DAVID HITTNER, District Judge.
Pending before the Court are Defendant Enterprise Products Operating LLC's Motion to Dismiss for Lack of Subject Matter Jurisdiction and Defendant Enterprise Products Operating LLC's Motion to Dismiss First Amended Complaint for Lack of Subject Matter Jurisdiction. On January 13, 2014, the Court conducted a hearing and heard arguments from all parties related to Defendant's motions to dismiss. Having considered the arguments in open court of counsel, motions, submissions, and applicable law, the Court determines that the motions should be granted.
This declaratory judgment action arises from the alleged breach of an indemnification agreement between Plaintiff Trafigura AG ("Trafigura") and Defendant Enterprise Products Operating LLC ("Enterprise"). Trafigura alleges that it has been made a party to an ongoing arbitration by a third-party vessel owner, Partrederiet Clipper Sirius (the "Owner"), in which the Owner is asserting claims based on allegations that certain cargo provided by Enterprise and shipped by Trafigura was contaminated prior to transit, resulting in
On September 13, 2013, Trafigura commenced the present action in this Court, seeking a declaratory judgment that: (1) Trafigura is entitled to indemnification from Enterprise; and (2) Enterprise is in breach of its contractual obligations for refusing to defend and indemnify Trafigura. On October 4, 2013, Trafigura filed its first amended complaint. The amended complaint states that this Court is vested with diversity jurisdiction pursuant to 28 U.S.C. § 1332. The jurisdictional facts pleaded by Trafigura establish that Trafigura is a company incorporated in Switzerland and Enterprise is a Texas limited liability company with its principal place of business in Houston, Texas. Enterprise has two members — Enterprise Products OLPGP, Inc. ("EPO") and Enterprise Products Partners, L.P. (NYSE: EPD) ("EPD"). EPD is a master limited partnership ("MLP"),
Enterprise now moves to dismiss this case for lack of subject matter jurisdiction on the grounds that complete diversity is lacking.
Federal district courts possess original jurisdiction over any civil action where the matter in controversy exceeds $75,000 and is between citizens of different states. 28 U.S.C. § 1332(a). Diversity jurisdiction requires complete diversity of citizenship between all plaintiffs and all
Motions filed pursuant to Federal Rule of Civil Procedure 12(b)(1) allow a party to challenge the subject matter jurisdiction of the district court. FED.R.CIV.P. 12(b)(1). "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case." Home Builders Ass'n of Miss., Inc. v. City of Madison, Miss., 143 F.3d 1006, 1010 (5th Cir.1998). "Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Ramming v. United States, 281 F.3d 158, 161 (5th Cir.2001) (per curiam). "The burden of proof for a Rule 12(b)(1) motion to dismiss is on the party asserting jurisdiction." Id.
The issue before this Court is whether the citizenship of a master limited partnership, an unincorporated entity, is determined by the citizenship of each of its constituent members, or, like a corporation, by its state of organization and the state in which its principal place of business is located. Enterprise argues that the citizenship of all unincorporated entities, including master limited partnerships, is determined by the citizenship of each of its underlying members, regardless of the entity's state of organization or its principal place of business. Trafigura contends that because a master limited partnership is publicly traded it is more like a corporation than a partnership, and it should therefore get corporate treatment for jurisdictional purposes, such that its citizenship is determined solely by reference to its state of incorporation and principle place of business.
The question of whether an MLP should be given jurisdictional citizenship tantamount to a corporation is an issue that has not yet been directly addressed by the Fifth Circuit. However, Supreme Court jurisprudence has firmly established the general rule of law, germane to this case, that the citizenship of all unincorporated entities is determined by the citizenship of the entity's individual members. Carden v. Arkoma Assocs., 494 U.S. 185, 189-90, 195-96, 110 S.Ct. 1015, 108 L.Ed.2d 157 (1990) (citing United Steelworkers of Am. v. R.H. Bouligny, Inc., 382 U.S. 145, 151, 86 S.Ct. 272, 15 L.Ed.2d 217 (1965); Great S. Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 456-57, 20 S.Ct. 690, 44 L.Ed. 842 (1900); Chapman v. Barney, 129 U.S. 677, 682, 9 S.Ct. 426, 32 L.Ed. 800 (1889)). In Carden v. Arkoma Associates, the Supreme Court considered, in a suit
Only once has the Supreme Court recognized an exception to this general rule. In Puerto Rico v. Russell & Co., the Supreme Court held that an entity known as a sociedad en comandita, created under the civil law of Puerto Rico, was a citizen of Puerto Rico for purposes of determining diversity jurisdiction. Puerto Rico v. Russell & Co., 288 U.S. 476, 482, 53 S.Ct. 447, 77 L.Ed. 903 (1933). The Court reasoned that the sociedad's juridical "personality is so complete in contemplation of the law of Puerto Rico [there is] no adequate reason for holding that the sociedad has a different status for purposes of federal jurisdiction than a corporation organized under that law." Id. (emphasis added).
Enterprise urges this Court to apply Carden as a rigid, bright-line rule. Trafigura, on the contrary, points to the single exception recognized by Russell and argues that, by analogy, the principles and policies that underlie diversity of citizenship strongly weigh in favor of holding that an MLP is a legal person subject to the same citizenship scrutiny as corporations. Because EPD itself has nearly one billion common units outstanding, Trafigura argues, EPD, and by extension practically any MLP in general, must be considered more than the sum of its parts, as the sum of its parts are thousands of individual investors regularly entering and exiting the partnership, most with little participation in the management or operations of the business. Trafigura further argues that fundamental fairness dictates its interpretation of Carden — because MLPs often have unitholders in many, if not all states, as well as numerous foreign countries, measuring an MLP's citizenship based on its individual unitholders would practically divest all MLPs of diversity jurisdiction. In short, Trafigura asserts that an MLP is not a real partnership and should not be treated as such.
Similar arguments to those now raised by Trafigura were considered and rejected by the Supreme Court in Carden. The Court noted that while the language of Russell might be read to "reflec[t] the Supreme Court's willingness to look beyond the incorporated/unincorporated dichotomy and to study the [entity's] internal organization," this argument had been specifically rejected in prior Supreme Court decisions, and the Supreme Court in Carden was flatly unwilling to depart from that jurisprudential consistency. Carden, 494 U.S. at 190, 110 S.Ct. 1015 (first alteration in original) (citing R.H. Bouligny, Inc., 382 U.S. at 151, 86 S.Ct. 272). As to Trafigura's fundamental fairness argument, the Supreme Court acknowledged that the law in this area "can validly be characterized as technical, precedent-bound, and unresponsive to policy considerations raised by the changing realities of business organization." Id. at 196, 110 S.Ct. 1015. Nevertheless, despite the
Having resolved the issue of determining an MLP's citizenship, this Court next turns to the amended complaint to determine whether the jurisdictional facts are sufficiently pleaded to establish federal diversity jurisdiction. Because Trafigura seeks to establish federal jurisdiction, it has the burden to "distinctly and affirmatively allege[] the citizenship of the parties." Howery v. Allstate Ins. Co., 243 F.3d 912, 919 (5th Cir.2001) (alteration in original) (internal quotation marks omitted).
The extent of the first amended complaint's jurisdictional allegations are that Trafigura is incorporated in Switzerland, Enterprise is a Texas limited liability company with its principal place of business in Houston, and the amount in controversy exceeds the sum of $75,000. Because Enterprise is an LLC, its citizenship is determined by the citizenship of its individual members. Harvey, 542 F.3d at 1079-80. However, the first amended complaint does not identify the citizenship of either of Enterprises' two members — EPO and EPD. That omission alone warrants dismissal of this case. Moreover, repleading could not remedy this deficiency.
Based on all of the foregoing, the Court hereby