United States District Court, M.D. Pennsylvania
D. Mariani United States District Judge.
Introduction & Procedural History
matter concerns a dispute over a series of contracts for the
construction of natural gas pipelines in Northeast
Pennsylvania. Plaintiff, STI Oilfield Services, Inc.,
initiated this diversity action on December 4, 2013, with the
filing of a Complaint. (Doc. 1). The Complaint alleged that
Defendants, Access Midstream Partners, LP., Appalachia
Midstream Services, LLC, Chesapeake Energy Corporation, and
Chesapeake Operating, Inc., were liable to Plaintiff under a
variety of theories including breach of contract, unjust
enrichment, quantum meruit, promissory estoppel, fraud, and
the Pennsylvania Contractor and Subcontractor Payment Act
("CASPA"), 73 P.S. § 501 et seq.
(Doc. 1). After a Motion to Dismiss and two Motions for
Summary Judgment were resolved, the following claims remained
pending: (1) a breach of contract claim against Chesapeake
Energy Corporation and Chesapeake Operating (collectively the
"Chesapeake Defendants"), (Count I); (2) a claim
under the CASPA against the Chesapeake Defendants, (Count V);
(3) a breach of contract claim against Access Midstream
Partners and Appalachia Midstream Services (collectively the
"Access Defendants"), (Count VI); and (4) a claim
under the CASPA against the Access Defendants, (Count X).
(Docs. 1, 50, 125, 127).
trial was scheduled to commence on October 30, 2017, to
resolve the remaining claims. (Doc. 132). Then, on July 19,
2017, more than three and a half years after this matter was
commenced, Defendants filed a Motion to Dismiss for Lack of
Subject Matter Jurisdiction. (Doc. 135). On September 1,
2017, after partially briefing the Motion, the case was
stayed to allow the parties to engage in private mediation.
(Docs. 145, 146). After mediation proved unsuccessful, the
parties finished briefing the Motion to Dismiss. This Motion
is presently pending before the Court and is now ripe for
resolution. For the reasons that follow, the Court will grant
in part and deny in part Defendants' Motion to Dismiss
for Lack of Subject Matter Jurisdiction and, as a result,
dismiss this action in its entirety.
the present Motion, Defendants primarily contend that there
is not complete diversity between Plaintiff and the Access
Defendants. Defendants assert that Access Midstream Partners
is a publicly-traded master limited partnership. Master
limited partnerships "are limited partnerships or
limited liability companies whose ownership interests, called
'common units, ' are publicly traded."
Grynberg v. Kinder Morgan Energy Partners,
LP., 805 F.3d 901, 903-04 (10th Cir. 2015). "[T]he
citizenship of partnerships and other unincorporated
associations is determined by the citizenship of its partners
or members." Zambelli Fireworks Mfg. Co. v.
Wood, 592 F.3d 412, 420 (3d Cir. 2010); see also
Grynberg, 805 F.3d at 906 (holding that the citizenship
of a master limited partnership is determined by the
citizenship of all unitholders).
to Defendants, Access Midstream Partners has 187, 000, 000
outstanding common units, (Doc. 151 at 6), and 40% of its
limited partnership is held by the public, (Doc. 135-1 at
¶ 4). Defendants also assert that 4, 600 unit holders
"used a State of Texas business or residential
address." (Id. at ¶ 5). From this,
Defendants argue that Access Midstream Partners is a citizen
of Texas for diversity jurisdiction purposes and thus is not
diverse from Plaintiff, who is also a citizen of Texas. (Doc.
140 at 5-8).
Motion further contends that Appalachia Midstream Services,
LLC, is also a citizen of Texas for diversity citizenship
purposes. (Doc. 140 at 8-9). As the Third Circuit has
the citizenship of an LLC is determined by the citizenship of
its members. And as with partnerships, where an LLC has, as
one of its members, another LLC, "the citizenship of
unincorporated associations must be traced through however
many layers of partners or members there may be" to
determine the citizenship of the LLC.
Zambelli Fireworks Mfg. Co., 592 F.3d at 420
(quoting Hart v. Terminex Int'l, 336 F.3d 541,
543 (7th Cir. 2003)). Defendants assert that Appalachia
Midstream Services has only one member, Access MLP Operating,
L.L.C., which itself also has only one member, Access
Midstream Partners. Thus, Defendants argued that Appalachia
Midstream Services has the same citizenship as Access
Midstream Partners and thus is not diverse from Plaintiff.
(Doc. 140 at 8-9).
opposition, Plaintiff did not dispute the fact that it is not
diverse from the Access Defendants. (Doc. 144 at 2).
Nevertheless, relying on Kaplan v. Industrial Risk
Insurers, 86 F.R.D. 484 (E.D. Pa. 1980), Plaintiff
proposed that the Court allow it to (1) dismiss the Access
Defendants and (2) proceed only against all of Access
Midstream Partners' diverse limited partners. (Doc. 144
at 5-10). On May 15, 2018, after holding a conference call
with the parties, this Court set a deadline for Plaintiff to
file a Motion for Leave to Amend its Complaint. (Doc. 159).
Then, in a letter dated June 11, 2018, Plaintiff notified the
Court that, due to an unforeseen legal issue, Plaintiff would
not seek to amend its Complaint and was therefore abandoning
its arguments based on Kaplan v. Industrial Risk
Insurers. (Doc. 162).
to 28 U.S.C. § 1332, district courts have subject matter
jurisdiction over "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
different States." 28 U.S.C. § 1332(a)(1).
"This statute and its predecessors have consistently
been held to require complete diversity of citizenship. That
is, diversity jurisdiction does not exist unless
each defendant is a citizen of a different State
from each plaintiff." Owen Equip. &
Erection Co. v. Kroger, 437 U.S. 365, 373, 98 S.Ct.
2396, 57 L.Ed.2d 274 (1978) (emphasis in original) (footnote
omitted). As it is undisputed that Plaintiff is not diverse
from the Access Defendants, the Court lacks subject matter
jurisdiction over this action. With that issue resolved, the
Court turns to the two secondary matters raised in
Defendants' Motion to Dismiss: (1) whether the Access
Defendants are dispensable parties such that the claims
against the Chesapeake Defendants should proceed in federal
court; and (2) whether this Court should vacate all prior
orders and judgments entered in this action. The Court will
address each of these issues in turn.
Dispensability of the Access Defendants
the presence of the Access Defendants destroys diversity and
divests this Court of subject matter jurisdiction, it does
not necessarily follow that the entire case must be
dismissed. Under Federal Rule of Civil Procedure 21,
"the court may at any time, on just terms, add or drop a
party." Although this rule is generally concerned with
misjoinder of parties, "it is well settled that Rule 21
invests district courts with authority to allow a dispensable
nondiverse party to be dropped at any time, even after
judgment has been rendered." Newman-Green, Inc. v.
Alfonzo-Larrain, 490 U.S. 826, 832, 109 S.Ct. 2218, 104
L.Ed.2d 893 (1989); see also CGB Occupational Therapy,
Inc. v. RHA Health Servs. Inc., 357 F.3d 375, 382 n.6
(3d Cir. 2004) ("[l]t is well established that courts,
both district and circuit alike, have the power under
Fed.R.Civ.P. 21 to dismiss dispensable parties to the suit in
order to preserve diversity"). "A district court
has broad discretion in deciding whether to sever a party
pursuant to Federal Rule of Civil Procedure 21."
Slater v. Hoffman-La Roche Inc., 771 F.Supp.2d 524,
529 (E.D. Pa. 2011).
argue that the Access Defendants are dispensable parties,
and, consequently, the Court should dismiss the claims
against the Access Defendants but proceed with the claims
against the Chesapeake Defendants. (Doc. 140 at 10-12).
Defendants primarily rely on the fact that Plaintiffs claims
against the Chesapeake Defendants are separate and distinct
from Plaintiffs claims against the Access Defendants. That
is, the claims against the Chesapeake Defendants involve a
specific set of contracts- the "Rome" and
"Oilcan" contracts-and Plaintiff has not alleged
that the Access Defendants were involved with those
on the other hand, argues that the Access Defendants are
indispensable parties. (Doc. 144 at 10-13). Plaintiff notes
that many of the witnesses in this case have information
concerning the claims against both the Chesapeake Defendants
and the Access Defendants. Plaintiff also argues that at
times it is unclear whether a particular individual worked
for the Chesapeake Defendants or the Access Defendants.
Further, Plaintiff contends that it will suffer ...