Truck Insurance Exchange v. Atlantic Mutual Insurance Company

Filing 104

ORDER TO SHOW CAUSE HOW THE COURT HAS SUBJECT MATTER JURISDICTION. Signed by Judge Charles R. Breyer on 4/1/2009. (crblc1, COURT STAFF) (Filed on 4/1/2009)

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IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

TRUCK INSURANCE EXCHANGE, Plaintiff, v. ATLANTIC MUTUAL INS. CO., Defendant. /

No. C 06-04573 CRB ORDER TO SHOW CAUSE

Plaintiff Truck Insurance Exchange ("Truck") sued defendant Atlantic Mutual Insurance Company ("Atlantic") in California state court for contribution arising from the parties' defense of a lawsuit against a joint insured. On July 29, 2006, Atlantic removed the action to this Court on the basis of diversity jurisdiction; in particular, Atlantic alleged that Truck is a citizen of California as it is a California corporation and Atlantic is a citizen of New Jersey and New York. A district court may, and indeed, should sua sponte raise the issue of subject matter jurisdiction if there is a question. See Galt G/S v. Hapag-Lloyd A.G., 60 F.3d 1370, 1373 (9th Cir. 1995). The Court has discovered that around the time this case was removed to this Court on the basis of diversity jurisdiction, Truck admitted in a case pending in the United States District Court for the Western District of Washington that it is not a California corporation and is instead an unincorporated association (reciprocal inter-insurance exchange) enjoying citizenship in every state in which it has a member. Dally Properties,

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LLC v. Truck Insurance Exchange, 05-0254RSL (Docket No. 170), 2006 WL 2091151 (W.D. Wash. July 25, 2006). In Dally, Truck's true citizenship­which destroyed diversity jurisdiction and rendered removal improper--was not brought to the district court's attention until after the court had ruled on several dispositive motions, all of which became null and void after the court remanded the case to state court for lack of subject matter jurisdiction. The Court hopes to avoid the same waste of judicial resources here. Accordingly, the parties are ordered to show cause as to how this Court had subject matter jurisdiction of this case at the time it was removed in light of Truck admission that it is, or at least at the time of removal was, an unincorporated association and thus a citizen of every state in which it has a subscriber. The parties must file their written responses on or before April 10, 2009 and the Court will hear oral argument at 10:00 a.m. on Friday, April 17, 2009. The hearing on the parties' cross motions for summary judgment is VACATED pending resolution of the jurisdictional issue. IT IS SO ORDERED. Dated: April 1, 2009

CHARLES R. BREYER UNITED STATES DISTRICT JUDGE

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