January 11, 2018
Appeal from the United States District Court for the Eastern
District of Pennsylvania (D.C. No. 2-11-cv-07732) District
Judge: Hon. Mitchell S. Goldberg
Kenneth B. Danielsen, Esq. Christopher Nucifora, Esq.
[ARGUED] Kaufman Dolowich & Voluck, Eileen M. Ficaro,
Esq. Kaufman Dolowich & Voluck, Gary P. Lightman, Esq.
Glenn A. Manochi, Esq. Lightman & Manochi Counsel for
L. Corgan, Esq. Francis J. Grey, Jr., Esq. Ricci Tyrrell
Johnson & Grey, Gary M. Fellner, Esq. [ARGUED] Porzio
Bromberg & NewmanCounsel for Appellees
Before: JORDAN and ROTH, Circuit Judges, and MARIANI,
OPINION OF THE COURT
JORDAN, Circuit Judge.
case requires us to consider whether, in assessing
diversity-of-citizenship jurisdiction under 28 U.S.C. §
1332(a), the citizenship of a traditional trust is determined
differently than that of a business trust. In light of the
Supreme Court's decision in Americold Realty Trust v.
Conagra Foods, Inc., 136 S.Ct. 1012 (2016), we conclude
that the citizenship of a traditional trust is based only on
the citizenship of its trustee. In so holding, we acknowledge
that Americold Realty abrogates part of our opinion
in Emerald Investors Trust v. Gaunt Parsippany
Partners, 492 F.3d 192 (3d Cir. 2007), which stated that
it was unnecessary to distinguish between types of trusts
when determining diversity jurisdiction. Id. at 198
on the distinction we recognize today between traditional
trusts and business trusts, we will vacate the District Court
order dismissing this case for lack of jurisdiction. Because
the record on appeal is insufficient for us to proceed
further, we will remand the case with instructions to
determine whether the trusts at issue are of the traditional
or business variety and whether there is diversity
jurisdiction. We also instruct the District Court to give
leave to further amend the complaint within a reasonable time
to cure defective jurisdictional allegations.
an investment opportunity gone awry, the details of which are
immaterial at this point, GBForefront, L.P., filed suit in
the District Court against Forefront Management Group, LLC
("FMG"); Forefront Capital Management, LLC;
Forefront Capital Markets, LLC; and Forefront Advisory, LLC,
(collectively, the "Defendants") for breach of
contract and unjust enrichment. Initially, GBForefront, which
is a limited partnership, had sued only FMG, a limited
liability company (or "LLC"), and alleged that the
Court had diversity jurisdiction under 28 U.S.C. § 1332
because, among other things, GBForefront's general
partner was an LLC whose sole member was a
"resident" of Pennsylvania and "none of
[FMG's] members are residents of
Pennsylvania." (J.A. at 50, 719-20.)
years of litigation, GBForefront accepted an offer of
judgment made by the Defendants pursuant to Federal Rule of
Civil Procedure 68. The District Court accordingly entered
judgment in favor of GBForefront and against the Defendants.
Later, when a difficulty arose with satisfaction of the
judgment, the parties submitted a joint motion to amend the
judgment to effectuate a new settlement agreement. Pursuant
to the terms of that agreement, GBForefront and the
Defendants signed a consent judgment against Forefront
Capital Markets, and they agreed that, in the event of any
default by the Defendants in satisfying the settlement,
GBForefront could immediately file a motion to enter that
consent judgment. The District Court granted the joint
motion, and everyone thought the case was over.
not. GBForefront soon alleged that "[c]ertain Forefront
entities" had defaulted on the terms of the
settlement agreement, and it thus moved for entry of the
consent judgment. (J.A. at 923). With the assistance of new
counsel, the Defendants cross-moved to dismiss the case for
lack of subject matter jurisdiction, claiming that
GBForefront had not adequately pled the citizenship of FMG
and that complete diversity was lacking when the lawsuit was
initially filed. The parties briefed the issue of diversity
jurisdiction, but then came a twist. The Supreme Court issued
its opinion in Americold Realty, specifically
dealing with the citizenship of trusts.
holding a hearing and considering the parties'
supplemental briefing on the new precedent, the District
Court granted the Defendants' motion to dismiss because
the Court determined the membership of GBForefront included
at least three trusts whose beneficiaries were citizens of
New Jerseyand FMG also had a member who was a citizen
of New Jersey.
Court reasoned that Emerald Investors instructed it
not to distinguish between traditional trusts and business
trusts for jurisdictional purposes, and that Americold
Realty required the citizenship of a business trust to
include all its members, including its beneficiaries.
timely appealed the dismissal.
appeal, GBForefront argues that the Americold Realty
holding described by the District Court applies only to
business trusts, while the trusts composing GBForefront are
traditional trusts whose citizenship is based only on the
citizenship of their trustees. The Defendants of course
disagree, asserting that Americold Realty requires
that the citizenship of trust beneficiaries always be
accounted for when determining diversity jurisdiction. The
Defendants further assert that GBForefront comprises a series
of trusts whose beneficiaries' citizenship prevents
subject matter jurisdiction based on diversity. The
resolution of this jurisdictional dispute accordingly turns
on the Supreme Court's Americold Realty opinion.
In our view, that case instructs that, for purposes of
diversity jurisdiction, the citizenship of a traditional
trust must be determined by the citizenship of its trustee
General Principles of Diversity Jurisdiction
fundamental that federal courts must have subject matter
jurisdiction before reaching the merits of a case, and, as
its name indicates, jurisdiction based on diversity of
citizenship requires that opposing parties be citizens of
diverse states. Zambelli Fireworks Mfg. Co. v. Wood,
592 F.3d 412, 418 (3d Cir. 2010). Under the dictates
of 28 U.S.C. § 1332(a), for diversity jurisdiction to
exist, "no plaintiff [may] be a citizen of the same
state as any defendant[, ]" and the amount in
controversy must exceed $75, 000. Id. at 419. A
challenge to subject matter jurisdiction may be raised at any
point in the litigation, and, when the jurisdictional basis
is diversity of citizenship, diversity is assessed as of the
time the complaint was filed. Grupo Dataflux v. Atlas
Glob. Grp., L.P., 541 U.S. 567, 570-71 (2004).
rules for determining the citizenship of natural persons and
business entities are well-established. Zambelli
Fireworks, 592 F.3d at 419. The citizenship of a natural
person is the state where that person is domiciled.
Id. The citizenship of a corporation is both its
state of incorporation and the state of its principal place
of business. Id. A partnership, as an unincorporated
business entity, assumes the citizenship of all its partners.
Id. Likewise, a limited liability company is a
citizen of all the states of its members. Id. at
420. But, as this case demonstrates, there are still some
rules in flux. Hence the challenge to jurisdiction we address
party raises an issue regarding a jurisdictional defect,
courts must determine whether the challenge is a facial
attack or a factual attack. Constitution Party of Pa. v.
Aichele, 757 F.3d 347, 357 (3d Cir. 2014). "A
facial attack ... is an argument that considers a claim on
its face and asserts that it is insufficient to invoke
subject matter jurisdiction of the court because, for
example, ... there is no indication of a diversity of
citizenship among the parties[.]" Id. at 358.
factual attack, on the other hand, is an argument that there
is no subject matter jurisdiction because the facts of the
case ... do not support the asserted jurisdiction."
Id. To resolve a factual challenge, the
"[c]ourt may look beyond the pleadings to ascertain the
facts[.]" Id. Again, "for example, while
diversity of citizenship might have been adequately pleaded
by the plaintiff, the defendant can submit proof that, in
fact, diversity is lacking." Id. The defendant
has the initial burden of production to raise a factual
challenge. See Washington v. Hovensa LLC, 652 F.3d
340, 345 & n.2 (3d Cir. 2011) (distinguishing between
burden of proof and burden of production, in that the latter
"determines which party must first present evidence
sufficient to raise a given issue as pertinent"). Once a
factual challenge has been raised, ...