United States District Court, W.D. Washington, Tacoma
ORDER VACATING PREVIOUS ORDER AND DISMISSING
COMPLAINT FOR LACK OF JURISDICTION
BENJAMIN H. SETTLE United States District Judge
matter comes before the Court on Defendants Superior Homes,
LLC (“Superior”) and Estela Mata's
(“Defendants”) motion to dismiss (Dkt. 12) and
the Court's order to show cause (Dkt. 19). The Court has
considered the pleadings filed in support of and in
opposition to the motion, the parties' responses to the
order to show cause, and the remainder of the file and hereby
dismisses the complaint for lack of jurisdiction.
March 22, 2017, Plaintiffs 1031 Equity Exchange, LLC
(“1031EE”) and Kauai Ocean View Professional
Building, LLC (“Kauai Ocean”) (collectively
“Plaintiffs”) filed a complaint against
Defendants asserting diversity jurisdiction and numerous
causes of action based on violations of state law. Dkt. 1.
1, 2017, Defendants filed a motion to dismiss arguing that
the Court should (1) abstain because of a prior action in
Hawaii, (2) dismiss because neither plaintiff is a real party
in interest, or (3) dismiss because joinder of the real party
in interest would defeat jurisdiction. Dkt. 12. On May 22,
2017, Plaintiffs responded. Dkt. 15. On May 23, 2017,
Defendants replied and argued for the first time that there
is not complete diversity. Dkt. 18.
13, 2017, the Court issued an order to show cause regarding
an apparent lack of diversity between the parties. Dkt. 19.
On June 16, 2016, Defendants responded and agreed with the
Court. Dkt. 20. On the morning of June 19, 2019, the Court
issued an order dismissing the complaint for lack of
jurisdiction. Dkt. 21. Later that day, Plaintiffs responded
and pointed out that the Court had set June 19, 2017 as the
deadline for responding to the order to show cause. Dkt. 22.
court may correct a clerical mistake or a mistake arising
from oversight or omission whenever one is found in a
judgment, order, or other part of the record. The court may
do so on motion or on its own, with or without notice.”
case, the Court issued its previous order before Plaintiffs
had a fair opportunity to respond. The Court generally sets
Fridays as the deadline for show cause responses, but set the
instant deadline for a Monday. Therefore, the Court sua
sponte vacates the previous order due to this oversight.
the court determines at any time that it lacks subject-matter
jurisdiction, the court must dismiss the
action.” Fed.R.Civ.P. 12(h)(3) (emphasis added).
See also Snell v. Cleveland, Inc., 316 F.3d 822, 826
(9th Cir. 2002) (“Federal Rule of Civil Procedure
12(h)(3) provides that a court may raise the question of
subject matter jurisdiction, sua sponte, at any time
during the pendency of the action . . . .”). Although
Defendants improperly raised the issue of diversity
jurisdiction for the first time in the reply, the Court must
confirm it has jurisdiction before reaching the merits of the
dispute. See Morongo Band of Mission Indians v. Cal.
State Bd. of Equalization, 858 F.2d 1376, 1380 (9th Cir.
1988). As the parties invoking federal jurisdiction,
Plaintiffs bear the burden of establishing its existence.
Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375,
courts have diversity jurisdiction when the parties are
citizens of different states and the amount in controversy
exceeds $75, 000, exclusive of interest and costs. 28 U.S.C.
§ 1332(a)(1). “Diversity jurisdiction requires
complete diversity between the parties-each defendant must be
a citizen of a different state from each plaintiff.”
In re Digimarc Corp. Derivative Litig., 549 F.3d
1223, 1234 (9th Cir. 2008). “In cases where entities
rather than individuals are litigants, diversity jurisdiction
depends on the form of the entity.” Johnson v.
Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th
Cir. 2006). “[A]n LLC is a citizen of every state of
which its owners/members are citizens.” Id.
Thus, if an individual defendant is an owner or member of a
plaintiff LLC, “then diversity requirement of section
1332 cannot be satisfied.” Skaaning v.
Sorensen, CV 09-00364 DAE-KSC, 2009 WL 3763056, at *3
(D. Haw. Nov. 10, 2009)
case, Plaintiffs have failed to show complete diversity
between the parties. Defendants assert that a member of
1031EE, Frank Sarabia, is a citizen of California, which
would result in 1031EE being a citizen of California.
Johnson, 437 F.3d at 899. Plaintiffs fail to address
this assertion in their response. They do, however, submit
evidence showing that Mr. Sarabia signed documents as the
“Managing Member” of 1031EE, Dkt. 22 at 31, and
refers to 1031EE as his “company, ” id.
at 98. In light of these documents and the uncontested
assertion from Defendants, the Court concludes that the
record reflects that 1031EE is a citizen of California