Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_06-cv-06508/USCOURTS-cand-3_06-cv-06508-2/pdf.json

Nature of Suit Code: 360
Nature of Suit: Other Personal Injury
Cause of Action: 28:1332 Diversity-Personal Injury

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

VINCE ZITO, individually and dba BEST OF

THE BAY COLLISION REPAIR,

Plaintiff,

 v.

STATE FARM GENERAL INSURANCE

COMPANY, STATE FARM MUTUAL

AUTOMOBILE INSURANCE COMPANY,

and DOES 1 through 100, inclusive,

Defendants.

 /

No. C 06-06508 JSW

ORDER GRANTING

PLAINTIFF’S MOTION TO

REMAND

Now before the Court is Plaintiff’s motion to remand this action to state court. Having

carefully reviewed the parties’ papers, considered their arguments and the relevant legal

authority, and good cause appearing, the Court hereby GRANTS Plaintiff’s motion to remand.

BACKGROUND

Plaintiff originally filed this action in San Mateo Superior Court on November 23, 2005,

asserting state law claims against State Farm General Insurance Company (“State Farm

General”) and State Farm Mutual Automobile Insurance Company (“State Farm Mutual”). 

Plaintiff served both State Farm entities on December 12, 2005. (Declaration of Steven H.

Schultz, Ex. B.) On October 17, 2006, Plaintiff dismissed State Farm General from this action. 

On October 18, 2006, two days before the hearing scheduled on the parties’ motions for

summary judgment in state court, State Farm Mutual removed this action to federal court, citing

diversity jurisdiction as the basis for removal. Plaintiff now moves to remand this matter, 

arguing that State Farm Mutual’s removal was untimely. 

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The Court will address the additional specific facts as required in the analysis. 

ANALYSIS

A. Legal Standards Relevant to Removal Jurisdiction. 

“[A]ny civil action brought in a State court of which the district courts of the United

States have original jurisdiction, may be removed by the defendant ... to the district court of the

United States for the district and division embracing the place where such action is pending.” 

Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7-8 (1983) (citation

omitted); see also 28 U.S.C. § 1441. However, federal courts are courts of limited jurisdiction. 

See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly,

the burden of establishing federal jurisdiction for purposes of removal is on the party seeking

removal, and the removal statute is strictly construed against removal jurisdiction. Valdez v.

Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004); see also Gaus v. Miles, Inc., 980 F.2d

564, 566 (9th Cir. 1992). “Federal jurisdiction must be rejected if there is any doubt as to the

right of removal in the first instance.” Gaus, 980 F.2d at 566.

In order to remove on the basis of diversity jurisdiction, the action may be removed only

if no defendant is a citizen of the same state as any plaintiff and “only if none of the parties in

interest properly joined and served as defendants is a citizen of the State in which the action is

brought.” 28 U.S.C. § 1441(b); see also 28 U.S.C. 1332(a)(1). Pursuant to 28 U.S.C. § 1446

“The notice of removal of a civil action or proceeding shall be filed within thirty days, by the

receipt of the Defendant, through service or otherwise, of a copy of the initial pleading setting

forth the claim for relief ....” The thirty-day period for filing a notice of removal is triggered

when the defendant first receives formal service of process. Murphy Bros., Inc. v. Michetti Pipe

Stringing, Inc., 526 U.S. 344, 354-56 (1999). However, in a diversity case, if the initial

pleadings do not indicate that federal diversity jurisdiction is available, the removal period does

not begin until additional papers are filed indicating that the case is removable. See 28 U.S.C. §

1446(b) (providing that the removal period starts to run when the defendant receives a “paper

from which it may first be ascertained that the case is . . . removable.”). If the initial pleadings

provide some indication that removal is available, it is generally held that the defendant has an

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obligation to determine whether or not federal jurisdiction in fact exists. In such a situation, the

removal period begins as soon as the defendant receives a paper containing a clue that removal

may be available. Kaneshiro v. North American Co. for Life & Health Ins., 496 F. Supp. 452,

460 (D. Haw. 1980) (citing Grigg v. Southern Pac. Co. 246 F.2d 613 (9th Cir. 1957)). 

B. State Farm Mutual Has Not Met Its Burden to Demonstrate Removal Was

Timely.

It is undisputed that the amount in controversy exceeds $75,000 and that there is

complete diversity between State Farm Mutual, an Illinois citizen, and Plaintiff, who is a

California citizen. The crux of the parties’ dispute centers around the location of State Farm

General’s principal place of business, and thus, whether State Farm General is a citizen of

California. If State Farm General’s principal place of business is in California, then complete

diversity between the parties did not exist until State Farm General was dismissed from the case. 

However, if, as Plaintiff contends, State Farm General’s principal place of business is in Illinois,

then the case was removable when it was first filed in state court, and the thirty-day window for

State Farm Mutual to remove this matter has long since expired.

For purposes of diversity jurisdiction, a corporation is considered a citizen of the state in

which it is incorporated and the state in which it has its principal place of business. 28 U.S.C. §

1332(c); see also Industrial Tectonics, Inc. v. Aero Alloy, 912 F.2d 1090, 1092 (9th Cir. 1990). 

When a corporation conducts a majority of its business activity in one state, “that state is the

corporation’s principal place of business, even if the corporate headquarters are located in a

different state.” Industrial Tectonics, 912 F.2d at 1094. In opposition to Plaintiff’s motion to

remand, State Farm Mutual submits a declaration from the Assistant Vice President of

Accounting of State Farm Mutual, stating that 98.7% of State Farm General’s direct premiums

written in 2005 were in California. (Declaration of Gregg Clapper, ¶ 4.) However, in response

to a form interrogatory seeking the address of its principal place of business, State Farm General

stated under penalty of perjury that it was “One State Farm Plaza, Bloomington, Illinois,

61701.” (Supplemental Declaration of Steven H. Schultz, Ex. C.) A State Farm General

employee verified the interrogatory responses on June 30, 2006. (Id.)

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At the oral argument on Plaintiff’s motion to remand, counsel for State Farm Mutual,

who was also counsel for State Farm General in this action, attempted to distinguish the

“principal place of business” provided in response to the interrogatory from the meaning of

“principal place of business” for purposes of determining federal jurisdiction. Relying on Rosas

v. Superior Court, 25 Cal. App. 4th 671 (1994), State Farm Mutual argued that it had responded

to the interrogatory based on what principal place of business means under state law. In Rosas,

the court held that for purposes of determining venue within California, “a corporation has been

deemed bound by its designation of a principal place of business in corporate documents filed

with the Secretary of State.” Id. at 673-74. In support of its argument that “principal place of

business” has a different meaning under federal law, State Farm Mutual cites to State Farm

Mutual Auto Ins. Co. v. Pyorre, 1999 WL 1244141, *2 (N.D. Cal. Dec. 17,1999), in which this

court, Judge Jenkins presiding, rejected State Farm Mutual’s contention that State Farm

General’s principal place of business was in Illinois because two-thirds of its policyholder base

and its president were in California. 

The Court rejects State Farm Mutual’s proposition that “principal place of business” has

a different meaning under state and federal law, and thus, that State Farm General’s

interrogatory response should be disregarded. First, State Farm Mutual’s characterization of a

corporation’s principal place of business under California law as the address provided in

documents file with the State is overstated. As noted above, Rosas merely addresses the

meaning of principal place of business for purposes of determining venue within the state. See

Rosas, 25 Cal. App. 4th at 673-74. Moreover, California courts have recognized that while

“generally speaking, a corporation’s residence is deemed to be where its principal office or place

of business as designated in the articles is located. ... that rule is not of inevitable application. 

There are many situations in the law where, for purposes of venue and jurisdiction, a

corporation has been held to be present in any county where it conducts its operations.” Partch

v. Adams, 55 Cal. App. 2d 1, 6 (1942). Second, the Court notes that if State Farm General was

providing its principal place of business based on its understanding of state law, while

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simultaneously believing that its principal place of business under federal law was California, it

could have easily clarified its understanding in its interrogatory response. 

The Court finds that in light of the verified interrogatory response in this action stating

that State Farm General’s principal place of business is in Illinois, State Farm Mutual fails to

meet its burden to demonstrate State Farm General’s place of business is in California, and thus,

that its removal was timely. See 28 U.S.C. § 1446(b) (providing that the removal period starts

to run when the defendant receives a “paper from which it may first be ascertained that the case

is . . . removable.”). At the very least, the Court finds that the interrogatory response creates

some “doubt as to the right of removal.” See Gaus, 980 F.2d at 566. Accordingly, the Court

grants Plaintiff’s motion to remand. 

C. Plaintiff’s Request for Attorneys’ Fees.

Pursuant to 28 U.S.C. Section 1447(c), Plaintiff requests an award of attorney’s fees and

costs incurred as a result of State Farm Mutual’s allegedly improper removal. “An order

remanding the case may require payment of just costs and any actual expenses, including

attorney fees, incurred as a result of the removal.” 28 U.S.C. § 1447(c). To determine whether

to award costs and fees under Section 1447(c), this Court has a “great deal of discretion.” 

Morris v. Bridgestone/Firestone, Inc., 985 F.2d 238, 240 (9th Cir. 1993). Although it was not

ultimately persuaded by State Farm Mutual’s arguments, the Court does not find that State Farm

Mutual’s removal was frivolous or motivated by bad faith. The Court therefore declines to

exercise its discretion to award Plaintiff’s fees and costs under Section 1447(c).

CONCLUSION

For the foregoing reasons, the case is remanded to the Superior Court of California for

the County of San Mateo. The Clerk shall transfer the file forthwith.

IT IS SO ORDERED.

Dated: January 23, 2007 

JEFFREY S. WHITE

UNITED STATES DISTRICT JUDGE

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