United States District Court, S.D. Alabama, Southern Division
WILLIAM H. STEELE UNITED STATES DISTRICT JUDGE
matter is before the Court on its sua sponte review
of its subject matter jurisdiction over this action, which
was recently reassigned to its docket. The original defendant
(“Mid-South”) removed in November 2018 on the
basis of diversity, (Doc. 1), and the amount in controversy
plainly exceeds $75, 000. (Doc. 1-1 at 7). The Court,
however, questioned the citizenship of Mid-South, since it
was described as having a single member, who died a decade
before suit was filed. (Doc. 20 at 2).
after removal, the plaintiff and Mid-South jointly moved to
substitute Salt Solutions, LLC (“Salt”), a
Mississippi citizen, as the party defendant, on the grounds
that Salt had purchased the assets of Mid-South in 2009 and
that Mid-South was not in operation at the relevant time.
(Doc. 2). That motion was granted by the Magistrate Judge.
(Doc. 3). As the Court noted, this post-removal change of
parties did not resolve the jurisdictional question, because
jurisdiction must exist at the moment of removal and cannot
initially exist at a later point in time; thus, Salt could
remain in federal court only by demonstrating that Mid-South
was a citizen of a state other than Louisiana or Texas (the
plaintiff's citizenship) at the time of removal. (Doc. 20
at 2). The Court afforded Salt a second opportunity to make
the necessary showing. (Id.).
has presented records from the office of the Mississippi
Secretary of State reflecting that Alan Salt became the sole
member of Mid-South in June 2009. (Doc. 21-3 at 11). Mr. Salt
has been shown to be a longstanding citizen of Mississippi.
(Doc. 2 at 1 n.1; Doc. 21-2 at 4). Mid-South thus was a
citizen of Mississippi as of June 2009 for purposes of
gauging diversity jurisdiction. The question is whether it
remained such in November 2018.
acknowledges, (Doc. 21 at 3), Mid-South was administratively
dissolved by the office of the Mississippi Secretary of State
for failing to file its 2011 annual report. (Doc. 21-3 at
13-14). The question is whether Mid-South can be considered a
citizen of Mississippi in November 2018 despite this
dissolution of a perpetual LLC does not destroy its
citizenship for diversity purposes if the LLC continues to
exist under state law after administrative
dissolution.” Go Fast Sports & Beverage Co. v.
Buckner, 2008 WL 2852626 at *2 (D. Colo. 2008). Thus,
where the state by statute expressly provides that an
administratively dissolved LLC “continues its
existence” but with certain restrictions on its
activities, the entity remains a citizen of the state for
purposes of determining diversity jurisdiction. Id.;
accord Tri-County Metropolitan Transportation v. Butler
Block, LLC, 337 Fed.Appx. 708, 708-09 (9th
Mississippi law, the Secretary of State, following certain
procedures, may administratively dissolve an LLC for failure
to deliver its annual report within a specified time. Miss.
Code § 79-29-821(b). Unlike in Go Fast and
Butler Block, however, the Mississippi Code does not
expressly state that an administratively dissolved LLC
continues to exist.
Mississippi Code does state that administrative dissolution:
(1) does not terminate the registered agent's authority;
(2) does not impair the validity of the LLC's contracts
and other agreements or acts; (3) does not prevent the LLC
from defending legal actions; and (4) does not make a member,
manager or officer liable for the LLC's obligations.
Id. § 79-29-831(1)-(3). Substantively
equivalent consequences follow the administrative dissolution
of a Mississippi corporation. Id. §
79-4-14.21(d)-(f). Such a corporation “continue[s] to
exist regarding agreements established prior to
dissolution and for the purposes of defending the corporation
in actions stemming from such agreements.” Columbus
Cheer Co. v. City of Columbus, 155 So.3d 744, 746 (Miss.
2014) (emphasis in original).
the parallel language of the provisions governing
administratively dissolved corporations and administratively
dissolved LLCs, the Court concludes that Mid-South continued
to exist under Mississippi law (and thus to be a Mississippi
citizen for purposes of establishing diversity jurisdiction)
only with respect to agreements it entered prior to its
dissolution. Since Mid-South engaged in no operations after
2009, (Doc. 2 at 1), the agreement on which the plaintiff
bases its complaint would have to have been entered, with
Mid-South, prior to 2010.
complaint is based on an alleged agreement for delivery of
scaffolding. (Doc. 1-1 at 3). The complaint asserts the
agreement was reached in April 2018, which is clearly
incorrect, since the first unpaid invoice dates from
September 2016. (Id. at 6, 15). The
plaintiff's statement in the parties' Rule 26(f)
report clarifies that the agreement on which suit is based
was reached with Salt (not Mid-South) in 2015. (Doc. 13 at
3). Salt offers no contrary evidence or even representation.
Under Mississippi law, therefore, Mid-South does not continue
to exist for purposes of this lawsuit. It thus lacks any
jurisdiction requires that suit be “between …
citizens of different States.” 28 U.S.C. §
1332(a)(1). Because Mid-South has no citizenship for purposes
of diversity jurisdiction, this action as it stood at the
time of removal was not “between citizens of different
states.” See also Hart v. Yamaha-Parts
Distributors, Inc., 787 F.2d 1468, 1469-70
(11th Cir. 1986) (in determining diversity for
removal jurisdiction, non-existent defendants are to be
ignored); Davis v. OneBeacon Insurance Group, 721
F.Supp.2d 329, 337 (D.N.J. 2010) (“‘[N]or is the
citizenship of a non-existent entity considered for purposes
of complete diversity of citizenship.'”) (quoting
Newsom v. Caliber Auto Transfer, Inc., 2009 WL
4506298 at *2 (S.D. Ill. 2009)); Susman v. Goodyear Tire
& Rubber Co., 2018 WL 1243733 at *8 (E.D. Pa. 2018)
argues that diversity should be measured by its citizenship
because it “is the proper defendant in this
matter.” (Doc. 21 at 1). And so it appears to be, but
it was not the defendant when the action was removed. Nor was
removal accomplished by Salt; on the contrary, Mid-South is
repeatedly identified as the entity seeking removal, without
any mention of Salt. (Doc. 1). Had Salt obtained substitution
in state court and then removed, the situation (and the
result) would be different, but that did not happen.
Court has done its best to determine Mississippi law as it
affects the jurisdictional issue, but “the burden is on
the party who sought removal to demonstrate that federal
jurisdiction exists.” Friedman v. New York Life
Insurance Co., 410 F.3d 1350, 1353 (11th Cir.
2005). Thus, to the extent doubt remains as to that law,
“all doubts about jurisdiction should be resolved in
favor of remand to state court.” University of
South Alabama v. American Tobacco Co., 168 F.3d 405, 411
(11th Cir. 1999).
reasons set forth above, this action is
remanded to the Circuit Court of Mobile