THI of New Mexico at Hobbs Center, LLC v. Patton

851 F. Supp. 2d 1281, 2011 WL 7561517, 2011 U.S. Dist. LEXIS 154389
CourtDistrict Court, D. New Mexico
DecidedOctober 31, 2011
DocketNo. Civ. 11-537 LH/CG
StatusPublished
Cited by9 cases

This text of 851 F. Supp. 2d 1281 (THI of New Mexico at Hobbs Center, LLC v. Patton) is published on Counsel Stack Legal Research, covering District Court, D. New Mexico primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
THI of New Mexico at Hobbs Center, LLC v. Patton, 851 F. Supp. 2d 1281, 2011 WL 7561517, 2011 U.S. Dist. LEXIS 154389 (D.N.M. 2011).

Opinion

MEMORANDUM OPINION AND ORDER

LeROY HANSEN, Senior District Judge.

On July 1, 2011, Defendant Lillie Mae Patton, as the personal representative of [1283]*1283the Estate of Willie George Patton, Sr., (hereinafter “Defendant”), filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. 10), alleging that complete diversity among the parties does not exist, and alternatively, that the Colorado River1 abstention doctrine requires the federal court proceeding to be dismissed. The Court, having considered the motion, briefs, arguments, relevant law, and otherwise being fully informed, concludes that this Court has subject matter jurisdiction over this case and an obligation to exercise it, and thus, Defendant’s motion to dismiss will be denied.

I. FACTUAL BACKGROUND

The facts relevant to this motion are undisputed. The deceased, Willie George Patton, was a resident at Hobbs Center, a nursing home in Hobbs, New Mexico. He entered the center in June 2007 and left when he was hospitalized on June 13, 2010; he died shortly thereafter. Mr. Patton’s personal representative and former spouse, Lillie Mae Patton, brought a negligence suit on behalf of Mr. Patton’s estate in the First Judicial District Court, State of New Mexico. Due to the alleged existence of an arbitration agreement signed by Mr. Patton’s step-daughter, purportedly pursuant to a Power of Attorney, and Hobbs Center, some of the state court defendants have brought a Complaint to Compel Arbitration against Ms. Patton in federal court under the Federal Arbitration Act, 9 U.S.C. § 1, et seq. (“FAA”).

Willie George Patton was a resident of Hobbs, New Mexico, and is deceased. Lillie Mae Patton is also a New Mexico citizen.

There are four plaintiffs in the case before this Court: (1) THI of New Mexico at Hobbs Center, LLC (“Hobbs”); (2) THI of New Mexico, LLC (“THI-NM”); (3) Fundamental Administrative Services, LLC (“FAS”); and (4) Fundamental Clinical Consulting, LLC (“FCC”), collectively “Plaintiffs.” Hobbs is a Delaware limited liability company (“LLC”) whose sole member is Plaintiff THI-NM. THI-NM is also a Delaware LLC whose sole member is THI of Baltimore, Inc., which is a Delaware corporation with its principal place of business in Maryland. The third plaintiff, Fundamental Administrative Services, LLC (“FAS”), is a Delaware LLC whose sole member is Fundamental Long-Term Care Holdings, LLC (“FLTCH”), which is also a Delaware LLC but which is not itself a party to this action. FLTCH has two members, who are both real persons who are citizens of New York and New Jersey. Lastly, Plaintiff FCC is a Delaware LLC whose sole member is also THI of Baltimore.

The state court action includes additional defendants who are not parties to the federal action. According to the allegations in the state court complaint, the other state court defendants are Rubin Schron, an individual who owns, operates, manages, and/or maintains Hobbs Center and the state-defendant corporations; Leonard Grunstein, an individual who owns, operates, manages, and/or controls Hobbs Center and the state-defendant corporations; Murray Forman, an individual who owns, operates, manages, and/or maintains Hobbs Center and the state-defendant corporations; THI Holdings, LLC, a corporation that owns, operates, manages, and/or controls Hobbs Center; Abe Briarwood Corporation, a corporation that owns Hobbs Center and entered into [1284]*1284an agreement with one or more THI or Fundamental companies; and David Stroud, the Administrator of Hobbs Center. (See Compl, Ex. D (Doc. 1-4) (“State Court Complaint”) at 3-7.) David Stroud is the only nonfederal party relevant to the current dispute. Mr. Stroud was the administrator of Hobbs Center at all times relevant to the negligence suit, and his “business home address” is in Hobbs, New Mexico. (State Court Complaint (Doc. 1-4) ¶ 21.)

Defendant filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction (Doc. 10) on July 1, 2011. Defendant argues that Plaintiffs have “self-selected certain parties” for the purposes of the federal lawsuit and intentionally excluded David Stroud, who is a New Mexico resident. Defendant thus urges this court to consider David Stroud’s citizenship for the purposes of establishing' diversity. Second, Defendant argues that the court should adopt the corporation model of citizenship toward LLCs, which views an entity as a citizen of those states where its principal places of business are located and where it is incorporated. Adoption of the corporation model would result in both Hobbs Center and THI-NM being deemed New Mexico citizens, and thus destroying diversity, since Hobbs Center’s only place of business is in Hobbs, New Mexico, and since THI-NM exists only to operate nursing homes within New Mexico. Defendant alternatively argues that, even if this Court has subject matter jurisdiction, the Colorado River abstention doctrine compels dismissal of this federal case.

In response, Plaintiffs argue that Defendant errs in applying the corporation model of citizenship to LLCs and instead maintains that the partnership model should be applied. Relying on extensive supporting authority, Plaintiffs state that the citizenship of LLCs is to be determined based upon the citizenship of all of its members, as would be done if Plaintiffs were partnerships. Plaintiffs argue that Hobbs Center, THI-NM, and FCC are all citizens of both Delaware and Maryland, FAS is a citizen of New York and New Jersey, and Defendant is a New Mexico citizen. Plaintiffs therefore contend that, because the LLCs’ members are not New Mexico citizens, diversity exists amongst the parties, and this court has subject matter jurisdiction. Finally, Plaintiffs assert that the Colorado River abstention doctrine is inapplicable to this case because the federal and state cases are not parallel proceedings, and in any event, the Colorado River factors here do not demonstrate any “exceptional circumstance” that merits abstention.

II. ANALYSIS

A. Diversity Jurisdiction

Plaintiffs, as the parties asserting jurisdiction, bear the burden of establishing subject matter jurisdiction. Montoya v. Chao, 296 F.3d 952, 955 (10th Cir.2002). Section 4 of the Federal Arbitration Act provides:

A party aggrieved by the alleged failure, neglect, or refusal of another to arbitrate under a written agreement for arbitration may petition any United States district court which, save for such agreement, would have jurisdiction under Title 28, in a civil action or in admiralty of the subject matter of a suit arising out of the controversy between the parties, for an order directing that such arbitration proceed in the manner provided for in such agreement.

9 U.S.C. § 4. The FAA itself, however, does not grant the federal courts jurisdiction over arbitration disputes; instead, the Act requires an “independent jurisdictional basis” for bringing the suit before the federal court. Hall Street Assoc., LLC v. Mattel, Inc., 552 U.S. 576, 581-82, 128 [1285]*1285S.Ct. 1396

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851 F. Supp. 2d 1281, 2011 WL 7561517, 2011 U.S. Dist. LEXIS 154389, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thi-of-new-mexico-at-hobbs-center-llc-v-patton-nmd-2011.