Court Opinion

ID: 9839059
Source: CourtListenerOpinion
Date Created: 2023-09-11 16:00:36.951233+00
Date Added: 2024-06-11T09:11:56.393923
License: Public Domain

United States Court of Appeals
                              For the Eighth Circuit
                          ___________________________

                                  No. 21-3815
                          ___________________________

                           Great River Entertainment, LLC

                                        Plaintiff - Appellant

                                           v.

                        Zurich American Insurance Company

                                       Defendant - Appellee
                                    ____________

                      Appeal from United States District Court
                     for the Southern District of Iowa - Eastern
                                   ____________

                           Submitted: September 21, 2022
                             Filed: September 11, 2023
                                   ____________

Before LOKEN, ARNOLD, and KOBES, Circuit Judges.
                           ____________

KOBES, Circuit Judge.

      Great River Entertainment, LLC sought coverage from Zurich American
Insurance for losses related to the COVID-19 pandemic. The district court granted
Zurich’s motion to dismiss for failure to state a claim. Great River appealed and
moved to remand because there was not complete diversity of citizenship. We
remand to the district court to consider whether there is federal diversity jurisdiction.
                                           I.

       In response to the COVID-19 pandemic, the Governor of Iowa issued a
proclamation closing all Iowa bars and restaurants to indoor dining. To comply,
Great River closed its restaurants, casinos, and other properties. Great River then
filed a claim with Zurich for lost business income and COVID-19 mitigation costs.
Zurich denied the claim, and Great River sued in state court for breach of contract
and a declaration of coverage. Zurich removed the case to federal court based on
diversity of citizenship. At that time, Great River agreed that federal subject matter
jurisdiction was proper because the parties were completely diverse. After the
district court granted Zurich’s motion to dismiss for failure to state a claim, Great
River appealed.

       One day before its opening brief was due in this Court, Great River submitted
an affidavit saying that at least 25 of its members were citizens of Illinois—Zurich’s
principal place of business. If true, this would destroy complete diversity between
the parties and strip both us and the district court of jurisdiction. Great River moved
to remand to state court on that basis.

                                           II.

       Jurisdiction is always the “first and fundamental question” of this Court.
Franklin ex rel. Franklin v. Peterson, 878 F.3d 631, 635 (8th Cir. 2017) (quoting
Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998)). We review the
district court’s finding of subject matter jurisdiction de novo. Am. Fam. Mut. Ins.
Co. v. Vein Ctrs. for Excellence, Inc., 912 F.3d 1076, 1080 (8th Cir. 2019).

      Federal diversity jurisdiction requires that (1) the amount in controversy
exceeds $75,000 and (2) there is complete diversity of citizenship. 28 U.S.C.
§ 1332(a). If any plaintiff is a citizen of the same state as any defendant, there is not
“complete diversity” and federal courts lack jurisdiction. See Halsey v. Townsend
Corp. of Ind., 20 F.4th 1222, 1226 (8th Cir. 2021). Because “an LLC’s citizenship

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is that of its members,” Great River is a citizen of any state where its members are
citizens. GMAC Com. Credit LLC v. Dillard Dep’t Stores, Inc., 357 F.3d 827, 829
(8th Cir. 2004). And a corporation, like Zurich, is a citizen of every state where it is
incorporated and the state where it has its principal place of business. 28 U.S.C.
§ 1332(c). If Great River’s members were citizens of the same state where Zurich
had its principal place of business, Illinois, the parties are not completely diverse.

       “Any party or the court may, at any time, raise the issue of subject matter
jurisdiction.” GMAC Com. Credit LLC, 357 F.3d at 828. The Supreme Court has
held that no action of the parties—including consent—can confer subject matter
jurisdiction. Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694,
702 (1982). But “the parties may admit the existence of facts which show
jurisdiction, and the courts may act judicially upon such an admission.” Ry. Co. v.
Ramsey, 89 U.S. 322, 327 (1874).1 Because Great River initially agreed that the
parties were completely diverse, Zurich argues that Great River admitted to a
jurisdictional fact. Zurich says that Great River cannot defeat federal jurisdiction by
taking back this admission after it lost a motion to dismiss.

       Requiring a party to stand by their admissions of fact has some support. In
general, stipulations and admissions bind the parties. State Farm Mut. Auto. Ins. Co.
v. Worthington, 405 F.2d 683, 686 (8th Cir. 1968). And our sister circuits have held
parties to their stipulations or admissions that establish federal question jurisdiction
under 28 U.S.C. § 1331. See, e.g., Ferguson v. Neighborhood Hous. Servs. of
Cleveland, Inc., 780 F.2d 549, 551 (6th Cir. 1986) (stating, in dicta, that an employer
consented to federal question jurisdiction when it did not challenge its status as an

      1
        Ramsey is often used to support the proposition that courts can rely on
stipulations or admissions to exercise federal subject matter jurisdiction. See, e.g.,
Durbois v. Deutsche Bank Nat’l Tr. Co., 37 F.4th 1053, 1060 (5th Cir. 2022);
Verzosa v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 589 F.2d 974, 977 (9th Cir.
1978). But in Ramsey, the evidence supporting federal jurisdiction was destroyed.
89 U.S. at 327. So the court was required to accept the parties’ admissions as true
to exercise jurisdiction. Id. at 327–28.
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FLSA employer); Meyer v. Berkshire Life Ins. Co., 372 F.3d 261, 265 (4th Cir. 2004)
(finding there was federal question jurisdiction when a pension plan manager
conceded it was an ERISA fiduciary).

       But no matter how other courts have handled the stipulation of jurisdictional
facts related to federal question jurisdiction, our precedent is clear. In GMAC, a
materially identical situation, we remanded the case for factual findings to determine
whether the parties are indeed diverse. GMAC Com. Credit LLC, 357 F.3d at 828.
We do the same here. If Great River’s members were citizens of Illinois, they were
citizens of Illinois—admissions to the contrary cannot change that fact.
GenoSource, LLC v. Inguran, LLC, 386 F. Supp. 3d 984, 995 (N.D. Iowa 2019).

                                         III.

       We cannot proceed without subject matter jurisdiction. Crawford v. F.
Hoffman-La Roche Ltd., 267 F.3d 760, 764 (8th Cir. 2001). Based on Great River’s
new affidavit, we are unable to conclude that its members were diverse. While Great
River’s carelessness has clearly wasted judicial resources, we cannot address the
merits before determining federal jurisdiction. This is a task better suited for the
district court. On remand, the court may also take additional action it deems
appropriate. See, e.g., Belleville Catering Co. v. Champaign Mkt. Place, LLC, 350
F.3d 691, 694 (7th Cir. 2003).

      Reversed and remanded.
                     ______________________________

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