BENEFICIAL PINES AT WARRINGTON

v.

MG GTC MIDDLE TIER II, LLC

In this removed action, Beneficial Pines at Warrington, LLC, (the general partner) sues (Doc. 1-1) MG GTC Middle Tier II, LLC, and MG Affordable Master, LLC (the limited partners); Hunt Capital Partners, LLC (the limited partners’ agent); and Pines at Warrington Limited Partnership (the limited partnership). The general partner alleges that the limited partners breached the limited partnership agreement and breached an option contract embedded in the agreement. Also, the general partner alleges that the limited partners’ agent tortiously interfered with each contract by unjustifiably causing the limited partners to breach each contract. After removing (Doc. 1) the action, the defendants move (Doc. 9) to dismiss the limited partners’ agent. The general partner moves (Doc. 23) to remand.

BACKGROUND

In 2005, the general partner and the limited partners’ predecessors-in-interest formed the limited partnership “to develop, construct, maintain, [and] operate . . . a 160-unit affordable housing development.” (Doc. 1-1 at 1) The partnership agree-

ment confers on the general partner a “buyout option” that allows the general partner to purchase for a nominal fee the entire limited partnership interest of each limited partner. The general partner attempted to exercise this option and tendered the purchase price to the limited partners, who (allegedly at their agent’s urging) claimed “material errors” and rejected the general partner’s attempt to exercise the option.

(Doc. 1-1 at 21) According to the complaint, the limited partners’ claims “were incorrect, contrary to the plain language of the [partnership agreement], and [lacked] a valid basis.” After tendering the option’s purchase price to the limited partners, the general partner attempted to sell the apartment complex owned by the limited partnership, but the limited partners (again allegedly at their agent’s urging) “objected to the listing of the [d]evelopment for sale” and claimed a right to prohibit the general partner from selling any property of the limited partnership. In a five-count complaint (Doc. 1-1) filed in Florida state court, the general partner sues the limited partners, the limited partners’ agent, and the partnership. Counts I and II claim that the limited partners breached the partnership agreement and the option by refusing to honor the general partner’s exercise of the option. (Doc. 1-1 at 23–26) Count III requests a declaration that the general partner “properly exercise[ed]” the buyout option and that the general partner, as sole owner of the partnership’s assets “has the right to list, solicit offers for, and sell the [d]evelopment without the [l]imited [p]artners’ consent.” (Doc. 1-1 at 26–28) Count IV requests an injunction directing the partnership to sell the development.¹ Finally, Count V claims that the limited partners’ agent tortiously interfered with each contract by causing the limited partners to breach each contract. (Doc. 1-1 at 30–32) Specifically, the complaint alleges that the limited partners’ agent “acted outside the scope of its authority and responsibilities” and “acted solely with ulterior purposes; that is, to personally benefit and enrich itself.” The defendants remove (Doc. 1) the action and invoke federal diversity juris-

diction under 28 U.S.C. 1332. Moving (Doc. 23) to remand, the general partner asserts two arguments against diversity jurisdiction. First, the general partner argues that the parties lack diversity because both the general partner and the partnership are Florida citizens. (Doc. 23 at 22–24) Second, the general partner argues that the defendants fail to invoke diversity because the defendants fail to demonstrate (or even allege) the citizenship of the limited partners’ agent. (Doc. 23 at 14–21) In response, the defendants urge disregarding the citizenship of both the partnership and the limited partners’ agent or severing the claims against both defendants under Rule 21, Federal Rules of Civil Procedure. Thus, the defendants conclude, the

DISCUSSION

Under Rolling Greens MPH, L.P. v. Comcast SCH Holdings, L.L.C., 374 F. 3d

1020, 1022 (11th Cir. 2004), a removing defendant bears the burden of invoking federal jurisdiction. If a removing defendant invokes diversity jurisdiction, the defendant must demonstrate that the parties are completely diverse. In other words, the defendant must establish the citizenship of each party and demonstrate that no defendant is a citizen of the same state as any plaintiff. If any party is an unincorporated entity, such as a limited partnership or an LLC, Rolling Greens MHP, L.P., 374 F. 3d at 1022, requires the defendant to “list the citizenship of all the members of the [unincorporated entity].” As Navarro Savings Association v. Lee, 446 U.S. 458, 460 (1980), notes, “[T]he

‘citizens’ upon whose diversity a plaintiff grounds jurisdiction must be real and substantial parties to the controversy.’” A district court must disregard the citizenship of a “nominal” or “formal” party as well as a party fraudulently joined “solely . . . to defeat federal diversity jurisdiction.” Henderson v. Wash. Nat. Ins. Co., 454 F. 3d 1278, 1281 (11th Cir. 2006). Thus, a removing party bears no burden to demonstrate the citizenship of a nominal, formal, or fraudulently joined party. The defendants insist that the partnership and the limited partners’ agent must be disregarded to determine diversity. First, the defendants argue that the partnership is a nominal party “with no real interest” in this action. (Doc. 25 at 7–11) Second, the defendants argue that the partnership and the limited partners’ agent are fraudulently joined. (Doc. 25 at 11–13, 14–16) Finally, to preserve jurisdiction, the defendants argue that the partnership and the limited partners’ agent warrant severance under Rule 21, Federal Rules of Civil Procedure. (Doc. 25 at 13–14, 17–19)

The defendants are correct that diversity exists despite the partnership’s Florida citizenship because the partnership “is merely a nominal party and not a real party in interest.” (Doc. 25 at 7) According to Thermoset Corp. v. Building Materials Corp. of America, 849 F. 3d 1313 (11th Cir. 2017), “‘[t]he ultimate test’ for whether a defendant is nominal is ‘whether in the absence of the defendant, the [c]ourt can en-

ter final judgment consistent with equity and good conscience which would not be in any way unfair or inequitable to [the] plaintiff.’” 849 F. 3d at 1317 (quoting Tri-Cities Newspapers, Inc. v. Tri-Cities Printing Pressman & Assistants’ Local 349, 427 F. 2d 325, 327 (5th Cir. 1970). Attempting to demonstrate that the partnership is a real party in interest, the general partner primarily relies on Wesley Housing Development Corp. of Northern Virginia v. SunAmerica Housing Fund 1171, 577 F. Supp. 3d 448 (E.D. Va. 2021), which concludes that a partnership constitutes a real party in interest in a similar dispute about a contractual buyout in a low-income housing partnership. In Wesley, the part-

nership agreement confers on the general partner an option to purchase the apartment complex — property of the partnership. Attempting to exercise the option, the general partner sued to “compel the [p]artnership to sell a housing development according to the specific terms of the [option].” Wesley, 577 F. Supp. 3d at 459. Because “[the general partner] cannot obtain the relief [it] seek[s] without suing the [p]artnership” for specific performance, Wesley concludes that the partnership constitutes a real party in interest and that “the [p]artnership’s citizenship must be considered in assessing whether diversity jurisdiction exists.”

Unlike Wesley, the partnership agreement in this action confers on the general partner an option to purchase the limited partnership interests from the limited partners and confers no option to purchase the property of the partnership. Enforcement of the option would neither affect any property owned by the partnership nor compel or forbid any act by the partnership. The partnership is not a party to the option con-

tract, asserts no ownership of the disputed partnership interests, has committed no alleged misconduct,² and otherwise asserts no control over or legal or property interest in this action. In the limited partnership’s absence, an order could afford the general partner complete relief that “would not be in any way unfair or inequitable.” Accordingly, the partnership is a nominal party whose citizenship the law disregards in assessing diversity of citizenship among the parties. The limited partners’ agent, however, is a real party in interest whose diverse citizenship the defendants must demonstrate. Attempting to justify the failure to allege or demonstrate the citizenship of the limited partners’ agent, the defendants

ner claims that the agent, “acted outside the scope of its authority and responsibilities” by causing the limited partners to repudiate the general partner’s exercise of the option. Further, the general partner alleges that in causing the limited partners to repudiate the option, the agent “acted solely with ulterior purposes; that is, to personally benefit and enrich itself,” and “acted without an honest belief that its actions would benefit the [l]imited [p]artners and would be in the [l]imited [p]artners best interest.” By causing the limited partners to “intentionally breach the [partnership agreement] and the [o]ption,” the general partner concludes, the agent tortiously interfered with each contract and “needlessly expos[ed] the [l]imited [p]artners to legal liability.” (Doc. 1-1 at 31)

Attempting to demonstrate that the general partner cannot possibly establish a cause of action against the limited partners’ agent, the defendants insist that two privileges protect the agent’s interference with each contract and thus bar the tortious interference claim. First, the defendants argue that tortious interference requires conduct by an “outside party” and “‘[a]n agent of a corporate party to a contract, acting within [its] capacity and scope as an agent, [is not] a separate entity outside of the contractual relationship.’” (Doc. 8 at 8) (quoting Cedar Hills Props. Corp. v. E. Fed. Corp., 525 So. 2d 673, 676 (Fla. 1st DCA 1991) (alteration in original). Second, the defendants claim that the agent’s conduct enjoys the protection of the “financial-interest privilege,” which (according to the defendants) holds: “[A]ctivities taken to safeguard or promote one’s own financial[] and contractual interests are entirely nonactionable.” (Doc. 25 at 16) (quoting Ethyl Corp. v. Balter, 386 So. 2d 1220, 1225 (Fla. 3d DCA) (alteration in original).³ And even if neither privilege protects the agent, the defendants conclude, the general partner fails to state a claim for tortious interefence because the complaint merely “parrot[s] the legal standard from applicable case law” and offers no “factual allegations” plausibly suggesting that the limited partners’ agent interfered with either contract. (Doc. 8 at 8–9)

As the general partner demonstrates in the motion (Doc. 23) to remand, however, each of the defendants’ arguments fails. First, the defendants misstate Ethyl Corp.’s “financial-interest privilege.” Under Ethyl Corp., “activities taken to safeguard or promote one’s own financial[] and contractual interests are entirely non-

leging that the limited partners’ agent employed improper means, such as “the purposeful causing of a breach of contract.” McCurdy v. Collis, 508 So. 2d 380, 384 (Fla. 1st DCA 1987). Throughout the complaint, the general partner alleges that the agent unjustifiably caused the limited partners to “intentionally breach the [partnership agreement] and the [o]ption,” and alleges that the agent “acted outside the scope of its authority and responsibilities.” Accordingly, the complaint includes allegations that, if proven, overcome a qualified privilege. Finally, the insistence that the complaint fails to state a claim is irrelevant under Tillman v. R.J. Reynolds Tobacco, 253 F. 3d 1302, 1305 (11th Cir. 2001), which notes that “[t]he plaintiff need not have a winning case against the allegedly fraudu-

lent defendant; he need only have a possibility of stating a valid cause of action in order for the joinder to be legitimate.” As the general partner demonstrates in the motion (Doc. 23) to remand and in the response (doc. 24) to the defendants’ motion to dismiss, the complaint enjoys at least “the possibility” of stating a claim against the limited partners’ agent. The limited partners’ agent is not fraudulently joined. Also, in the motion (Doc. 8 at 10–12) to dismiss and in the response (Doc. 25 at 17–19) to the motion for remand, the defendants argue that the limited partners’ agent is not a required party and thus “[can] be dismissed under Rule 21.” But the defendants offer no justification supporting severance. The claim against the limited partner’s agent “arises from the same transaction or occurrence” as the claims against the limited partners; the agent’s severance would result in duplicative litigation over the same issues, including whether the limited partners breached either con-

tract; and the agent’s dismissal would prejudice the general partner’s interests in this action. Even if Rule 21 permits severance,⁴ these considerations militate decisively against severance in this action. See Malibu Media, LLC v. Does¹–28, 295 F.R.D. 527, 533 (M.D. Fla. 2012) (“A district court has broad discretion when deciding whether to sever claims under Rule 21 and may consider factors such as judicial economy,

CONCLUSION

Because the limited partners’ agent is a “real party in interest” and properly joined as a defendant, Rolling Greens MHP, L.P., 374 F. 3d at 1022, requires the de-

fendants to establish the agent’s citizenship by “list[ing] the citizenships of all the members of [the agent].” Because the defendants — repeatedly and despite the general partner’s motion for remand — decline to demonstrate or even allege the citizenship of the agent’s members, the defendants fail to properly invoke diversity jurisdic-

tion. Accordingly, the motion (Doc. 23) for remand is GRANTED. Because the defendants enjoyed a reasonable basis to believe that neither the partnership nor the limited partner’s agent effected any change to diversity, the request for an attorney’s fee and costs is DENIED. This action is REMANDED to the circuit court for Sarasota County, Florida. The clerk must mail a certified copy of this order to the clerk of the circuit court in Sarasota County and must close the case. ORDERED in Tampa, Florida, on December 8, 2022.

STEVEN D. MERRYDAY

UNITED STATES DISTRICT JUDGE