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Hancock v. Kulana Partners, LLC

United States District Court, D. Hawaii

February 1, 2017

WILLIAM R. HANCOCK, individually and as Trustee of HANCOCK AND COMPANY, INC. PROFIT SHARING TRUST, under trust instrument April 3, 1983, Plaintiff,
v.
KULANA PARTNERS, LLC, a Hawaii limited liability company; FIDELITY NATIONAL TITLE & ESCROW OF HAWAII, INC., a Hawaii corporation, Defendants.

          ORDER REGARDING SUBJECT MATTER JURISDICTION

          Derrick K. Watson United States District Judge

         By memorandum dated November 7, 2016, the United States Court of Appeals for the Ninth Circuit directed this Court to assess whether diversity exists between the parties, whether this case is “related to” a bankruptcy proceeding under 28 U.S.C. § 1334(b), or whether there is any other basis for federal court jurisdiction. See Dkt. No. 56. Based on the uncontested submissions of the parties, the Court concludes that diversity jurisdiction exists in this case pursuant to 28 U.S.C. § 1332(a)(1).[1]

         DISCUSSION

         I. Diversity Jurisdiction

         A federal court has diversity jurisdiction over actions between citizens of different states where the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332. “Diversity jurisdiction requires complete diversity between the parties-each defendant must be a citizen of a different state from each plaintiff.” In re Digimarc Corp. Derivative Litig., 549 F.3d 1223, 1234 (9th Cir. 2008). A limited liability company “is a citizen of every state of which its owners/members are citizens, ” not the state in which it was formed or does business. NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 612 (9th Cir. 2016) (quoting Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)).

         In the jurisdictional allegation of his Complaint, Plaintiff William R. Hancock alleges that Kulana Partners, LLC (“KPL”) is “a Hawaii Limited Liability company and a citizen of the State of Hawaii.” Complaint ¶ 2. The Complaint, however, does not allege the citizenship of each of the members of KPL. See Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001) (“[I]n a diversity action, the plaintiff must state all parties' citizenships such that the existence of complete diversity can be confirmed.”). The citizenship of each of the members of a limited liability company must be pled. Johnson, 437 F.3d at 899. When judgment entered in this matter on January 10, 2014, neither the parties nor the Court had identified the defect in Hancock's jurisdictional allegations.

         II. Diversity Existed At The Time Of The Filing Of The Complaint

         Following the Ninth Circuit's limited remand, the Court solicited additional information from the parties regarding the citizenship of KPL, among other things. The parties agree that complete diversity exists. Moreover, Defendants do not dispute Hancock's allegation that the jurisdictional amount for purposes of diversity has been satisfied. See Complaint ¶¶ 5-6.

         A. Citizenship of Hancock

         Hancock, individually and as Trustee of Hancock and Company, Inc. Profit Sharing Trust, under trust Instrument April 3, 1993, alleges that he was a citizen of Nevada at the time of filing the Complaint. See Complaint ¶ 1. He further avers that he intends to reside and remain domiciled in the State of Nevada. See Hancock Decl. ¶ 8.

         B. Citizenship of Fidelity

         Defendant Fidelity National Title & Escrow of Hawaii, Inc. (“Fidelity”) admits in its Answer that it is a citizen of Hawaii. Dkt. No. 14 (6/19/13 Answer ¶ 1). Further, Fidelity does not dispute Hancock's showing that it has not registered to do business in Nevada for purposes of its corporate citizenship. See, e.g., Hogan Decl. Ex. F.

         C. Citizenship of KPL

         None of the members of KPL were citizens of Nevada at the time the action was commenced. The four members of KPL and their respective citizenships are: C. Dustin Crane (Georgia); Milan S. Crane (Utah); Curtis R. Crane (Arizona); and F. Michael Crane (Utah). See C. Dustin Crane Decl. ¶ 4; Milan S. Crane Decl. ¶ 4; Curtis ...


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