Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-casd-3_10-cv-01649/USCOURTS-casd-3_10-cv-01649-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 10cv1649 BTM(POR)

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF CALIFORNIA

TRAVELERS PROPERTY CASUALTY

COMPANY OF AMERICA, et al.,

Plaintiffs,

Case No. 10cv1649 BTM(POR)

ORDER DISMISSING CASE FOR

LACK OF SUBJECT MATTER

v. JURISDICTION

EVEREST INDEMNITY INSURANCE

COMPANY, et al.

Defendants.

On August 6, 2010, Plaintiffs commenced this action in the Southern District of

California. Plaintiffs alleged that the Court had diversity jurisdiction over the action. (Compl.

¶ 14.) 

In an Order to Show Cause filed on August 19, 2010, the Court ordered Plaintiffs to

show cause why this case should not be dismissed for lack of jurisdiction. The Court

explained that with respect to defendant CRV El Centro Partners, L.P. (“CRV El Centro”), it

is unclear whether any of the partners of the limited partnership are citizens of Connecticut,

Iowa, or Minnesota, a circumstance that would destroy diversity. 

In an order filed on October 21, 2010, the Court explained that Plaintiffs had still failed

to establish the identity and citizenship of the General Partner and limited partners of CRV

El Centro. However, the Court granted Plaintiffs 60 days to conduct limited discovery

regarding the citizenship of CRV El Centro (including the identity and citizenship of its

Case 3:10-cv-01649-BTM-POR Document 70 Filed 03/29/11 Page 1 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2 10cv1649 BTM(POR)

partners, the identity and citizenship of its partners’ partners, and so on and so forth). 

On January 3, 2011, Plaintiffs filed a supplemental response to the OSC in which

Plaintiffs explained that despite their diligent efforts, they were unable to identify the

members (and citizenship of the members) of LB Capstone, a Delaware limited liability

corporation, which is a member of Capstone Residential Venture IX (GP/El Centro), LLC,

which is the General Partner of defendant CRV El Centro Partners, LP. Plaintiffs explained

that they had served a subpoena on LB Capstone, requesting documents identifying its

members. However, LB Capstone had failed to comply with the subpoena. Plaintiffs

requested a continuance of the OSC hearing so that Plaintiffs could bring an application for

an order holding LB Capstone in contempt for failure to comply with the subpoena. The

Court granted Plaintiffs’ request and continued the OSC to March 25, 2011.

On March 22, 2011, Plaintiffs filed another supplemental response to the OSC.

Plaintiffs explain that they learned that LB Capstone’s partnership interest in Capstone

Residential Ventures IX Co. had been assigned to Halcap 2008 LLC in December 2008 (prior

to the filing of this lawsuit). CRV El Centro’s counsel provided Plaintiffs’ counsel with some

information regarding Halcap’s members, but Plaintiffs’ counsel still does not know other

essential information such as the identity or citizenship of the members of Zikakis Asset

Management, LLC, a member of Halcap 2008 LLC. Plaintiffs seek another continuance of

the OSC so that they can serve a subpoena on Zikakis Asset Management, LLC. 

The Court denies Plaintiffs’ request for an additional continuance. The party asserting

diversity jurisdiction bears the burden of proof on the issue. Kanter v. Warner-Lambert Co.,

265 F.3d 853, 857-58 (9th Cir. 2001). Conclusory statements that all the members or

partners of a limited liability company or limited liability partnership are citizens of a certain

state (or are not citizens of a certain state) do not satisfy the burden of proof of establishing

diversity of citizenship. See Lindley Contours, LLC v. AABB Fitness Holdings, Inc., 2011 WL

398861 (9th Cir. Feb. 8, 2011) (holding that conclusory statement that none of the limited

partnership’s members is an Oregon citizen did not satisfy Appellees’ burden to establish

complete diversity); Iguana, LLC v. Patriot Performance Materials, Inc., 2008 WL 2967173,

Case 3:10-cv-01649-BTM-POR Document 70 Filed 03/29/11 Page 2 of 3
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3 10cv1649 BTM(POR)

*1 (M.D. Ga July 30, 2008) (“Defendant’s conclusory statement that none of the members

of the limited liability company are citizens of the State of North Carolina is insufficient.”) 

It appears that when Plaintiffs commenced this suit in federal court, Plaintiffs did not

really know whether diversity of citizenship existed. Under Fed. R. Civ. P. 11(b), however,

allegations of diversity jurisdiction should not be made unless the allegations are based on

facts revealed by a reasonable investigation. See Hendrix v. Naphtal, 971 F.2d 398 (9th Cir.

1992) (holding that reliance on a client’s conclusion about his domicile was not reasonable

inquiry under Rule 11). If Plaintiffs were uncertain about the citizenship of CRV El Centro,

Plaintiffs should have filed suit in state court. 

The Court has already continued the OSC a number of times and has also continued

pending motions so that the issue of jurisdiction can be determined first. It has been seven

months since the Court raised the issue of jurisdiction, and there is no guarantee that

Plaintiffs can reach the end of their research trail anytime soon. 

Therefore, the Court concludes that Plaintiffs have failed to satisfy their burden of

establishing diversity jurisdiction and DISMISSES this action for lack of subject matter

jurisdiction.

IT IS SO ORDERED.

DATED: March 29, 2011

Honorable Barry Ted Moskowitz

United States District Judge

Case 3:10-cv-01649-BTM-POR Document 70 Filed 03/29/11 Page 3 of 3