MERIDIAN SECURITY INSURANCE COMPANY v. RES-CARE, INC.
ORDER - The Court ORDERS Plaintiff to file a Second Amended Complaint by September 8, 2017, which addresses the issues outlined in this Order and properly alleges a basis for this Court's diversity jurisdiction. Signed by Judge Jane Magnus-Stinson on 8/21/2017.(JRB)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
MERIDIAN SECURITY INSURANCE COMPANY,
as subrogee of Interprop Fund III, L.P.,
RES-CARE, INC., and IRELAND HOME BASED
Plaintiff Meridian Security Insurance Company (“Meridian”), as subrogee of Interprop
Fund III, L.P., has filed an Amended Complaint in which it alleges that this Court has diversity
jurisdiction over this matter. The Court notes the following issues with Plaintiff’s jurisdictional
allegations regarding the parties in this action:
Plaintiff has not adequately alleged the citizenship of Defendant Ireland Home
Based Services, LLC, an unincorporated association. The citizenship of an unincorporated association is “the citizenship of all the limited partners, as well
as of the general partner.” Hart v. Terminex Int’l, 336 F.3d 541, 542 (7th Cir.
2003). “[T]he citizenship of unincorporated associations must be traced
through however many layers of partners or members there may be.” Id. at 543.
Asserting that all partners are citizens of “X” or that no partners are citizens of
“X” is insufficient. See Peters v. Astrazeneca LP, 224 Fed. Appx. 503, 505 (7th
Cir. 2007) (noting the insufficiency of a limited partnership asserting that none
of its partners were citizens destroying diversity “rather than furnishing the citizenship of all of its partners so that [the court] could determine its citizenship”).
Determining a party’s citizenship for purposes of a subrogation claim requires
determining whether the subrogation was total or partial. “[T]otal subrogation…results in focusing solely on the subrogee’s citizenship for diversity purposes, [while] partial subrogation forces a look at both subrogee and
subrogor….” Allianz Global Risks U.S. Ins. Co. v. Goshen Air Ctr., Inc., 2011
WL 843950 (N.D. Ind. 2011). Meridian must set forth whether it is a total or
partial subrogee of Interprop Fund III, L.P. (“Interprop”), and also the citizenship of Interprop – keeping in mind the Court’s statements above regarding the
citizenship of unincorporated associations.
The citizenship of a mutual insurance company turns on the corporate form it
is considered to be by applicable state law. See Mut. Serv. Cas. Ins. Co. v.
Country Life Ins. Co., 859 F.2d 548, 551 (7th Cir. 1988) (noting that Texas law
rendered Texas mutual insurance company an unincorporated association while
Minnesota law rendered Minnesota mutual insurance company a corporation).
Meridian must set forth whether it is a mutual insurance company and, if so, set
forth its citizenship accordingly.
The Court is not being hyper-technical: Counsel has a professional obligation to analyze
subject-matter jurisdiction, Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir.
2012), and a federal court always has a responsibility to ensure that it has jurisdiction, Hukic v.
Aurora Loan Servs., 588 F.3d 420, 427 (7th Cir. 2009). The Court must know the details of the
underlying jurisdictional allegations because parties cannot confer jurisdiction on the Court simply
by stipulating that it exists. See Evergreen Square of Cudahy v. Wisconsin Housing and Economic
Development Authority, 776 F.3d 463, 465 (7th Cir. 2015) (“the parties’ united front is irrelevant
since the parties cannot confer subject-matter jurisdiction by agreement…and federal courts are
obligated to inquire into the existence of jurisdiction sua sponte”).
For these reasons, the Court ORDERS Plaintiff to file a Second Amended Complaint by
September 8, 2017, which addresses the issues outlined in this Order and properly alleges a basis
for this Court’s diversity jurisdiction. Defendants need not answer or otherwise respond to the
Amended Complaint at which this Order is directed. Defendants are cautioned, however, that
when they do respond to the Second Amended Complaint, and to the extent that they deny any of
Plaintiff’s jurisdictional allegations or state that they do not have sufficient information to respond
to those allegations, the Court will require the parties to conduct whatever investigation is necessary and file a joint jurisdictional statement confirming that all parties are in agreement with the
underlying jurisdictional allegations before the litigation moves forward.
Distribution via ECF only to all counsel of record
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