Friday, July 29, 2016

Plaintiff Allowed Jurisdictional Discovery with Respect to Partnership and LLC Defendants

Plaintiff Allowed Jurisdictional Discovery with Respect to Partnership and LLC Defendants


      In an action brought in federal court on the basis of diversity, the party asserting diversity jurisdiction bears the burden of showing that it exist, i.e., that no defendant is a citizen of the same state as is any plaintiff. This can be an especially daunting task when one of the defendants is a partnership or LLC. A partnership or an LLC is deemed to have the citizenship of each of its members, but who are those partnerships or members is not a matter of public record. On the recent decision from Pennsylvania, the court allowed the plaintiff to undertake discovery as to the membership of the defendant partnership and LLC in order to determine whether or not diversity actually existed. Bissell v. Graverley Brothers Roofing Corp., Civ. Act. No. 15-04677, 2016 WL 3405455 (E.D. Penn. June 21, 2016).
      Bissell brought suit against the various defendants after a house she owned was bulldozed by the defendants. In response to that complaint, the defendants filed a motion to dismiss on the basis that Bissell had not identified in the complaint who are all the partners of Graverley Family Partnership, one of the defendants, or the members of Gerard Commons, LLC, also a defendant. In response, the court first noted that those defendants had not advised the court of who are those partners/members, from which the court could have made a factual determination. Second, based upon Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99, 105 (3rd Cir. 2015), “affirmative allegations of citizenship for unincorporated associations are not required when a party can allege in good faith that it is diverse from each member.” 2016 WL 3405455,*7. The court then recounted the efforts made by Bissell to investigate the partners and members of the LLC, and found that she had undertaken sufficient efforts of reasonable investigation.
      From there, the court ordered that there will be jurisdictional discovery as to who are the partners of the partnership and who are the members of the LLC.

Because members of the unincorporated associations are not within Plaintiff’s reach, jurisdictional discovery is appropriate with regard to the citizenship of the two disputed Defendants. Therefore, plaintiff shall be afforded an opportunity to conduct discovery to establish the existence of diversity jurisdiction with regard to the unincorporated associations. This, however, is not an invitation to Plaintiff to embark on a fishing expedition - discovery shall be narrowly tailored to address the limited issues set forth herein. 2016 WL 3405455,*7.

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