contract review gavelAccording to a March 16, 2020, decision by the U.S. District Judge Brian M. Cogan of the Eastern District of New York, the answer is yes. In United States Liability Ins. Co. v. M Remodeling, 2020 WL 1244658 (E.D.N.Y. March 16, 2020), the court dismissed an insurance subrogation action against Case Plumbing LLC and three other corporate defendants because the insurer failed to properly establish complete diversity of citizenship of the members of the LLC.

When the insurer, a Pennsylvania corporation, initially filed its complaint in federal court, the insurer pled only that the LLC was a New York limited liability corporation with a New York principal place of business, which is all that is necessary for pleading the citizenship of a corporation. The court, however, correctly determined that this basic jurisdictional allegation failed to satisfy the requirements of federal subject matter jurisdiction for a limited liability corporation based on diversity of citizenship (28 U.S.C. 1332(a)), and reminded the plaintiff that for diversity jurisdiction purposes, the citizenship of a LLC is determined by that of each of its members. The court thus ordered the insurer to show cause why the case should not be dismissed for lack of subject matter jurisdiction.

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