UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Glenn L. Beane

v. Civil No. 08-cv-236-JL

Alan F. Beane

PROCEDURAL ORDER

Plaintiff Glenn L. Beane has moved for voluntary dismissal

of count 1 of his amended complaint without prejudice. See Fed.

R. Civ. P. 41(a)(2). That count is styled as a claim for

equitable relief under the Employee Retirement Income Security

Act (“ERISA”), specifically 29 U.S.C. § 1132(a)(3)(B)(ii), to

enforce certain obligations under an employee benefit plan

created by two now-defunct companies Glenn created with defendant

Alan F. Beane, Materials Innovation, Inc. and Mii Technologies,

LLC. Glenn also seeks, among other relief under state law, a

declaration that both his membership in Mii and its existence

ceased as of February 2004.

Alan objects to the voluntary dismissal of Glenn’s ERISA

claim on the grounds that it would deprive this court of subjectmatter jurisdiction and therefore cost Alan the opportunity to

litigate his counterclaims against Glenn in this forum. See Fed.

R. Civ. P. 41(a)(2). Alan argues in the alternative that, if

Glenn is permitted to voluntarily dismiss the ERISA claim without

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prejudice, he should be required to pay the expenses Alan has

incurred in defending against it so far, including attorneys’

fees, and to withdraw with prejudice a similar claim Glenn has

filed in Alan’s pending bankruptcy case, In re Alan F. Beane, No.

06-5723 (M.D. Fla. Oct. 19, 2006).

Alan has also separately moved to modify the stay this court

has imposed over this action due to another pending lawsuit

between Glenn and Mii in Grafton County Superior Court, in which

“Glenn brought claims against Mii resulting from the collapse of

Materials and Mii.” Beane v. Mii Techs., LLC, No. 2008-C-079,

slip op. at 2 (N.H. Super. Ct. July 9, 2009). That action has

since ended with the entry of judgment in Mii’s favor on all of

Glenn’s claims, see id. at 2-8, though Glenn has appealed that

decision to the New Hampshire Supreme Court, Beane v. Mii Techs.,

LLC, No. 2009-0562 (N.H. Aug. 24, 2009). Alan seeks to modify

the stay to move for summary judgment in his favor on Glenn’s

ERISA claim, as well as on Alan’s counterclaim against Glenn for

“wrongful disassociation,” which alleges that Glenn withdrew from

Mii in violation of the absolute prohibition on voluntary

withdrawal set forth in the limited liability company agreement.

The court had previously expressed the same concerns as Alan

about its subject-matter jurisdiction in the absence of Glenn’s

ERISA claim. Glenn says that the court has diversity

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jurisdiction, because he is a citizen of New Hampshire, Alan is a

citizen of Florida, and the amount in controversy exceeds

$75,000, arguing that Mii (which has not been named as a

defendant) is not an indispensable party to Glenn’s claims for

declaratory relief. But that proposition is not free from doubt,

particularly in light of Glenn’s request for a declaration that

Mii ceased to exist as of a date certain, see, e.g., Odom v.

Posey, No. 09-3532, 2009 WL 2356865, at *5 (E.D. La. July 27,

2009), though there is authority to the contrary, see, e.g.,

Polak v. Kobayashi, No. 05-330, 2005 WL 2008306, at *3 (D. Del.

Aug. 22, 2005). In any event, neither Glenn nor Alan has

addressed whether Mii is an indispensable (or even a necessary

party) according to the factors set forth in Rule 19.1

Glenn’s argument for diversity jurisdiction also depends on

his view that Mii has New Hampshire citizenship as “a New

Hampshire LLC.” An LLC, however, does not have the citizenship

of its state of its formation, but the citizenship of each of its

members. See Pramco, LLC ex rel. CFSC Consortium, LLC v. San

In addition, Glenn has framed the indispensability issue as 1

entirely dependent on whether his claims against Alan are in

essence derivative claims belonging to Mii. If the claims were

derivative, then Mii would likely be an indispensable party; in

the court’s view, though, the more relevant theory of

indispensability is that Glenn seeks relief that would result in

Mii’s dissolution effective February 2004. 

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Juan Bay Marina, Inc., 435 F.3d 51, 54-55 (1st Cir. 2006). And

the identity of Mii’s members is a disputed issue: Glenn claims

that his membership terminated upon his resignation in February

2006, while Alan’s position seems to be that the voluntary

resignation was void such that Alan remains a member. So, if

Glenn indeed remains a member of Mii, and if Mii is indeed an

indispensable party, that puts a New Hampshire citizen on both

sides of the lawsuit and destroys diversity jurisdiction. 

Assuming that Mii is indispensable, then, the question of

diversity jurisdiction is bound up in the merits of several of

the claims and counterclaims here, viz., Glenn’s claim for a

declaration that his membership in Mii ceased upon his voluntary

withdrawal, and Alan’s counterclaim that Glenn’s withdrawal

amounted to wrongful disassociation. In other words, the court

cannot decide its jurisdiction to hear this case without deciding

the case itself, or at least a major part of it.

In situations where jurisdictional facts “are inextricably

intertwined with the merits of the case,” a “court may defer

resolution of the jurisdictional issue until the time of trial”

or summary judgment. Valentin v. Hosp. Bella Vista, 254 F.3d

358, 363 & n.3 (1st Cir. 2001). Although, at first blush, using

that approach here would seem to threaten a colossal waste of

time and resources--if it is determined that Glenn remained a

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member of Mii, the result would be a dismissal of the case for

lack of subject-matter jurisdiction (assuming, again, that Mii is

indispensable)--the dismissal would nevertheless bind the parties

as to that issue. “Dismissal for lack of subject matter

jurisdiction precludes relitigation of issues determined in

ruling on the jurisdictional question.” Muniz Cortes v.

Intermedics, Inc., 229 F.3d 12, 14 (1st Cir. 2000). Such a

dismissal would, however, leave the parties free to litigate all

other issues, as well as other claims that do not rise or fall on

Glenn’s status as a member, because the dismissal would have no

res judicata, as opposed to collateral estoppel, effect. See id.

While the court wants to accommodate Alan’s wishes that it

hear this case as expeditiously as possible, it also wants to

spare itself and the parties the risk of expending time and

resources without obtaining a full and final resolution of their

dispute. Accordingly, the court will hold a status conference in

chambers, followed by a session on the record in open court if

necessary, to address the following issues:

1. the dismissal of Glenn’s ERISA claim. The parties

have addressed that issue to some extent in

Glenn’s motion for voluntary dismissal and Alan’s

objection, but the court is concerned that, as a

result of the actions of Summit Financial

described in the motion, the ERISA claim is or

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will shortly become moot and should therefore be

dismissed on that basis ;

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2. whether Mii is a necessary and indispensable

defendant to Glenn’s claim for declaratory relief,

with reference to the factors set forth in Rule

19, as well as any relevant caselaw or other

authority ; 3

3. whether, assuming Mii is a necessary and

indispensable party to Glenn’s claim for

declaratory relief, Glenn, Alan, and Mii wish to

proceed in this forum to resolve the issue of

Glenn’s membership in Mii and, if so, how to reach

that resolution most fairly and efficiently, and

with due regard to Alan’s demand for trial by jury

on his counterclaims; and

4. whether the judgment of the Grafton County

Superior Court, if affirmed by the New Hampshire

Supreme Court, will have any res judicata or

collateral estoppel effect on the issue of Glenn’s

membership in Mii or Alan’s wrongful

disassociation claim.

Conversely, Glenn’s stated concern about possible 2

“exposure” to government agencies overseeing the plan, or to its

participants, would not appear to make out a claim ripe for

adjudication at the moment.

It appears that Mii is the real party in interest to a 3

number of Alan’s counterclaims, as Chief Judge McAuliffe ruled in

dismissing Alan’s previous suit in this forum, which asserted

those counterclaims as claims against Glenn, for lack of subjectmatter jurisdiction. Beane v. Beane, 2008 DNH 082, 14-16. In

fact, as just discussed, that ruling appears to collaterally

estop Alan from arguing to the contrary. Adding Mii as

plaintiff-in-counterclaim, however, would not affect the

jurisdictional question because this court can exercise

supplemental jurisdiction over those counterclaims under 28

U.S.C. § 1367(a) (assuming there is subject-matter jurisdiction

over Alan’s claims). See, e.g., Kyle v. Fidéle Tremblay, Inc.,

2008 DNH 201, 2.

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Given the prolixity and tone of many of the parties’ filings so

far, the court does not believe that written submissions on these

point would be a particularly efficient use of resources, but,

depending on what happens during the conference, the court may

request briefing on one or more particular issues.

The clerk will contact counsel forthwith to schedule the

conference at a mutually agreeable date and time.

SO ORDERED.

____________________________

Joseph N. Laplante

United States District Judge

Dated: March 5, 2010

cc: W.E. Whittington, Esq.

William S. Gannon, Esq.

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