Megalomedia v. Philadelphia Indemnity

Case: 23-20570 Document: 92-2 Page: 1 Date Filed: 09/20/2024

United States Court of Appeals for the Fifth Circuit United States Court of Appeals Fifth Circuit

____________ FILED September 20, 2024 No. 23-20570 Lyle W. Cayce ____________ Clerk

Megalomedia Incorporated; Megalomedia Studios, L.L.C.; Mansfield Films, L.L.C.; DBA Holdings, L.L.C.,

Plaintiffs—Appellants,

versus Philadelphia Indemnity Insurance Company,

Defendant—Appellee. ______________________________

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:20-CV-1644 ______________________________

PUBLISHED ORDER Before Ho, Duncan, and Oldham, Circuit Judges. Andrew S. Oldham, Circuit Judge: This is yet another case presenting an evergreen problem in our cir- cuit: The parties failed to establish the citizenship of limited liability compa- nies in a diversity case under 28 U.S.C. § 1332. We therefore remand for jurisdictional discovery.

Case: 23-20570 Document: 92-2 Page: 2 Date Filed: 09/20/2024

* Philadelphia Indemnity Insurance Company (“Philadelphia Indem- nity”) brought this action against Megalomedia Inc., Megalomedia Studios, LLC, Mansfield Films, LLC, and DBA Holdings, LLC (the “Megalomedia entities”) in federal court. Philadelphia Indemnity sought a declaratory judg- ment that it had no duty to defend or indemnify the Megalomedia entities. The Megalomedia entities counterclaimed for breach of contract and various torts. The contractual claims were resolved on summary judgment, and the tort claims were resolved after a bench trial. The claimed basis of subject matter jurisdiction over the case was diversity of citizenship under 28 U.S.C. § 1332. Diversity jurisdiction is proper only if there is complete diversity of citizenship among the parties. See Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267, 267 (1806). This means “[e]ach plaintiff must be diverse from each defendant.” In re Levy, 52 F.4th 244, 246 (5th Cir. 2022) (per curiam). We have repeatedly held that the citizenship of an LLC is determined by the citizenship of its members. See, e.g., Harvey v. Grey Wolf Drilling Co., 542 F.3d 1077, 1079–80 (5th Cir. 2008); Settlement Funding, LLC v. Rapid Settlements, Ltd., 851 F.3d 530, 536 (5th Cir. 2017); MidCap Media Fin., LLC v. Pathway Data, Inc., 929 F.3d 310, 314 (5th Cir. 2019); Acadian Diagnostic Lab’ys, LLC v. Quality Toxicology, LLC, 965 F.3d 404, 408 n.1 (5th Cir. 2020). At the pleading stage, the party invoking the federal court’s jurisdic- tion must allege the citizenship of each LLC’s members. See Lujan v. Defs. of Wildlife, 504 U.S. 555, 561 (1992) (explaining that standing “must be sup- ported . . . with the manner and degree of evidence required at the successive stages of the litigation”). At the summary judgment stage, that party must provide evidence sufficient to support a jury finding of the citizenship of each LLC’s members. See ibid. And at trial, that party must prove the citizenship

Case: 23-20570 Document: 92-2 Page: 3 Date Filed: 09/20/2024

of each LLC’s members. See ibid. The parties cannot stipulate to diversity jurisdiction, just as they cannot stipulate to any other form of subject matter jurisdiction. E.g., J.A. Masters Invs. v. Beltramini, --- F.4th ---, No. 23-20292, 2024 WL 4115280, at *1 (5th Cir. Sept. 9, 2024) (per curiam) (diversity stip- ulations insufficient); see also Ins. Corp. of Ir. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982) (“[N]o action of the parties can confer sub- ject-matter jurisdiction upon a federal court. Thus, the consent of the parties is irrelevant . . . .”). Here, the complaints alleged only where the LLC parties were “doing business” and had their “principal place of business.” The latter allegation is relevant to the citizenship of a corporation, see 28 U.S.C. § 1332(c)(1), but neither allegation is relevant to an LLC’s citizenship. We can amend defec- tive jurisdictional allegations on appeal under 28 U.S.C. § 1653, but only if there is record evidence establishing the necessary jurisdictional facts. See MidCap, 929 F.3d at 314. This case had already proceeded to trial, so we re- quested the parties to file a letter brief identifying record evidence proving the citizenship of the LLCs’ members. The parties’ joint letter admitted there is no such evidence. We thus cannot proceed to the merits. See Beltra- mini, 2024 WL 4115280, at *1. * The case is REMANDED for jurisdictional discovery. This panel will retain jurisdiction pending any further appeal.