Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-1_16-cv-00162/USCOURTS-caed-1_16-cv-00162-0/pdf.json

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

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

On February 3, 2016, Defendants removed this insurance dispute from the Kern County 

Superior Court. See Doc. No. 1. The basis for the removal was diversity jurisdiction. See id. 

The Notice of Removal states that the Plaintiff seeks $41.5 million in damages, that Plaintiff is a 

corporation who is incorporated under the laws of Delaware with a principal place of business in 

California, and that the defendant corporations are incorporated in either Bermuda or New Jersey

with principal places of business in New Jersey. See id. Critically, however, the Complaint 

alleges that Plaintiff is a limited liability company. See Complaint ¶ 4.

A district court has “a duty to establish subject matter jurisdiction over the removed action 

sua sponte, whether the parties raised the issue or not.” United Investors Life Ins. Co. v. Waddell 

& Reed, Inc., 360 F.3d 960, 967 (9th Cir. 2004). The removal statute (28 U.S.C. ' 1441) is 

strictly construed against removal jurisdiction. Geographic Expeditions, Inc. v. Estate of Lhotka, 

MT. POSO COGENERATION CO., LLC,

Plaintiff

v.

ASSOCIATED ELECTRIC & GAS 

INSURANCE SERVICES LIMITED a 

Bermuda Corporation, and AEGIS 

INSURANCE SERVICES, INC., a New 

Jersey Corporation

Defendants

_____________________________________

AND RELATED COUNTERCLAIMS

CASE NO. 1:16-CV-0162 AWI JLT 

ORDER TO SHOW CAUSE WHY CASE 

SHOULD NOT BE REMANDED FOR 

LACK OF SUBJECT MATTER 

JURISDICTION

Case 1:16-cv-00162-AWI-JLT Document 19 Filed 04/22/16 Page 1 of 3
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599 F.3d 1102, 1107 (9th Cir. 2010); Provincial Gov=t of Marinduque v. Placer Dome, Inc., 582 

F.3d 1083, 1087 (9th Cir. 2009). It is presumed that a case lies outside the limited jurisdiction of 

the federal courts, and the burden of establishing the contrary rests upon the party asserting 

jurisdiction. Geographic Expeditions, 599 F.3d at 1106-07; Hunter v. Philip Morris USA, 582 

F.3d 1039, 1042 (9th Cir. 2009). For diversity jurisdiction, the amount in controversy must 

exceed $75,000.00, and there must be “complete diversity,” which means “each of the plaintiffs 

must be a citizen of a different state than each of the defendants.” See 28 U.S.C. § 1332(a); 

Hunter, 582 F.3d at 1043; Allstate Ins. Co. v. Hughes, 358 F.3d 1089, 1095 (9th Cir. 2003). “The 

strong presumption against removal jurisdiction” means that “the court resolves all ambiguity in 

favor of remand to state court.” Hunter, 582 F.3d at 1042; Gaus v. Miles, Inc., 980 F.2d 564, 566 

(9th Cir. 1992). “If at any time prior to judgment it appears that the district court lacks subject 

matter jurisdiction, the case shall be remanded.” 28 U.S.C. ' 1447(c); Gibson v. Chrysler Corp., 

261 F.3d 927, 932 (9th Cir. 2001). Remand under 28 U.S.C. ' 1447(c) “is mandatory, not 

discretionary.” Bruns v. NCUA, 122 F.3d 1251, 1257 (9th Cir. 1997).

Here, there is no doubt that the amount in controversy exceeds $75,000.00. See Complaint 

at ¶ 44. The problem is that it is unclear whether complete diversity exists. Defendants’ notice of 

removal alleges that Plaintiff is a corporation and then proceeds to identify the state of 

incorporation and the principal place of business. If Plaintiff was in fact a corporation, this would 

sufficiently demonstrate Plaintiff’s citizenship, see Hertz Corp. v. Friend, 559 U.S. 77, 80-81 

(2010), and complete diversity for purposes of the notice of removal. Nevertheless, Plaintiff is not 

a corporation. As its name expressly shows, Plaintiff is an LLC. See Complaint ¶ 4; Doc. No. 12. 

It is well established in the Ninth Circuit that, “like a partnership, an LLC is a citizen of every 

state of which its owners/members are citizens.” Johnson v. Columbia Props. Anchorage, LP, 437 

F.3d 894, 899 (9th Cir. 2006); see Zambelli Fireworks Mfg. Co. v. Wood, 592 F.3d 412, 420 (3d 

Cir. 2010). Defendants’ allegations regarding Plaintiff’s place of business and incorporation do 

not establish in any way Plaintiff’s citizenship. See id.

Plaintiff’s Rule 7.1 disclosure shows Plaintiff’s “partial” citizenship. The disclosure 

indicates that Plaintiff has two members, both of whom are LLC’s – DTE Mt. Posco, LLC 

Case 1:16-cv-00162-AWI-JLT Document 19 Filed 04/22/16 Page 2 of 3
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(“DTE”) and Macpherson Green Power Co., LLC (“Macpherson Green”). See Doc. No. 12. DTE 

is “ultimately owned” by a corporation that is incorporated in Michigan. See id. However, there 

is no information about the Michigan corporation’s principal place of business, see Hertz, 559 

U.S. at 80-81, and it is unclear whether the Michigan corporation is DTE’s only member. Thus, 

DTE’s “full” citizenship is unknown. As for Macpherson Green, that entity is “ultimately owned” 

by a “California corporation” and a California limited partnership. See Doc. No. 12. However, 

assuming that the “California corporation” is incorporated in California, it is still unknown where 

that corporation’s principal place of business is. Thus, like DTE, the California corporation’s 

“full” citizenship is unknown. See Hertz, 599 U.S. at 80-81. As for the California limited 

partnership, the citizenship of a limited partnership is the same as each of its partners. Johnson, 

437 F.3d at 899; Kuntz v. Lamar Corp., 385 F.3d 1177, 1182 (9th Cir. 2004). There is no 

information about who the partners in the limited partnership are, or what the partners’ citizenship 

may be. Thus, the citizenship of the California limited partnership is entirely unknown. See id.

As indicated above, it is Defendants’ burden to establish subject matter jurisdiction, and 

they have not done so. Based on the filings made in the case to this point, the Court will not 

immediately remand the matter. Instead, through an order to show cause, Defendants will be

given an opportunity to demonstrate that complete diversity of citizenship exists. If they cannot 

do so, this case will be remanded.

ORDER

Accordingly, IT IS HEREBY ORDERED that, within fourteen (14) days of service of this 

order, Defendants are to show cause in writing why this case should not be remanded for lack of 

subject matter jurisdiction.

IT IS SO ORDERED.

Dated: April 21, 2016 

 SENIOR DISTRICT JUDGE

Case 1:16-cv-00162-AWI-JLT Document 19 Filed 04/22/16 Page 3 of 3