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Fratelli Cosulich Unipessoal, S.A. v. Specialty Fuels Bunkering, LLC

United States District Court, S.D. Alabama, Southern Division

June 11, 2014



KRISTI K. DuBOSE, District Judge.

This action is before the Court on the Second Motion for Leave to File Second Amended Complaint ("Second Motion to Amend") (Doc. 27) filed by Plaintiff Fratelli Cosulich Unipessoal S.A. f/k/a Fratelli Cosulich Consultadoria e Participacoes Unipessoal, LDA ("Cosulich"), the objections to the motion (Doc. 28) filed by Defendant Specialty Fuels BTU, LLC ("BTU"), and Cosulich's reply to those objections (Doc. 29). Upon consideration, the Court finds that the Second Motion to Amend (Doc. 27) is due to be GRANTED.

By way of background, the Court previously denied Cosulich's first Motion for Leave to Amend Complaint (Doc. 10), determining for several reasons that both the original Complaint (Doc. 1) and Cosulich's first proposed amended complaint (Doc. 10, Ex. 1) failed to allege sufficient facts demonstrating the requisite diversity of citizenship by which this Court could exercise subject matter jurisdiction over this action under 28 U.S.C. § 1332, the only basis for jurisdiction Cosulich asserts. (Doc. 15). Cosulich was directed to file a second motion to amend its complaint, attaching a second proposed amended complaint "that properly alleges sufficient facts to establish diversity jurisdiction, or some other basis for subject-matter jurisdiction, over this action." (Id. at 7). After being granted several extensions, Cosulich timely filed its Second Motion to Amend (Doc. 27), which is fully briefed (Docs. 28, 29) and ripe for adjudication.

I. Subject Matter Jurisdiction

"[B]ecause a federal court is powerless to act beyond its statutory grant of subject matter jurisdiction, " Smith v. GTE Corp. , 236 F.3d 1292, 1299 (11th Cir. 2001), the Court must first determine whether Cosulich has pled sufficient facts in its Second Motion to Amend and attached second proposed amended complaint to establish subject matter jurisdiction over this action. See Lovern v. Edwards , 190 F.3d 648, 654 (4th Cir. 1999) ("It is elementary that the burden is on the party asserting jurisdiction to demonstrate that jurisdiction does, in fact, exist."); Taylor v. Appleton , 30 F.3d 1365, 1367 (11th Cir. 1994) ("The pleader must affirmatively allege facts demonstrating the existence of jurisdiction...").

Cosulich continues to assert diversity under § 1332 as the sole basis for the Court's jurisdiction over this action. Regarding its own citizenship, Cosulich first alleges that it is a "Sociedade Anomima, " or "S.A., " organized under Portuguese law, and that it should be treated as a corporation for purposes of diversity. Cosulich represents that, under Portuguese law, the designation "S.A." signifies an entity as a "stock corporation company, " which is distinct from the designation "Sociedade Comandita por Accoes, " or a "partnership by shares." Cosulich cites to a number of characteristics that it claims make it equivalent to a corporation under United States law, such as: its ownership is represented by shares; shareholders are free from personal liability and their liability is limited to the shares to which they have subscribed; it operates under Articles of Association establishing a Board of Directors; its name must be registered with the National Registration of Portuguese Companies and be followed by the designation "S.A." If Cosulich is treated as a corporation for purposes of diversity, then it would be a citizen of Portugal, as it was organized under Portuguese law and has its principal place of business there. See (Doc. 27-1 at 1-2, ¶ 1; Doc. 27 at 5-7); § 1332(c)(1) ("For the purposes of this section... a corporation shall be deemed to be a citizen of every State and foreign state by which it has been incorporated and of the State or foreign state where it has its principal place of business...").

Cosulich asserts in the alternative that, if it is to be treated as an unincorporated entity for purposes of diversity, then it is a citizen of Italy, as its sole shareholder is Fratelli Cosulich S.p.A., an Italian corporation with its principal place of business in Italy.[1] See (Doc. 27 at 7-8); Iraola & CIA, S.A. v. Kimberly-Clark Corp. , 232 F.3d 854, 860 (11th Cir. 2000) ("[B]ecause unincorporated entities are attributed the citizenship of their owners, that rule would mean that Geo Med is an Argentinian entity because its owner, Alpert, is Argentinian." (citation and footnote omitted)).

For purposes of establishing diversity jurisdiction, the Court need not determine whether Cosulich is to be treated as a corporation (and thus a citizen of Portugal) or unincorporated entity (and thus a citizen of Italy), as complete diversity of citizenship has been alleged regardless, see infra.

"It has long been the case that the jurisdiction of the court depends upon the state of things at the time of the action brought... It measures all challenges to subject-matter jurisdiction premised upon diversity of citizenship against the state of facts that existed at the time of filing..." Grupo Dataflux v. Atlas Global Grp., L.P. , 541 U.S. 567, 570-71 (2004) (quotation omitted). The original Complaint asserted claims against two Defendants, BTU and Specialty Fuels Bunkering, LLC ("Bunkering"), both Alabama limited liability companies (LLCs). (Doc. 1). For purposes of assessing diversity of citizenship, "a limited liability company is a citizen of any state of which a member of the company is a citizen." Rolling Greens, MHP, L.P. v. Comcast SCH Holdings, L.L.C., 374 F.3d 1020, 1022-23 (11th Cir. 2004) ( per curiam ). Accord Mallory & Evans Contractors & Engineers, LLC v. Tuskegee Univ., 663 F.3d 1304, 1305 (11th Cir. 2011) ( per curiam ).

Cosulich's proposed second amended complaint ("the PSAC") (Docs. XX-X-XX-X) alleges that, at the time this action was commenced on November 6, 2013, BTU had one member, F. Javier Brito ("Brito"), a natural person who is a citizen of the United States and domiciled in Alabama. (Doc. 27-1 at 5, ¶ 3). Bunkering is alleged to have had two members at the time this action was commenced: Brito and CCC Holdings, LLC, an Alabama LLC whose sole member is Scott Cleveland, a United States citizen domiciled in Alabama. (Id. at 3-4, ¶ 2). Thus, at the time this action commenced, BTU and Bunkering were citizens of Alabama. McCormick v. Aderholt, 293 F.3d 1254, 1257-58 (11th Cir. 2002) ( per curiam ) ("Citizenship is equivalent to domicile' for purposes of diversity jurisdiction. A person's domicile is the place of his true, fixed, and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom." (citations, quotations, and footnote omitted)). Based on these allegations, unchallenged by the Defendants, complete diversity of citizenship existed at the time this action commenced between Cosulich (a citizen of either Portugal or Italy) and Defendants Bunkering and BTU (both Alabama citizens). See, e.g., Vermeulen v. Renault, U.S.A., Inc. , 985 F.2d 1534, 1542 (11th Cir. 1993) ("For diversity jurisdiction under 28 U.S.C. § 1332, all defendants must be diverse from all plaintiffs."). As the Court has already determined (see Doc. 15 at 2, n.2), the original Complaint also alleged sufficient facts establishing that the amount in controversy in this action exceeds $75, 000, exclusive of interests and costs. Thus, Cosulich's allegations establish that the Court had diversity jurisdiction over this action at the time it was commenced. See § 1332(a)(2) ("The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between 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..."); 28 U.S.C. § 1653 ("Defective allegations of jurisdiction may be amended, upon terms, in the trial or appellate courts.").

The PSAC retains BTU as a defendant, deletes Bunkering as a defendant, and adds Brito and Bunkers International Corporation ("BIC") as defendants. As has been established, see supra, Plaintiff Cosulich is a citizen of either Portugal or Italy, while BTU and Brito are citizens of Alabama. BIC is alleged to be incorporated under the laws of Florida and to have its principal place of business in Florida, thus making BIC a Florida citizen. See § 1332(c)(1). As such, complete diversity of citizenship exists on the face of the PSAC. Moreover, the PSAC also alleges sufficient facts establishing that the amount in controversy in this action exceeds $75, 000, exclusive of interests and costs. Based on these allegations, unchallenged by the Defendants, the PSAC does not deprive the Court of diversity jurisdiction under § 1332(a)(2).

II. Propriety of Amendment under Fed.R.Civ.P. 15(a)

Federal Rule of Civil Procedure 15(a) provides, in relevant part, as follows:

(1) Amending as a Matter of Course. A party may amend its pleading once as a matter of course within:
(A) 21 days after serving it, or
(B) if the pleading is one to which a responsive pleading is required, 21 days after service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f), whichever is earlier.
(2) Other Amendments. In all other cases, a party may amend its pleading only with the opposing party's written consent or the court's leave. The court should freely give leave when justice so requires.

Bunkering has not filed an answer or a motion under Federal Rule of Civil Procedure 12(b), (e), or (f). As such, Cosulich can still amend its Complaint once as a matter of course against Bunkering. See Arthur R. Miller & Mary Kay Kane, 6 Fed. Prac. & Proc. Civ. § 1481 (3d ed.) ("[I]f only some defendants file responsive pleadings, plaintiff still should be governed by the 21-day amendment period in Rule 15(a)(1)(A) for pleading amendments regarding the nonresponding defendants.") (addressing Rule 15(a)(1) after 2009 amendment); Williams v. Bd. of Regents of Univ. Sys. of Ga. , 477 F.3d 1282, 1291 (11th Cir. 2007) ("If the case has more than one defendant, and not all have filed responsive pleadings, the plaintiff may amend the complaint as a matter of course with regard to those defendants that have yet to answer." (citing Brewer-Giorgio v. Producers Video, Inc. , 216 F.3d 1281, 1284 (11th Cir. 2000), abrogated on other grounds, Reed Elsevier, Inc. v. Muchnick , 559 U.S. 154 (2010)) (addressing Rule 15(a)(1) prior to 2009 amendment). As the PSAC deletes Bunkering as a defendant entirely in this action, Bunkering is no longer a party to this action.[2] See Williams , 477 F.3d at 1292 n.6 ("When the plaintiff has the right to file an amended complaint as a matter of course, []the plain language of Rule 15(a) shows that the court lacks the discretion to reject the amended complaint based on its alleged futility.").

However, BTU filed its Answer on January 7, 2014; thus, the time for Cosulich to amend its Complaint against BTU once as a matter of course has expired. See Fed.R.Civ.P. 15(a)(1)(B).

Once the time period for amending a pleading as of right has expired, Rule 15(a) of the Federal Rules of Civil Procedure, provides amendment "only by leave of court or by written consent of the adverse party." The decision whether to grant leave to amend a complaint is within the sole discretion of the district court. Rule 15(a), however, limits the court's discretion by mandating that "leave shall be freely given when justice so requires." See Halliburton & Assoc. v. Henderson, Few & Co. , 774 F.2d 441 (11th Cir. 1985). There must be a substantial reason to deny a motion to amend. Id . Substantial reasons justifying a denial include "undue delay, bad faith, dilatory motive on the part of the movant, ... undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment." Foman v. Davis , 371 U.S. 178, 182, 83 S.Ct. 227, 9 L.Ed.2d 222 (1962).

Laurie v. Ala. Court of Criminal Appeals, 256 F.3d 1266, 1274 (11th Cir. 2001) ( per curiam ).

Initially, the Court notes that the PSAC is a "shotgun pleading, " as it "incorporate[s] every antecedent allegation by reference into each subsequent claim for relief..." Wagner v. First Horizon Pharm. Corp. , 464 F.3d 1273, 1279 (11th Cir. 2006). The Eleventh Circuit greatly disfavors such pleadings, see, e.g., id. ("[S]hotgun pleadings wreak havoc on the judicial system.' Byrne v. Nezhat , 261 F.3d 1075, 1130 (11th Cir. 2001). Such pleadings divert already stretched judicial resources into disputes that are not structurally prepared to use those resources efficiently."), and has stated that, "[w]hen presented with a shotgun complaint, the district court should order repleading sua sponte. " Ferrell v. Durbin, 311 F.App'x 253, 259 n.8 (11th Cir. 2009) ( per curiam ) (citing Wagner , 464 F.3d at 1280). However, having reviewed the PSAC, the Court does not find it confusing on its face and will not sua sponte deny amendment on this basis.

BTU has objected to the Second Motion to Amend on several grounds (see Doc. 28), with Cosulich filing responses (Doc. 29) to those objections. The ...

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