Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-00122/USCOURTS-caed-2_05-cv-00122-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1332 Diversity-Breach of Contract

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

AMERICAN MANUFACTURERS MUTUAL

INSURANCE CO. and AMERICAN

MOTORISTS INSURANCE CO.,

NO. CIV. S 05-0122 MCE GGH

Plaintiffs,

v. MEMORANDUM AND ORDER

CAROTHERS CONSTRUCTION, INC., 

DAVID L. CAROTHERS, and 

TERRI L. CAROTHERS,

Defendants.

----oo0oo----

Defendants Carothers Construction, Inc., David Carothers,

and Terri Carothers (collectively “Defendants”) have asked this

Court to dismiss the present action, filed by Plaintiffs American

Manufacturers Mutual Insurance Co. and American Motorists

Insurance Co. (collectively “Plaintiffs”), for lack of subject

matter jurisdiction, improper venue, and nonjusticiability. For

Case 2:05-cv-00122-MCE-KJN Document 13 Filed 04/25/05 Page 1 of 7
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 This matter was deemed suitable for decision without oral 1

argument. Local Rule 78-230(h).

 Some of the factual allegations as set forth in this 2

section are disputed by the parties. To the extent either party

has interposed evidentiary objections to said allegations, those

objections are overruled unless otherwise noted. 

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the reasons discussed below, Plaintiffs’ motion is DENIED.1

BACKGROUND2

Plaintiffs are sureties who issued payment and performance

bonds on behalf of Defendants in connection with various

construction projects in the Eastern District of California

pursuant to a general agreement of indemnity (the “Indemnity

Agreement”). The Indemnity Agreement was executed on June 7,

2001, in favor of Plaintiffs and named Defendants as individual

indemnitors. (Mot. to Dis. at 4:13-17; Compl. at 2:17-3:6;

Indemnity Agreement at 1, 2, and 5.) 

Plaintiffs allege that they have received, investigated and

resolved, or are resolving, claims under bonds they issued on

behalf of Defendants. (Compl. at 3:26-4:5; 4:13-16.) As a

result of these claims, Plaintiffs allege that they have incurred

over $1,000,000 in damages. (Compl. at 4:5-12; 4:16-23; Opp’n at

5:1-6.)

In addition to the present federal action, Plaintiffs and

Defendants are involved in extensive litigation in state court. 

(Mot. to Dis. at 3:3-18.) Defendants argue that this action

should be consolidated with the other actions being resolved in

state court because this Court lacks subject matter jurisdiction,

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venue is improper, and the case is nonjusticiable for lack of

ripeness. (Mot. to Dis. at 3:3-6; 3:15-18.) In opposition,

Plaintiffs claim that the present case is properly before this

Court.

STANDARD

The district courts have jurisdiction over all civil actions

where the amount in controversy exceeds $75,000 and the dispute

is between citizens of different states. 28 U.S.C. § 1332(a). A

corporation is a citizen of any state in which it has been

incorporated and the state where it has its principal place of

business. 28 U.S.C. § 1332(c). 

With regard to venue, a civil action where jurisdiction is

based on diversity of citizenship may be brought in a judicial

district where any defendant resides, if all defendants reside in

the same state. 28 U.S.C. § 1391.

Finally, ripeness is a question of timing, designed to

“prevent courts, through avoidance of premature adjudication,

from entangling themselves in abstract disagreements.” Abbott

Laboratories v. Gardner, 387 U.S. 136, 148 (1967) (abrogated on

different grounds). The courts’ role is “neither to issue

advisory opinions nor to declare rights in hypothetical cases,

but to adjudicate live cases or controversies consistent with the

powers granted the judiciary in Article III of the Constitution. 

Thomas v. Anchorage Equal Rights Com’n., 220 F.3d 1134, 1138 (9th

Cir. 2000). 

The Ninth Circuit has found the ripeness inquiry to contain

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both constitutional and prudential components. Portman v. County

of Santa Clara, 995 F.2d 898, 902 (9th Cir. 1993). “The

constitutional component of the ripeness inquiry is often treated

under the rubric of standing and, in many cases, ripeness

coincides squarely with standing’s injury in fact prong . . .

[I]n measuring whether the litigant has asserted an injury that

is real and concrete rather than speculative and hypothetical,

the ripeness inquiry merges almost completely with standing.” 

Thomas, 220 F.3d at 1138-39 (internal citations and quotations

omitted). Thus, in assuring that the jurisdictional prerequisite

of ripeness is satisfied, courts must consider whether the

plaintiff has 1) sustained a direct injury, 2) faces a realistic

danger of sustaining a direct injury, or 3) alleged an injury

that is too imaginary or speculative to support jurisdiction. 

See id. at 1139 (internal citations and quotations omitted). 

In evaluating the prudential aspects of ripeness, the

court’s analysis “is guided by two overarching considerations:

[1] the fitness of the issue for judicial decision and [2] the

hardship to the parties of withholding court consideration.” Id.

at 1141 (internal citations and quotations omitted). 

ANALYSIS

1. Subject Matter Jurisdiction

Defendants assert that Plaintiffs cannot establish subject

matter jurisdiction and, therefore, the present action should be

dismissed pursuant to Rule 12(b)(1). The Court disagrees. 

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 Simply conducting business in California does not 3

invalidate Plaintiffs’ jurisdictional claims nor does it

establish California as Plaintiffs’ primary place of business.

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Plaintiff’s have pled sufficient facts to invoke the diversity

jurisdiction of this Court. The Court has carefully considered

Defendants’ arguments to the contrary and found them to be

without merit. 

First, Plaintiffs have alleged an amount in controversy

exceeding the $75,000 jurisdictional minimum. (Compl. at 2:12-

14; 4:5-23.) Second, diversity exists between all Plaintiffs and

all Defendants in this action. Both plaintiffs are Illinois

corporations, which have their principal places of business in

Illinois. (Compl. at 1:23-25; 2:1-2.) In contrast, two of the

defendants are individual California citizens and the third

defendant is a California corporation with a principal place of

business in California. (Compl. at 2:5-11.)

Defendants have failed to provide any evidence that

Plaintiffs’ jurisdictional allegations are not true. Notably, 3

Defendants admit that Plaintiffs’ allegations are, in fact, true. 

(Mot. to Dis. at 3:26-27; 4:2-9 (stating that Plaintiffs are

Illinois corporations with principal places of business in

Illinois)) 

Pursuant to 28 U.S.C. §§ 1332(a) and 1332(c), the Court

finds that subject matter jurisdiction does indeed exist, and,

therefore, Defendant’s motion to dismiss for lack of subject

matter jurisdiction is denied.

//

//

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 The Court notes that Federal Rule of Civil Procedure 4

42(a) is inapplicable in the present situation.

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2. Proper Venue

Defendants assert that the Eastern District of California is

an improper venue and, therefore, the present action should be

dismissed pursuant to Rule 12(b)(3). Venue is proper in any

federal district where any defendant resides, if all defendants

reside in the same state. 28 U.S.C. § 1391(c). 

Here, pursuant to 28 U.S.C. §§ 1391(a), 1391(c), all

Defendants are California residents who reside in the Eastern

District of California. (Mot. to Dis. at 4:6-9.) Therefore, the

Court finds that venue is indeed proper. Defendants motion to 4

dismiss for lack of proper venue is denied.

3. Justiciability

Defendants assert that Plaintiffs’ action is nonjusticiable

for lack of ripeness. In accordance with the law discussed in

the Standard section above, Plaintiffs have alleged concrete

injury that is neither speculative, imaginary, nor hypothetical

in nature. Plaintiffs have alleged specific monetary damages as

a result of Defendants’ failure to act in accordance with the

Indemnity Agreement. (Compl. at 3:9-26.) 

The Court finds that this case is fit for judicial decision

and if it were to withhold judicial review, Plaintiffs would

suffer considerable financial hardship. Defendants’ motion to

dismiss for lack of ripeness is, therefore, denied. 

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CONCLUSION

For the aforementioned reasons, Defendants’ motion to

dismiss and remand is DENIED.

IT IS SO ORDERED.

DATED: April 25, 2005

__________________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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