USCA4 Appeal: 21-1196 Doc: 74 Filed: 11/16/2022 Pg: 1 of 6

PUBLISHED

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 21-1196

TIMOTHY CAPPS,

Plaintiff - Appellant,

v.

NEWMARK SOUTHERN REGION, LLC; NEWMARK & COMPANY REAL ESTATE, INC.,

Defendants - Appellees.

Appeal from the United States District Court for the Eastern District of North Carolina, at Raleigh. Louise W. Flanagan, District Judge. (5:18-cv-00133-FL; 7:18-cv-00047-FL)

Argued: September 16, 2022 Decided: November 16, 2022

Before RICHARDSON, Circuit Judge, FLOYD, Senior Circuit Judge, and Bruce H. HENDRICKS, United States District Judge for the District of South Carolina, sitting by designation.

Vacated and remanded by published per curiam opinion.

ARGUED: Troy D. Shelton, FOX ROTHSCHILD LLP, Raleigh, North Carolina, for Appellant. David A. Paul, CANTOR FITZGERALD, New York, New York, for Appellees. ON BRIEF: Matthew Nis Leerberg, FOX ROTHSCHILD LLP, Raleigh, North Carolina, for Appellant. Jonathan D. Sasser, Thomas H. Segars, ELLIS & WINTERS, LLP, Raleigh, North Carolina, for Appellees. USCA4 Appeal: 21-1196 Doc: 74 Filed: 11/16/2022 Pg: 2 of 6

PER CURIAM:

Timothy Capps is a commercial-real-estate broker specializing in tenant

representation. In 2015, he entered into an independent-contractor agreement with

Newmark Southern Region, LLC (Newmark)—an international real-estate brokerage and

advisory firm. Issues arose, and Newmark terminated its relationship with Capps.

Contending that his termination was improper, Capps sued Newmark, alleging eight state-

law claims, including breach of contract. Newmark counterclaimed, alleging only breach

of contract. The district court dismissed each of Capps’s claims at the pleading stage, with

the exception of his claim for breach of contract. 1 See Capps v. Harris, No. 5:18-CV-133-

FL WESTERN DIVISION, No. 7:18-CV-47-FLSOUTHERN DIVISION,

, at *15 (E.D.N.C. Nov. 26, 2018). Newmark’s counterclaim also remained. The

parties’ competing claims for breach of contract proceeded to a bench trial, where the

district court rendered judgment for Newmark. See Capps v. Newmark S. Region, LLC,

No. 5:18-CV-133-FL,

, at *27 (E.D.N.C. Dec. 22, 2020).

Notably, after Capps filed his complaint against Newmark but before the matter

went to trial, the district court consolidated this and a separate lawsuit between Capps and

his estranged business partner, Greg Katz—also employed by Newmark. Katz sued Capps,

alleging various state-law claims and one claim under the federal Computer Fraud and

Abuse Act,

. Capps counterclaimed. Following consolidation, but before

1 Capps also sued Newmark & Company Real Estate, Inc., alleging only breach of contract. This claim, too, was dismissed at the pleading stage, and no claim remained as to that entity.

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trial commenced, Capps and Katz stipulated to the dismissal of their claims against one

another. 2

Following the district court’s judgment against him, Capps appealed. In addition to

seeking reversal of the judgment, Capps also sought reversal of the district court’s

dismissal of his various claims at the pleading stage. At argument, because Newmark’s

citizenship was unclear for purposes of confirming diversity jurisdiction, this Court ordered

Newmark to file a letter pursuant to Rule 28(j) of the Federal Rules of Appellate Procedure

conveying the LLC’s membership and citizenship.

Newmark complied with our order. In its supplemental letter, Newmark provides

that, as of the date Capps filed his complaint, “Newmark Southern was wholly owned by

NGA, LLC, a Georgia LLC. NGA was wholly owned by Newmark Partners, L.P., a

Delaware limited partnership. The partners of Newmark Partners, L.P. were Newmark

Holdings, L.P., a Delaware limited partnership, and Newmark Group, Inc., a Delaware

corporation.” Newmark’s Suppl. Authorities 1, ECF No. 67. According to Newmark’s

letter, the limited partners of Newmark Holdings, L.P. resided in thirty-nine states, plus the

District of Columbia. North Carolina was one such state. Capps was also a citizen of

North Carolina when he filed his complaint.

Overlapping citizenship between Capps and a limited partner of Newmark

Holdings, L.P. is a purported revelation to the parties. Capps now moves for vacatur of

2 Monty Harris and Kacie Hopkins Van Hine were also parties to the lawsuit between Katz and Capps, and also stipulated to dismissal.

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judgment and remand for dismissal without prejudice, given the conceded lack of complete

diversity—and consequent lack of subject-matter jurisdiction—that existed at the time of

filing. 3 Newmark opposes, contending that the intervening consolidation of the lawsuit

between Katz and Capps cured the jurisdictional defect between Capps and Newmark.

Rather, Newmark posits that the presence of Katz’s federal claim under the Computer

Fraud and Abuse Act provided a basis from which supplemental jurisdiction effectively

arose as to the state-law claims between Newmark and Capps.

Having considered the parties’ submissions, we conclude that this situation warrants

vacatur and remand for dismissal without prejudice. First, Capps and Newmark agree that

complete diversity did not exist between them at the time of filing, given the North Carolina

citizenship of at least one limited partner of Newmark Holdings, L.P.—a great-grandparent

entity to Newmark. See Cent. W. Va. Energy Co., Inc. v. Mountain State Carbon, LLC,

(4th Cir. 2011) (“[T]he citizenship of a limited liability company . . . is

determined by the citizenship of all of its members . . . .”); Gen. Tech. Applications, Inc. v.

Exro Ltda,

, 121 (4th Cir. 2004) (explaining that a partnership’s citizenship

“is that of its members”). Because Newmark is an LLC, wholly owned by another LLC,

wholly owned by a limited partnership, a partner of which is another limited partnership,

we necessarily trace Newmark’s citizenship through these layered entities.

3 The Supreme Court has long held that “jurisdiction depending on the condition of [a] party is governed by that condition, as it was at the commencement of the suit.” Connolly v. Taylor,

, 565 (1829). This rule “has a pedigree of almost two centuries,” and the Court is loath to recognize exceptions to it. Grupo Dataflux v. Atlas Glob. Grp., L.P.,

, 580–82 (2004).

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Consequently, the district court lacked subject-matter jurisdiction over Capps’s

claims against Newmark pre-consolidation, so it lacked the power to consolidate the

lawsuits in the first place. See Steel Co. v. Citizens for a Better Env’t,

, 94–95

(1998) (“The requirement that jurisdiction be established as a threshold matter ‘spring[s]

from the nature and limits of the [federal] judicial power’ . . . and is ‘inflexible and without

exception.’” (first alteration in original) (quoting Mansfield, C. & L.M. Ry. Co. v. Swan,

(1884))); see also id. at 94 (“Without jurisdiction the court cannot

proceed at all in any cause. Jurisdiction is power to declare the law, and when it [fails] to

exist, the only function remaining to the court is that of announcing the fact and dismissing

the cause.” (quoting Ex parte McCardle,

(1868))).

Even if we could disregard the district court’s error in exercising jurisdiction over a

matter where no such power truly existed, consolidation could not cure the defect. Rather,

“consolidation does not merge . . . suits; it is a mere matter of convenience in

administration, to keep them in step. They remain as independent as before.” Hall v. Hall,

(2018) (quoting Johnson v. Manhattan Ry. Co.,

(2d Cir. 1932)). We have previously held that, “[i]n consolidated appeals, ‘each constituent

case must be analyzed individually . . . to ascertain jurisdiction.’” Abdul-Mumit v.

Alexandria Hyundai, LLC,

(4th Cir. 2018) (quoting Hall,

). Such a “compartmentalized analysis . . . would be gratuitous if the cases had

merged into a single case.” Hall,

. The same is no less true of

consolidation at the trial level.

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Newmark contends that we should forgive the jurisdictional defect here in the

interest of “finality, efficiency, and economy,” given that this matter proceeded to

judgment. Resp. to Mot. to Vacate 14, ECF No. 71 (quoting Caterpillar Inc. v. Lewis,

(1996)). To be sure, vacatur and remand for dismissal now could burden the

parties and squander judicial resources already expended. But the profound burdens on

parties and the judiciary, if we were to recognize convoluted jurisdictional exceptions,

would greatly outweigh the prejudice to Capps and Newmark. See Grupo, 541 U.S. at

580–81 (“[T]he policy goal of minimizing litigation over jurisdiction is thwarted whenever

a new exception to the time-of-filing rule is announced . . . .”); see also

(concluding that

re-litigation is not nearly as burdensome as one might think).

Neither side of this dispute lacked the means to ascertain Newmark’s citizenship at

any point. Whether mutual contentment with the federal forum or genuine obliviousness

brought the parties to this unfortunate juncture, this Court will not condone the exercise of

jurisdiction where it did not truly exist. Accordingly, we vacate the district court’s

judgment and remand with instructions to dismiss this matter without prejudice.

VACATED AND REMANDED

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