“The Unilateral-Manager Rule” – Why a Manager’s Forum Contacts Cannot Confer Jurisdiction on an LLC: A Commentary on CDC Real Estate v. La Biela (5th Cir. 2025)

Introduction

The United States Court of Appeals for the Fifth Circuit’s unpublished opinion in CDC Real Estate Corporation v. La Biela, L.L.C., No. 24-50626 (5th Cir. Aug. 5, 2025) clarifies a recurring jurisdictional puzzle: can an out-of-state limited-liability company (LLC) be sued in the home state of its manager when all of the forum contacts were made exclusively by the manager? The Fifth Circuit’s answer—an emphatic “no”—solidifies what this commentary terms the “Unilateral-Manager Rule.” Under this rule, an LLC does not purposefully avail itself of the forum merely because its manager, operating unilaterally from that forum, performs managerial acts there.

The dispute arose after CDC Real Estate Corporation (“CDC”), a Texas-based Delaware corporation, managed La Biela, a Colorado LLC, for over twenty years. CDC, still acting as manager, executed a controversial self-interested purchase of a 25 percent stake in a Colorado entity. When La Biela’s member, Jeff Oberg, objected and replaced CDC as manager, CDC sought declaratory relief in Texas state court. The defendants removed to federal court and moved to dismiss for lack of personal jurisdiction. The district court agreed, and the Fifth Circuit affirmed.

Summary of the Judgment

Sitting de novo, the Fifth Circuit held:

• No General Jurisdiction – La Biela, Oberg, and the related trusts are “at home” in Colorado, not Texas; CDC’s Texas-based managerial acts cannot be imputed to La Biela for jurisdictional purposes.
• No Specific Jurisdiction – The declaratory-judgment claims do not “arise out of or relate to” any purposeful Texas contacts by the defendants. All relevant assets, governing law, and operations center on Colorado (and Wisconsin), not Texas.
• Agency Theory Rejected – CDC’s unilateral Texas acts as manager cannot establish jurisdiction over Oberg or the trusts; there is no basis to treat CDC’s forum contacts as those of the defendants.
• The court therefore affirmed dismissal without reaching the defendants’ alternative motion to transfer venue.

Analysis

Precedents Cited and Their Influence

• Walden v. Fiore, 571 U.S. 277 (2014) – Reinforced that the plaintiff’s contacts cannot supply the minimum-contacts analysis; the defendant’s conduct is the focal point.
• Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) – Cited for the “purposeful-availment” axis and the admonition against jurisdiction based on unilateral activity.
• Carmona v. Leo Ship Mgmt., Inc., 924 F.3d 190 (5th Cir. 2019) – Emphasized that “the defendant himself” must deliberately contact the forum; the court relied heavily on this language to reject CDC’s argument.
• Daimler AG v. Bauman, 571 U.S. 117 (2014) & Frank v. PNK (Lake Charles) L.L.C., 947 F.3d 331 (5th Cir. 2020) – Governed the “at-home” test for general jurisdiction over LLCs.
• Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952) – Distinguished; although Perkins found general jurisdiction where the corporation’s president moved its operations wholesale to Ohio, here CDC (the plaintiff) was the actor, not the defendant.
• Central Freight Lines, Inc. v. APA Transportation Corp., 322 F.3d 376 (5th Cir. 2003) & Moncrief Oil Int’l Inc. v. OAO Gazprom, 481 F.3d 309 (5th Cir. 2007) – Offered contrasting results on specific jurisdiction flowing from contracts; the court explained why La Biela fits Moncrief, not Central Freight.
• Other support precedents: Johnston v. Multidata Sys. Int’l Corp., Wilson v. Belin, Pace v. Cirrus Design, Holt Oil & Gas, and Jones v. Petty-Ray.

Legal Reasoning

The court collapsed Texas’s long-arm analysis into the federal due-process test and proceeded in two tiers:

1. General Jurisdiction
   • The defendants are at home in Colorado.
   • CDC’s performance of managerial tasks from Texas constitutes unilateral plaintiff activity, insufficient under Walden and Burger King.
   • The Perkins analogy fails because there the corporate decision-maker who moved to Ohio was the defendant’s chief executive, not an adverse plaintiff.
2. Specific Jurisdiction
   • Purposeful-availment: The key contract (the consent naming CDC manager) is silent on place of performance; La Biela never obligated itself to conduct business in Texas.
   • Relation nexus: The declaratory-judgment claim concerns a Colorado property interest, a Colorado LLC, and a Colorado governing law clause—only tangentially connected to any Texas activity.
   • Even assuming foreseeability of Texas-based management, foreseeability alone cannot supply purposeful availment (Moncrief).

Because CDC could not satisfy the first two prongs of the Pace/Moncrief test, the court never reached “fair play and substantial justice.” The same logic defeated the agency argument vis-à-vis Oberg and the trusts.

Impact on Future Litigation

• Clarifies Jurisdictional Boundaries for LLCs – When an LLC engages an out-of-state manager, the manager’s home forum will not automatically obtain jurisdiction over the LLC or its members.
• Encourages Contractual Precision – Parties drafting operating- or management agreements may include explicit forum-selection or choice-of-forum clauses if they wish to litigate in the manager’s home state.
• Limits Forum Shopping by Managers – A disgruntled manager cannot rely on its own forum contacts to anchor jurisdiction; disputes will likely proceed where the LLC is “at home” or where the underlying assets are located.
• Reinforces Walden/Carmona Principles – The decision solidifies within the Fifth Circuit the principle that unilateral acts by the plaintiff in the forum state are jurisdictionally meaningless.
• Potential for Split with Other Circuits – Some circuits treat agent contacts as the principal’s contacts more expansively. Although unpublished, the decision may be cited persuasively to resist jurisdiction where only the manager, not the LLC itself, touched the forum.

Complex Concepts Simplified

• General vs. Specific Jurisdiction
  • General: Defendant is “at home” in the forum (usually place of incorporation & principal place of business). The court can hear any claim there.
  • Specific: Defendant’s forum-state acts give rise to or relate to the claim. Requires purposeful availment plus a nexus.
• Purposeful Availment – A defendant must have deliberately engaged with the forum, not merely acted in a way that had—incidentally—effects there.
• Unilateral Activity – Actions taken solely by the plaintiff or a third party in the forum, without direction or control from the defendant, do not count toward minimum contacts.
• Manager-Managed LLC – An LLC in which day-to-day control rests with a manager (who may be an outsider); members are akin to shareholders. Here, CDC was such a manager.
• Choice-of-Law Clause – Contractual provision stating which jurisdiction’s substantive law will govern disputes. Not automatically dispositive for jurisdiction, but a strong signal of the parties’ expectations.

Conclusion

CDC Real Estate v. La Biela orchestrates a concise but important melody in the jurisprudence of personal jurisdiction: a plaintiff-manager cannot bootstrap its own forum contacts into jurisdiction over the managed LLC or its members. The Fifth Circuit, echoing Supreme Court guidance, treated CDC’s Texas activities as juridically invisible to the minimum-contacts assessment. The “Unilateral-Manager Rule” that emerges is likely to influence transactional planning and litigation strategy wherever LLC managers operate from locations different from the entity’s domicile. Future litigants should expect courts, at least within the Fifth Circuit, to scrutinize who—plaintiff or defendant—truly reached into the forum before permitting a lawsuit to proceed there.