United States District Court, D. Montana, Great Falls Division
JAIME [sic] DURBIN individually, and as conservator for his mother, JOAN DURBIN, Plaintiff,
Welcov Healthcare, LLC, Lewiston Healthcare #2, LLC d/b/a The Villa Assisted Living at Valle Vista, Defendants,
MORRIS, UNITED STATES DISTRICT COURT JUDGE.
Lewiston Health Care #2, LLC (“LHC”) has filed a
motion to dismiss the Fourth Amended Complaint filed by
Plaintiff Jaime Durbin (“Durbin”) based on a lack
of subject matter jurisdiction. (Doc. 112). Defendant Welcov
Healthcare, LLC (“Welcov”) likewise has filed a
motion to dismiss the Fourth Amended Complaint for failure to
state a claim. (Doc. 110). The Court conducted a hearing on
these motions on October 1, 2019.
Durbin (“Ms. Durbin”) is a citizen of Montana who
resided at The Villa Assisted Living at Valle Vista
(“The Villa”). (Doc. 113 at 4). Ms. Durbin was
twice injured when she fell at The Villa. The first fall took
place on December 5, 2016, and again on January 22, 2017.
(Doc. 65 ¶ 13).
filed a complaint against Welcov, an Arizona LLC, in this
Court in which he alleged that Welcov owned and operated The
Villa. (Doc. 1). LHC sought to intervene as a necessary and
indispensable party. (Doc. 75-76). Durbin amended his
complaint and added LHC as a defendant before the Court had
ruled on LHC's motion to intervene. (Doc. 103). The Court
now has before it Durbin's Fourth Amended Complaint.
represents that it owns and operates The Villa, employs all
staff at The Villa, and maintains the premises of The Villa.
(Doc. 105 at 3). The parties agree that LHC exists as an LLC
organized under the laws of Montana with LE Subtenant Holding
LLC as the sole owning member (“LE Subtenant”).
(Doc. 95). The parties further agree that LE Subtenant, in
turn, is a citizen of Minnesota. (Doc. 95, Ex. 1-2).
federal court's diversity jurisdiction extends “to
all civil actions where the matter in controversy exceeds . .
. $75, 000 . . . and is between . . . [c]itizens of different
States.” 28 U.S.C. § 1332(a)(1). Diversity
jurisdiction depends on the form of the entity in cases where
an entity rather than a person is a litigant. Congress has
determined that a corporation qualifies as a citizen only of
(1) the state where its principal place of business is
located, and (2) the state in which it incorporated. 28
U.S.C. § 1332(c)(1). The Supreme Court has determined
that an unincorporated association, such as a limited
partnership, possesses the citizenships of all its members.
Carden v. Arkoma Assocs., 494 U.S. 185, 195-196,
Limited Liability Corporation (“LLC”) possesses
attributes of both a partnership and a corporation.
Johnson v. Columbia Properties Anchorage, LP, 437
F.3d 894, 899 (9th Cir. 2009). Despite possessing some traits
that resemble a corporation, every circuit that has addressed
the issue treats an LLC like a partnership “for the
purposes of diversity jurisdiction.” Id.;
3123 SMB LLC v. Horn, 880 F.3d 461, 465 (9th Cir.
2018); See Gen. Tech. Applications, Inc. v. Exro
Ltda, 388 F.3d 114, 120 (4th Cir. 2004); GMAC
Commercial Credit LLC v. Dillard Dep't Stores, Inc.,
357 F.3d 827, 828-29 (8th Cir. 2004); Rolling Greens MHP,
L.P. v. Comcast SCH Holdings LLC, 374 F.3d 1020, 1022
(11th Cir. 2004); Handelsman v. Bedford Village Assocs.
Ltd. P'ship, 213 F.3d 48, 51 (2d Cir. 2000);
Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir.
1998). The Ninth Circuit joined all other circuits in
treating an LLC as a citizen of every state of which its
owners and members are citizens. Johnson, 437 F.3d
argues that an LLC organized under Montana law must be
treated as a corporation for purposes of diversity
jurisdiction under 28 U.S.C. § 1332. (Doc. 105 at 15).
LHC points to the unique nature of the Montana Limited
Liability Company Act (“the Act”) as
justification for this Court to ignore the controlling Ninth
Circuit precedent in Johnson. The Act requires an
LLC organized under Montana law to file its organizational
documents and records with the Montana Secretary of State.
MCA § 35-8-108(2). The Act further directs that Montana
law will regulate a Montana LLC's organization and
affairs. (Doc. 105 at 16-17). Corporations in Montana must
file similar reports and remain subject to similar
organizational regulations. (Doc. 105 at 16).
argues that similar filing mechanisms and regulations that
govern a Montana LLC and a Montana corporation illustrate the
uniquely corporate characteristics in a Montana LLC.
Accordingly, LHC argues that this Court must treat an LLC
organized under Montana law like a corporation for purposes
of diversity jurisdiction under § 1332. This rational
would require the Court to conclude that an LLC stands as a
separate entity distinct from its members for purposes of
§ 1332. (Doc. 105 at 17). LHC failed to explain how the
Act differs in any material way from the laws of other states
that allow for the formation of an LLC.
nevertheless asks this Court to look past the Ninth Circuit
decision in Johnson. LHC claims repeatedly that the
Ninth Circuit premised Johnson on the “common
law presumption that unincorporated associations are not
legal entities independent of their members.” (Doc. 105
at 18-19) (citing Johnson, 437 F.3d at 899)). LHC
points to the decision of the Montana Supreme Court in
Beach v. State, 348 P.3d 629 (2015), to support the
undisputed proposition that a law passed by the Montana
legislature replaces the common law that previously
controlled the issue. No. action of the Montana legislature
to create any kind of unique corporate form overcomes the
authority of Congress, however, to establish the parameters
of diversity jurisdiction under § 1332. This Court lacks
the ability to ignore applicable law within the Ninth Circuit
that supports the very rule that LHC seeks to hurdle.
Ninth Circuit recently remanded a case to the district court
in Stalwart Capital, LLC v. iCap Pac. Nw. Opportunity
& Income Fund, LLC, 715 Fed.Appx. 794, 794 (9th Cir.
2018), where a New Jersey LLC sued two Washington LLCs based
on diversity of jurisdiction. The Ninth Circuit refused on
appeal to analyze the merits of the case until the district
court determined that diversity jurisdiction properly had
been grounded. Id. The Ninth Circuit instructed the
district court on remand to apply the principles in