N.Y. Metro. Reg'l Ctr., L.P. II v. Mammoet USA Holding, Inc.

552 F.Supp.3d 451

NEW YORK METROPOLITAN REGIONAL CENTER, L.P. II, Plaintiff,

v.MAMMOET USA HOLDING, INC., Defendant.

20-CV-9477 (JMF)

United States District Court, S.D. New York.

Signed August 6, 2021

John Jeffrey Eichmann, Jonas Bram Jacobson, Dovel & Luner, LLP, Santa Monica, CA, Hunter B. Mims, Friedman Kaplan Seiler & Adelman LLP, New York, NY, for Plaintiff.

Anthony B. Ullman, Dentons US LLP, New York, NY, Jonathan Scott Jemison, Dentons US LLP, Short Hills, NJ, for Defendant.

OPINION AND ORDER

JESSE M. FURMAN, United States District Judge:

The single claim in this case—a breach-of-contract claim brought by New York Metropolitan Regional Center, L.P. II ("NY Regional") against Mammoet USA Holding, Inc. ("Mammoet Holding"), arising from a doomed project to construct a massive observation wheel (similar to, but larger than, the London Eye) dubbed the "New York Wheel"—is before the Court for the second time. In the earlier suit, which was brought by NY Regional and New York Wheel Owner LLC ("NYW"), the Court denied Mammoet Holding's motion to dismiss the claim. But shortly thereafter, the plaintiffs disclosed that the jurisdictional allegations in their pleadings had been inaccurate and that, in fact, the Court lacked subject-matter jurisdiction over NYW's claims, forcing the Court to dismiss the case in its entirety. Eager to roll on in federal court, NY Regional filed this action, invoking the Court's diversity jurisdiction pursuant to 28 U.S.C. § 1332. According to Mammoet Holding, however, this suit suffers from the same fatal defect as the earlier one—a lack of subject-matter jurisdiction, here derived from the fact that NY Regional, which is a limited partnership, has one partner who is a New York citizen and other partners who are foreign citizens, including some who are domiciled in Texas, of which Mammoet Holding is a citizen. Mammoet Holding thus moves to dismiss. See ECF No. 19. In response, NY Regional argues that jurisdiction is nonetheless proper under Section 1332. But its arguments are foreclosed by the plain language of Section 1332 and by binding Supreme Court precedent holding that, for purpose of diversity, limited partnerships assume the citizenship statuses of their members. Accordingly, and for the reasons that follow, Mammoet Holding's motion to dismiss is GRANTED and, like its precursor, this case is dismissed.¹

BACKGROUND

The background of this case is long and complicated, but thankfully it is largely irrelevant for present purposes. The New York Wheel project was supposed to produce the largest observation wheel in the Western Hemisphere, the anchor of a major redevelopment of the Staten Island waterfront. Instead, all it has produced is years of litigation. The litigation began here in 2017, with a complaint filed by the project's developer, NYW, against the team hired to design and build the project, including Mammoet Holding. See Complaint, New York Wheel Owner LLC v. Mammoet-Starneth LLC , No. 17-CV-4026 (JMF) (S.D.N.Y. May 30, 2017), ECF No. 1 Two years later, after an aborted settlement and other twists and turns not relevant here, the litigation involved various claims by NYW and NY Regional (including a contract claim by NY Regional against Mammoet Holding indistinguishable from the one pressed in this lawsuit), see Third Amended Complaint, New York Wheel Owner LLC v. Mammoet-Starneth LLC , No. 17-CV-4026 (JMF) (S.D.N.Y. Sept. 27, 2019), ECF No. 214, as well as counterclaims against NYW and third-party claims against the City of New York, see Defendant/Third-Party Plaintiff Mammoet USA North Inc.’s Amended Third-Party Complaint and Counterclaims, New York Wheel Owner LLC , No. 17-CV-4026 (JMF) (S.D.N.Y. Feb. 5, 2020), ECF No. 251. On August 21, 2020, the Court issued a fifty-four-page Opinion and Order ruling on various motions and cross-motions, including a motion by Mammoet Holdings to dismiss NY Regional's contract claim, which was denied. See New York Wheel Owner LLC v. Mammoet Holding B.V. , 481 F. Supp. 3d 216, 236-38 (S.D.N.Y. 2020). Shortly thereafter, counsel to NYW and NY Regional made a startling disclosure: that, despite the allegations in their complaints, complete diversity was lacking because (simplifying slightly) NYW had one member who, like Defendant Starneth LLC, was a citizen of Florida and another who, like Defendant Mammoet USA North, Inc., was a citizen of California. See Joint Letter, New York Wheel Owner LLC , No. 17-CV-4026 (JMF) (S.D.N.Y. Oct. 22, 2020), ECF No. 300, at 1. "Given this overlapping citizenship," counsel conceded, "no portion of 28 USC § 1332 provides jurisdiction ...." Id. As diversity had been the sole basis for subject-matter jurisdiction, the Court was compelled to dismiss the case in its entirety. See Order, New York Wheel Owner LLC , No. 17-CV-4026 (JMF) (S.D.N.Y. Nov. 13, 2020), ECF No. 305.²

Two days before the 2017 case was actually dismissed, on November 11, 2020, Mammoet Holding and Mammoet USA North filed suit against NY Regional, NYW, and NYW's parent in New York Supreme Court, seeking compensatory damages against NYW and its parent as well as a declaratory judgment that Mammoet Holding has no guarantor liability to NY Regional. See ECF No. 21-1, at 47-48. Later that same day, NY Regional filed this lawsuit against Mammoet Holding. ECF No. 21 ("Jemison Decl."), ¶ 4. According to the Complaint, NY Regional is an investment partnership, with a general partner ("a Delaware limited liability company whose sole member is a citizen of New York") and an indeterminate number of individual limited partners. ECF No. 1 ("Compl."), ¶ 11. The limited partners are "foreign citizens," but "certain of" them "are green card holders domiciled in Texas." Id. ¶¶ 11, 14 n.3. Mammoet Holding (or, more precisely, an entity into which Mammoet Holding merged sometime after 2017) is a Texas corporation with its principal offices in Texas. Id. ¶ 13. To the extent relevant here, the Complaint alleges that the Court has subject-matter jurisdiction "because this is an action between ‘citizens of different states’ (New York and Texas), ‘in which citizens or subjects of a foreign state’ (NY Regional's limited partners) ‘are additional parties’ .... 28 U.S.C. § 1332(a)(3)." Id. ¶ 14. "Alternatively," it continues, the Court has subject-matter jurisdiction "because this is an action between (a) ‘citizens of different states’ (New York and Texas), 28 U.S.C. § 1332(a)(1), and (b) ‘citizens of a State’ (Texas) and ‘citizens ... of a foreign state’ (NY Regional's limited partners), provided that the green card status of the limited partners residing in Texas is not imputed to NY Regional. 28 U.S.C. § 1332(a)(2)." Id. (footnote omitted).

DISCUSSION

Subject-matter jurisdiction is "an unwaivable sine qua non for the exercise of federal judicial power." Curley v. Brignoli, Curley & Roberts Assocs. , 915 F.2d 81, 83 (2d Cir. 1990). Indeed, as the parties in this case (and the Court) are painfully aware, "arguments attacking federal jurisdiction" must be considered "whenever they arise," even if the consequences of doing so are "burdensome and costly," and even when doing so would "undermine an expensive and substantially completed litigation." Herrick Co. v. SCS Commc'ns, Inc. , 251 F.3d 315, 322 (2d Cir. 2001). Moreover, because "federal courts are courts of limited jurisdiction and, as such, lack the power to disregard such limits as have been imposed by the Constitution or Congress," Purdue Pharma L.P. v. Kentucky , 704 F.3d 208, 213 (2d Cir. 2013) (internal quotation marks omitted), it is "well established ... that federal jurisdiction is not to be extended beyond the scope permitted by a strict construction of the statute upon which it rests." Kresberg v. Int'l Paper Co. , 149 F.2d 911, 913 (2d Cir. 1945) ; see, e.g. , Healy v. Ratta , 292 U.S. 263, 270, 54 S.Ct. 700, 78 L.Ed. 1248 (1934) ("The policy of the [diversity] statute calls for its strict construction."); see also Romanella v. Hayward , 114 F.3d 15, 16 (2d Cir. 1997) (stating that a court should "strictly construe the diversity statute ... even where the Congressional rationale for not providing for diversity jurisdiction is ... [not] clear").

Here, it is undisputed that the only potential source of federal subject-matter jurisdiction is diversity of citizenship pursuant to Section 1332(a). See Compl. ¶ 14. As relevant, Section 1332(a) provides for jurisdiction over "all civil actions where the matter in controversy exceeds" a certain sum (clearly met here) "and is between":

(1) citizens of different States;

(2) citizens of a State and citizens or subjects of a foreign state, except that the district courts shall not have original jurisdiction under this subsection of an action between citizens of a State and citizens or subjects of a foreign state who are lawfully admitted for permanent residence in the United States and are domiciled in the same State;

(3) citizens of different States and in which citizens or subjects of a foreign state are additional parties; and

(4) a foreign state ... as plaintiff and citizens of a State or of different States.

28 U.S.C. § 1332(a). NY Regional relies primarily on Section 1332(a)(3), contending that the case is between "citizens of different States" (New York and Texas) "in which citizens or subjects of a foreign state"—namely, NY Regional's limited partners—"are additional parties." ECF No. 22 ("Pl.’s Opp'n"), at 1-9; see also Compl. ¶ 14. "In the alternative," it contends that diversity exists "under a combination of Sections 1332(a)(1) and (a)(2)." Pl.’s Opp'n 1; see id. at 9-17; see also Compl. ¶ 14. That is, Section 1332(a)(1) applies insofar as NY Regional "is a New York citizen (by virtue of its general partner)," and Section 1332(a)(2) applies insofar as NY Regional is a foreign citizen (by virtue of its foreign partners). Pl.’s Opp'n 10. Taken together, NY Regional asserts, the two subsections "account for the citizenship of all its partners." Id. The...