In Great River Entertainment, LLC v. Zurich American Ins. Co., No. 21-3815 (8th Cir. Sept. 11, 2023), the Eighth Circuit reverses and remands a final judgment dismissing this insurance coverage lawsuit, holding that—despite an admission by the plaintiff in the district court that the parties were diverse—the plaintiff could contradict that stipulation on appeal with evidence that the complete diversity is absent.
Great River is a limited liability corporation that operates a casino in Iowa. The casino was shut down during the COVID-19 pandemic and Great River made a claim on Zurich under its business-interruption coverage. “ Zurich denied the claim, and Great River sued in state court for breach of contract and a declaration of coverage. Zurich removed the case to federal court based on diversity of citizenship. At that time, Great River agreed that federal subject matter jurisdiction was proper because the parties were completely diverse. After the district court granted Zurich’s motion to dismiss for failure to state a claim, Great River appealed.”
Note that LLCs, for diversity purposes, are domiciled wherever their members are found. “One day before its opening brief was due in this Court, Great River submitted an affidavit saying that at least 25 of its members were citizens of Illinois—Zurich’s principal place of business. If true, this would destroy complete diversity between the parties and strip both us and the district court of jurisdiction. Great River moved to remand to state court on that basis.” The district court denied remand to state court and granted Zurich’s motion to dismiss for failure to state a claim.
The Eighth Circuit reverses and remands on the diversity jurisdiction issue. The opinion succinctly states the issue: “If Great River’s members were citizens of the same state where Zurich had its principal place of business, Illinois, the parties are not completely diverse.” That the issue was raised by a party for the first time on appeal is of no consequence, because subject-matter jurisdiction is never waived and can be raised at any time.
Zurich sought to bind the plaintiff to its original admissions, noting that it lost on the merits in the court below and that raising the issue on appeal appears opportunistic: “Because Great River initially agreed that the parties were completely diverse, Zurich argues that Great River admitted to a jurisdictional fact. Zurich says that Great River cannot defeat federal jurisdiction by taking back this admission after it lost a motion to dismiss.” The opinion notes cases from the Fourth, Fifth, Sixth, and Ninth Circuits where parties were bound by admissions of jurisdictional facts.
“But no matter how other courts have handled the stipulation of jurisdictional facts related to federal question jurisdiction, our precedent is clear . . . . If Great River’s members were citizens of Illinois, they were citizens of Illinois—admissions to the contrary cannot change that fact.”
“Based on Great River’s new affidavit, we are unable to conclude that its members were diverse. While Great River’s carelessness has clearly wasted judicial resources, we cannot address the merits before determining federal jurisdiction. This is a task better suited for the district court. On remand, the court may also take additional action it deems appropriate.”
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