Surface Art Inc v. Tesserae Technologies LLC

Opinion

1 2 3 4

5 6 7 8 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 9 AT SEATTLE 10 11 SURFACE ART, INC., CASE NO. 2:24-cv-00924-TL 12 Plaintiff, ORDER OF DISMISSAL v. 13 TESSERAE TECHNOLOGIES, LLC, et 14 al., 15 Defendants. 16

17 In this case, Plaintiff Surface Art, Inc., a “Washington based, family-owned distributor of 18 tile and tile-related products,” seeks redress for a number of corporate misdeeds alleged against a 19 handful of defendants with whom it entered into an ultimately unsuccessful business 20 relationship. See generally Dkt. No. 21. This matter comes before the Court on its own motion. 21 Presently pending before the Court is Defendants Tesserae Technologies, LLC, and David 22 Drishpon’s Motion to Dismiss Plaintiff’s First Amended Complaint (“FAC”). Dkt. No. 27. But 23 before the Court can consider Defendants’ motion, it must first address whether it is within its 24 jurisdiction to do so. 1 I. LEGAL STANDARD 2 Subject-matter jurisdiction, which concerns a court’s power to hear a case, can never be 3 forfeited or waived. Arbaugh v. Y&H Corp., 546 U.S. 500, 514 (2006) (quoting United States v. 4 Cotton, 535 U.S. 625, 630 (2002)). Federal courts have an independent obligation to determine

5 whether subject matter jurisdiction exists, even if no party challenges jurisdiction. Id.; see also 6 Corral v. Select Portfolio Servicing, Inc., 878 F.3d 770, 773 (9th Cir. 2017) (examining and 7 finding lack of diversity jurisdiction sua sponte). If a court determines at any time that it lacks 8 subject-matter jurisdiction, the court must dismiss the action. Fed. R. Civ. P. 12(h)(3); Arbaugh, 9 546 U.S. at 506 (citing Fed. R. Civ. P. 12(h)(3)). “The party seeking to invoke the court’s subject 10 matter jurisdiction has the burden to demonstrate that jurisdiction exists.” Cascadia Wildlands v. 11 Scott Timber Co., 328 F. Supp. 3d 1119, 1127 (D. Or. 2018) (citing Kokkonen v. Guardian Life 12 Ins. Co. of Am., 511 U.S. 375, 377 (1994)). 13 Under 28 U.S.C. § 1332, “[f]or a case to qualify for federal jurisdiction, there must be 14 complete diversity of citizenship between the parties opposed in interest.” Kuntz v. Lamar Corp.,

15 385 F.3d 1177, 1181 (9th Cir. 2004) (internal citation omitted); see 28 U.S.C. § 1332(a)(1). A 16 limited liability company (LLC) is a citizen of each state of which its members are citizens. See 17 Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006). Accordingly, to 18 properly plead diversity jurisdiction in a case involving LLCs, a plaintiff must plead “the 19 citizenship of all of the members” of the defendant LLCs. NewGen, LLC v. Safe Cig, LLC, 840 20 F.3d 606, 611 (9th Cir. 2016) (citing Johnson, 437 F.3d at 899). 21 II. DISCUSSION 22 Here, Plaintiff’s FAC does not plead the citizenship of all members of the defendant 23 LLCs and, therefore, does not adequately establish this Court’s subject-matter jurisdiction.

24 Among the named defendants are two LLCs—Tesserae Technologies, LLC, and Erpizo, LLC. 1 Dkt. No. 21 ¶¶ 2, 4. Plaintiff alleges that Tesserae is a “Georgia domestic limited liability 2 company.” Id. ¶ 2. Erpizo is allegedly a “Texas domestic limited liability company.” Id. ¶ 4. But 3 Plaintiff does not provide a factual basis for these allegations. Plaintiff identifies Tesserae’s CEO 4 and executive vice president, as well as Erpizo’s CEO, but asserts nothing about the LLCs’

5 respective members, let alone their citizenship. Id. ¶¶ 3, 5. This is not sufficient. 6 The Court notes that, pursuant to Federal Rule of Civil Procedure 7.1 (and, though the 7 Parties neglected to say so, Local Civil Rule 7.1), Defendants Tesserae and Erpizo respectively 8 filed Corporate Disclosure Statements that purport to assert the LLCs’ citizenships. See Dkt. 9 Nos. 11(Tesserae), 14 (Erpizo). But these Statements are incomplete: Neither provides the Court 10 with a definitive list of citizenships of every member of each respective LLC, as required by the 11 rules.1 See Fed. R. Civ. P. 7.1(a)(2); LCR 7.1(b); see also Lloyd’s of London Syndicate 2987 v. 12 PCL Homes LLC, No. C23-1497, 2023 WL 7212554, at *1 (W.D. Wash. Nov. 2, 2023) 13 (discussing requirements of Federal Rule of Civil Procedure 7.1 and Local Civil Rule 7.1). In 14 any event, Plaintiff did not cite the disclosure statements in its FAC and, therefore, did not

15 incorporate the citizenship information contained therein—however deficient—into its pleading. 16 Indeed, the typical section on jurisdiction that is often included in complaints is missing in the 17 FAC. See generally Dkt. No. 21. 18 In sum, at this stage in the proceedings, Plaintiff’s obligation to establish subject-matter 19 jurisdiction remains unfulfilled. See Jack v. Asbestos Corp. Ltd., No. C17-537, Dkt. No. 126 20 (W.D. Wash. May 22, 2017) (ordering plaintiffs to “file a response . . . addressing where all of 21 22 1 Tesserae’s Corporate Disclosure Statement implies that David Drishpon and Gerry King are somehow associated with the LLC, but it does not define these individuals’ relationship to Tesserae. See Dkt. No. 11 ¶ 2. The Statement 23 also identifies Kevin Stupfel as a “member of Tesserae.” Id. But given the language of the Statement, it is unclear whether Drishpon, King—or any number of unnamed individuals and entities, for that matter—are also legally 24 members of the organization. 1 || LLC Defendants’ members are domiciled” because corporate disclosure statements “call[ed] into 2 || question the court’s subject matter jurisdiction on the basis of diversity of citizenship”). 3 || Therefore, the Court DISMISSES this case without prejudice. See, e.g., Asana Partners Fund IT 4 || Reit 14 LLC v. Heath Family I LLC, No. C20-1034, 2020 WL 7241449 (W.D. Wash. Dec. 9, 5 |} 2020) (dismissing case without prejudice where plaintiff did not plead citizenship of all members 6 || of defendant LLC). 7 TI. CONCLUSION 8 Therefore, the Court ORDERS: 9 (1) Plaintiff's First Amended Complaint (Dkt. No. 21) is DISMISSED WITHOUT 10 PREJUDICE. 11 (2) Defendants Tesserae Technologies, LLC, and Erpizo, LLC, SHALL file 12 amended corporate disclosure statements that comport with the 13 requirements of Federal Rule of Civil Procedure 7.1 and Local Civil Rule 14 7.1 no later than January 6, 2025. 15 (3) If Plaintiff files a Second Amended Complaint, it SHALL do so no later 16 than January 20, 2025. 17 (4) Defendants Tesserae Technologies, LLC, and David Drishpon’s Motion to 18 Dismiss Plaintiff's First Amended Complaint (Dkt. No. 27) 1s DENIED AS 19 MOOT. 20 21 Dated this 18th day of December 2024. 22 / | 4y PC c 23 ana Lin United States District Judge