Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-02308/USCOURTS-cand-3_07-cv-02308-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1332 Diversity-Insurance Contract

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The removing defendants represent that the other named defendants, specifically,

Marsh USA Risk & Insurance Services, Inc., Marsh & McLennan Companies, Inc., Marsh

Ltd., Finpro, and Richard E. Cowan, have not yet been served.

United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

CROWN PAPER LIQUIDATING TRUST,

Plaintiff,

 v.

AMERICAN INTERNATIONAL GROUP,

INC., et al.,

Defendants /

No. C-07-2308 MMC

ORDER DIRECTING DEFENDANTS TO

SHOW CAUSE WHY ACTION SHOULD

NOT BE REMANDED FOR LACK OF

SUBJECT MATTER JURISDICTION

Before the Court is the Notice of Removal, filed April 27, 2007 by defendants

American International Group, Inc., National Union Fire Insurance Company of Pittsburgh,

Pa., and AIG Domestic Claims, Inc., by which said defendants have removed from state

court plaintiff Crown Paper Liquidating Trust’s complaint.1

Defendants allege the district court has diversity jurisdiction over plaintiff’s claims,

each of which arises under state law. In that respect, defendants have alleged sufficient

facts to establish that the amount in controversy exceeds $75,000. With respect to

diversity of citizenship, however, defendants have failed to make a sufficient showing. 

Defendants acknowledge that plaintiff and defendant Richard E. Cowan (“Cowan”) are both

Case 3:07-cv-02308-MMC Document 18 Filed 05/14/07 Page 1 of 2
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Although the complaint contains eleven causes of action, only one cause of action

is alleged against Cowan, specifically, a claim for negligent misrepresentation, which, under

California law, is a form of fraud. See, e.g., CACI § 1903 and Use Note thereto (Spring Ed.

2007) (citing Cal. Civ. Code § 1710; collecting cases).

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citizens of California. Defendants assert, without further elaboration, that Cowan’s

citizenship should be disregarded on the ground “there is no possibility that plaintiff will be

able to establish liability against him because [ ] Cowan had no duty to the plaintiff and

acted only in his official capacity.” (See Notice of Removal ¶ 5.) Defendants’ assertion is

insufficient to demonstrate it is “obvious according to the settled rules of the state” that

plaintiff cannot state a negligent misrepresentation claim against Cowan.2 See McCabe v.

General Foods Corp., 811 F. 2d 1336, 1339 (9th Cir. 1987) (“If the plaintiff fails to state a

cause of action against a resident defendant, and the failure is obvious according to the

settled rules of the state, the joinder of the resident defendant is fraudulent.”).

Accordingly, defendants are hereby ORDERED TO SHOW CAUSE, in writing no

later than May 24, 2007, why the instant action should not be remanded for lack of subject

matter jurisdiction. Plaintiff may, no later than May 31, 2007, file a reply to defendants’

response. As of May 31, 2007, the Court will take the matter under submission.

IT IS SO ORDERED.

Dated: May 14, 2007 

MAXINE M. CHESNEY

United States District Judge

Case 3:07-cv-02308-MMC Document 18 Filed 05/14/07 Page 2 of 2