E3 Biofuels, LLC v. Biothane, LLC

781 F.3d 972

E3 BIOFUELS, LLC, Plaintiff–Appellant

v.BIOTHANE, LLC, successor in interest and liability to Biothane Corporation; Perennial Energy, Inc., Defendants–Appellees.

No. 14–1894.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 13, 2014.

Filed: March 25, 2015.

Rehearing and Rehearing En Banc Denied May 5, 2015.

Randall Rhodes, argued, Leawood, KS, (Evan A. Douthit, Leawood, KS, Daniel P. Chesire, Jason W. Grams, Omaha, NE, on the brief), for Plaintiff–Appellant.

Kristina J. Kamler, argued, Omaha, NE, (Stephen G. Olson, II, Omaha, NE, on the brief), for Defendant–Appellee Perennial Energy, Inc.

Randy P. Scheer, argued, Springfield, MO, (William Henry Selde, Omaha, NE, S. Jacob Sappington, Springfield, MO, on the brief), for Defendant–Appellee Biothane, LLC.

Before RILEY, Chief Judge, BEAM and GRUENDER, Circuit Judges.

Opinion

GRUENDER, Circuit Judge.

After a boiler explosion, E3 Biofuels, LLC (“E3”) sued Biothane, LLC and Perennial Energy, Inc. (“PEI”). The district court¹ granted summary judgment to Biothane and PEI. After finding that diversity jurisdiction existed, the court held that Nebraska's two-year statute of limitations for professional negligence barred all of E3's claims. We affirm.

I.

In 2005 one of E3's predecessors in interest began construction of an ethanol plant in Mead, Nebraska. The plant was to be powered, at least in part, by methane. To generate electricity from the gas, E3's predecessor contracted with Biothane for a boiler system. The Boiler Purchase Order explained that Biothane would supply two boilers and integrate them into the plant:

Biothane will supply, start-up, and warrant the boiler system and controls as well as manage and take responsibility for integration of the boiler into the biogas handling system for a lump sum price of $1,450,000. This lump sum price includes ... the design engineering services necessary to integrate the boiler into the overall biogas management system.

Biothane, an expert in systems integration but not in boilers specifically, subcontracted with PEI to install and integrate the boilers. Biothane retained overall responsibility. Both Biothane and PEI are engineering companies.

In February 2007, PEI engineer Ted Landers repeatedly tried and failed to light the main flame of one of the boilers. The repeated attempts caused gas to build up and eventually explode. E3 claims that the boiler never worked properly afterward and that the plant failed as a result.

The plant's owners eventually reorganized in bankruptcy. A company called AltEn, LLC ended up owning the plant, including the boiler. At the request of an appointed bankruptcy trustee, the bankruptcy court assigned the legal claims stemming from the explosion to E3.

In 2011—3 years and 364 days after the explosion—E3 sued Biothane and PEI, alleging various torts against both and breach of contract against Biothane. Rejecting a jurisdictional challenge by PEI, the district court first found that the parties were diverse. The court then granted summary judgment to Biothane and PEI. The court concluded that all of E3's claims were time-barred under Neb.Rev.Stat. § 25–222, Nebraska's two-year statute of limitations for actions based on professional negligence. E3 appealed.

II.

On appeal, PEI again challenges the district court's subject-matter jurisdiction. E3 then argues that its suit was timely under any of five potentially applicable Nebraska statutes of limitations and that one of these statutes, not § 25–222, controls. We begin with the jurisdictional question. After that, we consider Nebraska limitations law, which the parties agree applies. In Nebraska, when two “equally applicable” limitations periods cover the same claim, the longer controls. Georgetowne Ltd. P'ship v. Geotechnical Servs., Inc., 230 Neb. 22, 430 N.W.2d 34, 38–39 (1988). Accordingly, we determine whether § 25–222 covers E3's claims; that is, whether Biothane and PEI were “professional[s] ... acting in professional capacit[ies]” with respect to the boiler. See Churchill v. Columbus Cmty. Hosp., Inc., 285 Neb. 759, 830 N.W.2d 53, 56 (2013). We then consider whether any of E3's proposed alternative statutes displaces § 25–222.

A.

We review issues of subject-matter jurisdiction de novo. Slater v. Republic–Vanguard Ins. Co., 650 F.3d 1132, 1134 (8th Cir.2011). Diversity jurisdiction “requires an amount in controversy greater than $75,000 and complete diversity of citizenship of the litigants.” OnePoint Solutions, LLC v. Borchert, 486 F.3d 342, 346 (8th Cir.2007) (citing 28 U.S.C. § 1332(a) ). “Complete diversity of citizenship exists where no defendant holds citizenship in the same state where any plaintiff holds citizenship.” Id. “An LLC's citizenship, for purposes of diversity jurisdiction, is the citizenship of each of its members.” Id. And when an entity with a right to sue assigns that right to an assignee diverse from all defendants, a proper, non-collusive assignment will create diversity jurisdiction. See 28 U.S.C. § 1359 ; Slater, 650 F.3d at 1135.

For diversity purposes, E3, an LLC, is a citizen of Kansas and South Dakota; Biothane is a citizen of Delaware and Pennsylvania; and PEI is a citizen of Missouri. The amount in controversy is well over $75,000. Diversity jurisdiction is thus facially proper. See 28 U.S.C. § 1332(a). PEI, however, challenges our diversity jurisdiction in two ways.

PEI first argues that the citizenship of AltEn, the LLC that ended up owning the plant and the boiler, should be attributed to E3. PEI argues that AltEn and E3 are related because AltEn owns the property that is the subject of E3's claims and because E3, directly and indirectly, owns interests in AltEn. And PEI claims that AltEn, like PEI, is a citizen of Missouri. Thus, if AltEn's purported Missouri citizenship is attributable to E3, E3 and PEI are not diverse. But AltEn's citizenship is not attributable to E3 because E3's “citizenship is that of its members.” GMAC Commercial Credit LLC v. Dillard Dep't Stores, Inc., 357 F.3d 827, 829 (8th Cir.2004). And E3's sole member is a citizen of Kansas and of South Dakota, not of Missouri. What AltEn owns and what E3 owns do not matter here. What matters is the citizenship of E3's member.

As its second point, PEI claims that E3 was assigned the right to sue from a related entity that, like PEI, was a citizen of Missouri. Such an assignment arguably suggests that E3 “improperly or collusively” invoked diversity jurisdiction. 28 U.S.C. § 1359 ; see also, e.g., McCulloch v. Velez, 364 F.3d 1, 6 (1st Cir.2004) (“Assignments between related parties ... are subject to ... exacting scrutiny.”). This specific aspect of our review, whether diversity jurisdiction was wrongfully manufactured through assignment, is a question of fact, which we review for clear error. Nat'l Fitness Holdings, Inc. v. Grand View Corporate Ctr., LLC, 749 F.3d 1202, 1206 (10th Cir.2014) (collecting cases). Here the assignment was ordered by the bankruptcy court at the request of an appointed bankruptcy trustee. PEI presents no evidence that this assignment was improper or collusive. Nor does PEI cite any case finding impropriety or collusion in similar circumstances. We thus hold that the district court did not clearly err on this basis.

B.

Satisfied with our jurisdiction, we turn to the merits of the grant of summary judgment to Biothane and PEI.

We review a grant of summary judgment de novo and view all genuinely disputed facts in favor of the non-moving party. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir.2011) (en banc). “Summary judgment is proper ‘if ... there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law.’ ” Id. (quoting Fed.R.Civ.P. 56 ). In this diversity case, we are bound by the decisions of the Nebraska Supreme Court, and, where it has not spoken, we must predict how it would rule. Lindsay Mfg. Co. v. Hartford Accident & Indem. Co., 118 F.3d 1263, 1267–68 (8th Cir.1997). In Nebraska, “[w]hich statute of limitations applies is a question of law.” Churchill, 830 N.W.2d at 55.

Before reviewing other statutes of limitations, we first conclude that the two-year statute of limitations for professional negligence, § 25–222, could apply.² This requires us to consider “whether [Biothane and PEI] were professionals who provided professional services to [E3] and whether the activity that caused [E3's] injuries was part of those professional services.” See Churchill, 830 N.W.2d at 56.

The Nebraska Supreme Court has held repeatedly that engineers, including engineering companies, are professionals. Reinke Mfg. Co., Inc. v. Hayes, 256 Neb. 442, 590 N.W.2d 380, 388 (1999) ; Lindsay Mfg. Co. v. Universal Sur. Co., 246 Neb. 495, 519 N.W.2d 530, 538 (1994) ; Georgetowne, 430 N.W.2d at 38. Biothane and PEI are engineering companies. Accordingly, they are professionals. E3's only response to this syllogism is to argue that Biothane and PEI are not professionals because their personnel working on the ethanol plant were not licensed in Nebraska. The Nebraska Supreme Court, however, has never held that a Nebraska professional license is a prerequisite to professional status. Admittedly, it has suggested so in dicta. See Churchill, 830 N.W.2d at 58 (“A license strongly indicates that a person is a professional, but that is not the only prerequisite.”); Tylle v. Zoucha, 226 Neb. 476, 412 N.W.2d 438, 440 (1987) (“[A] profession is far more than the mere possession of a license to ply one's trade.”). But the issue in those cases was whether licensure was sufficient for professional status, not whether it was necessary. We do not detect a rule in these peripheral dicta—especially not a rule that often would contradict the repeated and commonsense holding that engineers are professionals.

We next conclude that Biothane and PEI “provided professional services.” PEI, which actually attempted to integrate the boiler into the methane system, clearly provided engineering, and...