Echelon Property & Casualty Insurance Company v. Fazio et al

Filing 6

ORDER: IT IS ORDERED that within two weeks of the date of this order, Echelon shall file an amended complaint properly alleging the citizenship of each party. IT IS FURTHER ORDERED that if Echelon fails to timely file an amended complaint, the Clerk of the Court shall dismiss this case, without prejudice, for lack of subject matter jurisdiction [see attached Order for details]. Signed by Judge Dominic W Lanza on 10/22/20. (MAW)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF ARIZONA

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Echelon Property & Casualty Insurance
Company,

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Plaintiff,

No. CV-20-02001-PHX-DWL
ORDER

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v.
Daniel M Fazio, et al.,
Defendants.

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On October 15, 2020, Plaintiff Echelon Property & Casualty Insurance Company

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(“Echelon”) filed its complaint, seeking declaratory relief. (Doc. 1.) The “action arises

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out of contract.” (Id. ¶ 35.) Specifically, Echelon denied coverage under an insurance

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policy (“the Policy”) (id. ¶¶ 10, 30) and seeks a declaratory judgment that will

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“[d]etermine whether there is coverage under the Policy.” (Id. at 7.) Plaintiff alleges that

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“[t]his Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C.

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§§ 2201-2202, the Federal Declaratory Judgment Act.” (Id. ¶ 8.)

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The Court has an independent obligation to determine whether it has subject-

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matter jurisdiction.

Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999).

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Pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure, “[i]f the court

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determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the

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action.”

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“Because the Declaratory Judgment Act does not by itself confer federal subject-

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matter jurisdiction, [Plaintiff] was required to plead an independent basis for federal

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jurisdiction.” Nationwide Mut. Ins. Co. v. Liberatore, 408 F.3d 1158, 1161 (9th Cir.

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2005). Echelon did not plead an alternative basis for federal jurisdiction. Because this

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action arises out of contract and does not appear to raise a federal question, the only

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possible basis upon which subject-matter jurisdiction could rest is diversity.

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complaint appears to take a stab at alleging the facts that would give rise to diversity

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jurisdiction (Doc. 1 ¶¶ 1-4, 9) but fails to properly allege the citizenship, for diversity

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purposes, of any party to this action.

The

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Diversity jurisdiction exists when there is complete diversity of citizenship

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between the plaintiff and the defendants and the amount in controversy exceeds $75,000,

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exclusive of interests and costs. 28 U.S.C. § 1332. A controversy meets this requirement

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when “all the persons on one side of it are citizens of different states from all the persons

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on the other side.” Strawbridge v. Curtiss, 7 U.S. 267 (1806).

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The party seeking to invoke diversity jurisdiction has the burden of

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proof, Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986), by a preponderance of the

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evidence. McNatt v. Allied-Signal, Inc., 972 F.2d 1340 (9th Cir. 1992); see 13B Federal

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Practice § 3611 at 521 & n. 34. “Absent unusual circumstances, a party seeking to

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invoke

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actual citizenship of the relevant parties.” Kanter v. Warner-Lambert Co., 265 F.3d 853,

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857 (9th Cir. 2001).

diversity

jurisdiction

should

be

able

to allege affirmatively the

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A corporation, whether incorporated in a state of the United States or in a foreign

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country, is “deemed a citizen of its place of incorporation and the location of its principal

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place of business.” Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20

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F.3d 987, 990 (9th Cir. 1994). Both the place of incorporation and the location of its

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principal place of business must be expressly pleaded. Id.

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An LLC, on the other hand, “is a citizen of every state of which its

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owners/members are citizens.” Johnson v. Columbia Properties Anchorage, LP, 437

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F.3d 894, 899 (9th Cir. 2006). Thus, to properly establish diversity jurisdiction “with

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respect to a limited liability company, the citizenship of all of the members must be

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pled.” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 611 (9th Cir. 2016). Plaintiff may

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allege the LLC members’ citizenship on information and belief if the information is not

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reasonably ascertainable. Carolina Cas. Ins. Co. v. Team Equipment, Inc., 741 F.3d

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1082, 1087 (9th Cir. 2014).

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As to individual natural persons, an allegation about an individual’s residence does

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not establish his or her citizenship for purposes of establishing diversity jurisdiction. “It

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has long been settled that residence and citizenship [are] wholly different things within

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the meaning of the Constitution and the laws defining and regulating the jurisdiction of

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the . . . courts of the United States; and that a mere averment of residence in a particular

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state is not an averment of citizenship in that state for the purpose of jurisdiction.”

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Steigleder v. McQuesten, 198 U.S. 141, 143 (1905). “To be a citizen of a state, a natural

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person must first be a citizen of the United States. The natural person’s state citizenship

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is then determined by her state of domicile, not her state of residence. A person’s

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domicile is her permanent home, where she resides with the intention to remain or to

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which she intends to return.” Kanter, 265 F.3d at 858-59 (emphasis added) (citations

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omitted).

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Plaintiff must amend the complaint to correct these deficiencies.1 NewGen, 840

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F.3d at 612 (“Courts may permit parties to amend defective allegations of jurisdiction at

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any stage in the proceedings.”).

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Accordingly,

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IT IS ORDERED that within two weeks of the date of this order, Echelon shall

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file an amended complaint properly alleging the citizenship of each party.

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…

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…

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…

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…

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This amended complaint pursuant to court order will not affect Plaintiff’s right
under Rule 15(a)(1) to later amend once as a matter of course. See, e.g., Ramirez v. Cty.
of San Bernardino, 806 F.3d 1002, 1006-09 (9th Cir. 2015).
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IT IS FURTHER ORDERED that if Echelon fails to timely file an amended

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complaint, the Clerk of the Court shall dismiss this case, without prejudice, for lack of

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subject matter jurisdiction.

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Dated this 22nd day of October, 2020.

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