United States District Court, W.D. Virginia, Roanoke Division
MEMORANDUM OPINION AND ORDER
Elizabeth K. Dillon United States District Judge
Phillip Flagg, Emma Howell, Jordan Romeo, and Evin Ugur (the
Removing Defendants) removed this action from the Circuit
Court of Montgomery County, Virginia, on August 14, 2019,
invoking this court's diversity jurisdiction pursuant to
28 U.S.C. §§ 1332, 1441, and 1446 and noting the
consent of Tree-Sitter 1 and Tree-Sitter 2.
August 16, 2019, the court issued an order to show cause,
noting issues with the removal notice's assertion of
diversity jurisdiction. The court explained in its order that
a limited liability company (LLC) such as plaintiff Mountain
Valley Pipeline (MVP) that is “organized under the laws
of a state is not a corporation and cannot be treated as such
under section 1332 until Congress says otherwise.”
Gen. Tech. Applications, Inc. v. Exro Ltda, 388 F.3d
114, 121 (4th Cir. 2004) (citing GMAC Comm. Credit, LLC
v. Dillard Dep't Stores, Inc., 357 F.3d 827, 829
(8th Cir. 2004)). Rather, an LLC is “an unincorporated
association, akin to a partnership for diversity purposes,
whose citizenship is that of its members.”
Id.; accord Central W.Va. Energy Co., Inc. v.
Mountain State Carbon, LLC, 636 F.3d 101, 103 (4th Cir.
2011). “Thus, an LLC's [and limited
partnership's] members' citizenship must be traced
through however many layers of members there may be.”
Jennings v. HCR ManorCare, Inc., 901 F.Supp.2d 649,
651 (D.S.C. 2012) (citing Gen. Tech. Applications,
Inc., 388 F.3d at 121). The court stated:
This means the Removing Defendants must examine the principal
place of business of the corporate members of MVP, and the
citizenship of all of the LLC members of MVP, and the
citizenship of all of the limited partnership members of MVP.
If those members include corporations or LLCs or limited
partnerships, the tracing through the layers continues.
Because the notice of removal does not specify this level of
analysis, it does not allege sufficient facts to establish
complete diversity of citizenship between the parties.
No. 4, Order to Show Cause 2-3.)
court held a telephonic status conference call on August 19,
2019. During the conference call, defendants admitted that
the court lacked diversity jurisdiction, but requested the
opportunity to amend the notice of removal to state that the
court may exercise federal question jurisdiction. On August
20, 2019, defendants indicated in an email to the court that
they decided not to amend the notice of removal. There being
no basis for subject matter jurisdiction, this matter will be
remanded to the Circuit Court of Montgomery County.
Mountain Valley Pipeline (MVP) requests an award of costs and
attorney's fees. 28 U.S.C. § 1447(c) (“An
order remanding the case may require payment of just costs
and any actual expenses, including attorney fees, incurred as
a result of the removal.”). The standard for awarding
fees under § 1447(c) “should turn on the
reasonableness of the removal.” Martin v. Franklin
Capital Corp., 546 U.S. 132, 141 (2005). “Absent
unusual circumstances, courts may award attorney's fees
under § 1447(c) only where the removing party lacked an
objectively reasonable basis for seeking removal.”
UMLIC Consol., Inc. v. Spectrum Fin. Servs. Corp.,
665 F.Supp.2d 528, 534 (W.D. N.C. 2009) (citing
Martin, 546 U.S. at 141)). “The appropriate
test for awarding fees under § 1447(c) should recognize
the desire to deter removals sought for the purpose of
prolonging litigation and imposing costs on the opposing
party, while not undermining Congress' basic decision to
afford defendants a right to remove as a general
admit that they understand the requirements for determining
the citizenship of an LLC. (Dkt. No. 12-1, Declaration of
Terry C. Frank ¶ 7.) Yet they offer no convincing
explanation for why they did not conduct further
investigation into the citizenship of MVP's members
before deciding to remove this case to federal court.
Defendants note the difficulty of sifting through MVP's
“Russian nesting doll” structure, and that they
were pressed for time. This action was filed in Montgomery
County on August 6, and it was removed to federal court on
August 14. The removal statute allows defendants much more
time than that--thirty days-- to file a notice of removal.
See 28 U.S.C. § 1446(b)(1). Conveniently, this
matter was removed on August 14, one day before an injunction
hearing scheduled for August 15 in Montgomery County. This is
the type of manipulation of the removal process that §
1447(c)'s provision for the award of fees and costs was
meant to deter. Ultimately, the difficulty of determining
MVP's citizenship does not relieve defendants of their
responsibility to conduct an adequate investigation and form
an objectively reasonable basis for the assertion of subject
matter jurisdiction before removal. The court will therefore
award costs and fees under § 1447(c).
requests $7, 355.00 in fees and costs. (Dkt. No. 10-1.)
Defendants challenge certain costs and fees related to
preparing for and traveling to the August 15 hearing in
Christiansburg that was canceled due to the removal of this
case. (See Id. (8/15/19, Prepare for hearing in
Christiansburg, 1.00 hours, $240.00; To Christiansburg for
hearing and return, 4.00 hours, $960.00; Travel to
Christiansburg to advice Circuit Court of removal, $116.00).)
The court agrees that the time spent preparing for the
hearing should not be awarded because that time will still be
useful in the state case. Regarding travel time, defendants
argue that MVP's counsel knew that the matter had been
removed and that the hearing would be canceled. MVP states in
opposition that it only had an unfiled copy of a notice of
removal and could not confirm that the notice of removal had
been filed. The hearing was scheduled in Christiansburg for
9:00 a.m. on August 15, and this court's records indicate
that the notice of removal was filed at 8:48 a.m. on that
same date. Therefore, the court finds that MVP was justified
in traveling to attend the hearing. The court will subtract
the 8/15/19 $240.00 entry for preparation but award the
balance to MVP.
also requests sanctions under Rule 11 of the Federal Rules of
Civil Procedure. The court will not award sanctions under
Rule 11 because MVP did not utilize the safe harbor provision
set forth in Rule 11(c)(2), and there has been no notice and
order to show cause by the court pursuant to Rule 11(c)(3).
defendants move for an extension of time to file an answer.
Given the court's lack of jurisdiction, the court will
not address this motion.
for the reasons discussed herein:
1. MVP's motion to remand (Dkt. No. 6) is GRANTED. MVP is
awarded $7, 155.00 in costs and fees incurred as a ...