UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 04-1271
SAXON FIBERS, LLC; ROSS ROGERS; JERRY LEONARD,
Plaintiffs - Appellees,
versus
LARRY WOOD; DALTON MACHINERY AND SURPLUS,
INCORPORATED,
Defendants - Appellants.
No. 04-1472
SAXON FIBERS, LLC; ROSS ROGERS; JERRY LEONARD,
Plaintiffs - Appellees,
versus
LARRY WOOD; DALTON MACHINERY AND SURPLUS,
INCORPORATED,
Defendants - Appellants.
Appeals from the United States District Court for the District of
South Carolina, at Spartanburg. Margaret B. Seymour, District
Judge. (CA-02-2373-7-24)
Argued: December 2, 2004 Decided: January 4, 2005
Before WILKINS, Chief Judge, and MICHAEL and TRAXLER, Circuit
Judges.
Vacated and remanded with instructions by unpublished per curiam
opinion.
Thomas Howard Keim, Jr., EDWARDS, BALLARD, BISHOP, STURM, CLARK &
KEIM, Spartanburg, South Carolina, for Appellants. Matthew Elliott
Cox, JOHNSON, SMITH, HIBBARD & WILDMAN, Spartanburg, South
Carolina, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).
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PER CURIAM:
Larry Wood and Dalton Machinery and Surplus, Inc. (Dalton
Machinery) appeal a judgment against them on the ground that the
district court lacked subject matter jurisdiction over the case.
We vacate the judgment and remand with instructions for the
district court to dismiss the action.
I.
Saxon Fibers, LLC (Saxon) is a limited liability company
composed of three members--Georgia residents Larry Wood, Ross
Rogers, and Jerry Leonard--each of whom owns one-third of the
company. Dalton Machinery is a company owned by Wood.
Saxon filed this action in federal court against Wood and
Dalton Machinery (collectively, “Appellants”) on July 17, 2002,
alleging several state law causes of action arising from Wood’s
alleged failure to make an agreed-upon capital contribution to
Saxon. The complaint alleged that the district court had diversity
jurisdiction, see 28 U.S.C.A. § 1332 (West 1993 & Supp. 2004),
because Saxon was organized in South Carolina--and hence, a South
Carolina citizen--and Appellants were both citizens of Georgia.
Appellants moved to dismiss for lack of subject matter
jurisdiction on the basis that Rogers and Leonard were
indispensable parties whose joinder as plaintiffs would destroy
diversity. See Fed. R. Civ. P. 19. Appellants also answered
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Saxon’s complaint on August 23, 2002, while their motion to dismiss
was pending.
On August 26, 2002, Saxon moved to amend its complaint, see
Fed. R. Civ. P. 15(a), to add Rogers and Leonard as plaintiffs and
to add a claim against Wood under the Racketeer Influenced and
Corrupt Organizations Act (RICO), see 18 U.S.C.A. § 1962(c) (West
2000), thereby purporting to establish federal question
jurisdiction, see 28 U.S.C.A. § 1331 (West 1993). Appellants
opposed the motion, arguing that a party may not establish federal
question jurisdiction by amending its complaint to add a new cause
of action when the district court lacks subject matter jurisdiction
over the original complaint. The district court granted Saxon’s
motion to amend and denied Appellants’ motion to dismiss.
The case proceeded to trial, and the jury awarded Saxon,
Rogers, and Leonard (collectively, “Appellees”) $468,679 in
damages. Further, the district court awarded Appellees $79,873.12
in attorneys’ fees and denied Appellants’ renewed motion to dismiss
for lack of subject matter jurisdiction.
II.
Appellants contend that the district court erred in permitting
Saxon to amend its complaint and in refusing to dismiss this action
for lack of subject matter jurisdiction. We are compelled to
agree.
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The parties agree that a plaintiff may not use
28 U.S.C.A. § 1653 (West 1994)1 or any other means to obtain leave
of court to amend a complaint to allege a federal cause of action
not previously pled when the court had no jurisdiction over the
original complaint. See Newman-Green, Inc. v. Alfonzo-Larrain, 490
U.S. 826, 831-32 (1989); Advani Enters. v. Underwriters at Lloyds,
140 F.3d 157, 161 (2d Cir. 1998); Boelens v. Redman Homes, Inc.,
759 F.2d 504, 512 (5th Cir. 1985). Such a proposition makes sense,
considering that a court without subject matter jurisdiction lacks
authority to grant a party’s amendment motion.2 See Whitmire v.
Victus Ltd., 212 F.3d 885, 888 (5th Cir. 2000).
Appellants contended in their initial brief that the district
court lacked jurisdiction over the original complaint because
Rogers and Leonard were indispensable parties who, if joined, would
have destroyed complete diversity. Appellees responded by arguing
that the parties in the original complaint were completely diverse
because Saxon, a South Carolina citizen, was the only plaintiff.
1
Section 1653 provides that “[d]efective allegations of
jurisdiction may be amended, upon terms, in the trial or appellate
courts.” The Supreme Court has held that this statute allows only
the correction of incorrect statements in pleadings “about
jurisdiction that actually exists.” Newman-Green, Inc. v. Alfonzo-
Larrain, 490 U.S. 826, 831 (1989). It does not allow an amendment
“to produce jurisdiction where none actually existed before.” Id.
2
A party may amend its pleading once as a matter of course
before a responsive pleading is served. See Fed. R. Civ. P. 15(a).
Once the responsive pleading is served, however, as the answer was
here, a pleading may not be amended without leave of court or
written consent of the adverse party. See id.
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Appellees maintained that failure to join indispensable parties
does not create a jurisdictional defect. See 4 James Wm. Moore et
al., Moore’s Federal Practice § 19.02[4][c] (3d ed. 2004). They
therefore argued that the district court had jurisdiction to grant
their motion to amend the complaint to add the RICO cause of
action, which conferred federal question and supplemental
jurisdiction, see 28 U.S.C.A. § 1367 (West 1993), upon the district
court over this suit.
In their reply brief, Appellants argue for the first time that
it is immaterial whether failure to join indispensable parties is
a jurisdictional defect because even if it is not, the district
court lacked jurisdiction over the original complaint. See Plyler
v. Moore, 129 F.3d 728, 731 n.6 (4th Cir. 1997) (holding that
issues regarding subject-matter jurisdiction “may be raised at any
time by either party or sua sponte by this court”). Appellants
contend that Saxon, a limited liability company, was a citizen of
Georgia because its members were citizens of Georgia, and
therefore, because Appellees were also Georgia citizens, the
parties were not diverse. A recent decision of this court confirms
the correctness of Appellants’ position. See Gen. Tech.
Applications, Inc. v. Exro Ltda., 388 F.3d 114, 120 (4th Cir. 2004)
(holding that limited liability company was citizen of all states
of which its members were citizens); see also Hoffman v. Hunt, 126
F.3d 575, 584 (4th Cir. 1997) (“A decision of a panel of this court
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becomes the law of the circuit and is binding on other panels
unless it is overruled by a subsequent en banc opinion of this
court or a superseding contrary decision of the Supreme Court.”
(internal quotation marks omitted)). Thus, because Wood, Rogers,
and Leonard were all Georgia citizens and Saxon was also a citizen
of Georgia, the parties were never diverse. The district court
therefore never had subject matter jurisdiction over this suit and,
in particular, lacked jurisdiction to authorize the amendment of
the original complaint.
III.
For the reason discussed, we vacate the district court
judgment and remand with instructions for the district court to
dismiss for lack of subject matter jurisdiction.
VACATED AND REMANDED WITH INSTRUCTIONS
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