Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_10-cv-08191/USCOURTS-azd-3_10-cv-08191-0/pdf.json

Nature of Suit Code: 245
Nature of Suit: Real Property Product Liability
Cause of Action: 28:1441 Petition for Removal- Product Liability

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Truck Insurance Exchange,

 Plaintiff,

vs.

The Manitowoc Company, et al.,

 Defendants.

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No. CV-10-8191-PCT-PGR

 

 ORDER

 

Defendant American Shizuki Corporation removed this action on October

10, 2010 solely on the basis of diversity of citizenship jurisdiction. In two prior

orders (Docs. 7 & 13), the Court ordered the removing defendant, who has the

burden of establishing that this Court has subject matter jurisdiction over this

action, to amend its notice of removal to provide additional information regarding

the citizenship of plaintiff Truck Insurance Exchange (“TIE”) based on the Court’s

serious concern as to whether TIE is in fact diverse from all of the defendants. 

As the Court has made clear to the parties, the resolution of the jurisdictional

issue depends, in the first instance, on whether there is a legal basis for the

allegation in the Amended Notice of Removal of Civil Action (Doc. 8) that TIG is a

citizen of California because it is a California corporation with its principal place of

Case 3:10-cv-08191-PGR Document 16 Filed 12/01/10 Page 1 of 6
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1

 The fact that TIG states in its response to the removing defendant’s

motion that it does not oppose the removal of this action is of absolutely no legal

relevance as it is axiomatic that “parties ... cannot create federal court subject

matter jurisdiction by stipulation.” Holman v. Laulo-Rowe Agency, 994 F.2d 666,

668 n.1 (9th Cir.1993); see also, United States v. Ceja-Prado, 333 F.3d 1046,

1049 (9th Cir.2003) (noting that a federal court has the independent obligation to

address sua sponte whether it has subject matter jurisdiction and that “courts

have not allowed jurisdiction to depend on either malfeasance or well-intentioned

agreement of the parties.”)

2

 While the Court may have the discretion to allow some types of postremoval jurisdictional discovery, it is certainly not required to permit it, see Abrego

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business in California, or whether it is instead an unincorporated association

under California law. 

Rather than refuting the federal case law cited to it by the Court in its last

order (Doc. 13) which noted that TIG is an unincorporated association for

purposes of diversity jurisdiction, the removing defendant filed a Motion to

Continue Deadline and to Conduct Early Discovery (Doc. 14), wherein it requests

that it be allowed to take early discovery limited in part to “questions about TIE’s

legal structure, place of incorporation (as appropriate), principal place of

business, name and identity of each member of the unincorporated association

(as appropriate), and information related to the citizenship of each member.”1

Leaving aside the fact that the removing defendant has conspicuously

failed to cite to any legal authority permitting it to take post-removal subject

matter jurisdiction-related discovery under the circumstances present here, the

Court concludes that its request to take jurisdictional-related discovery regarding

TIE’s legal structure is neither appropriate nor necessary because the Court finds

as a matter of law that TIE is an unincorporated association for purposes of

diversity of citizenship jurisdiction.2

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Abrego v. The Dow Chemical Co., 443 F.3d 676, 691 (9th Cir.2006) (noting that its

prior decisions do not indicate that subject matter jurisdiction-related discovery “is

required”) (emphasis in original), and the Court will deny the removing

defendant’s request that it be allowed at this time to “seek a certified copy of the

insurance policy under which TIE obtained its insurance rights, as the information

contained therein will be material in determining whether some subsidiary

corporate insurer is actually involved.” If that information was determinative of

this Court’s subject matter jurisdiction then the removing defendant should have

obtained it prior to removing this action on the basis of diversity jurisdiction. The

Court’s only concern at this time is whether it has diversity jurisdiction over this

action based on the parties currently before it.

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First, the Court concludes, as set forth by TIG in its corporate disclosure

statement (Doc. 12), that TIE is a reciprocal or interinsurance exchange

organized pursuant to the California Insurance Code and that it is owned by its

subscribers or policyholders. Under California law, an interinsurance exchange is

not a corporation, Industrial Indemnity Exchange v. State Board of Equalization,

161 P.2d 222, 225 (Calif.1945), but is rather “an unincorporated business

organization of a special character in which the participants, called subscribers

(or underwriters) are both insurers and insureds[.]” Industrial Indemnity Co. v.

Golden State Co., 256 P.2d 677, 680 (Cal.App.1953). The California appellate

courts specifically recognize that TIE is an unincorporated association. See e.g.,

Ulwelling v. Crown Coach Corp., 206 Cal.App.2d 96, 129, 23 Cal.Rptr. 631, 650

(1962) (“Truck Insurance Exchange is an unincorporated association of policy

holders organized as an inter-insurance exchange[.]”); R&B Auto Center, Inc. v.

Farmers Group, Inc., 140 Cal.App.4th 327, 362, 44 Cal.Rptr.3d 426, 455 (2006)

(“Truck Insurance [Exchange] is a reciprocal or interinsurance exchange. ... An

interinsurance exchange is an unincorporated business organization made up of

subscribers and managed by an attorney-in-fact.”); Tran v. Farmers Group, Inc.,

104 Cal.App.4th, 1202, 1207 & 1210, 128 Cal.Rptr.2d 728, 731 & 733-34 (2002)

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(noting that Truck Insurance Exchange is a reciprocal insurer, also known as an

interinsurance exchange, and that an interinsurance exchange is an

unincorporated business organization.)

Second, federal courts considering the legal status of Truck Insurance

Exchange for diversity of jurisdiction purposes have also specifically found it to be

an unincorporated association. See e.g., Dally Properties, LLC v. Truck Insurance

Exchange, 2006 WL 2091151, at *1 (W.D.Wash.2006) (In remanding the action

for lack of diversity jurisdiction, court noted that “Truck [Insurance Exchange] is

not a ‘foreign corporation’ but rather an unincorporated association enjoying

citizenship in every state in which it has a subscriber[.]); Country Rock Cafe, Inc.

v. Truck Insurance Exchange, 417 F.Supp.2d 399, 402-03 (S.D.N.Y.2006) (Court,

in finding that it lacked diversity jurisdiction, determined that Truck Insurance

Exchange was an unincorporated association for diversity purposes); Adolph

Coors Co. v. Truck Insurance Exchange, 2005 WL 486580 (D.D.C. Feb. 28,

2005) (Court, relying on California law stating that reciprocal insurance

exchanges are unincorporated business organizations, remanded action removed

by Truck Insurance Exchange for lack of diversity jurisdiction because it found

that it was an unincorporated entity which was a citizen of the states in which its

members were citizens); Truck Insurance Exchange v. The Dow Chemical Co.,

331 F.Supp. 323, 324-25 (W.D.Mo. 1971) (Court, in dismissing the case for lack

of diversity jurisdiction, determined that the citizenship of Truck Insurance

Exchange was the citizenship of each of its members because it is “a reciprocal

insurance exchange composed of a number of members acting as an

unincorporated association.”)

Since the citizenship of an unincorporated association is the citizenship of

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3

 As the California Court of Appeals has explained in reference to the

subscribers of a reciprocal insurance exchange regulated by the California

Insurance Code, “[t]he subscribers furnish their premium deposits, the means

required for losses and costs, reserves and surpluses of the reciprocal insurance

of them all, and therefore are entitled to the equity in the assets of the Exchange

subject to the purpose for which they have furnished said means.” Industrial

Indemnity Co. v. Golden State Co., 256 P.2d at 680.

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each of its members, the only remaining diversity-related issue of concern to the

Court at this time is whether TIG has any members who are citizens of Wisconsin

or Nebraska, which are the states of which the defendants are citizens. Since

TIG is owned by its subscribers, they are its members for purposes of

determining TIG’s citizenship.3

 In order to more speedily resolve this issue, and

in light of TIG’s statement in its response to the removing defendant’s motion that

“[i]f there is specific information that the Court needs beyond that contained in

TIE’s corporate disclosure TIE will supply it[,]” the Court will require TIG to file an

affidavit or declaration with the Court from an appropriate official setting forth

whether, as of the time this action was commenced in state court, which was May

27, 2010, and as of the time this action was removed, which was October 1,

2010, any subscriber of TIG was a citizen of Wisconsin or Nebraska. See Themis

Lodging Corp. v. Erie Insurance Exchange, 2010 WL 2817251, at *1 (N.D.Ohio

July 16, 2010) (In dismissing an action for lack of diversity jurisdiction, the court

stated that courts make no legally significant distinction between a “subscriber” or

a “member” of a reciprocal insurance exchange, which it noted was an

unincorporated business organization, in determining the citizenship of the

exchange.) Therefore,

IT IS ORDERED that defendant American Shizuki Corporation’s Motion to

Continue Deadline and to Conduct Early Discovery (Doc. 14) is granted solely to

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the extent that plaintiff Truck Insurance Exchange shall no later than noon on

December 15, 2010 file a notice with the Court, supported by the affidavit or

declaration of an appropriate official, setting forth whether any of its members

were citizens of Wisconsin or Nebraska as of the dates this action was

commenced in state court and was removed to this Court.

DATED this 1st day of December, 2010.

Case 3:10-cv-08191-PGR Document 16 Filed 12/01/10 Page 6 of 6