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 Although the instant motion is titled “Plaintiff’s Motion for Removal to State Court,”

the Court deems it a motion to remand because the case has already been removed to this Court. 

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UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF MICHIGAN

SOUTHERN DIVISION

WOODWARD AVENUE PROTESTANT

CHURCH OF CHRIST, a Michigan domestic

non-profit corporation, 

Plaintiff, 

v.

STATE FARM FIRE AND CASUALTY

COMPANY, an Illinois corporation, 

Defendant.

___________________________________ /

Civil Case Number: 09-12178

PAUL D. BORMAN

UNITED STATES DISTRICT COURT 

ORDER DENYING PLAINTIFF’S MOTION TO REMAND

Now before the Court is plaintiff Woodward Avenue Protestant Church of Christ’s Motion

to Remand to State Court.1 (Dkt. No. 6). Defendant State Farm Fire and Casualty Company

(“Defendant”) responded to the Motion on July 8, 2009. (Dkt. No. 7). Because the relevant

allegations, facts, and legal arguments are sufficiently presented by the parties briefs, the Court

dispenses with oral argument pursuant to E.D. Mich. LR 7.1(e). For the following reasons, the

Court DENIES Plaintiff’s Motion to Remand to State Court. 

Plaintiff Woodward Avenue Protestant Church of Christ (“Plaintiff”) filed an action against

Defendant in Michigan state court on May 8, 2009, alleging that in violation of Plaintiff’s insurance

policy with Defendant, Defendant failed to compensate Plaintiff for losses that it suffered as result

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of an explosion on Plaintiff’s property. 

Defendant removed the action to this Court on June 5, 2009 based on federal diversity

jurisdiction under 28 U.S.C. §1332, alleging that Plaintiff is a citizen of Michigan, that Defendant

is a citizen of Illinois with its principal place of business in Bloomington, Illinois, and that pursuant

to Plaintiff’s Sworn Statement in Proof of Loss, Plaintiff seeks damages of $870,000, well above

the $75,000 threshold. (Notice of Removal, ¶¶ 3-5, Ex. B). 

Plaintiff filed the instant motion to remand on July 6, 2009, claiming that Plaintiff is a citizen

of Plaintiff’s state of citizenship of Michigan by operation of 28 U.S.C. § 1332(c)(1): 

(c) For purposes of this section and section 1441 of this title- 

(1) a corporation shall be deemed to be a citizen of any State by which it has

been incorporated and of the state where it has its principal place of business, except

that in any direct action against the insurer of a policy or contract of liability

insurance, whether incorporated or unincorporated, to which action the insured is

not joined as a party-defendant, such insurer shall be deemed a citizen of the State

of which insured is a citizen, as well as any State by which the insurer has been

incorporated and of the State where it has its principal place of business. 

(emphasis added). 

Plaintiff appears to argue that this case must be remanded back to state court because it fits

within the direct action exception in 28 U.S.C. §1332(c)(1). But the Sixth Circuit has expressly held

that where an insured sues its own insurance company, federal courts have jurisdiction over such

actions because they are not direct actions within the meaning of 28 U.S.C. § 1332(c)(1). See Henry

v. Wausau Business Ins. Co., 351 F.3d 710, 713 (6th Cir. 2003) (citing Lee-Lipstreau v. Chubb

Group of Ins. Cos., 329 F.3d 898, 899-900 (6th Cir. 2003) (refusing to apply the direct action

provision to a dispute between an insured and her own insurance company because it “would result

in an absurdity—federal courts would never hear common insurance disputes because the insured

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and the insurer, the plaintiff and the defendant, would always be considered citizens of the same

state”). As pointed out in an unpublished opinion of a district court in the Eastern District of

Michigan, the purpose of the direct action exception was not to destroy jurisdiction in insurance

disputes between an insured and its insurer, but rather to prevent “back door diversity”: 

Congress enacted this statute in order to prevent a plaintiff of State A, who was

injured by a party who is also a resident of State A, from achieving diversity

jurisdiction by suing the other party’s foreign insurance company while intentionally

failing to join the individual party in the suit. In the statute prevents “back door

diversity,” i.e., the practice of substituting a tortfeasor’s insurer for the tortfeasor asa

named defendant to create diversity. 

Hillen v. AllState Ins. Co., No. 05-74330, 2006 WL 250038, at *1 (E.D. Mich. Jan. 31, 2006)

(unpublished). 

Because Plaintiff is an insured suing its insurer, the Court has proper federal diversity

jurisdiction over the action. 

Accordingly, the Court DENIES Plaintiff’s Motion to Remand to State Court. (Dkt. No. 6).

SO ORDERED.

S/Paul D. Borman 

PAUL D. BORMAN

UNITED STATES DISTRICT JUDGE

Dated: August 19, 2009

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CERTIFICATE OF SERVICE

Copies of this Order were served on the attorneys of record by electronic means or U.S. Mail on

August 19, 2009.

S/Denise Goodine 

Case Manager

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