Source: https://cbaclelegalconnection.com/tag/diversity-jurisdiction/
Timestamp: 2019-04-22 18:00:19+00:00

Document:
The Tenth Circuit Court of Appeals issued its opinion in Grynberg v. Kinder Morgan Energy Partners, L.P. on Monday, November 2, 2015.
Celeste Grynberg, individually and on behalf of several trusts of which she is trustee, and Jack Grynberg petitioned the U.S. District Court for the District of Colorado to vacate an arbitration award entered against them in favor of Kinder Morgan Energy Partners L.P. and Kinder Morgan CO2 Company L.P. (Kinder Morgan entities). The Grynbergs alleged diversity jurisdiction since the amount in controversy was over $75,000, they were residents of Colorado, Kinder Morgan Energy Partners (KMEP) was a Delaware limited partnership with its principal place of business in Texas, and Kinder Morgan CO2 Company (KMCO2) was a Texas limited partnership with its principal place of business in Texas. The district court issued an order to show cause that said the Grynbergs’ petition did not adequately allege diversity jurisdiction because it did not properly identify the citizenship of the Kinder Morgan entities as of the filing date. In response, the Grynbergs explained that KMEP was a publicly traded Delaware master limited partnership (MLP) and KMCO2 was a Texas limited partnership wholly owned by KMEP. The Kinder Morgan entities responded and explained that KMEP had unitholders who were citizens of Colorado. The district court dismissed the action without prejudice based on lack of diversity jurisdiction.
On appeal, the Tenth Circuit analyzed the jurisdictional statutes and the citizenship of MLPs. The Tenth Circuit noted it could only find diversity jurisdiction if no plaintiff is a citizen of the same state as any defendant. The Tenth Circuit turned to the citizenship of MLPs and determined that an MLPs citizenship consists of its unitholders’ citizenship. First, the Tenth Circuit analyzed the long-standing rule regarding citizenship of corporations and unincorporated entities, finding that under Carden v. Arkoma Associates, 494 U.S. 185 (1990), an unincorporated entity’s citizenship is determined by the citizenship of its members. The Tenth Circuit next found that the narrow exception set forth in Puerto Rico v. Russell & Co., 288 U.S. 476 (1933), did not apply because the entity at issue in Russell was wholly unique to Puerto Rico and resembled a corporation more than an unincorporated entity. The Tenth Circuit noted that the Supreme Court had declined to apply the Russell exception to any entities other than the type enunciated in Russell. Finally, the Tenth Circuit addressed the Grynbergs’ argument that applying Carden would preclude jurisdiction over MLPs, noting that these policy arguments were best addressed to Congress.
The Tenth Circuit affirmed the district court’s dismissal without prejudice.
The Tenth Circuit Court of Appeals issued its opinion in Siloam Springs Hotel, L.L.C. v. Century Surety Co. on Tuesday, March 31, 2015.
Siloam Springs Hotel, L.L.C. operates a Hampton Inn in Siloam Springs, Arkansas. It purchased a commercial general liability insurance policy from Century Surety Co. During the applicable coverage period, the heating element of an indoor swimming pool suddenly malfunctioned, causing a sudden carbon monoxide leak and injuring several guests. Siloam sought coverage from Century, but Century denied coverage, relying on an exclusion in the insurance policy for injuries arising from noxious characteristics of indoor air. In response, Siloam filed suit in Oklahoma state court, seeking a declaration of coverage. Century removed the case to the U.S. District Court for the Western District of Oklahoma, asserting complete diversity jurisdiction and an amount in controversy exceeding $75,000. The parties filed cross-motions for summary judgment in district court, and the district court granted summary judgment to Century.
Siloam timely appealed, challenging the district court’s ruling that the indoor air exclusion barred coverage. After the parties filed their merits briefs, the Tenth Circuit recognized a jurisdictional defect in Century’s notice of removal, which labeled Siloam as a “corporation” and asserted it was organized under Oklahoma law and had its primary place of business in Arkansas. The Tenth Circuit ordered Century to show cause regarding the discrepancy, noting that although the Tenth Circuit had not addressed the issue, every other circuit to consider citizenship of an LLC for diversity jurisdiction purposes has held citizenship of the LLC is defined by citizenship of its members.
Century responded by arguing the LLC’s citizenship should be determined by treating it as a corporation, or, alternatively, the court should find Siloam’s citizenship to be of Oklahoma, Florida, New York, North Carolina, and Texas. The Tenth Circuit disagreed. First, the Tenth Circuit found that Oklahoma law defines an LLC as an unincorporated association or proprietorship, not a corporation. Following Supreme Court precedent, the Tenth Circuit determined that citizenship of an unincorporated association or proprietorship is decided based on citizenship of all its members. Next, the Tenth Circuit rejected Century’s offer that the LLC’s citizenship be Oklahoma, Florida, New York, North Carolina, and Texas, since Century based its determination on an unsworn letter from Siloam’s counsel dated after the notice of removal. The Tenth Circuit found two flaws with Century’s argument. First, residence is not equivalent to domicile, and domicile is used to determine citizenship, so the information in the unsworn letter regarding residence of the LLC’s members did not adequately address domicile. Second, the letter was dated after the notice of removal, and relevance regarding removal is to be determined at the time of removal, not after.
Without addressing the merits of the appeal, the Tenth Circuit remanded to the district court to consider whether diversity jurisdiction is proper and whether the insurance coverage questions would be better answered by certification to the appropriate state court.
The Tenth Circuit Court of Appeals re-issued its opinion in ConAgra Foods, Inc. v. Americold Logistics, LLC on Thursday, April 9, 2015. The opinion was originally published on January 27, 2015, but the court sua sponte amended a sentence in the conclusion of the decision. Read the previous Legal Connection summary here.
The Tenth Circuit Court of Appeals issued its opinion in ConAgra Foods, Inc. v. Americold Logistics, LLC on Tuesday, January 27, 2015.
Multiple plaintiffs brought suit against Americold Logistics, LLC and Americold Realty Trust (collectively, Americold) in Kansas state court. Americold removed to the U.S. District Court for the District of Kansas, asserting complete diversity of the parties. No party challenged removal and the district court did not address the issue. The district court granted summary judgment to Americold and plaintiffs timely appealed on the merits. On appeal, the Tenth Circuit noticed a potential defect in the notice of removal and ordered Americold to file supplemental briefing to address whether Americold’s Notice of Removal was sufficient to establish diversity jurisdiction and, if not, what curative facts could correct the defect in the appeal?
In its supplemental briefing, Americold asserted the omission of the citizenship of the beneficiaries of the Americold Realty Trust was not a jurisdictional defect because the citizenship of a trust is determined solely by the citizenship of its trustees. The Tenth Circuit disagreed. After analyzing Supreme Court precedent in Navarro and Carden, the Tenth Circuit found the citizenship of a trust depends on not only the citizenship of the trustees but also that of its beneficiaries. The Tenth Circuit ruled that when a trustee is a party to litigation, it is the trustee’s citizenship that controls for diversity jurisdiction purposes, as long as the trustee satisfies Navarro‘s real-party-in-interest test. However, when a trust itself is party to the litigation, the citizenship of the trust is derived from all of the trust’s “members.” In this case, the Tenth Circuit found that at a minimum the trust’s “members” were its beneficiaries.
The Tenth Circuit found Americold failed to meet its burden to establish diversity jurisdiction because it failed to present evidence of the citizenship of its beneficiaries. The Tenth Circuit remanded to the district court to vacate its judgment on the merits and remand to state court.

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