failed to do so despite this
court’s numerous warnings. Indeed our warnings have
focused on the exact issue that is at the root of the juris-
dictional problem in this case, namely, the misidentifica-
tion in diversity cases of the citizenship of parties which
are neither individuals nor corporations. For example, in
Market Street Assocs. Ltd. P’ship v. Frey we issued this
admonition:
[B]y their insouciance concerning jurisdiction the
litigants not only ran the risk of having to start the
case over in state court but also made more work for
us and delayed the decision of the appeal. We remind
the bench and bar of this circuit that it is their non-
delegable duty to police the limits of federal jurisdic-
tion with meticulous care and to be particularly alert
for jurisdictional problems in diversity cases in which
one or more of the parties is neither an individual
nor a corporation.
941 F.2d 588, 590 (7th Cir. 1991). We are nonetheless
faced once again with a diversity case where the status
of a partnership, which is neither an individual nor a
corporation, was left unresolved until after oral argu-
ments before this court, and where, now that the status
is finally resolved, it turns out there is no complete diver-
sity of citizenship between the parties.
I. Background
Melissa and John Hart are citizens of Illinois. They
filed this suit in the Circuit Court of Cook County on
February 17, 1995, based on injuries related to the use
of chemicals for purposes of extermination in and around
their residence. The suit was brought against Dow Chemi-
cal Company, DowElanco, and an entity they referred to
as “Terminex [sic] International, a Delaware corporation,
d/b/a Balantyne Pest Control, L.P.” (as we will discuss later,
No. 02-1714 3
this was an improper designation and the party they
were really suing was Terminix International Company
L.P., but for ease of reference we will refer to them as
“Terminix”). Dow Chemical Company is incorporated in
Delaware with its principal place of business in Michigan;
the citizenships of the partners in DowElanco were
never sufficiently established; and Terminix is a partner-
ship in which two Illinois citizens are partners. That last
fact destroys diversity, see Market Street Assocs., 941 F.2d
at 589 (“[F]or purposes of deciding whether a suit
by or against a limited partnership satifies the require-
ment of complete diversity of citizenship . . . the citizen-
ship of all the limited partners, as well as of the general
partner, counts.”), and along with diversity in this case
goes federal subject matter jurisdiction. Nonetheless, Dow
Chemical Company and DowElanco (collectively “Dow”)
removed the case, with the consent of Terminix, to the
United States District Court for the Northern District
of Illinois in March of 1995 based on diversity of citizen-
ship. Seven years of wasted litigation followed, ending
in judgment for the defendants based on default admis-
sions by the Harts; but this fact is irrelevant since we
need not and cannot reach the merits of this case.
II. Discussion
The initial fault in this jurisdictional morass lies with
Dow even though they have long since been dismissed
as defendants. When Dow originally removed this case to
the federal court they notified the court that Terminix
was a “Delaware limited partnership” in which “[n]either
of the limited partners are citizens of Illinois, nor do
they maintain their principal place of business in Illi-
nois.” This statement, we now know, is completely inac-
curate. Apparently, Dow failed to trace the ownership of
Terminix past the first layer of partners, which is neces-
4 No. 02-1714
sary where as here a partnership has as one of its part-
ners a second partnership. In such cases it is the citizen-
ship of the partners of the second partnership that mat-
ters (and if those partners are themselves partnerships,
the inquiry must continue to their partners and so on).
Meyerson v. Showboat Marina Casino P’ship (Meyerson II),
312 F.3d 318, 320-21 (7th Cir. 2002). Thus, we have ex-
plained that “the citizenship of unincorporated associa-
tions must be traced through however many layers of part-
ners or members there may be.” Meyerson v. Harrah’s East
Chicago Casino (Meyerson I), 299 F.3d 616, 617 (7th Cir.
2002). This may create some extra work for the diligent
litigant, and for those with less diligence the limited
partnership has become “a notorious source of jurisdic-
tional complications,” McMahon v. Bunn-O-Matic Corp., 150
F.3d 651, 653 (7th Cir. 1998) in which “mistakes concerning
the existence of diversity jurisdiction are most common,”
Market Street Assocs., 941 F.2d at 590. But the point is
“not so subtle that it should have escaped the attention
of the defendants’ lawyers.” Meyerson I, 299 F.3d at 617.
We need not dwell further on Dow’s work product other
than to provide, once more, a reminder to future litigants
that they should strive to establish relevant and accurate
jurisdictional facts at the outset “before unpleasant dis-
coveries about jurisdictional facts require the parties and
the judge to bemoan the waste of time and money invested
in the litigation.” McMahon, 150 F.3d at 654.
Moving on to the parties before us, they had their oppor-
tunity to notify this court of an appropriate basis for
jurisdiction—or the lack thereof—in their briefs. That be-
ing said, the jurisdictional statements of both the Harts
and Terminix are totally deficient. Circuit Rule 28(a)(1)
sets forth the requirements for the parties’ jurisdictional
statements:
No. 02-1714 5
If jurisdiction depends on diversity of citizenship, the
[jurisdictional] statement [in each party’s brief] shall
identify the jurisdictional amount and the citizenship
of each party to the litigation. . . . If any party is an
unincorporated association or partnership the state-
ment shall identify the citizenship of all members.
Compliance with this rule is extremely important, as we
emphasized in Meyerson I:
Once more we find it necessary publicly to remind the
bar of the existence and importance of 7th Cir. R.
28(a)(1), which requires parties to appeals in diversity
cases to identify in their briefs the citizenship of
each party to the appeal.
299 F.3d at 616. The importance of the rule and our
public reminders notwithstanding, the Harts provided us
with this jurisdictional statement in their brief:
Original jurisdiction in the district court was under 28
U.S.C. 1332(a)(1) based on diversity of citizenship of
Plaintiffs and Defendant and because the amount
in controversy between the parties exceeds $50,000
exclusive of interest and costs.
Terminix, in their statement, recognized one flaw in the
Hart’s statement:
The summary omits information required by Seventh
Circuit Rule 28(a). Specifically, because jurisdiction
was based upon diversity, Rule 28(a)(1) requires cer-
tain information about the citizenship of the parties.
The summary omits the facts that the Harts are citi-
zens of Illinois. The summary omits that Terminix is
a Delaware limited partnership with its principal place
of business in Tennessee.
But this statement contains a flaw of its own. The term
“Delaware limited partnership” is meaningless in the
context of diversity jurisdiction: “There is no such thing
6 No. 02-1714
as ‘a [state name] limited partnership’ for purposes of the
diversity jurisdiction. There are only partners, each of
which has one or more citizenships.” Guaranty National
Title Company Inc. v. J.E.G. Assocs., 101 F.3d 57, 59 (7th
Cir. 1996).
With all this before us, during oral argument we re-
quested a complete statement of jurisdiction from Terminix.
In response to this request a complete and accurate state-
ment of the citizenship of Terminix’s partners, with an
attached affidavit, was provided to the court on June 6,
2003–just over eight years after the case was removed
to federal court. This supplemental statement was suffi-
cient in that it provided the citizenship of all parties
still involved in this litigation, including all partners of
Terminix. The only problem is that Terminix’s supple-
mental filing, as we have suggested above, tells us that
if we trace the chain of ownership through all partnerships,
we ultimately end up with two partners who are corpora-
tions with Illinois citizenship and thus there is no di-
versity between them and the Harts.
Having established that there is no complete di-
versity between its partners and the plaintiffs, Terminix
is left scrambling to salvage the litigation. The best it
can offer is that the partnership—Terminix International
Company L.P.—was not a party to this case at the time
the case was filed or at the time the case was removed.
Instead, Terminix claims that its general partner—
Terminix International, Inc.—was the defendant along
with Dow until some unspecified time later in the federal
litigation. This is an astounding claim as we have in the
record a filing entitled “Consent to Removal” signed by
the “Attorneys for The Terminix International Company
L.P.” and stating, “Defendant The Terminix International
Company L.P. (improperly designated as ‘Terminex, In-
ternational d/b/a Ballantyne Pest Control, L.P.’) consents
to removal of this action to the United States District
No. 02-1714 7
Court for the Northern District of Illinois.” Why a non-
party would file a consent to removal is imponderable.
Furthermore, the filing contains Terminix’s (and by
Terminix we mean the partnership) own admission that
it was in fact a defendant and its own explanation that
it was the partnership that was intended by the improp-
er label. This is sufficient evidence that Terminix was—
or at the very least should be estopped from denying that
it was—in fact a defendant at the time of removal, and
therefore complete diversity of parties was lacking at
that time.
III. Conclusion
We therefore must regrettably find that subject matter
jurisdiction is lacking in this case, and emphasize that
this waste of federal judicial resources and delay of jus-
tice was avoidable and reiterate our admonitions to
future litigants to meticulously review the limits of fed-
eral jurisdiction. We VACATE the judgment of the district
court and REMAND with instruction to dismiss for want
of jurisdiction.
A true Copy:
Teste:
________________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—7-14-03