Echelon Property & Casualty Insurance Company v. Fazio

1 WO 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA

9 Echelon Property & Casualty Insurance No. CV-20-02001-PHX-DWL Company, 10 ORDER Plaintiff, v. Daniel M Fazio, et al., Defendants.

15 On October 15, 2020, Plaintiff Echelon Property & Casualty Insurance Company (“Echelon”) filed its complaint, seeking declaratory relief. (Doc. 1.) The “action arises out of contract.” (Id. ¶ 35.) Specifically, Echelon denied coverage under an insurance policy (“the Policy”) (id. ¶¶ 10, 30) and seeks a declaratory judgment that will “[d]etermine whether there is coverage under the Policy.” (Id. at 7.) Plaintiff alleges that “[t]his Court has jurisdiction over the subject matter of this action pursuant to 28 U.S.C. §§ 2201-2202, the Federal Declaratory Judgment Act.” (Id. ¶ 8.)

22 The Court has an independent obligation to determine whether it has subject- matter jurisdiction. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574, 583 (1999).

24 Pursuant to Rule 12(h)(3) of the Federal Rules of Civil Procedure, “[i]f the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”

27 “Because the Declaratory Judgment Act does not by itself confer federal subject- matter jurisdiction, [Plaintiff] was required to plead an independent basis for federal jurisdiction.” Nationwide Mut. Ins. Co. v. Liberatore, 408 F.3d 1158, 1161 (9th Cir. 2005). Echelon did not plead an alternative basis for federal jurisdiction. Because this action arises out of contract and does not appear to raise a federal question, the only possible basis upon which subject-matter jurisdiction could rest is diversity. The complaint appears to take a stab at alleging the facts that would give rise to diversity jurisdiction (Doc. 1 ¶¶ 1-4, 9) but fails to properly allege the citizenship, for diversity purposes, of any party to this action.

8 Diversity jurisdiction exists when there is complete diversity of citizenship between the plaintiff and the defendants and the amount in controversy exceeds $75,000, exclusive of interests and costs. 28 U.S.C. § 1332. A controversy meets this requirement when “all the persons on one side of it are citizens of different states from all the persons on the other side.” Strawbridge v. Curtiss, 7 U.S. 267 (1806).

13 The party seeking to invoke diversity jurisdiction has the burden of proof, Lew v. Moss, 797 F.2d 747, 749-50 (9th Cir. 1986), by a preponderance of the evidence. McNatt v. Allied-Signal, Inc., 972 F.2d 1340 (9th Cir. 1992); see 13B Federal Practice § 3611 at 521 & n. 34. “Absent unusual circumstances, a party seeking to invoke diversity jurisdiction should be able to allege affirmatively the actual citizenship of the relevant parties.” Kanter v. Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).

20 A corporation, whether incorporated in a state of the United States or in a foreign country, is “deemed a citizen of its place of incorporation and the location of its principal place of business.” Nike, Inc. v. Comercial Iberica de Exclusivas Deportivas, S.A., 20 23 F.3d 987, 990 (9th Cir. 1994). Both the place of incorporation and the location of its principal place of business must be expressly pleaded. Id. 25 An LLC, on the other hand, “is a citizen of every state of which its owners/members are citizens.” Johnson v. Columbia Properties Anchorage, LP, 437 27 F.3d 894, 899 (9th Cir. 2006). Thus, to properly establish diversity jurisdiction “with respect to a limited liability company, the citizenship of all of the members must be pled.” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 611 (9th Cir. 2016). Plaintiff may allege the LLC members’ citizenship on information and belief if the information is not reasonably ascertainable. Carolina Cas. Ins. Co. v. Team Equipment, Inc., 741 F.3d 4 1082, 1087 (9th Cir. 2014).

5 As to individual natural persons, an allegation about an individual’s residence does not establish his or her citizenship for purposes of establishing diversity jurisdiction. “It has long been settled that residence and citizenship [are] wholly different things within the meaning of the Constitution and the laws defining and regulating the jurisdiction of the . . . courts of the United States; and that a mere averment of residence in a particular state is not an averment of citizenship in that state for the purpose of jurisdiction.”

11 Steigleder v. McQuesten, 198 U.S. 141, 143 (1905). “To be a citizen of a state, a natural person must first be a citizen of the United States. The natural person’s state citizenship is then determined by her state of domicile, not her state of residence. A person’s domicile is her permanent home, where she resides with the intention to remain or to which she intends to return.” Kanter, 265 F.3d at 858-59 (emphasis added) (citations omitted).

17 Plaintiff must amend the complaint to correct these deficiencies.1 NewGen, 840 F.3d at 612 (“Courts may permit parties to amend defective allegations of jurisdiction at any stage in the proceedings.”).

20 Accordingly, 21 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.

23 … 24 … 25 … 26 … 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).

1 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.

4 Dated this 22nd day of October, 2020.

5 Lom ee” 6 f t _ Dominic W. Lanza 7 United States District Judge -4-