United States v. 2006-02-10 | 04-35592 | JOHNSON VCOLUMBIA PROPERTIES | precedential | opinion |

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 MORRIS JOHNSON, JR.,
Plaintiff-Appellant, No. 04-35592
v. D.C. No. CV-03-00054-A- COLUMBIA PROPERTIES ANCHORAGE, RRB LP,
Defendant-Appellee. 
 MORRIS JOHNSON, JR.,
Plaintiff-Appellee, No. 04-35671
v. D.C. No.
 CV-03-00054-RRBCOLUMBIA PROPERTIES ANCHORAGE,
LP, OPINION
Defendant-Appellant. 
Appeal from the United States District Court
for the District of Alaska
Ralph R. Beistline, District Judge, Presiding
Argued and Submitted
July 14, 2005—Anchorage, Alaska
Filed February 10, 2006
Before: Alfred T. Goodwin, Melvin Brunetti, and William
A. Fletcher, Circuit Judges.
Opinion by Judge William A. Fletcher
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COUNSEL
Hugh G. Wade, Wade, Kelly & Sullivan, Anchorage, Alaska,
for the plaintiff-appellant/appellee.
Douglas J. Serdahely and Michael A. Grisham, Patton Boggs,
Anchorage, Alaska, for the defendant-appellee/appellant.
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OPINION
W. FLETCHER, Circuit Judge:
Morris Johnson sued Columbia Properties Anchorage LP
(“Columbia”) for breach of contract in an Alaska state court,
alleging, inter alia, that Columbia failed to pay for crane ser-
vices he provided in connection with the construction of the
Marriott Hotel in Anchorage. After Columbia removed the
case, the federal district court denied Johnson’s motion to
remand and granted Columbia’s motion for partial summary
judgment. We hold that the district court properly exercised
jurisdiction over this case, and that it correctly held that John-
son’s claim for payment for the crane services is time-barred.
Finally, we hold that the district court did not abuse its discre-
tion in denying attorneys’ fees to Columbia.
I. Background
Johnson is a citizen of Alaska. Columbia is a limited part-
nership organized in Ohio. Its two partners, CP Anchorage,
GP, LLC, and CSC Holdings, LLC, are limited liability com-
panies (LLCs), also organized in Ohio. The two LLCs are
owned by a Kentucky corporation; by an Ohio corporation;
and by a trust whose sole trustee is a bank incorporated in
Delaware with its principal place of business in Minnesota.
Columbia managed the construction of the Marriott Hotel
in Anchorage between 1998 and 2000. In August 1998, Dave
Mueller, Columbia’s project manager, entered into a contract
with Johnson, an independent contractor, under which John-
son agreed to provide crane services. On August 17, 1998,
Johnson sent a proposal to Mueller for rental of a 125-ton
crane, as well as for wages for a crane operator and an oiler.
Brian Prince, a project engineer for Columbia, replied on
August 25th, accepting the proposal and summarizing the
agreement between Johnson and Columbia. Prince’s one-
paragraph letter stated that Johnson would provide the “125
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ton truck crane” to Columbia “per your proposal of 8/17/98
to Dave Mueller.” Also, “[t]he crane will be required proba-
bly sometime in mid-September and be required probably
through the end of the year, and periodically after that.” The
letter further noted that “no other agreements (such as Pur-
chase Orders, Contracts, etc.) will be sent unless you specifi-
cally request one.” The letter concluded that, unless Prince
heard back from Johnson to the contrary, “I will assume that
we have reached an agreement for your services to be pro-
vided as we need them.” The letter did not mention any bill-
ing arrangements or any other equipment or services.
Johnson states in his affidavit that in August and September
of 1998 he and Mueller discussed other lifting and hoisting
services Johnson could contribute to the Marriott Hotel proj-
ect, and that he sent Mueller his rates for the rental and opera-
tion of 50- and 25-ton cranes and a forklift. Johnson states
that, based on these discussions, the parties made oral modifi-
cations to the agreement summarized in Prince’s August 25th
letter, expanding the range of services that Johnson would
provide to Columbia. Johnson’s affidavit summarizes what he
contends were the final terms of the agreement, concluded in
late September 1998:
1) When requested, Johnson would provide the
appropriate crane or hoist to satisfy Columbia’s
requirements; 2) both parties would maintain ordi-
nary job records, time cards and daily logs, but there
was to be no contemporaneous exchange of such
records, nor any requirement for signatures or writ-
ten acknowledgment of receipt of services; 3) at the
conclusion of the project [Johnson] would invoice
Columbia for [his] services; 4) Columbia would
review [his] notice and [the parties] would attempt to
resolve any question or discrepancy if there was a
conflict between [his] invoice and Columbia’s job
records . . . [and] 5) the invoice or invoices would be
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due and payable promptly after submittal, and if
unpaid, would draw interest from the invoice date.
Johnson stated in his affidavit that he provided crane ser-
vices during four periods beginning in late September 1998:
(1) he provided a 50-ton crane on four different occasions
from September 28, 1998, through December 5, 1998; (2) he
provided the 125-ton crane described in the August 28 letter
for one month beginning on December 4, 1998; (3) he pro-
vided a 20-ton crane from January 15, 1999, through August
8, 1999; and (4) he provided the 50-ton crane from July 29,
1999, to August 3, 1999.
According to Johnson’s affidavit, he submitted a handwrit-
ten summary of his work logs to Mueller shortly after he fin-
ished providing the crane services on August 8, 1999.
Johnson states that he provided the summary “so that I could
prepare an invoice” once Columbia looked over the logs for
“any problems or questions with my summary.” Johnson
stated that Mueller never got back to him about the summary.
As described below, Johnson did not send an invoice to
Columbia until sometime in January 2002.
According to Johnson’s affidavit, Mueller was replaced by
Andy King as project manager sometime in mid to late 1999.
In February 2000, King contacted Johnson and asked him to
perform cleanup work in a storage yard at Ship Creek, a loca-
tion near the Port of Anchorage and some distance from the
Marriott Hotel. Johnson states in his affidavit that King “un-
derstood” his earlier agreement with Columbia, and he
implies that King intended the Marriott crane services con-
tract to cover the Ship Creek cleanup work as well. King
remembers the transaction differently. He states in his affida-
vit that the cleanup project was covered by a “stand-alone
contract,” and that he and Johnson “did not discuss any terms
of any sort from any preexisting or ongoing agreement.”
Johnson used a forklift and a crew of manual laborers to per-
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form the cleanup work at Ship Creek. He used no cranes.
Johnson completed this work on February 24, 2000.
Johnson sent Columbia an invoice totaling $105,328 in Jan-
uary 2002. This invoice covered all the services he had pro-
vided to Columbia, including the crane services at the
Marriott Hotel and the cleanup at Ship Creek. On February
14, King responded by expressing surprise at the size and the
lateness of the bill. He asked for back-up documentation for
the Ship Creek job. There is no indication in the record
whether Johnson responded to the request for documentation.
On February 13, 2003, over a year after submitting the
invoice, Johnson filed this suit for breach of contract in
Alaska state court.
Columbia removed the suit to federal court based on diver-
sity of citizenship. Columbia then moved for partial summary
judgment on all claims for payment for crane services pro-
vided at the Marriott Hotel, contending that they were barred
by Alaska’s three-year statute of limitations. The district court
granted Columbia’s motion. Johnson then moved to remand
the suit to state court for lack of diversity jurisdiction, con-
tending that Columbia was owned in part by an Alaska citi-
zen. The district court denied the motion. Johnson then
successfully moved for summary judgment on his remaining
claim for payment for the cleanup at Ship Creek. Finally,
although the district court determined that Columbia was the
“prevailing party,” it declined to award attorneys’ fees.
Johnson appeals the partial summary judgment in favor of
Columbia on the crane services at the Marriott Hotel, and the
denial of his motion to remand to state court. Columbia cross-
appeals the district court’s refusal to award attorneys’ fees.
II. Standard of Review
The existence of subject matter jurisdiction is a question of
law which we review de novo. Chang v. United States, 327
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F.3d 911, 922 (2003). We also review the district court’s
grant of summary judgment de novo. Universal Health Servs.
Inc. v. Thompson, 363 F.3d 1013, 1019 (9th Cir. 2004). We
must determine, viewing the evidence in the light most favor-
able to the nonmoving party, whether there are any genuine
issues of material fact and whether the district court correctly
applied the relevant substantive law. Olsen v. Idaho State Bd.
of Med., 363 F.3d 916, 922 (9th Cir. 2004). We review for
abuse of discretion an award or denial of attorneys’ fees made
pursuant to state law. Vess v. Ciba-Geigy Corp. USA, 317
F.3d 1097, 1102 (9th Cir. 2003).
III. Subject Matter Jurisdiction
[1] Columbia is a limited partnership in which the two part-
ners are limited liability companies, or LLCs. Because a part-
nership is a citizen of all of the states of which its partners are
citizens, Johnson’s motion to remand to state court for lack of
diversity jurisdiction turns on the citizenship of the two LLCs.
The citizenship of an LLC for purposes of diversity jurisdic-
tion poses a question of first impression in this circuit.
[2] The federal court’s basic diversity jurisdiction extends
to “all civil actions where the matter in controversy exceeds
. . . $75,000 . . . and is between . . . [c]itizens of different
States.” 28 U.S.C. § 1332(a)(1). In cases where entities rather
than individuals are litigants, diversity jurisdiction depends on
the form of the entity. For example, an unincorporated associ-
ation such as a partnership has the citizenships of all of its
members. Carden v. Arkoma Assocs., 494 U.S. 185, 195-96
(1990). By contrast, a corporation is a citizen only of (1) the
state where its principal place of business is located, and (2)
the state in which it is incorporated. 28 U.S.C. § 1332(c)(1).
[3] LLCs resemble both partnerships and corporations. Not-
withstanding LLCs’ corporate traits, however, every circuit
that has addressed the question treats them like partnerships
for the purposes of diversity jurisdiction. See Gen. Tech.
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Applications, Inc. v. Exro Ltda, 388 F.3d 114, 120 (4th Cir.
2004); GMAC Commercial Credit LLC v. Dillard Dep’t
Stores, Inc., 357 F.3d 827, 828-29 (8th Cir. 2004); Rolling
Greens MHP, L.P. v. Comcast SCH Holdings LLC, 374 F.3d
1020, 1022 (11th Cir. 2004); Handelsman v. Bedford Village
Assocs. Ltd. P’ship, 213 F.3d 48, 51 (2d Cir. 2000); Cosgrove
v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998). This treat-
ment accords with the Supreme Court’s consistent refusal to
extend the corporate citizenship rule to non-corporate entities,
including those that share some of the characteristics of cor-
porations. Carden, 494 U.S. at 189 (treating a limited partner-
ship as having the citizenship of all its members); Great S.
Fire Proof Hotel Co. v. Jones, 177 U.S. 449, 456-57 (1900)
(refusing to extend the corporate citizenship rule to a “limited
partnership association” although it possessed “some of the
characteristics of a corporation”). This treatment is also con-
sistent with the common law presumption that unincorporated
associations are not legal entities independent of their mem-
bers. Strotek Corp. v. Air Transp. Ass’n of Am., 300 F.3d
1129, 1133 n.2 (9th Cir. 2002). We therefore join our sister
circuits and hold that, like a partnership, an LLC is a citizen
of every state of which its owners/members are citizens.
[4] Columbia submitted an affidavit by Theodore Mitchel,
an officer of both LLCs that are partners in Columbia,
describing the three members of the LLCs. ER 108. Two of
the members are Columbia Sussex Corp., a Kentucky corpo-
ration with its principal place of business in Kentucky, and
Anchorage GP, Inc., an Ohio corporation with its principal
place of business in Kentucky. The third member is a trust
whose sole trustee is a bank incorporated in Delaware with its
principal place of business in Minnesota. A trust has the citi-
zenship of its trustee or trustees. See Navarro Sav. Ass’n v.
Lee, 446 U.S. 458, 464 (1980). In short, none of the three
members of the LLCs is a citizen of Alaska.
[5] Johnson has not provided evidence contradicting the
evidence of diverse citizenship provided in the Mitchel affida-
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vit. The district court therefore correctly denied Johnson’s
motion to remand to state court.
IV. Statute of Limitations
[6] Because Alaska state courts would apply Alaska’s stat-
ute of limitations to Johnson’s claim, a federal district court
sitting in Alaska is required to do the same. Erie R.R. Co. v.
Tompkins, 304 U.S. 64 (1938); Klaxon Co. v. Stentor Elec.
Mfg. Co., 313 U.S. 487 (1941); Sun Oil Co. v. Wortman, 486
U.S. 717 (1988). Alaska has a three-year statute of limitations
for contract claims. Alaska Stat. § 09.10.053. Under Alaska
law, a cause of action for breach of contract accrues, thereby
triggering this three-year period, when the breaching party
becomes obligated to perform. Howarth v. First Nat’l Bank of
Anchorage, 540 P.2d 486, 490-91 (Alaska 1975).
Johnson provided crane services at the Marriott Hotel
between September 28, 1998, and August 8, 1999. He filed
suit for breach of contract on February 13, 2003, three and a
half years after the last day on which he provided these ser-
vices. Johnson makes three arguments to support his conten-
tion that the three-year statute does not bar his claim for
payment. First, he argues that the statute of limitations did not
begin to run until he sent his invoice to Columbia on February
13, 2002, two and a half years after the last day on which he
provided crane services. Second, he argues that the statute of
limitations did not begin to run until he finished the cleanup
work at Ship Creek on February 24, 2000. Finally, he argues
that his agreement with Columbia should be regarded as an
“open account contract,” such that the statute of limitations
did not begin to run upon the completion of any particular
project. The district court rejected all of these arguments. We
agree with the district court.
A. Invoice Theory
[7] Johnson argues that Columbia had no obligation to pay
him until he sent the invoice on February 13, 2002, and that,
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accordingly, the statute of limitations did not begin to run
until that date. Even viewing the evidence in Johnson’s favor,
we cannot conclude that Columbia’s obligation to pay accrued
only when Johnson submitted the invoice, two and a half
years after the crane services were completed. Prince’s
August 25, 1998, letter to Johnson does not mention billing
arrangements. However, the oral modifications Johnson
describes in his affidavit obligated Johnson to send an invoice
to Columbia “at the conclusion of the project.” They further
provide that “the invoice or invoices would be due and pay-
able promptly after submittal.” Finally, Johnson states in his
affidavit that “I provided the services for which I invoiced
Columbia in good faith and in reliance on the understanding
. . . that I would be paid upon my invoices promptly after
completion of the project.”
[8] Even if we were to read the orally modified contract as
providing that Columbia’s obligation to pay did not accrue
until Johnson submitted an invoice, the contract contemplated
that the invoice would be sent “at the conclusion of the proj-
ect.” In arguing that the statute of limitations should begin
running only upon his submission of the invoice to Columbia,
Johnson is arguing, in effect, that a period of two and a half
years after his completion of the crane services is included in
the phrase “at the conclusion of the project.” Even taking all
inferences in Johnson’s favor, we cannot read the phrase that
broadly.
[9] Under widely applied principles of contract law, an
Alaska court would likely refuse to excuse this delay in start-
ing the clock for the statute of limitations. See 31 Samuel Wil-
liston & Richard A. Lord, A Treatise on the Law of Contracts
§ 79:14 (4th ed. 2004) (“Where the plaintiff’s right of action
depends on a preliminary act to be performed by the plaintiff,
the plaintiff cannot suspend indefinitely the running of the
statute of limitations by delaying performance of the act.”);
see also United States v. Colin, 314 F.3d 439, 443 (9th Cir.
2002) (noting that if the highest court of the state has not pro-
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nounced on an issue of state law, a federal court sitting in
diversity should rely on persuasive authorities, including trea-
tises, to predict how the court might rule). If Johnson’s two
and a half year delay in submitting the invoice were permitted
to delay the beginning of the limitations period until the date
of submission, the purpose of the statute of limitations would
be frustrated. See Byrne v. Ogle, 488 P.2d 716, 718 (Alaska
1971) (“[T]he purpose of statutes of limitations is to encour-
age promptness in the prosecution of actions and thus avoid
the injustice which may result from the prosecution of stale
claims. Statutes of limitations attempt to protect against the
difficulties caused by lost evidence, faded memories and dis-
appearing witnesses.”).
B. Single Contract Theory
[10] Johnson next argues that a single contract covered all
the work he provided to Columbia, and therefore the statute
of limitations did not begin to run until he completed the
cleanup services at Ship Creek on February 24, 2000. Had
Johnson indeed performed all his work for Columbia — crane
operating and cleanup — under a single contract, he would
likely be correct that his cause of action did not accrue until
the date of the last service provided. See 9 Arthur L. Corbin,
Corbin on Contracts § 951 (Interim ed. 2002) (“Corbin”).
However, when “the breaches involved are breaches of sepa-
rate and independent contracts,” the statute of limitations
begins to run with each breach. Id. § 952.
[11] While a single contract may have covered the four
periods during which Johnson provided crane services to
Columbia, it is clear that he performed the cleanup services
pursuant to a different agreement. The cleanup work at Ship
Creek involved a different kind of service (short-term manual
labor versus long-term provision of crane services) at a differ-
ent location (Marriott construction site versus the Port of
Anchorage). All parties agree that the initial contract dealt
solely with crane services. Indeed, the August 25, 1998, letter
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refers only to the services of the 125-ton crane. Although
Johnson insists that Columbia subsequently inquired about the
use of a forklift and other equipment, the oral contractual
terms he refers to in his affidavit make only vague mention
of “the appropriate crane or hoist.” Nothing in the record con-
flicts with King’s statement in his affidavit that the cleanup
work “was significantly different from the type of work
[Johnson] performed previously as a crane operator.”
[12] Johnson introduced no evidence to contradict King’s
statement that they negotiated terms for the cleanup services
at Ship Creek that were independent of the terms for the crane
services at the Marriott Hotel. Although Johnson states that
King “understood” the 1998 agreement he had struck with
Mueller, he also argues in his brief, somewhat inconsistently,
that King’s affidavit should have been inadmissible because
“King knows nothing about the [crane services] contract
terms or its formation.” Moreover, King and Johnson negoti-
ated the terms of the Ship Creek cleanup long after Johnson
had provided Columbia with a summary of his crane services
in preparation for an invoice. In short, Johnson adduces no
evidence, much less evidence sufficient to create a disputed
issue of material fact, to suggest that a single contract covered
all the work he performed for Columbia.
C. Open Account Theory
[13] Finally, Johnson argues that his contract with Colum-
bia should have been treated as an “open account,” with
Columbia’s liabilities fixed only at the end of the account
period. “Where there has been a series of [transactions]
between the parties, constituting a running account, payable
as bills may be rendered, there is but one right of action for
a balance due . . . .” 9 Corbin § 953. In other words, “the sep-
arate transactions are merged into one.” Id. However, as dis-
cussed above, the uncontradicted evidence in the record
suggests that the parties intended the crane services and
cleanup work to be covered by separate contracts rather than
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to be an interconnected series of transactions. Johnson’s open
account argument therefore founders on the same shoals as
his single contract theory.
V. Attorneys’ Fees
[14] On cross-appeal, Columbia contends that the district
court, having found that it was the prevailing party, was
obliged to award it attorneys’ fees. It bases its argument on
District of Alaska Local Rule 54.3(b), which directs the dis-
trict court to apply the Alaska Rules of Civil Procedure to
determine a fee award. Alaska Rule 82(a) provides that
“[e]xcept as otherwise provided by law . . . , the prevailing
party in a civil case shall be awarded attorney’s fees calcu-
lated under this rule.” Alaska R. Civ. P. 82(a). As Columbia
points out, this rule is phrased in mandatory terms. However,
the rule further provides that “[t]he court may vary an attor-
ney’s fee award” based on various considerations, including
“other equitable factors deemed relevant.” Id. §§ 82(b)(3) &
(b)(3)(K). The district court based its decision on this last pro-
vision, explaining that “[t]he equities in this matter are such
that . . . each party shall bear their own attorney fees.” Under
the circumstances of this case, we do not believe that the dis-
trict court abused its discretion in declining to award attor-
neys’ fees to Columbia.
Conclusion
We hold that LLCs have the citizenship of all of their
owners/members and that the parties here satisfy the require-
ments for diversity of citizenship under 28 U.S.C. § 1332. We
also hold that the district court properly concluded that John-
son’s claims arising from the crane services he provided to
Columbia are time-barred, and that the district court did not
abuse its discretion in denying Columbia’s motions for attor-
neys’ fees.
We therefore AFFIRM the decision of the district court in
all respects. Each party shall bear its own costs on appeal.
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