United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
July 15, 2004
FIFTH CIRCUIT
Charles R. Fulbruge III
_________________ Clerk
No. 03-60899
(Summary Calendar)
_________________
UNITY COMMUNICATIONS INC, a Delaware Corporation,
Plaintiff - Appellant,
versus
UNITY COMMUNICATIONS OF COLORADO LLC, Etc; ET AL,
Defendants,
UNITY COMMUNICATIONS OF COLORADO LLC, a Colorado Limited Liability Company;
JAMES A NASH; RICHARD M SHERWIN
Defendants - Appellees.
Appeal from the United States District Court
For the Southern District of Mississippi
USDC No. 3:01-CV-41
Before BARKSDALE, EMILIO M. GARZA, and DENNIS, Circuit Judges.
PER CURIAM:*
Unity Communications, Inc. (“Unity Inc.”) appeals from the district court’s dismissal of its
complaint to compel arbitration under the Federal Arbitration Act, 9 U.S.C. § 1 et seq., of its dispute
with Unity Communications of Colorado, LLC (“Unity Colorado”) and certain members of Unity
Colorado. The Federal Arbitration Act does not provide an independent source of federal
jurisdiction, and an independent basis for jurisdiction must exist before a federal court may assume
jurisdiction. See Moses H. Cone. Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 26 n.32
(1983). Unity Inc. alleges that federal jurisdiction is proper under 28 U.S.C. § 1332 because the
parties to its complaint are diverse. The district court found that the issue of diversity was controlled
by the doctrine of res judicata, and that the parties were not completely diverse. The district court
then dismissed the complaint for lack of subject matter jurisdiction and imposed sanctions under FED.
R. CIV. P. 11 against Unity Inc. and its attorney. We review res judicata determination and dismissals
for lack of subject matter jurisdiction de novo. Corfield v. Dallas Glen Hills LP, 355 F.3d 853, 857
(5th Cir. 2003); Schmueser v. Burkburnett Bank, 937 F.2d 1025, 1031 (5th Cir.1991).
Unity Colorado previously filed a complaint against Unity Inc. in the Federal District Court
for the District of Colorado (the “Colorado court”). The Colorado court held that a limited liability
company, for purposes of a diversity analysis, takes on the citizenship of its members.1 The Colorado
court dismissed for lack of subject matter jurisdiction because it found that Unity Inc. was a member
*
Pursuant to 5th Cir. R. 47.5, the court has det ermined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.
1
We express no opinion about whether or not the district court’s holding regarding the
citizenship of limited liability companies is the proper interpretation of the law.
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of Unity Colorado and that the parties consequently lacked diversity. Unity Inc. filed a motion to
amend the judgment of the Colorado court, arguing that the Colorado court made a factual error
when it found that Unity Inc. was a member of Unity Colorado. The Colorado court denied this
motion.
It is well established that there are four requirements in federal court that must be met for a
prior judgment to bar a subsequent action as res judicata: “1) the parties must be identical in both
actions, 2) the prior judgment must have been rendered by a court of competent jurisdiction, 3) the
same cause of action must be involved in both cases, and 4) the prior judgment must have been a final
judgment on the merits.” Steve D. Thompson Trucking Inc. v. Dorsey Trailers, 870 F.2d 1044, 1045
(5th Cir. 1989). The district court in this case properly found that the first three factors are present
in the Colorado court’s diversity determination.
Unity Inc. argues that the Colorado ruling was not a “final judgment on the merits” because
the Colorado court’s order dismissed the case for lack of subject matter jurisdiction. FED. R. CIV.
P. 41(b). Although a dismissal for lack of jurisdiction is not a ruling on the merits of the claim, “[i]t
has long been the rule that principles of res judicata apply to jurisdictional determinations))both
subject matter and personal.” Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee,
456 U.S. 694, 702 n.9 (1982); see also Boone v. Kurtz, 617 F.2d 435, 436 (5th Cir. 1980)
(“Although the dismissal of a complaint for lack of jurisdiction does not adjudicate the merit[s] so as
to make the case res judicata on the substance of the asserted claim, it does adjudicate the court’s
jurisdiction, and a second complaint cannot command a second consideration of the same
jurisdictional claims.”). Thus, the Colorado court’s jurisdictional ruling is properly the subject of a
res judicata determination.
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Unity Inc. raises two other claims on appeal to challenge the res judicata consequences of the
Colorado court’s order. First, Unity Inc. argues that the Colorado court made a factual error when
it found that Unity Inc. is a member of Unity Colorado. Second, Unity Inc. argues that the Colorado
court’s order was based upon an incorrect understanding of the law regarding the citizenship of
limited liability companies. Neither of these arguments overcome the res judicata consequences of
the Colorado court’s order. Even if the Colorado court’s order was based upon a factual or legal
error, that error should be raised on direct review of that order and not by challenging its res judicata
consequences. See Federated Dep’t Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981).
Finally, the parties appeal the district court’s award of sanctions against Unity Inc. and its
attorney. This is not a final order subject to appellate review because the district court has not yet
reduced that sanctions award to a sum certain. See Southern Travel Club, Inc. v. Carnival Air Lines,
Inc., 986 F.2d 125, 131 (5th Cir. 1993).
The district court’s order dismissing this case for lack of subject matter jurisdiction is
AFFIRMED. The appeal of the district court’s award of sanctions is DISMISSED for lack of
appellate jurisdiction.
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