American Causalty Company Of Reading, Pennsylvania et al v. Western Environmental Consultants, Inc. et al.,

Filing 115

ORDER signed by Judge Garland E. Burrell, Jr on 8/31/11 DISMISSING for lack of subject-matter jurisdiction 61 First Amended Complaint filed by plts, DISMISSING 38 Crossclaim filed by Lexington Insurance Company, DISMISSING 23 Crossclaim and [25 ] Counterclaim filed by Pacific Gas & Electric Company, and DISMISSING 89 Crossclaim filed by Western Environmental Consultants, Inc; DENYING AS MOOT 62 and 65 Motions to Stay; and DENYING AS MOOT 95 Motion to Dismiss filed by Lexington. The parties whose pleadings have been dismissed in this Order are each granted 14 days from the date on which this Order is filed to file an amended pleading addressing the deficiencies in their respective dismissed pleadings. (Meuleman, A)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE EASTERN DISTRICT OF CALIFORNIA

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AMERICAN CASUALTY COMPANY OF
READING, PENNSYLVANIA, and
NATIONAL FIRE INSURANCE COMPANY
OF HARTFORD, successor by merger
to TRANSCONTINENTAL INSURANCE
COMPANY,

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Plaintiffs,

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v.
WESTERN ENVIRONMENTAL
CONSULTANTS, INC., a California
Corporation; and PACIFIC GAS &
ELECTRIC COMPANY, a California
Corporation; LEXINGTON INSURANCE
COMPANY; UNDERWRITERS AT LLOYD’S
LONDON,
Defendants.
_______________________________
AND RELATED CROSSCLAIMS AND
COUNTERCLAIMS
_______________________________

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2:10-cv-02806-GEB-EFB
ORDER

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Currently pending are separate motions to stay this action;

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one was filed by Pacific Gas & Electric Company (“PG&E”), and the other

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by

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Environmental Consultants, Inc. (“Western”) joined each motion. In

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connection with consideration of the stay motions, the Court examined

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Plaintiffs’ First Amended Complaint (“FAC”). Although Plaintiffs allege

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in the FAC that diversity of citizenship is the basis of subject matter

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jurisdiction, they have not alleged sufficient facts to establish

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diversity

Underwriters

of

at

Lloyd’s

citizenship

London

jurisdiction,

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(“Underwriters”).

since

Plaintiffs

Western

have

not

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sufficiently alleged the citizenship of the business-entity Defendants.

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Further, certain crossclaims and counterclaims filed in this action also

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fail to allege sufficient facts to establish diversity of citizenship

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jurisdiction, which is the only alleged basis for original subject

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matter jurisdiction in those pleadings.

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A “plaintiff has the burden of pleading the existence of the

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court’s jurisdiction and, in a diversity action, the plaintiff must

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state all parties’ citizenships such that the existence of complete

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diversity can be confirmed.” Chem. Leaman Tank Lines, Inc. v. Aetna Cas.

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and Sur. Co., 177 F.3d 210, 222 n.13 (3d Cir. 1999) (internal citation

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omitted).

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In cases where entities rather than individuals are
litigants, diversity jurisdiction depends on the
form of the entity. For example, an unincorporated
association
such
as
a
partnership
has
the
citizenships of all of its members. By contrast, a
corporation is a citizen only of (1) the state
where its principal place of business is located,
and (2) the state in which it is incorporated.

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Johnson v. Columbia Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir.
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2006) (internal citation omitted).
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Here,

Plaintiffs

name

Western,

PG&E,

Underwriters,

and

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Lexington Insurance Company (“Lexington”) as Defendants in the FAC. (FAC
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¶¶

4-7.)

Plaintiffs

allege

that

Western,

PG&E,

and

Lexington

are

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corporations, but have not alleged the principal place of business of
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either Western or PG&E, and have not alleged Lexington’s state of
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incorporation.

Additionally,

Plaintiffs

have

not

alleged

whether

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Underwriters is a corporation, or a different type of business entity.
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Therefore, Plaintiffs have failed to sufficiently allege the citizenship
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of the Defendants. Accordingly, the FAC is dismissed for lack of subject
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matter jurisdiction.
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“[T]he dismissal of [Plaintiffs’ FAC] . . . for lack of

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subject-matter jurisdiction will require the court also to dismiss the

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[related] crossclaim[s], unless [those] claim[s] [are] supported by an

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independent basis of federal jurisdiction.” 6 Charles Alan Wright, et

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al., Federal Practice and Procedure § 1433 (3d ed. 2010). “The dismissal

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of . . . [P]laintiff’s [FAC] for lack of jurisdiction [also] requires

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dismissal of [the related] counterclaim[s] unless the counterclaim[s]

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present[] independent grounds of jurisdiction.” Kuehne & Nagel (AG & Co)

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v. Geosource, Inc., 874 F.2d 283, 291 (5th Cir. 1989). Therefore, the

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following pleadings are dismissed for the below stated reason: PG&E’s

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crossclaim against Lexington and Underwriters filed on January 10, 2011,

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since PG&E has not alleged its own principal place of business, the

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location in which Lexington is incorporated, and whether Underwriters is

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a

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counterclaim against Plaintiffs filed on January 11, 2011, since PG&E

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has

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crossclaim against Western, PG&E, and Underwriters filed on January 31,

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2011, since Lexington has not alleged the principal place of business of

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Western or PG&E, or whether Underwriters is a corporation or a different

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type of business entity; and Western’s crossclaim against Lexington and

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Underwriters filed on May 6, 2011, since Western has not alleged

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Lexington’s

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corporation or a different type of business entity.

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corporation

not

or

alleged

state

a

its

of

different

own

type

principal

incorporation,

of

business

place

or

of

business;

whether

Further, the pending motions to stay,

entity;

PG&E’s

Lexington’s

Underwriters

is

a

filed respectively on

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March 24, 2011 and March 28, 2011, are denied as moot, since each

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movant’s argument in favor of a stay is premised on the allegations and

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relief sought in Plaintiffs’ dismissed FAC.

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Lastly,

since

Western’s

crossclaim

has

been

dismissed,

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Lexington’s motion filed on May 27, 2011, to dismiss the “claim for

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attorney’s fees” in Western’s crossclaim is denied as moot.

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The parties whose pleadings have been dismissed in this Order

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are each granted fourteen (14) days from the date on which this Order is

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filed to file an amended pleading addressing the deficiencies in their

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respective dismissed pleadings.

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Dated:

August 31, 2011

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GARLAND E. BURRELL, JR.
United States District Judge

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