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No Standing to Sue for LLC, Court Says

A Roanoke U.S. District Court does not have subject matter jurisdiction over this contract action filed by plaintiff in his own name because he lacks standing to sue on behalf of the construction company, an LLC organized under Afghanistan law; the court dismisses this suit, as it may not consolidate this suit with a like suit already pending, filed in the company’s name.

Defendant UXB International Inc. argues this court lacks subject matter jurisdiction because plaintiff construction company lacks standing to assert the breach of contract claim in the complaint. Specifically, plaintiff purports to bring the suit in his own name, d/b/a 77 Construction Contracting and Trading Company, and in the complaint, identifies that entity as a “foreign sole proprietorship.” After discovery in this matter, however, both parties agree the party to the contract at issue, 77 Construction Company, is not a sole proprietorship, but instead is a limited liability company organized under the laws of Afghanistan. As such, any breach of contract action to recover monies on behalf of the corporation must be brought in its name, and cannot be asserted by an individual shareholder. For this reason, defendant argues that plaintiff, as a shareholder, lacks standing to prosecute this action in his own name.

Plaintiff does not dispute this, but suggests a remedy other than dismissal. Specifically, plaintiff’s attorneys have recently filed a separate action in this court in which the named plaintiff, 77 Construction Company, asserts nearly identical breach of contract and quantum meruit claims against defendant. Plaintiffs in both cases have moved to consolidate the two cases under Fed. R. Civ. P. 42 or, in the alternative, to allow the instant case to go forward, but to allow plaintiff to amend his complaint in this action to substitute the company as the proper party.

Based on this court’s conclusion – and the parties’ agreement – that plaintiff lacks standing and thus that subject matter jurisdiction is lacking, the court concludes that neither consolidation nor amendment is permissible here. In short, consolidation of two cases is improper where the court lacks jurisdiction over one of them.

Similarly, a plaintiff who lacks standing is not permitted to amend the complaint to substitute a new plaintiff in order to cure a lack of jurisdiction, because a plaintiff may not create jurisdiction by amendment where none exists.

The court denies as moot plaintiff’s motion to consolidate or amend and instead dismisses this suit without prejudice. The claims of 77 Construction Company may go forward in the separate civil action that has already been field and is pending before this court.

Suleyman Ciliv, d/b/a 77 Construction Contracting & Trading Co. v. UXB Int’l Inc. (Turk) (Published) No. 7:12cv290, Aug. 8, 2013; USDC at Roanoke, Va. VLW 013-3-391, 4 pp.

 

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