United States District Court, W.D. Wisconsin
D. PETERSON, District Judge.
K3 Prop, LLC, procures frac sand for its customers in the
petroleum industry. In March 2017, K3 filed this lawsuit
against defendant GQ Sand, LLC, alleging that it transferred
$930, 000 to GQ to purchase frac sand but that GQ failed to
place any of the money in escrow, as required by the
parties' contract, and failed to deliver the correct
amount of sand. Now pending before the court is GQ's
summary judgment motion. Dkt. 39. But before the court can
consider GQ's motion, it must determine whether it has
subject matter jurisdiction over the action.
courts are courts of limited jurisdiction.”
Int'l Union of Operating Eng'rs, Local 150 v.
Ward, 563 F.3d 276, 280 (7th Cir. 2009). Unless the
party invoking federal jurisdiction establishes complete
diversity of citizenship among the real parties to the
controversy and an amount in controversy exceeding $75, 000,
or raises a federal question, the court must dismiss the case
for lack of jurisdiction. Smart v. Local 702 Int'l
Bhd. of Elec. Workers, 562 F.3d 798, 802 (7th Cir.
2009). Federal courts “have an independent obligation
to determine whether subject-matter jurisdiction exists, even
when no party challenges it.” Hertz Corp. v.
Friend, 559 U.S. 77, 94 (2010). The party invoking
federal jurisdiction bears the burden of establishing that
jurisdiction is proper. Smart, 562 F.3d at 802-03.
invokes this court's subject matter jurisdiction pursuant
to 28 U.S.C. § 1332. It contends that diversity
jurisdiction exists because: (1) the amount in controversy
exceeds $75, 000; and (2) the parties are completely diverse.
The allegations in K3's initial complaint were
insufficient to determine whether diversity jurisdiction
actually exists because K3 failed to allege the names or
citizenships of any of its or GQ's members. See
Dkt. 1. “[T]he citizenship of an LLC is the citizenship
of each of its members.” Camico Mut. Ins. Co. v.
Citizens Bank, 474 F.3d 989, 992 (7th Cir. 2007). The
court allowed K3 to file an amended complaint establishing
subject matter jurisdiction. Dkt. 14. K3 did so, alleging
that K3's sole member is Charles Cody Lyon, a citizen of
Texas, and that GQ's members are Joshua Quisling and Joe
Gargano, both citizens of Wisconsin. Dkt. 16. Those
allegations were sufficient to establish subject matter
jurisdiction at the pleading stage. Dkt. 18.
now, K3 has adduced evidence in opposition to GQ's
summary judgment motion that puts the veracity of K3's
earlier allegations in doubt. A document titled
“Membership Interests Purchase and Sale Agreement,
” dated July 29, 2015, purports to transfer membership
of K3 from Kenneth C. White, III, and Kenneth C. White, Jr.,
to Managed Owners Group, LLC. Jim R. Pierce signed the
document on behalf of Managed Owners Group as its manager.
Dkt. 48-5. The agreement does not mention Charles Cody Lyon.
To further complicate things, Texas public records list
“Ken White” as the director and manager of K3 in
2016. Texas public records list “Chartes
Cody Lyon” as the director and owner of Managed Owners
this case is at the summary judgment stage, the court will
direct K3 to adduce evidence sufficient to determine the
members of K3 and the citizenship of each member. If any
member of K3 is itself a limited liability company, then K3
must adduce evidence of the individual citizenships of each
member of that LLC, as well: “the citizenship of
unincorporated associations must be traced through however
many layers of partners or members there may be.”
Meyerson v. Harrah's E. Chi. Casino, 299 F.3d
616, 617 (7th Cir. 2002). Failure to timely submit evidence
will result in prompt dismissal of this matter for lack of
subject matter jurisdiction with an award of fees and costs
other issue is worth addressing at this point. In opposition
to GQ's summary judgment motion, K3 adduces Lyon's
declaration. Dkt. 48. The court will assume, for the moment,
that Lyon was a member of K3 during the events in question,
and therefore has personal knowledge of the facts included in
his declaration. Even so, for the court to consider
Lyon's declaration at summary judgment, it must be
possible to put the information into an admissible form for
trial. 11 James Wm. Moore et al., Moore's Federal
Practice § 56.91 (3d ed. 2015) (“[T]he
party submitting the material must be able to demonstrate how
it will be possible to introduce the content or substance of
the material at trial.”). Here, GQ claims that Lyon was
recently sentenced to 30 years in prison and may be unable to
testify at trial. Dkt. 62, ¶ 7. The court will order K3
to show that the content of Lyon's declaration would be
admissible at trial. Failure to timely make this showing will
result in the court striking Lyon's declaration and its
Plaintiff K3 Prop, LLC, may have until July 3, 2017, to
adduce evidence sufficient to establish complete diversity of
citizenship among the real parties to the controversy for
purposes of determining subject matter jurisdiction under 28
U.S.C. § 1332.
Failure to timely submit evidence will result in prompt
dismissal of this matter for lack of subject matter
Plaintiff may have until July 3, 2017, to show cause as to
why the court should not strike the Charles Cody Lyon
declaration and its attachments, Dkt. 48, as inadmissible