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P.O. Box 251551
Woodbury, Minnesota 55125-6551
   

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 mdouglas@injurylawtwincities.com

 

In re Arbitration between Wells Fargo Bank, N.A. and WMR e-PIN, LLC, e-Banc, LLC, and Synoran, Inc.: US District Court : CIVIL PROCEDURE - where is LLC citizen for diversity jurisdiction purposes

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Marquette Business Credit, Inc.,
Plaintiff,
v. Civil No. 08-1383 (JNE/FLN)
ORDER
International Wood, Inc., Sonak
Management LLC, Edward G. Gleason,
and Irwin A. Engelman,
Defendants.
This case is before the Court on the request of Marquette Business Credit, Inc.
(Marquette), to reschedule a motion hearing from January 30, 2009, to December 17, 2008, and
for an order requiring Defendants to file reply briefs instead of new memoranda. For the reasons
set forth below, the Court denies the request.
Asserting diversity jurisdiction, Marquette brought this action against International
Wood, LLC (International Wood),1 Sonak Management LLC (Sonak), Edward G. Gleason, and
Irwin A. Engelman. On July 14, 2008, Defendants filed Motions to Dismiss for lack of personal
jurisdiction and improper venue. On August 19, Defendants amended their Motions to Dismiss
to add lack of subject matter jurisdiction as a basis for dismissal. The motion hearing was
scheduled for November 21. Defendants filed memoranda in support of their motions on
October 7, and Marquette responded on October 31. On November 4, defendants International
Wood, Sonak, and Gleason asked the Court to postpone the November 21 motion hearing to
1 Although the caption identifies International Wood as International Wood, Inc., the
Complaint indicates that International Wood is a Delaware limited liability company.
International Wood stated in its Amended Motion to Dismiss that it is misnamed in the caption
and that its proper name is International Wood, LLC.
2
allow for expedited jurisdictional discovery. Engelman joined in the request on November 5,
and Marquette objected to postponement on the same day.
On November 6, the Court noted that the parties had assumed the rules applicable to
citizenship of corporations also applied to limited liability companies, that the rules governing
citizenship of limited liability companies actually differ from those applicable to corporations,
and that Marquettes jurisdictional allegations were deficient. The Court therefore ordered
Marquette to establish the citizenship of Defendants by November 10. Marquette filed an
Amended Complaint on November 6, and Defendants withdrew their Motions to Dismiss on
November 10. Defendants filed new motions to dismiss for lack of personal jurisdiction and
improper venue on November 20, which are scheduled for hearing on January 30, 2009.
Marquette now asks the Court to reschedule the January 30 motion hearing to December
17, 2008. Marquette observes that the opening and response briefs filed in connection with
Defendants August 19 motions address personal jurisdiction and venue and asks the Court to
order Defendants to file their reply briefs relating to the August 19 motions rather than rebriefing
the personal jurisdiction and venue arguments. Defendants International Wood, Sonak,
and Gleason reply that they would prefer to present a streamlined brief focused on personal
jurisdiction and venue rather than asking the Court to determine which facts and legal arguments
in the briefs filed in connection with the August 19 motions are germane to the November 20
motions.
Federal Rule of Civil Procedure 15(a)(3) provides that a party must respond to an
amended pleading within the time remaining to respond to the original pleading or within ten
days after service of the amended pleading, whichever is later. Defendants timely responded to
Marquettes Amended Complaint by filing their Motions to Dismiss on November 20. See Fed.
3
R. Civ. P. 6(a)(1)-(2). The Court appreciates Marquettes concerns regarding delay, but much of
the delay to date was occasioned by the parties wasted effort stemming from their
misapprehension of the applicable law. Nevertheless, the Court concludes that retaining the
January 30 hearing date and allowing new briefing focused on personal jurisdiction and venue
will facilitate the just determination of this action.
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. Marquettes request to reschedule the January 30, 2009, hearing and for an
order requiring Defendants to file reply briefs instead of new memoranda
[Docket No. 73] is DENIED.
Dated: November 26, 2008
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge

-------------------------------------

1
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
In re Arbitration Between
Wells Fargo Bank, N.A.,
Claimant,
and Civil No. 08-5472 (JNE/FLN)
ORDER
WMR e-PIN, LLC, e-Banc, LLC, and
Synoran, Inc.,
Respondents.
Wells Fargo Bank, N.A., petitions the Court to correct an arbitration award and to
confirm the award as corrected. Respondents seek to vacate or modify the arbitration award.
Pursuant to 28 U.S.C. 636(b)(1)(A)-(C) (2006), the Court refers Wells Fargo Banks petition to
correct the award and to confirm the award as corrected [Docket No. 1] and Respondents
motions to vacate or modify [Docket Nos. 5, 7 & 15] to the Honorable Franklin L. Noel, United
States Magistrate Judge. Counsel are directed to contact Cathy Orlando, Magistrate Judge
Noels Judicial Assistant, to obtain a hearing date. The hearing before the undersigned on
January 13, 2009, at 2:00 p.m. is stricken.
The Courts review of Wells Fargo Banks petition reveals that Wells Fargo Banks
jurisdictional allegations are insufficient.1 Wells Fargo Bank asserts that jurisdiction exists
based on the Federal Arbitration Act and diversity of citizenship. The Federal Arbitration Act,
however, does not confer subject matter jurisdiction on federal courts. Advance Am. Servicing of
Ark., Inc. v. McGinnis, 526 F.3d 1170, 1173 (8th Cir. 2008) (The Federal Arbitration Act does
not create independent federal question jurisdiction.); Carter v. Health Net of Cal., Inc., 374
1 Respondents motions do not include any jurisdictional allegations.
2
F.3d 830, 833 (9th Cir. 2004) (It is well-established that even when a petition is brought under
the Federal Arbitration Act . . . a petitioner seeking to confirm or vacate an arbitration award in
federal court must establish an independent basis for federal jurisdiction.); Specialty Healthcare
Mgmt., Inc. v. St. Mary Parish Hosp., 220 F.3d 650, 653 n.5 (5th Cir. 2000) (Since the [Federal
Arbitration Act] does not create federal jurisdiction, confirmation under 9 requires an
independent basis for federal jurisdiction . . . .). The Court turns to Wells Fargo Banks
assertion of diversity jurisdiction.
Under 28 U.S.C. 1332 (2006), a federal district court has original jurisdiction of a civil
action where the matter in controversy exceeds ,000, exclusive of interest and costs, and is
between citizens of different states. 28 U.S.C. 1332(a)(1). Wells Fargo Bank asserts that it is a
national banking association headquartered in California; that WMR e-PIN, LLC, is an Ohio
limited liability company with its principal place of business in Ohio; that e-Banc, LLC, is an
Ohio limited liability company with its principal place of business in Ohio; that Synoran, Inc., is
a Delaware corporation with its principal place of business in Ohio; and that the amount in
controversy exceeds ,000. Wells Fargo Bank properly alleges its citizenship, see Wachovia
Bank v. Schmidt, 546 U.S. 303, 307 (2006), and that of Synoran, Inc., see 28 U.S.C.
1332(c)(1), but does not properly allege the citizenship of the limited liability companies. For
purposes of diversity jurisdiction, an LLCs citizenship is that of its members. GMAC
Commercial Credit LLC v. Dillard Dept Stores, Inc., 357 F.3d 827, 829 (8th Cir. 2004). Having
failed to allege the citizenship of the members of WMR e-PIN, LLC, and e-Banc, LLC, Wells
Fargo Bank has not satisfied its burden to establish subject matter jurisdiction. See Sheehan v.
Gustafson, 967 F.2d 1214, 1215 (8th Cir. 1992). Unless Wells Fargo Bank establishes the
citizenship of WMR e-PIN, LLC, and e-Banc, LLC, by 5:00 p.m. on Wednesday, December 3,
3
2008, the Court will dismiss this action for lack of subject matter jurisdiction. Wells Fargo
Banks submission regarding jurisdiction shall be made directly to the undersigned; it is the
petition and motions to correct, confirm, vacate, or modify the arbitration award which are
referred to Magistrate Judge Noel.2
Based on the files, records, and proceedings herein, and for the reasons stated above, IT
IS ORDERED THAT:
1. Wells Fargo Banks petition to correct the award and to confirm the award
as corrected [Docket No. 1] and Respondents motions to vacate or modify
[Docket Nos. 5, 7 & 15] are referred to Magistrate Judge Noel. Counsel
shall contact Cathy Orlando to schedule a hearing before Magistrate Judge
Noel.
2. Wells Fargo Bank shall establish the citizenship of WMR e-PIN, LLC,
and e-Banc, LLC, by 5:00 p.m. on Wednesday, December 3, 2008.
Dated: November 26, 2008
s/ Joan N. Ericksen
JOAN N. ERICKSEN
United States District Judge
2 Synorans corporate status is apparently in dispute. In its Petition, Wells Fargo Bank
asserts that Synoran is a corporation. [Docket No. 1] In its motion to vacate or modify, Synoran
identifies itself as Synoran, Inc. [Docket No. 5] In a subsequent letter to the Court, Synoran
identifies itself as Synoran, LLC. [Docket No. 15] Upon receipt of Wells Fargo Banks
submission regarding jurisdiction, the Court will decide what proceedings to conduct to resolve
the dispute regarding Synorans corporate status and its effect on Synorans citizenship. See
Barclay Square Props. v. Midwest Fed. Sav. & Loan Assn of Minneapolis, 893 F.2d 968, 969-70
(8th Cir. 1990).
 

 
 
 

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