United States District Court, C.D. California
Fire Ins. Exchange
Watts Regulator Co.
Present: Honorable PERCY ANDERSON, UNITED STATES DISTRICT
CIVIL MINUTES - GENERAL
IN CHAMBERS - COURT ORDER
Rule 26(f) Joint Report filed by the parties, plaintiff Fire
Insurance Exchange (“Fire Insurance”) stated that
it expects to file a Motion to Remand because its citizenship
as an unincorporated association is the citizenship of each
of its members, and the Court therefore lacks diversity
jurisdiction over this matter. Defendant Watts Regulator Co.
(“Watts”) stated that it is concerned about
inconsistent positions taken by Fire Insurance concerning its
may be based on complete diversity of citizenship, requiring
all plaintiffs to have a different citizenship from all
defendants and for the amount in controversy to exceed $75,
000.00. See 28 U.S.C. § 1332; Owen Equip.
& Erection Co. v. Kroger, 437 U.S. 365, 373, 98
S.Ct. 2396, 2402, 57 L.Ed.2d 274 (1978). To establish
citizenship for diversity purposes, a natural person must be
a citizen of the United States and be domiciled in a
particular state. Kantor v. Wellesley Galleries,
Ltd., 704 F.2d 1088, 1090 (9th Cir. 1983). Persons are
domiciled in the places they reside with the intent to remain
or to which they intend to return. See Kanter v.
Warner-Lambert Co., 265 F.3d 853, 857 (9th Cir. 2001).
“A person residing in a given state is not necessarily
domiciled there, and thus is not necessarily a citizen of
that state.” Id. A corporation is a citizen of
both its state of incorporation and the state in which it has
its principal place of business. 28 U.S.C. § 1332(c)(1);
see also New Alaska Dev. Corp. v. Guetschow, 869
F.2d 1298, 1300-01 (9th Cir. 1989). Finally, the citizenship
of a partnership or other unincorporated entity is the
citizenship of its members. See Johnson v. Columbia
Props. Anchorage, LP, 437 F.3d 894, 899 (9th Cir. 2006)
(“[L]ike a partnership, an LLC is a citizen of every
state of which its owners/members are citizens.”);
Marseilles Hydro Power, LLC v. Marseilles Land &
Water Co., 299 F.3d 643, 652 (7th Cir. 2002) (“the
relevant citizenship [of an LLC] for diversity purposes is
that of the members, not of the company”);
Handelsman v. Bedford Village Assocs., Ltd.
P'ship, 213 F.3d 48, 51-52 (2d Cir. 2000) (“a
limited liability company has the citizenship of its
membership”); Cosgrove v. Bartolotta, 150 F.3d
729, 731 (7th Cir. 1998); TPS Utilicom Servs., Inc. v. AT
& T Corp., 223 F.Supp.2d 1089, 1101 (C.D. Cal. 2002)
(“A limited liability company . . . is treated like a
partnership for the purpose of establishing citizenship under
well-established that “a district court's duty to
establish subject matter jurisdiction is not contingent upon
the parties' arguments.” See United Investors
Life Ins. Co. v. Waddell & Reed Inc., 360 F.3d 960,
966 (9th Cir. 2004). Parties cannot agree to nor can they
“waive” a lack of such jurisdiction. Id.
at 966-67. Courts may consider the issue sua sponte.
Demery v. Kupperman, 735 F.2d 1139, 1149 n.8 (9th
Cir. 1984). Indeed, the Supreme Court has repeatedly
emphasized that “district courts have an
‘independent obligation to address subject-matter
jurisdiction sua sponte.'” Grupo
Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 593,
124 S.Ct. 1920, 1937, 158 L.Ed.2d 866 (2004) (quoting
United States v. So. Cal. Edison Co., 300 F.Supp.2d
964, 972 (E.D. Cal. 2004)).
majority of courts that have considered the issue have
concluded that, as unincorporated associations, insurance
exchanges organized as Fire Insurance is are citizens of each
state in which its policyholders are citizens. See, e.g.
Staggs v. Farmers Ins. Exch., Civ. No. 3:15-cv-01502-MC,
2016 WL 1725302, at *3 (D. Or. April 27, 2016) (“I
conclude that Farmers' citizenship must be determined in
relation to the citizenship of its
member-subscribers.”); Nevada Captial Ins. Co. v.
Farmers Ins. Exch., No. 2-12-CV-02166-APG-CWH, 2014 WL
6882342, at *2 (D. Nev. Dec. 4, 2014) (“I conclude that
under California and Nevada law, a reciprocal insurance
exchange's subscribers are its members, not its
customers, and an exchange therefore has the citizenships of
all of its subscribers.”); United Services Auto
Ass'n v. Franke Consumer Prods., Inc., No.
11-05430-PSG, 2012 WL 368378, at *2 (N.D. Cal. Feb. 3, 2012)
(“Consistent with the Second Circuit and the other
appellate and district courts that have followed it, this
court must conclude that USAA is a reciprocal inter-insurance
exchange and thus an unincorporated association. As an
unincorporated association, Supreme Court case law directs
that USAA's citizenship be based on the citizenship of
each of its members.”).
Court therefore orders that parties to show cause in writing
why this Court should not remand this action to the Los
Angeles Superior Court, Case No. BC648898, for lack of
subject matter jurisdiction. The parties' responses to