United States District Court, S.D. California
THE CITY OF VISTA, a chartered California municipality, Plaintiff,
GENERAL REINSURANCE CORPORATION, Defendant. GENERAL REINSURANCE CORPORATION, Counter Claimant,
THE CITY OF VISTA, a chartered California municipality, Counter Defendant.
WILLIAM Q. HAYES, UNITED STATES DISTRICT COURT.
matter before the Court is the motion to remand filed by
Plaintiff City of Vista. (ECF No. 7).
October 25, 2017, Plaintiff City of Vista
(“Vista”) filed a complaint in Superior Court of
the State of California for the County of San Diego against
General Reinsurance Corporation (“GRC”). (ECF No.
1-2). The complaint alleges that Vista is insured under an
excess indemnity insurance policy (the “Policy”)
issued by GRC. Id. The complaint alleges,
“Pursuant to its rights, duties, and obligations
arising under law and the Policy, Vista is now entitled to
indemnity from [GRC], and all other defendants, arising from
a workers' compensation claim brought by Vista's
employee, Frank Soper.” Id. at 3.
complaint alleges that Frank Soper, a Vista employee, brought
a workers' compensation claim against Vista. The parties
settled the underlying workers' compensation action. The
complaint alleges that under the Policy, GRC is now required
“to indemnify a settlement of Mr. Soper's
permanent, total disability claim” and that GRC has
“refused to participate financially any further than
they had participated effective and up to October 20,
2015.” Id. at 1-2.
brings a single cause of action for declaratory relief
pursuant to California Code of Civil Procedure section 1060
with a claim for immediate trial setting under California
Code of Civil Procedure section 1062.3. Vista “seeks a
binding declaration of its rights under the Policy, along
with a binding declaration articulating Defendants'
duties” and “a declaration from this court, that
Defendants owe Vista a minimum of $1, 030, 000.00 (exact
amount subject to proof at the time of trial) plus interest,
plus fees, plus costs.” Id. at 5. The
complaint alleges that Vista is a municipality in San Diego
“properly formed and existing under the laws of the
State of California” and that GRC is “a
corporation, organized and existing under the laws of the
State of Delaware and is authorized to do business within the
state of California.” Id. at 3.
November 27, 2017, GRC removed the action to this Court
pursuant to 28 U.S.C. § 1441(a) on the grounds that this
Court has diversity jurisdiction over this action under 28
U.S.C. § 1332(a)(1). (ECF No. 1 at 2-3). The notice of
removal states that Vista is a municipality organized under
California law and located in San Diego County and therefore
is a citizen of California. (ECF No. 1 at 2). The notice of
removal states that GRC was incorporated in Delaware and has
a principal place of business in Connecticut. Id.
Further, the notice of removal states that the amount in
controversy is $1, 030, 000 plus interest because Vista seeks
a declaration and judgment that it is owed that sum from GRC.
Id. at 3.
December 14, 2017, GRC filed an answer and counterclaim. (ECF
No. 5). GRC brings the following counterclaims: (1)
declaratory relief cause of action seeking “a
declaration that it is not obligated to indemnify Vista under
the Policy for its claimed excess loss” and “a
determination that it is entitled to reimbursement of loss
and claim expense payments made to Vista in an amount
according to proof.”; (2) a cause of action for
reimbursement and accounting, and offset; and (3)
“breach of contract, including contractual breach of
the implied covenant of good faith and fair dealing by
Vista.” Id. at 19-22.
December 26, 2017, Vista filed a motion to remand to state
court. (ECF Nos. 7, 8). On January 12, 2018, GRC filed a
response in opposition. (ECF No. 13). On January 22, 2018,
Vista filed a reply. (ECF No. 15).
moves this Court for an Order remanding this action to state
court on the grounds that the Court lacks subject matter
jurisdiction. Vista contends that GRC has failed to establish
that diversity jurisdiction is proper. Vista contends that
the parties in this action are not diverse because GRC does
business in California and is therefore a citizen of this
state. Vista contends that GRC has a corporate nerve center
in all states and that there is “no rational basis for
diversity jurisdiction based on the location of certain
officers and offices out-of-state, particularly where, as
here, [GRC] clearly also conducts business in
California.” (ECF No. 7-1 at 5). Vista contends that
GRC has waived its right to remove this action because it has
“availed itself of a State of California judicial
process already” by unsuccessfully seeking to intervene
in the underlying workers' compensation matter before the
California Workers' Compensation Appeal Board.
Id. at 5-6. Further, Vista contends that
“where the relief sought is equitable in nature, a
removed matter can and should be remanded.” (ECF No.
7-1 at 2). Vista contends that “[i]nasmuch as
[GRC's] potential counter-claim does not sound in legal
damages, either, there is no premise for diversity
jurisdiction.” Id. at 4.
contends that this action was properly removed because this
Court has subject matter jurisdiction on diversity grounds.
GRC asserts that it is a citizen of Delaware and Connecticut
and that the amount in controversy exceeds $75, 000. GRC
contends that Vista's argument that diversity is
destroyed because GRC does business in California and has a
nerve center in all fifty states has no merit and is
contradicted by Supreme Court precedent. GRC contends that
the Court's exercise of jurisdiction is mandatory because
this is “an action for common law damages” rather
than declaratory relief. (ECF No. 13 at 8). GRC contends that
the Court “must exercise jurisdiction” over its
counterclaim for breach of contract and other damages in the
amount of $691, 511.71. GRC contends that Vista has failed to
demonstrate that the Court could exercise its discretion to
decline jurisdiction, even if this case was primarily for
declaratory relief. GRC contends that it has not waived its
right to litigate in federal court. GRC asserts that it filed
only the notice of removal to this court in the state court
action and that its unsuccessful petition to intervene in the
underlying workers' compensation proceeding was not an
attempt to litigate coverage issues.
28 U.S.C. § 1441, a defendant may remove an action filed
in state court to federal court if the federal court would
have original subject matter jurisdiction over the
action.” Moore-Thomas v. Alaska Airlines,
Inc., 553 F.3d 1241, 1243 (9th Cir. 2009). Federal
jurisdiction must exist at the time the complaint is filed
and at the time removal is effected. Strotek Corp. v. Air
Transp. Ass'n of Am., 300 F.3d 1129, 1131 (9th Cir.
2002). A party can challenge removal based on lack of subject
matter jurisdiction through a motion to remand. 28 U.S.C.
§ 1447. There is a “strong presumption against
removal” such that the removing party “always has
the burden of establishing that removal is proper.”
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