Court Opinion

ID: 9956207
Source: CourtListenerOpinion
Date Created: 2024-04-01 15:00:31.116177+00
Date Added: 2024-06-11T08:15:43.573625
License: Public Domain

23-1191-cv
Novel Energy Sols., LLC v. Pine Gate Renewables, LLC

                             UNITED STATES COURT OF APPEALS
                                 FOR THE SECOND CIRCUIT

                                          SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT.
CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS
PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE
32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE
FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION
“SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST SERVE A
COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

      At a stated term of the United States Court of Appeals for the Second Circuit,
held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the
City of New York, on the 1st day of April, two thousand twenty-four.

        PRESENT: JOSÉ A. CABRANES,
                         RICHARD C. WESLEY,
                         RAYMOND J. LOHIER, JR.,
                                 Circuit Judges.
        ------------------------------------------------------------------
        NOVEL ENERGY SOLUTIONS,
        LLC,

                         Plaintiff-Appellant,

                   v.                                                        No. 23-1191-cv

        PINE GATE RENEWABLES, LLC,
        GREEN STREET POWER
        PARTNERS, GSPP HOLDCO, LLC,
        GSPP CAPITAL, LLC,

                         Defendants-Appellees.
        ------------------------------------------------------------------
      FOR APPELLANT:                               STEPHEN J. RICCARDULLI,
                                                   Holland & Knight LLP, New
                                                   York, NY

      FOR APPELLEE PINE GATE                       JEFFREY R. WHITLEY, Fox
      RENEWABLES, LLC:                             Rothschild LLP, Raleigh, NC

      FOR APPELLEES GREEN STREET                   NOAM BESDIN, Stein Adler
      POWER PARTNERS, GSPP HOLDCO,                 Dabah Zelkowitz LLP, New
      LLC, GSPP CAPITAL, LLC:                      York, NY (Aron J. Frakes,
                                                   Fredrikson & Byron, P.A.,
                                                   Minneapolis, MN, on the brief)

      Appeal from a judgment of the United States District Court for the

Southern District of New York (Vernon S. Broderick, Judge).

      UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED,

AND DECREED that the judgment of the District Court is AFFIRMED in part,

VACATED in part, and the matter is REMANDED with instructions to dismiss

the amended complaint without prejudice.

      Plaintiff Novel Energy Solutions, LLC appeals from a judgment of the

United States District Court for the Southern District of New York (Broderick, J.)

dismissing, with prejudice, its breach of contract claim against Defendant Pine

Gate Renewables, LLC and its unjust enrichment claim against Defendants Green

Street Power Partners, GSPP Holdco LLC, and GSPP Capital, LLC (together,

“Green Street”). We assume the parties’ familiarity with the underlying facts

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and the record of prior proceedings, to which we refer only as necessary to

explain our decision.

      After Pine Gate and Green Street moved to dismiss Novel’s operative

complaint for failure to state a claim, the District Court concluded, sua sponte and

without warning the parties, that Novel’s allegations failed to establish diversity

jurisdiction, which is the only basis for subject-matter jurisdiction in this case.

The District Court dismissed the case with prejudice. Novel did not request

leave to amend, and the District Court independently concluded that

amendment would be futile because Novel could not under any circumstances

state a breach of contract or an unjust enrichment claim.

      On de novo review, see Wash. Nat’l Ins. Co. v. OBEX Grp. LLC, 958 F.3d 126,

133–34 (2d Cir. 2020), we find no error in the District Court’s dismissal for lack of

subject-matter jurisdiction. To determine diversity jurisdiction, limited liability

companies “take[] the citizenship of each of [their] members.” Bayerische

Landesbank, N.Y. Branch v. Aladdin Cap. Mgmt. LLC, 692 F.3d 42, 49 (2d Cir. 2012).

Novel, which bore the burden of establishing subject-matter jurisdiction, see

Morrison v. Nat’l Austl. Bank Ltd., 547 F.3d 167, 170 (2d Cir. 2008), aff’d, 561 U.S.

247 (2010), did not allege the citizenship of each member of every limited liability

                                           3
company that is a party to this lawsuit. Accordingly, Novel did not adequately

allege the complete diversity of the parties, as required to establish diversity

jurisdiction. See Pa. Pub. Sch. Emps. Ret. Sys. v. Morgan Stanley & Co., Inc., 772

F.3d 111, 117–18 (2d Cir. 2014).

      Ordinarily, Novel could “cure defective jurisdictional allegations . . .

through amended pleadings.” Fund Liquidation Holdings LLC v. Bank of Am. Corp.,

991 F.3d 370, 388–89 (2d Cir. 2021). As noted, however, the District Court

dismissed the complaint with prejudice, concluding that amendment would be

futile because the complaint failed to state a claim. This was error. “Even when

the citizenship of an LLC . . . is in question, a district court may not proceed to

the merits without first determining whether it has subject-matter jurisdiction.”

Platinum-Montaur Life Scis., LLC v. Navidea Biopharms, Inc., 943 F.3d 613, 619 (2d

Cir. 2019). And “[a] dismissal for lack of jurisdiction must be without prejudice

rather than with prejudice.” Miller v. Brightstar Asia, Ltd., 43 F.4th 112, 126 (2d

Cir. 2022) (quotation marks omitted). Lacking subject-matter jurisdiction, the

District Court did not have the power to reach the merits and dismiss the

complaint with prejudice.

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      Novel failed to provide any evidence on appeal from which we could

determine whether complete diversity of the parties exists. At the same time,

however, Pine Gate and Green Street failed to show that it would be impossible

for Novel to establish complete diversity. We therefore affirm the judgment of

the District Court insofar as it concluded that Novel failed to establish subject-

matter jurisdiction, but we vacate the judgment insofar as it dismissed the case

with prejudice, and we remand with instructions to dismiss the amended

complaint without prejudice and with leave to amend to establish complete

diversity. Should Novel choose to amend, the District Court must determine

whether Novel established complete diversity before reaching the merits. 1

                                         FOR THE COURT:
                                         Catherine O’Hagan Wolfe, Clerk of Court

1
 Because Novel has yet to establish subject-matter jurisdiction, we do not express a view
on the merits of Novel’s underlying claims.
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